Survey reveals biggest project risks and disputes in construction

The study – which surveyed 125 senior in-house counsel in the international construction, infrastructure and engineering industries across Africa, the Americas, Asia-Pacific, Europe and the Middle East – revealed that, across the globe, the biggest sources of disputes relating to construction projects remain project delays, payment issues, and scope of work.

These issues, while subject to regional nuances, remain steadfast as primary sources of contention and are expected to continue to be the top sources of disputes. The survey revealed that 61% of respondents had a recent dispute about project delays and 66% expect to have a future dispute about this.

Over half (52%) has a recent dispute over payments and 54% expect to have a future dispute about this.

Environmental issues are expected to contribute a higher proportion of disputes in future, doubling from 6% of recent disputes to an anticipated 12% of disputes in the future. Escalating ESG concerns will impact the source of disputes in future. Over half (54%) of respondents anticipate more risks associated with sustainability reporting requirements in the next year.

Construction project stakeholders mostly prefer to resolve disputes separately during the course of a project, rather than at the end. The survey revealed that 80% of respondents said that issues solved separately during the course of a project result in greater success, compared with 18% who felt it was better to resolve issues all together at the end of a project.

“The escalating concerns surrounding ESG means this is an issue to watch closely within the industry,” said Adrian Bell, Partner and Co-Head of Infrastructure, Construction and Energy Disputes, CMS.

“With over half of respondents anticipating more frequent disputes associated with sustainability reporting requirements in the next year, and a 100% increase in respondents ranking ESG as one of their top three sources of disputes in future (from 6% to 12%), it’s imperative for stakeholders to adapt their contractual frameworks and negotiation strategies to address these evolving challenges.”

Download the full study here.