An ongoing research program of global risk management consulting firm HKA found that overruns, time extensions, and other costly problems are preventable. Plus, two-thirds of projects requiring a schedule time extension did so for reasons that could have been prevented.

Disputed costs accounted for more than a third of the $2.27M in projects that were analyzed by the CRUX program. Clashes that resulted from contract interpretation were a factor leading to time extensions in 19.8% of the projects analyzed. 

Tellingly, about the same amount (19.5%) of projects that were analyzed were hampered in their operation by poor management or administration of contracts or were bogged down by interaction with subcontractors or suppliers. 

How do you prevent time extensions?  

Experts suggest smarter business practices by companies in architectural engineering and construction could close this gap in accountability that leads to change orders, overruns, or adding time to a project schedule. 

“Modern megaprojects are increasingly complex, but the cruel conundrum for the global construction and engineering industry is that those most common causes of claims and disputes are highly predictable and largely within the control of the contracting parties,” said Renny Borhan, Partner and CEO of HKA. 

The study by HKA found a wide variation in problems with contracts worldwide: 

• Deficiencies in design and workmanship plague AEC companies in Europe and the Americas. 
• Incorrect design was top of the European ranking, amounting to the disruption of about one in three projects (32.3%). That problem ranked second in the Americas, where more than one in five projects were affected (20.4%). 

Highlights from the study include:

• A recent increase in rail disputes is explained to a large degree by deficient planning and coordination.
• Changing scope of the project contributed to more than half (57.1%) of the disputes analyzed worldwide. 
• An incomplete design was a factor in more than a third (40.3%) of the projects. 
• Offshore wind projects are much more likely to be blown off course by changes in scope (45%) than other renewables or non-energy-sector projects. 
• All-risk engineering, procurement, and construction projects may not be as sure as they seem to some.  

Additionally, the study found that nearly one in five projects (18.8%) worldwide are affected by conflicts over unforeseen physical conditions on the site. This is the second-most-common pitfall in the Americas, according to the report. Deficient workmanship was also a more significant problem in Europe and the Americas as compared to other regions, affecting 23.2% and 20.3% of projects, respectively. 

Buildings and transportation infrastructure projects faced claims for longer time extensions than other sectors, the report concludes, averaging 76.7% and 70%, respectively, of planned duration. 

Want to learn more? Read the full 2023 report from HKA.