Infrastructure and capital projects are being hit hard by rising financing costs, inflation and expensive lawsuits, but the latter issue is one builders have some power to mitigate. Contractors can empower themselves by understanding the causes of cost disputes and overruns, and curb the losses of money and time these conflicts routinely incur.
That’s according to the sixth annual Crux insight report on global construction claims and disputes. The research comes from London-based HKA, a consultancy that specializes in construction risk mitigation and dispute resolution, which analyzed 1,800 projects in 106 countries.
In the Americas, the top causes of conflict on a project were:
- Changes in scope.
- Incorrect design.
- Deficiencies in workmanship.
- Unforeseen physical conditions.
- Incomplete design.
The impact of this conflict is enormous: Disputed costs on projects in the Americas reached more than a third of their value, according to the report, averaging $100 million, or 33.6% of capital expenditure. U.S. general contractors are being squeezed by inflation and higher borrowing costs, and as a result, are less inclined to settle and seek to maximize their recovery by litigation, the report found.
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