29.11.2021 – 21:12
The astonishing amount of money and time lost in construction and construction projects around the world is reflected in a new analysis of claims and disputes from HKA, a leading global consultancy for risk reduction and dispute resolution with over 1000 experts, advisors and consultants in 40 offices in 15 countries.
CRUX Insight 2021 Distills real-world insights from 1,400 projects in 94 countries to identify root causes of overshoots approaching half the NPV of projects and three-quarters of their planned programs.
CRUX’s fourth annual report combines a regional analysis of this unique knowledge base with actionable insights from industry-leading consultants.
CRUX 2021 facts and results
The most important statistics include:
- 1,401 projects analyzed
- $ 2 trillion – combined capital expenditure
- $ 73 billion – total receivables value
- $ 100 million – average disputed cost per project
- 46.3% – the value of the receivables in relation to the planned costs
- 17 months – Average deadline extension requested
- 71.4% – Typical extension for programs
- 750 years – Cumulative overruns on all projects
The main sources of claims and disputes are: changes in scope, conflicting contract interpretations, design flaws and mismanagement of subcontractors.
The Covid-19 pandemic has caused additional disruptions that have restricted access to construction sites and labor, hampered cash flow and exceeded the limits of contract terms Force majeure and highlighted changes in the law.
In addition to Covid, CRUX Insight reports that a shortage of skilled workers, disruptions in the supply chain, cost inflation, increased market volatility and the climate crisis increase the potential for conflict in projects:
- Skilled workers: More than a third of the projects (35.6%) were hindered by a lack of qualifications and experience and the associated lack of execution.
- Consumables: Delayed material and equipment deliveries had an impact on one of nine projects (11.3%) (before the August 2021 deadline mentioned in the report and the ongoing global shortage of materials).
- Climate: One tenth of the projects (10.3%) were affected by exceptionally unfavorable weather conditions. Like other global uncertainties, the climate emergency requires recalibrating the risks involved in carrying out capital projects.
“Capital projects lose billions of dollars each year to recurring, predictable, and often avoidable claims and disputes “said Renny Borhan, CEO of HKA. “CRUX Insight 2021 not only diagnoses these failures and quantifies the impact, but also provides corrective action to contain these losses. Project stakeholders and the industry can learn from CRUX to work more effectively in this increased uncertainty.”
Josephine Guckian – [email protected]
Original content by: HKA, transmitted by news aktuell