Rebounding Construction Risks Rising Toll Of Lost Time And Cash
PR93307
PHILADELPHIA, Nov. 29, 2021 /PRNewswire=KYODO JBN/ --
The astounding scale of cash and time lost on construction and engineering
projects around the globe is revealed in a new analysis of claims and disputes
from HKA (
https://c212.net/c/link/?t=0&l=en&o=3371599-1&h=4272240841&u=https%3A%2F%2Fwww.hka.com%2F&a=HKA
), a leading global consultancy in risk mitigation and dispute resolution with
over 1000 experts, consultants and advisors across 40 offices in 15 countries.
Logo - https://mma.prnewswire.com/media/1572488/hka_Logo.jpg
CRUX Insight 2021 (
) distills real-world intelligence on more than 1,400 projects across 94
countries to identify the primary causes of overruns approaching half of
projects' capital value and three quarters of their scheduled programmes.
The fourth annual CRUX report combines a regional analysis of this unique
knowledge bank with actionable insights from industry-leading consultants.
CRUX 2021 facts and findings
Headline statistics include:
-- 1,401 projects analysed
-- $2 trillion – combined capital expenditure
-- $73 billion – total value of claims
-- $100 million – the average disputed costs per project
-- 46.3% – the value of claims as a proportion of planned cost
-- 17 months – the average time extension claimed
-- 71.4% – the typical prolongation for programmes
-- 750 years – the cumulative overruns faced by all projects
The dominant drivers of claims and disputes are: changes in scope, conflicting
interpretation of contracts, design failures, and mismanagement of
subcontractors.
COVID-19 has caused additional disruption, restricting access to sites and
labour, constricting cashflow, and exposing the limitations of contract
provisions on force majeure and changes in law.
Beyond Covid, CRUX Insight reports that skills shortages, supply chain
disruption, cost inflation, increased market volatility, and the climate crisis
are increasing the potential for conflict on projects:
-- Skills: Over a third of projects (35.6%) were hindered by skills and
experience gaps, and associated workmanship deficiencies
-- Supplies: Late delivery of materials and equipment impacted one in nine
projects (11.3%) (even before the report's August 2021 cut-off and
ongoing global materials shortages)
-- Climate: A tenth of projects (10.3%) were affected by exceptionally
adverse weather. Like other global uncertainties, the climate emergency
requires recalibration of capital project delivery risks.
"Capital projects are haemorrhaging billions of dollars each year to recurrent,
predictable and often avoidable claims and disputes," said Renny Borhan, CEO of
HKA. "CRUX Insight 2021 not only diagnoses these failings and quantifies the
impacts, but also identifies corrective actions to stem these losses. Project
stakeholders and the industry can learn lessons from CRUX to operate more
effectively amid this heightened uncertainty."
SOURCE HKA
Media contact: Josephine Guckian – josephineguckian@hka.com
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