RC108 SeptOct2023 - Magazine - Page 29
TABLE A
Top 10 causes of claims or disputes
RANKING
Canada
U.S.
Change in scope
1
1
Design was incorrect
2
4
Physical conditions were unforeseen
3
6
Access to site/workplace was restricted and/or late
4
Ø
Design was incomplete
5
5
Design information was issued late
6
7
Workmanship deficiencies
7
2
Bias and/or failure to cooperate
8
Ø
Contract management and/or administration failure
9
10
Tender errors and/or inaccurate estimates
10
Ø
Ø – not a top 10 reported cause of claims or disputes
overruns blamed on design shortcomings. Meanwhile,
we have observed professional indemnity claims being
昀椀led against insurers of design professionals for allegedly
de昀椀cient designs.
A deeper analysis shows what proportion of projects
associated with each of the three design-related issues was
a昀툀icted by claims or disputes (see Table B):
NCORRECT DESIGN a昀昀ected close to one in three
I
(30.9 per cent)
NCOMPLETE DESIGN almost one in four
I
(24.7 per cent)
ATE ISSUE OF DESIGN INFORMATION one in 昀椀ve
L
(22.2 per cent)
These failings will be compounded on many projects,
but the rami昀椀cations go wider still. Change in scope—the
most common and universal culprit for claims or disputes—is often a by-product of design concerns. We see
few cases where a project owner unilaterally changes the
design or widens a project’s scope in a material way. More
often, it is the discovery of design defects and dilemmas as
projects evolve that necessitates signi昀椀cant change. Projects go to tender with an incomplete design, and disputes
arise during design development as the scope grows.
Sector-by-sector analysis
Our sectoral analysis o昀昀ers further insight into the pattern
of design failings in both countries (although sample sizes
are proportionately smaller):
BUILDINGS: Error was the prime design-related challenge
in Canada, a昀昀ecting almost one in four projects (24.1 per
cent) Late design caused con昀氀ict in 10.3 per cent, and incomplete design just 3.4 per cent. In the U.S., design errors
occurred slightly less often, but late and incomplete design
were more common.
TRANSPORTATION INFRASTRUCTURE: Incomplete design impacted
almost half of the Canadian projects (46.4 per cent), closely
followed by incorrect design (39.3 per cent) and lateness
(32.1 per cent), all exceeding their US equivalents by at
least 10 percentage points.
POWER AND UTILITIES: Each design-centric problem drove
disputes and claims on almost one in three Canadian pro-
RENEWCANADA.NET
jects (29.4 per cent)—more than double the impact those
issues had on US contracts.
Clearly, greater attention needs to be given to design
strategy. Owners should consider whether to invest more
in design upfront. On lump sum contracts, it may be a
false economy to tender for design services and appoint
the lowest bidder on a 昀椀xed budget. Spending more in
the design phase, if an option, can help to avoid otherwise
inevitable con昀氀icts on-site.
One fortunate byproduct of the pandemic was that
some owners used the hiatus to conduct constructability
reviews of their design prior to tendering the project. In
the case of one major project in which HKA was involved,
this exercise handsomely repaid its cost by identifying coordination issues, leading the owner to resolve them prior
to the issuance of the drawings and thereby avoiding cost
increases during construction.
CRUX data con昀椀rms that these design shortcomings are
a signi昀椀cant problem across sectors in Canada, even more
so than in the U.S.
Unforeseen physical conditions
As well as changes in scope, di昀케culties with design can
stem at least partly from root causes that underlie other
con昀氀icts. Undue haste to break ground—whether due to
commercial pressures or political imperatives, as in the
case of high-pro昀椀le transportation projects—increases the
risk of encountering unforeseen physical conditions.
Last year’s CRUX Insight Report 昀氀agged this concern
and a tendency to allow insu昀케cient time for thorough
ground investigations and due diligence in Canada, which
Although focus on project disputes most often occurs at
project completion, more participants are seeking expert
support earlier in the project life cycle.
SEPTEMBER/OCTOBER 2023 – RENEW CANADA 29
