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Reducing Construction Costs: Uses of Best Dispute Resolution Practices by Project Owners: Proceedings Report
FIGURE 8.1 Claim amount versus settlement value.
FIGURE 8.2 Overview of IPA study database.
IPA’s findings are based on 122 projects in more than 21 companies and span diverse industries including energy, chemical, pharmaceuticals, steel, consumer products, and other specialty chemical manufacturers. The average cost of projects in the database is $163 million and ranges from $4 million to approximately $1.4 billion. The database is therefore broad enough to facilitate study of claims and risks.
Risk is one of the biggest drivers of claims. Projects that transfer more project risk to the contractor are much more likely to have a claim. The drivers of risk are fast-track projects, aggressiveness of contractors’ bids, and the contracting strategy.