Canada better than average in avoiding construction claims and disputes
Canada performed better than the US and global average in terms of minimizing construction claims and disputes, according to HKA’s sixth annual CRUX report “Forewarned is Forearmed.”
The global consultancy’s report – which tracks regional and sector construction claims and disputes – analyzed over 1,800 projects in 106 countries with a combined capital expenditure value (Capex) of $2.247 trillion. The data includes 99 projects in Canada.
Contentious costs in Canadian construction projects were an average of 22% of Capex – significantly lower than the global (33.6%) and US (34.4%) averages.
The average extension of time (EOT) claimed on a project in Canada, meanwhile, was 53.4% of the planned project duration – also lower than the global (67.1%) and US (60.3%) averages.
Change in scope was the biggest cause for claims in Canada, at 32.7% of projects – lower than the global average of 39.2%. The other most common causes for claims in Canada were incorrect design (26.5%), unforeseen physical conditions (25.5%), and workmanship deficiencies (20.4%).
“Modern megaprojects are increasingly complex, but the cruel conundrum for the global construction and engineering industry is that these most common causes of claims and disputes are highly predictable and largely within the control of the contracting parties,” said Renny Borhan, partner and CEO, HKA. “The purpose of CRUX is to better inform all stakeholders so they can apply these lessons, raise the standard of risk management, and achieve better outcomes.”
Globally, the average disputed cost on a project was $100 million. Claims on major construction projects exceeded $91 billion in total value.
Toby Hunt, partner at HKA, added, “The high cost of capital and the losses sustained through avoidable disputes make the case for proactive risk management all the more compelling.”
