Construction Dispute Statistics

Construction disputes are common, and they often wreak havoc on the parties’ agreement for the building services promised. A building and construction contract is an agreement or contract between parties to complete a construction project. The involved parties must perform according to and adhere to the contract terms. If one party breaches the contract, the other can sue for damages.

Unfortunately, the statistics are clear — construction disputes are prevalent, lengthy, and often costly for all parties involved. If you’re involved in a construction dispute, you need to understand the numbers and statistics, and you need to be aware of your legal rights and options.

Statistical Numbers Behind Construction Disputes

Just how prevalent are construction disputes? You may be surprised to hear that they are, in fact, pretty common. According to the 2022 Global Construction Disputes Report published by Arcadis, the majority of respondents handled more disputes in 2021 than in 2020. Whether it’s a project for a homeowner, the rebuild of a business, or the building of a brand new commercial project, a construction project can be derailed by various types of common construction disputes.

And construction disputes can be costly — the average dispute value globally in 2021 was reported to be $52.6 million, according to the report. “From 2020 to 2021, the average value of disputes declined by 3% across the globe but remains at historically high levels compared to 2019 and earlier,” the report states.

The report also notes, “the average time taken to resolve disputes increased significantly, by almost 15%, after steadily declining for three years.” The 2021 average dispute length was reported by Arcadis to be 16.7 months in North America and 15.4 months globally, a considerable length of time when you are experiencing a construction dispute. With both the value of construction disputes and the length of time it takes to resolve them on the rise, it is important to understand how disputes can happen and how resolving them might be possible.

Statistical Causes of Construction Disputes

According to the Arcadis report, there are several causes for most construction disputes: poorly drafted or incomplete and unsubstantiated claims were ranked as the top cause, while errors and omissions in the contract were ranked second, underscoring the need for carefully thought-out and drafted contracts. Failure to understand contractual obligations, supply chain issues, and pandemic-related issues were also listed as causes of construction disputes.

Another report, released by global consulting firm HKA and titled CRUX Insight 2020, identifies some additional issues that cause construction disputes: “While the primary cause of claims and disputes in the annual CRUX ranking is change in scope as projects increase in scale and complexity, other powerful drivers of disputes are exacting a heavy toll across all regions.” The causes of these disputes, according to HKA, include: incorrect or incomplete designs, shoddy management of third parties, inadequate contract management, as well as deficiencies in workmanship.

How Do Construction Disputes Happen?

Construction disputes often happen as a result of a breach of contract, non-performance, or inadequate performance. They often involve confusion over the scope of the work, changes to the original scope of the work, issues regarding site conditions, and trade disputes.

Generally, commercial or business construction disputes involve the following parties and claims:

• Claims by builders against commercial property owners, which can include claims for non-payment or builders claiming a mechanic’s lien against the homeowner’s property
• Commercial property owners filing claims against builders or contractors for delayed or unfinished work or for poor workmanship
• Claims filed by contractors or subcontractors against commercial property owners for a change in the scope of a project
• Third-party claims, such as those filed by suppliers, subcontractors, or professional consultants for non-payment

How Can Construction Disputes Best Be Resolved?

As far as resolving construction disputes as quickly as possible, one key factor can sum up the most successful strategy — compromise.

“Most disputes are settled through party-to-party negotiation, and a willingness to compromise plays a key role in early resolution,” the Arcadis report notes. “The 2021 survey results show that the most important factor in the mitigation and early resolution of disputes encountered is the owner and contractor’s willingness to compromise.”

Although some construction disputes end with litigation, there are various dispute resolution methods that can be used to resolve a building and construction dispute, including:

• Meditation
• Adjudication
• Arbitration
• Expert determination
• Litigation

Each dispute resolution method has advantages and disadvantages, and it’s important to understand your legal rights and options if you are facing a construction dispute. Contact an experienced construction dispute attorney to discuss your options and get legal advice. They will be able to review your contracts, investigate the key facts regarding performance and related issues, and advise you regarding the next best steps to take in your case.

They will also work with you to discuss potential ways of resolving your dispute, accurately assess the damages you have suffered, and research the laws involved in your claim. Construction contract disputes can quickly become complicated and often take a long time to resolve, and a knowledgeable lawyer can be invaluable for resolving these issues as fairly, reasonably, and swiftly as possible.

How Can Nix Patterson Help You Resolve Your Construction Dispute?

When you are going through a construction dispute, it is essential that you have peace of mind regarding the work of your legal team. Our team of experienced, knowledgeable construction dispute lawyers will take charge of your case and do what needs to be done in order to remedy the wrongs that occurred in your construction dispute case. You can count on us to handle your dispute so that you can focus on accomplishing the end result of the build you seek.

Our experienced attorneys have knowledge of construction laws, understand the requirements of all dispute resolution methods, and have the extensive experience necessary to resolve the dispute effectively. Let Nix Patterson work with you to resolve all your construction disputes swiftly and effectively. Contact us at 512-328-5333 or reach out online to schedule a free, no-obligation consultation today.