Research by EC Harris found the average value of UK construction disputes hit £6.5m in 2011 – up from £4.8m in 2010.
The average time taken to resolve disputes also stretched-out to 8.7 months from 6.75 as firms snub adjudication.
Gary Kitt, Head of Contract Solutions in the UK at EC Harris said: “The length of time for resolution of disputes in the UK has increased due to parties’ reluctance to refer disputes to adjudication quite as readily as in past years.
“This would appear to be as a result of the inconsistent results obtained in adjudication proceedings. In addition, once matters are referred to adjudication these proceedings regularly exceed the statutory period of 28 days for a decision.”
EC Harris found that the top five causes of disputes in British construction projects during 2011 were:
A failure to properly administer the contract
Conflicting party interests
Unrealistic risk transfer from Employers to Contractors
Employer imposed change
Ambiguities in the Contract Document
The performance of the project manager or engineer was also looked at in the report, with their conduct often being at the heart of how the dispute crystallised.
The most likely problem with the project manager or engineer was a lack of understanding of the procedural aspects of the contract followed by them being too partial to the employer’s interests.
When it came to dispute resolution, party-to-party negotiation was the most common method used in the UK, followed by adjudication and then mediation.
Kitt said: “The results of the survey support the view that parties are becoming increasingly frustrated by the adjudication process resulting in increased attempts at negotiation prior to seeking third party resolution.
“Mediation is still a popular option and although not featuring specifically within the survey we are seeing an increased willingness for parties to resort to resolution of disputes by litigation.”