Powering through Uncertainty – the ninth annual CRUX Insight report – focuses on risk profiles in sectors bound up with the global energy transition, while analysing the main causes of conflict on construction and engineering projects worldwide. While risk management may be improving overall, design failures, scope change and payment issues remain prime drivers of claims and disputes.

Key findings from the CRUX dataset:

• 2,410 projects across 122 countries analysed, worth a combined $2.56 trillion
• Claims on contracts averaged two-thirds of schedules and a third of budgets
• Scope change was blamed for disputes on 33.4% of all projects
• Design-related failures, on 40.5%, outweighed scope creep over the full dataset
• Megaprojects were more prone to most types of claim or dispute
• Evidence grows of improving outcomes on more recent projects
• Renewables face heightened risk from new entrants and site-specific factors
• Data centre overruns halved on later projects but sums in dispute tripled
• Nuclear projects saw smaller time savings but costs have ballooned

“Global construction growth remains strong, and risk management is improving, as our research shows. But claims and disputes still cost the industry heavily in time and money. While technology adoption may be contributing to the progress indicated by CRUX, but we don’t believe the industry has yet been able to absorb the potential benefits from AI and other advances.”

Steve Culp, Partner, Chief Executive Officer

Risk hotspots in the energy transition

Several sectors are bound up with the global energy transition, each with distinct risk profiles.

Data centres

Rapid roll-out is testing contractors’ capacity as well as water and electricity infrastructure, and public acceptance. Incomplete and inaccurate designs – each affecting almost a quarter of projects – compound delays installing dense building services and integrating critical systems. Overruns more than doubled (112%) planned schedules and costs claimed 20.6% of budgets. On projects completing from 2020 onwards, EOT claims shortened to 67.0%, but costs rose to 30.2%.   

Nuclear

Nuclear projects’ historically long overruns approached 50% of contract schedules, often driven by political pressures to start works before completing planning and design. Later projects lost less time, but late design worsened (41.7% of projects) and dispute sums ballooned to 122% of contracted budgets.

Renewable energy

Renewable energy projects face uncertainties and blockages in national policy, supply chains, grid access, and on site: unforeseen conditions (typically ground or seabed) disrupted 23.7% of projects, and late or restricted access a further 18.7%. Outcomes improved on later projects, though HKA consultants report rising interface failures – often involving contractors inexperienced in cable-laying – and supply chain constraints. The fitness of EPC arrangements and standard contracts for offshore wind is also questioned.

Improving over time, with exceptions

Overall, projects scheduled to complete from 2020 onwards were less likely to experience most types of dispute, reinforcing evidence of general improvement reported last year. Incomplete design and scope change were down by almost 10 percentage points on earlier levels. Average EOTs fell to 48.8% of contract schedules, and contested costs to 28.4% of budget.

Regional variations

The world’s regions continue to show some significant differences in causation and outcomes.

Africa

Historically high overruns fell on later projects to 55.4% of schedules and 25.0% of budgets. But disagreements over site access (33.3%) and payments (25.9%) worsened.

Americas

Deficient workmanship (20.1%) and unforeseen physical conditions (17.4%) triggered more claims than elsewhere. EOTs dropped to 44.2% of later schedules but claimed costs edged up to 31.8% of budgets.

Asia

Most dispute drivers eased post-2020, but late approvals affected 23.9% of projects. Both outturn averages improved to 46.7% of schedules and 20.4% of budgets.

Europe

The only region where scope change was outranked. Design error hit 31.5% of all projects, but was less common on later contracts. Overruns shortened a few points to 57.0%, but costs to rose to 38.1%.

Middle East

The most improved region saw average EOTs shrink to 46.7% (from 97.6% of earlier schedules) with cost claims down to 22.4% of budgets (from 37.2%). Disputes over payments still affected 24.1% of projects.

Oceania

Previously low claimed costs fell further to average 13.3% of budgets, but this was the only region where schedule overruns lengthened, to 60.0%.

About CRUX

Now in its ninth year, HKA’s integrated research programme draws on consultants’ first-hand investigations of claims and disputes on capital and infrastructure projects worldwide to identify the underlying causes and quantify the impacts on contract budgets and schedules.

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