--- title: Construction Disputes and the 2017 Arcadis Middle East Report description: Construction projects have always been characterised by high level of disputes. The 2017 Arcadis Report analyses the Construction Dispute in Middle East. image: http://blog.bdalaw.it/hubfs/Photo_GB/Canvas%20ENG/LI%20Arcadis%20Report.png --- [![BADLAW](https://blog.bdalaw.it/hs-fs/hubfs/BADLAW-2.png?width=400&height=160&name=BADLAW-2.png "BADLAW")](https://www.bdalaw.it/home) - Services - [CONSTRUCTION CONTRACTS](https://bdalaw.it/services/construction-contracts) - [CLAIM MANAGEMENT & DISPUTE RESOLUTION](https://bdalaw.it/services/claim-management-dispute-resolution) - [FIRST DEMAND BONDS & GUARANTEES](https://bdalaw.it/services/first-demand-bonds-and-guarantees) - [INTERNATIONAL COMMERCIAL CONTRACTS](https://bdalaw.it/services/international-commercial-contracts) - [KSA Business Guides](https://bdalaw.it/ksa-business-guides) - [Insights](https://blog.bdalaw.it/en) - [Italian](https://blog.bdalaw.it/) - [English](https://blog.bdalaw.it/en) - [Profile](https://bdalaw.it/profile/giuseppe-broccoli) - [CONTACT US](https://bdalaw.it/en/contact-details) ![Post_3.jpg](https://blog.bdalaw.it/hs-fs/hubfs/Clean_2018/Post_3.jpg?width=1600&name=Post_3.jpg "Post_3.jpg") ** ## [Construction Disputes and the 2017 Arcadis Middle East Report](https://blog.bdalaw.it/en/construction-disputes-in-middle-east-arcadis-report) 6 Jun 2017 ![Giuseppe Broccoli](https://app.hubspot.com/settings/avatar/02df1d9e3f894f476c494c644f4b39fa) #### Written by [Giuseppe Broccoli](https://blog.bdalaw.it/en/author/giuseppe-broccoli) ** 3 MIN READ** ![Construction Disputes](http://blog.bdalaw.it/hs-fs/hubfs/Photo_GB/Canvas%20ENG/LI%20Arcadis%20Report.png?width=770&name=LI%20Arcadis%20Report.png "Construction Disputes") The construction industry has always been characterised by a high volume of disputes for several reasons. The 2017 Arcadis report highlights some interesting findings based on their engagements in the Middle East over the previous twelve months. [Arcadis](http://www.arcadis.com/) (the well-known and authoritative consultancy firm) observed an increase in the number of disputes in the Middle East, which has certainly been influenced by the current economic situation in GCC countries.  From our reading, the [2017 Arcadis report](https://wwwlb.arcadis.com/media/8/6/C/%7B86C4C594-6BA3-4BEC-9549-F4AF58FC72E1%7D2017%20Middle%20East%20Construction%20Disputes%20Report.pdf?_ga=2.179024743.215392704.1496596451-835613659.1495743506)* highlights that in 2016, the most frequent causes of construction disputes in the Middle East have arisen out of:   1. a failure to properly administer the contract; 2. poorly drafted and unsubstantiated claims; 3. parties' failure to understand their contractual obligations.   We believe that these causes are not unique to the Middle East region but instead, rather typical of the construction industry overall. Interestingly, for disputes in the Middle East, the Arcadis report also stresses that: "*One other factor to note is that if the overall volume of disputes went up but the* *average value went down, this would appear to suggest there was a greater number of* *smaller disputes. This reflects the move by contractors to try and pursue cash collection* *through claims to help protect cash flow."*   It is pretty obvious that in a weak economic environment, Employers are rather strict on prices and Contractors often face situations where their prices do not allow any flexibility for contingencies that might arise during the project. As a consequence, many Contractors rely on claims to recover part of the margin lost in the bid/pricing phase. This has been a very common issue in recent years.     At the same time, according to the [Arcadis report](https://wwwlb.arcadis.com/media/8/6/C/%7B86C4C594-6BA3-4BEC-9549-F4AF58FC72E1%7D2017%20Middle%20East%20Construction%20Disputes%20Report.pdf?_ga=2.219959386.215392704.1496596451-835613659.1495743506), the length of disputes went down which should be (at least in theory) beneficial to the projects and the industry overall.   ![Construction disputes ME Arcadis.jpg](https://blog.bdalaw.it/hs-fs/hubfs/Photo_GB/Press-News/Construction%20disputes%20ME%20Arcadis.jpg?width=700&height=219&name=Construction%20disputes%20ME%20Arcadis.jpg) (Source:  Arcadis | The 2017 Middle East Construction Disputes Report)   The report also highlights that a lack of liquidity and the oil price drop had a material impact on construction disputes in the Middle East.   Many projects in GCC countries have been either delayed or even cancelled which naturally leads to more claims and disputes. It must be stressed that in some countries, the Contractor cannot suspend the works in case of non-payment from the Employer and therefore a greater attention should be given to the law applicable to the contract.    Interestingly, the [2017 Arcadis report](https://wwwlb.arcadis.com/media/8/6/C/%7B86C4C594-6BA3-4BEC-9549-F4AF58FC72E1%7D2017%20Middle%20East%20Construction%20Disputes%20Report.pdf?_ga=2.219959386.215392704.1496596451-835613659.1495743506) goes on to say that the reduction in the average value of disputes does not necessarily indicate that the parties in the Middle East are getting better at avoiding conflicts.   Our reading is that this could suggest that the parties have been able to better handle, at least partially, their controversies. In fact, the report stresses that party-to-party negotiation remains the preferred method for settling disputes. In theory, this should also be beneficial for projects.   What is certainly true is that the solutions proposed by Arcadis to avoid the same pitfalls in the future are rather sensible and certainly not limited to projects in the Middle East.   Any mid-size or large-scale construction project is at serious risk if:   1. the project is not properly administered from a contractual point of view; 2. a proper document management system is not kept in place; 3. a full understanding of the scope of works is not reached and shared among the relevant parties (employer, contractor, and subcontractors); 4. a technical analysis of the scope of works is not carefully carried out by (internal or external) skilled resources.   However, it certainly holds true that many controversies (concerning for instance, **extra works**, **extension of time**, **liquidated damages **for -alleged or actual- delay of the Contractor, or for the calling of the **bonds issued by the Contractor **for -alleged or actual- default from the Contractor itself) could be settled at an earlier stage, if the contract is properly administered, if document records are kept in order and always updated and, even more importantly, if the scope of work is actually fully agreed between the parties   We will revisit these issues in future articles. If you wish to receive them as soon as they are published sign up to our Blog. 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