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How to forecast construction claims and disputes on a construction project.
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Construction projects over the past few decades have become
increasingly complex. As a result disputes2 have grown in direct
relation to the size and complexity of projects. One recent study
reported that the value of the average dispute in the United
States is approximately $34.3 million.3 A slightly older survey
of claims and disputes determined that in the 2009 – 2011
timeframe there were 65 international contract arbitrations in
which at least US$1 billion was in controversy.4 The amounts in
controversy ranged from US$1 billion to US$20 billion.5 The total
value of these 65 disputes was US$174.8 billion with the median
value being US$2.73 billion.
One key to delivering a dispute free project is the early
identification of potential claims and disputes. Disputes cannot
be avoided by simply drafting and issuing a contract that
attempts to shift all risk of delays and costs to the contractor.
Contractors and their legal counsel will likely find some way
around such contract terms. As the old saying goes, “what one
man can invent another man can circumvent”.6
Before owners and contractors can deal with a dispute both
must recognize that one is in the offing. Experience shows
that the parties to a contract are often in a dispute long before
they realize it. The Navigant Construction Forum™ believes that
the keys to successful dispute resolution are (1) to recognize a
potential dispute as it starts and (2) to take appropriate action
to resolve whatever the issue is. Waiting, in the hope that the
dispute will resolve itself rarely, if ever, succeeds.
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