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Construction contract disputes are getting longer, more complex

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Construction contract disputes across the world are getting longer, more complex and more expensive, according to the “Global Construction Disputes Report 2018” from design and consultancy firm Arcadis.

The value of North American disputes — or total costs added to a project for the additional work being claimed — dropped for a fourth consecutive year to $19 million in 2017, compared with the $43 million global average, the report found. Meanwhile, the average length of North American disputes increased from 15.6 months in 2016 to 17.7 months last year, exceeding the global average of 14.8 months.

Contract errors and/or omissions were the top cause of disputes in North America last year, followed by poor contract administration, which was trailed by failure on the part of an owner, contractor or subcontractor to understand or comply with contractual obligations.

Social infrastructure and the public sector collectively saw the most disputes while the transportation sector saw the second most.

Keep reading this article at: https://www.constructiondive.com/news/report-contract-disputes-are-getting-longer-more-complex/527970/

What contractors need to know about arbitration

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Many construction firms have never had a legal dispute that couldn’t be resolved quickly and amicably without a lawyer. But for those who aren’t so lucky, it can sometimes be surprising to take a good look at a construction agreement to see what legal remedies are available and find that a traditional jury trial is not even an option.

In those cases, the last legal stop could be arbitration.

Contractors sometimes conflate arbitration with mediation, which is another form of alternative dispute resolution in which contractors try to work out their differences with the assistance of a neutral third party well versed in construction law who is only there to be a sounding board.

Keep reading this article at: https://www.constructiondive.com/news/the-dotted-line-what-contractors-need-to-know-about-arbitration/523167/

A faster way for contractors to recover on claims

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Filing claims against the government is not contractors’ preferred method of resolving problems on a federal project, but often contractors are left with little choice with federal procurement officials spread thin. For example, the U.S. Army Corps of Engineers has not moved on a significant number of pending changes and refused to pay the contract balance because the Corps has assessed an equal amount in liquidated damages for delay. The delay was caused by a differing site condition, for which the contractor submitted a claim for time and money. After waiting 60 days, the Corps responded by stating that it will issue the contracting officer’s final decision in seven months. Meanwhile, the contractor continues to spend money trying to close out the project. 

How can contractors speed up the claims process, recover on favorable terms, and avoid throwing good money after bad on a multiyear dispute resolution process?   The answer: Unbundle your claims and file as many under $50,000 or $100,000 as possible to take advantage of the various board of contract appeals’ expedited or accelerated procedures. Then consolidate all expedited appeals and push aggressively toward a fast and cost-effective global resolution.

Keep reading this article at: http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=15032395091

Contractors believe the government is inefficient in resolving contract issues

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Nearly three-quarters (74%) of government contractors surveyed consider the government to be slow and inefficient in resolving contract issues, with 56% believing that the inefficiencies are caused by the Defense Contract Audit Agency (DCAA) and 18% saying it is caused by the contracting officer, according to Grant Thornton LLP’s 16th Annual Government Contractor Industry Survey.

 

“These findings were not unexpected given the changes in DCAA policy adopted in the aftermath of Government Accountability Office (GAO) reports issued in July 2008 and September 2009 that severely criticized the quality of the DCAA’s work,” noted Kerry Hall, Grant Thornton LLP’s Government Contractor practice leader. “The GAO reports and the DCAA changes that followed likely contributed to the survey findings, namely that the process of resolving contract issues is increasingly inefficient.”

More than half (55%) of government contractors reported that their revenue from federal business increased during the past year, while only 22% reported reduced revenue from federal business.

Other highlights of this year’s survey include:

Revenue from the stimulus program — 72% of respondents anticipate no significant revenue growth from the stimulus program over the next 18 months, while the remaining 28% foresee modest growth.

Identifying claims for out-of-scope work — 31% of government contractors consider their procedures for identifying out-of-scope work to be very effective, while 69% see them as being either somewhat effective or not effective. The failure to identify out-of-scope work effectively and seek related compensation may contribute to reduced profit rates.

Bid protests — A total of 22 bid protests were filed during the past year by companies surveyed, and 11 of them were sustained by the GAO or the court hearing the bid protest. This appears to be a higher sustainment rate than has historically been the case and could possibly signal an emerging trend.

— from The Financial – Jan. 18, 2011 – http://www.finchannel.com/Main_News/Business/79196_Contractors_believe_the_government_is_inefficient_in_resolving_contract_issues/

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