Disputes in construction in the Middle East surged by 38% in 2020 due to several factors, of which the biggest one was Covid-19, which created significant impacts in labour, supply chain delays and even suspension of projects in major Middle East economies.
Suspension of projects in areas such as Saudi Arabia and Kuwait, according to Arcadis, a leading global design and consultancy firm for natural and built assets.
Secondly, Arabtec’s insolvency affected many contracted subcontractors and suppliers.
Thirdly, the progression of Saudi Arabia’s giga projects, representing a significant proportion of construction in the Middle East, could have contributed to a higher average value, stated the Arcadis report.
It was noted in recent years that low liquidity in the market made clients reluctant to pursue disputes, even when they had strong entitlement in their case. Now, clients are availing themselves to new funding and pursuing disputes, the report added.
According to Arcadis Global Construction Disputes Report, most of the 2020 disputes came from building projects (including education, healthcare, retail, commercial and real estate developments), replacing infrastructure atop the list. The change could be because many building projects, such as those related to Expo 2020 or Saudi Arabia’s giga projects, reached their final target dates in 2020.