The average value of construction disputes in North America saw a significant surge, increasing by 40% in 2024. This is in comparison to the modest 1% rise from 2022 to 2023, according to the 15 Annual Arcadis Construction Disputes Report. Since 2021, dispute values have nearly doubled, and compared to 2019, they have tripled. Perhaps even more terrifying, respondents are anticipating the data is going to reveal even more disputes in 2025 compared to the 2024 time period. Do we need better risk management with the help of AI (artificial intelligence)?
This begs the question why? This is really an interesting question when you take into account the average value of construction disputes in North America is surging. The changing economic environment is ripe for disruption. Supply-chain disruptions, new and changing regulations, labor shortages, material price spikes, and other project bottlenecks. In JLL’s 2025 Construction Perspective U.S. Midyear Update, we see a number of disruptions—such as policy volatility, tariffs, trade patterns reorganizing, and cost increase, just to name a few—are impacting both existing projects and future work capacity.
I think one of the interesting points from the Arcadis Construction Disputes Report is the increasing client demand and the need to do more faster than ever before. The is perhaps one of the most potent pieces of the perfect storm that is happening in the construction industry today. It is a breeding ground for errors to occur, leading to a rise in disputes.
What can help? Let’s explore a few options:
- Open communication and collaboration throughout a project
- Aligned incentives to promote teamwork
- Ongoing education for internal and external stakeholders
- Adapting to change as needed
- Collaborative contracting models such as IPD (integrated project delivery)
- Alternative dispute resolution such as mediation and neutral evaluators
- Adopting digital tools and technologies, as a proactive approach
Let’s consider the technology point. Realtime data tracking can provide records. In a tech-driven world, there is data for everything, which means there is a record for everything. This can help in both a proactive and reactive way. Let’s explore both.
Construction companies need to leverage technology in a proactive way if they want to minimize disputes. Predictive analytics can forecast potential project disruptions before they even occur and enable smarter decisions to be made ahead of time. This means construction companies can fix the problem before it even happens. Clearly, we aren’t quite at this stage yet, as the number of disputes is still massive.
Meanwhile, realtime data tracking can also help in a reactive way after an error has occurred. This data can resolve disputes faster than ever before because there is very clear information about what actually happened. This is something we are seeing in this report. The average time required to resolve disputes has dropped by 14%, marking the lowest resolution timeframe in the past decade. So, clearly, we are at this stage where we are at least realizing there are things we can do to speed up and resolve disputes after they occur.
Now, it is just a matter of reaching the point where we can leverage data to fix the problem before it occurs because the reality is there is a huge opportunity for a more proactive approach to risk management, aided by technology. The only questions left are will we reach it? And, when?
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