A survey of the UK construction industry by NBS, part of RIBA Enterprises, has revealed an increase in the number of disputes over the last 12 months. And that disputes over extensions of time outweighed any other reason
The second annual NBS National Construction Contracts and Law Survey was carried out in June in July 2013. Undertaken with the help of the membership of more than 20 industry bodies, the survey of over 1,000 clients, contractors and consultants found that 30% had been involved in one or more contract entering into dispute in the last 12 months compared to 24% in the previous year.
It is also clear from the NBS survey that many disputes involve large sums of money and have a significant effect on the construction process.
Respondents were asked to identify the main causes of disputes in 2012, with “extensions of time” being named by just under half the sample, at 49%. Other reasons included defective work, named by one in three (32%), valuation of interim payments (16%) and contractual terms (6%).
Another question asked the sample to identify the issues that had caused most problems during the construction phases of projects in 2012. “Assessment of delay and extension of time” emerged as the most problematic issue, identified by 44% of clients, 63% of contractors, and 48% of consultants.
“Lateness in payment” was named by 9% of clients, 34% of contractors and 20% of consultants.
On actual disputes, 70% said that none of the projects they worked on in 2012 had seen a dispute, by 17% had been involved in one disputed project, 6% had involvement in two, and 7% had been involved in three or more.
The survey found that collaboration was far from the norm, and therefore failing to reduce the number of disputes. 49% of those questioned said that they had not used any collaboration techniques on projects that started in 2012.
When the remaining 51% was questioned further on collaboration, 32% had worked on projects with formal partnering arrangements, 12% on projects with alliancing agreements and 20% on projects with non-binding partnering charters.
But the most common form of collaboration was “a contract that included the ethos of trust and mutual collaboration”, at 61%, although the report’s authors question how effective this would be.
One solution to this problem launched in 2013 is the new CIOB Complex Projects Contract which includes the requirement for effective schedule management (read the post) and is backed up by the CIOB PTMC time management certification (see more on the certification).