National Construction Contracts and Law Survey 2015

NBS has revealed the results of its third major survey into construction contracts and related legal issues. 

The study found that disputes remain a fact of everyday life in the construction industry, with disagreements over the value of final accounts and extension of time on projects cited as the most common headaches.

Although construction output is now stronger than at any point since the 2008 recession, the results show that despite market buoyancy the number of disputes within the construction industry remains unchanged in recent years.

In 2012, 90% of respondents thought the number of disputes in the construction industry had increased or stayed the same, and in this year’s survey that figure was the same. 

While during the recession this was attributed to lack of work and low-value contracts only being made profitable through disputes, the changing market suggests this is not the case and that the

adversarial legal process is an inherent issue in the construction industry.

Almost half of those who responded said that had had to deal with at least one dispute in the last year – with most disputes occurring between clients and main contractors (according to 76% of respondents) or between a main contractor and subcontractor (29%).

Collaboration

Other aspects of the results were more encouraging with 62% of respondents reporting that they have been involved in some collaborative working in the last 12 months and most (81%) believing it enabled information sharing and reduced the number of disputes that arose (65%).

Building Information Modelling (BIM) has been introduced to address one of the major barriers to collaborative working - the lack of clear definition of responsibilities - but the report suggests that the legal framework needs to evolve to recognise and accommodate the changes this brings. Only 14% of those taking part in the survey currently have BIM fully integrated into contracts.

The research also concluded that there have been significant changes in the forms of appointment that people use. The use of bespoke contracts has risen from 42% in 2011 to 51% in 2015 and use of the NEC Professional Services Contract has risen from 15% to 37% over the same period.

Organisations are increasingly using contracts that are better suited to higher value, collaborative projects. Figures provided by NBS suggest that there has been an increase in the use of NEC and FIDIC contracts, whilst use of JCT contracts has fallen.

Respondents included members of more than 20 industry bodies, who shared their legal and contractual experience of the last 12 months to provide an overarching view of the construction industry. NBS has previously conducted this survey in 2011 and 2012 and whilst the economic climate was very different on each occasion the resulting themes remain the same:  the need for collaboration, the damaging effect of disputes and the often adversarial character of construction.

Download the survey