Commercial disputes in construction ‘will threaten firms’

Posted 26/01/2010

The importance of dispute resolution may be set to increase due to a predicted rise in the number of legal cases over corporate contracts in construction, according to an expert.

Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group, told the Financial Times that an expected increase in legal issues over contracts will cause many firms to fall into insolvency.

The prediction comes in response to a report from the Construction Products Association, which suggested that falling output in the sector during 2010 will make contractual disputes more likely.

Mr Klein said the fines associated with such cases will undercut profits at many large contractors, which will filter down to smaller companies in the supply chain.

He said: “There is going to be an increase in this kind of problem … some of the smaller guys on these sites will be forced out of business.”

The Construction Products Association has also predicted that any recovery from the current slump is likely to be extremely slow, suggesting these problems will persist for some time.