One in five joint ventures end in dispute

One in five joint ventures ended in a formal dispute between the partners last year, according to a report on construction disputes by EC Harris.

EC Harris also found the value and duration of construction disputes rose dramatically in 2012.

The average value of a dispute in the UK rose almost three-fold to £17.7m, from £6.6m the previous year, while the average duration jumped 33% to 12.9 months from 8.7 months.

EC Harris’ head of contract solutions Gary Kitt said there was an increasing number of cases of JV partners falling into dispute.

Kitt said: “Joint venture agreements are becoming more prevalent, particularly where a project is of such a large size and scale or there is a need because of licensing requirements for a local JV partner.

“More needs to be done in order to ensure that the JV itself does not end up in dispute.”

Kitt added that the value and duration of UK construction disputes was increasing because projects were “increasing in complexity” and the Technology & Construction court had made some changes to its protocol that had delayed disputes.

The top five causes of construction disputes in the UK during 2012 were:

1. Failure to properly administer the contract
2. Failure to understand or comply with contractual obligations
3. Employer imposed change
4. Conflicting party interests
5. Incomplete and/ or unsubstantiated claims

Despite the increase in dispute value, the UK is still below the global average which stands at £20.4m. 

The Middle East continued to experience the highest value disputes at £41.8m, whilst disputes in the US had the lowest value at £5.8m.