HKA has investigated claims and disputes on 1,602 projects in 100 countries for its latest annual Crux Insight report. The combined value of the projects investigated exceeds US$2 trillion (roughly £1.7 trillion).
Total claims analysed in the report exceeded US$80 billion in value, while the cumulative overruns add up to 840 years.
This year’s report, which distils the analysis of projects HKA has provided services on up to the end of July 2022, highlights the damaging influence of factors such as dysfunctional design processes, skills shortages and supply chain disruption on project performance.
A significant number of projects are dogged by design-related issues, such as design information issued late (24.3%), incorrect design (23.8%) or incomplete design (23.2%).
Over 17% of projects were affected by problems with workmanship, 15.3% by low levels of skill or experience and 9.7% by a shortage of workers.
The report also found that 10.5% of projects were disrupted by late delivery of materials or products.
Across all projects globally, the leading cause of claims and disputes was change in scope, followed by conflicting contract interpretations and delayed design information. But within the regional analysis of the dataset, notable variations emerge in both causes and effects.
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In Africa, Asia and Oceania, restricted or delayed access to sites was one of the top three triggers for claims and disputes.
Deficient workmanship was a far more significant cause of contention in Europe and the Americas than in other regions – on 23.2% and 20.3% of projects, respectively.
While conflict over unforeseen physical conditions on site affected 18.8% of projects worldwide, this was the second most common cause of dispute in the Americas.
Design-related issues are a significant problem in all regions but especially so in Europe, where incorrect design is the prime culprit for distress on almost a third of projects (32.7%).
Projects in the Middle East faced the worst delays (83.1% of schedule duration or 22.5 months, on average). And overruns averaged almost a year in the Americas, prolonging schedules by 58.2%, equivalent to 11.3 months.
HKA partner Toby Hunt said “In 2022 we are still seeing a long Covid legacy of uncertainty, and that economic and logistical overhang has been compounded by the war in Ukraine, resurgent inflation, further supply shocks, and a slowdown in the global economic recovery. All pose significant challenges for major capital projects even though many of the world’s construction markets remain buoyant and boast strong project pipelines.
“Amid acute skills shortages and these uncertainties, there are actions project teams can take to tackle the root causes of the most common claims and disputes. Crux Insight shares world-class intelligence to help promoters, contractors and the wider industry navigate the complexities of major projects and avoid the unnecessary consequences in lost time and money,” said Hunt.
- The Crux database is searchable via an interactive dashboard, which can be used to gauge risks in various sectors and regions, benchmark causes, and help to identify areas for improvement (link opens in a new window).
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