Fifth Annual CRUX Insight Report reveals how global headwinds threaten further damaging overruns in costs and delivery of construction projects
Key facts and findings in the 2022 analysis:
- Over 1,600 projects across 100 countries valued at more than $2 trillion were analyzed first hand by expert consultants.
- On average, costs claimed in disputes amounted to $98.7 million per project and more than a third of their capital expenditure (35.1% of CAPEX).
- Projects faced even heavier losses in time. Claimed time extensions average 16.5 months – equivalent to 68.6% of the original planned project duration.
- Conflicts over contract interpretation, design failings, and changes in scope plague projects, with some notable variations in regions and industries.
- Projects in the Middle East are prone to the worst delays (83.1% of schedule duration), while contentious costs in Europe (at 38.3% of CAPEX) exceeded the global average.
Claims and disputes on 1,602 projects in 100 countries were investigated by expert consultants for the latest CRUX Insight report, published by HKA, the world’s leading risk mitigation and dispute resolution consultancy. The combined CAPEX of these projects amounted to more than US$2.13 trillion.
The analysis reveals that major capital projects are facing significant overruns in costs and delivery. Total claims analyzed exceeded $80 billion in value, while the cumulative overruns total a staggering 840 years.
Claims and disputes on 1,602 projects in 100 countries were investigated by expert consultants for the latest CRUX Insight report
This year’s report, which distils the analysis of projects HKA has provided services on up to the end of July 2022, highlights the damaging influence of factors such as dysfunctional design processes, skills shortages, and supply chain disruption on project performance:
- Design: A significant number of projects are dogged by design-centric failures – design information issued late (24.3%), incorrect design (23.8%), and/or incomplete design (23.2%).
- Workforce: 17.3% of projects were impacted by workmanship deficiencies, 15.3% by low levels of skill and/or experience, and 9.7% by a shortage of workers.
- Supplies: 10.5% of projects were disrupted by late delivery of materials and/or products.
As well as analyzing the underlying causes, HKA proposes actions to pre-empt or mitigate these recurrent conflicts – and further insights to be gleaned via the CRUX Interactive Dashboard*.
Renny Borhan, CEO of HKA, comments:
“This new CRUX Insight report reveals the impacts in additional costs and time claimed for the completion of major capital projects, as well as the underlying causes. Based on first-hand investigations by our expert consultants around the world, it quantifies the huge toll on the global economy, our industry and project stakeholders.
“Our unique analysis of the multiple reasons for distress on capital projects can help project promoters and the construction and engineering industry better understand where problems on projects can arise, and ultimately help them achieve better project outcomes.”
“This new CRUX Insight report reveals the impacts in additional costs and time claimed for the completion of major capital projects, as well as the underlying causes”
Regional analysis reveals significant variations
Across all projects globally, the leading cause of claims and disputes was change in scope, followed by conflicting contract interpretations and delayed design information. Within the regional analysis of the dataset, notable variations emerge in both causes and effects:
- Restricted or late access to sites and/or workfaces was one of the top three triggers for claims and disputes in Africa, Asia and Oceania (ranking first, second and third, respectively).
- Nearly one in five projects (18.8%) worldwide are impacted by conflicts over unforeseen physical conditions on-site. In the Americas, this is the second most common project pitfall.
- Deficient workmanship was a far more significant cause of contention in Europe and the Americas than in other regions – on 23.2% and 20.3% of projects, respectively.
- While various design-related failings rank highly in all regions, in Europe incorrect design is the prime culprit for distress on almost a third of projects (32.7%).
- Projects in the Middle East faced the worst delays (83.1% of schedule duration or 22.5 months, on average); even at their least severe, overruns averaged almost a year in the Americas (prolonging schedules by 58.2%, equivalent to 11.3 months).
- Contentious costs were lowest in Oceania, but still significant at over a quarter of CAPEX on average (26.2%).
Toby Hunt, Partner, CRUX Sponsor, comments:
“In 2022 we are still seeing a long COVID legacy of uncertainty, and that economic and logistical overhang has been compounded by the war in Ukraine, resurgent inflation, further supply shocks, and a slowdown in the global economic recovery. All pose significant challenges for major capital projects even though many of the world’s construction markets remain buoyant and boast strong project pipelines.
Amid acute skills shortages and these uncertainties, there are actions project teams can take to tackle the root causes of the most common claims and disputes. CRUX Insight shares world-class intelligence to help promoters, contractors and the wider industry navigate the complexities of major projects and avoid the unnecessary consequences in lost time and money.”
*CRUX Interactive dashboard
The CRUX database is searchable via an interactive dashboard, which can be used to gauge risks in various sectors and regions, benchmark causes, and help to identify areas for improvement.
https://www.hka.com/crux-interactive-dashboard/
Industries unevenly impacted by claims and disputes
The CRUX dataset can also be analyzed by sector, among various other parameters.
Buildings and Transportation Infrastructure projects faced claims for longer time extensions than other sectors, averaging 76.7% and 70.0% of planned duration, respectively. A serious concern for owners and the wider industry, the implications may be even more troubling for governments and state agencies promoting new infrastructure as a stimulus for economies emerging from the pandemic.
Delays tended to be least severe in the Industrial and Manufacturing markets, but sums in dispute were higher, proportionately. Claimed extensions of time would prolong schedules by 54.6% (11 months on average). Contentious costs, averaging 54.8% of CAPEX, were significantly higher than the all-sector average (35.1%).
English 
Arabic