Analysis of nearly 1,602 construction and engineering projects across 100 countries with a combined CapEx of more than US$2.13 trillion reveals how global headwinds threaten further damaging overruns in costs and delivery of major construction projects.
The fifth annual CRUX Insight report, developed through HKA’s integrated research programme, highlights the impact that skills shortages and supply constraints connected to the war in Ukraine are continuing to have on project performance. The pandemic also continues to negatively impact upon capital projects: delays in granting approvals, accessing sites, issuing design information, and delivery of materials have all moved up the CRUX Insight ranking over the last 12 months. Across all projects globally, change in scope was the leading cause of claims and disputes, followed by conflicting contract interpretations and delayed design information. While the scale of these impacts cannot be underestimated, expert analysis of these claims and disputes outlines the actions that can pre-empt or mitigate these recurrent conflicts.
Renny Borhan, CEO of HKA, says: “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.”
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.”
The report reveals the astonishing scale of impact that claims and disputes are having on costs and project delivery at global and regional levels. Dysfunctional design processes, skills shortages and supply chain disruption are all exercising a high cost on project performance. Total claims analysed exceeded $80 billion in value, while the cumulative overruns total a staggering 840 years.