Industry Trends

Increased Construction Litigation due to COVID-19

Thursday, January 6, 2022

          Many industries throughout the world have been affected by the COVID-19 pandemic, and the construction industry was not immune. According to a RICS Economics study, as of Q1 2021, 6.9% of residential projects, 6.9% of infrastructure projects, and 10.3% of non-residential projects, globally, had been permanently cancelled since the onset of COVID-19, and numerous others had experienced delays.1  A Turner & Townsend survey of globally-based owner and contractor managers, published in February 2021, indicated that half of respondents were reporting increased contractual disputes due to COVID-19 impacts.2  The pandemic also appears to have caused an increase in the number of projects exercising Forced Majeure clauses, which are meant to protect the parties involved if a contract cannot be performed due to causes outside the control of the parties and could not be avoided by exercise of due care.3  Finally, according to a 2021 report, “third-party or force majeure events” became a new issue listed as one of the top three causes of disputes globally in 2020.4

          Breakwater Forensics has also seen an increase in the number of construction disputes that include COVID-19 claims in our engagements. Breakwater personnel can assist in resolving COVID-19 claims related to delay, disruption, termination, and added costs.

 

1: RICS Q1 2021: Global Construction Monitor.
2: Article by Debra K. Rubin for ENR.com, dated February 11, 2021.
3: Article by David J. Marmins of the American Bar Association, dated March 19, 2020.
4: Arcadis 2021 Global Construction Disputes Report.

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