Dive Brief:
- In its latest Global Construction Disputes Report, international design and consultancy firm Arcadis found that the average value of North American construction disputes dropped in 2016 to $21 million.
- While construction disputes values fell slightly, Arcadis found that resolving those claims took two months longer in 2016 than it did in 2015, making North America home to the world's longest construction dispute resolution process.
- Arcadis found that the most common causes of disputes were errors and omissions in contracts, followed by unsubstantiated claims and poor contract administration. In addition, the firm found that public projects had the highest percentage of disputes, and a third of all cases involved a joint venture.
Dive Insight:
Disputes are a common occurrence in the construction industry, so ensuring that contracts clearly spell out the resolution process before a project begins is crucial. The industry is in the midst of a growing shift away from traditional contract delivery methods and toward more collaborative approaches — a trend that many hope will help reduce the number and size of disputes.
In the U.S., construction defects are a major source of construction litigation and insurance claims. Florida had a wave of condominium and single-family home defects cases last year involving residential heavy hitters KB Home and D.R. Horton.
In February 2016, KB Home agreed to pay $23.5 million to the state of Florida for knowingly selling some properties with building code violations and, in other cases, not meeting client specifications. As part of the settlement, KB Home was also ordered to repair some of the properties in the lawsuit.
In May of last year, D.R. Horton was also ordered to pay for defects repairs at one of the builder's Jacksonville, FL, condominium complexes. The $9.6 million was intended to cover subpar construction that resulted in leaky roofs and defective windows and doors, as well as cracked stucco.
