A study of senior and legal management within the global construction industry has highlighted crucial areas where risk management on projects can be further improved. 38% of respondents revealed that ‘time’ was the single most important factor in triggering conflict, while a further 38% identified ‘cost’ as the main source of disputes.
Law firm CMS interviewed more than 50 top level executives from across the globe to discover where potential disputes are arising, how they are managed and how sector participants are moving towards new approaches to minimise conflicts and disputes.
The respondents to The International Construction Survey 2020 identified a number of key areas where they believed risks could be better managed. Keeping better records and improving change management procedures came out top, while earlier identification of risks during tender phase, submitting notices within prescribed time limits, and better management of supply chain and subcontractors were also highlighted as important factors in reducing the potential for disputes.
Scotland-based CMS partner and construction specialist Shona Frame said, “While the average value of UK construction disputes has significantly decreased according to the most recent reports, there is still a strong feeling from senior and legal management that more can be done within the industry to identify and manage the risk of disputes arising throughout a project. With time and cost being seen as the most significant themes at the heart of disputes, there are a number of valuable insights from those we surveyed on how we could reduce the potential of conflict on projects.
“While construction firms… have historically been renowned for being contentious, it is encouraging to see that many within the industry are increasingly valuing the importance of risk management, dispute avoidance and early-stage resolution.
“Early identification of issues and open communication lines with the contractor’s client are an essential part of this process. This approach will only benefit the construction sector, especially as we emerge from the damaging effect of Covid-19, by helping reduce the potential for expensive, long-running arbitrations or other forms of disputes which can prove detrimental to both sides in a conflict.”