By Satish Kanady
DOHA: Delayed payment and repeated changes in original designs are the two major reasons for the disputes in Qatar’s construction sector and across the region. The settlement value of the disputes in the region is equal to 20 to 30 percent of the combined contract value, according to an expert.
Delay in payment will often leads to holding up a project for long, which will ultimately upset the project cost and schedule. Payment delay is a long term problem for any project, Peter Murphy (pictured), Associate Director, Quantum Global Solutions told The Peninsula.
Speaking on the sidelines of American Chamber of Commerce in Qatar’s (AmCham) ‘Distinguished Speaker Series”, Peter said: “Delayed payment is a serious issue everywhere, not only in Qatar. Back-to-back payment is key for meeting project schedules”. Design changing is another key reason for the growing number of disputes in the construction sector. “Yes, it is the prerogative of the client to step in at any point of time in the project development and make suggestions. Because he is paying for it. But the client must remember that the extra cost of the ‘re-designing’ will trickle down to every aspect of the project, ranging from time to cost”, he said.
Disputes relating to major construction projects rose almost 88 percent last year to reach $76.7m in value. It was the highest value increase in construction disputes since 2011. The construction dispute values touched $112.5m in 2011 as a result of a number of high value claims that were initiated for projects undertaken in 2008 and 2009, according to a report by built asset design and consultancy firm Arcadis. Top reasons for construction disputes in the Middle East were failure in properly administering the contract, poorly drafted or incomplete and unsubstantiated claims and a biased manager or an engineer.
Sharing his view on the challenges and development in the Qatar’s construction market, Ahmad Jassim Al Jolo, Chairman, The Qatar Society of Engineer recently said he believed the greatest challenge to Qatar’s massive infrastructure programme was coordination amongst various stakeholders despite the efforts of the Central Planning Office.
There is a perception that this region’s construction market is difficult to participate in. However, serious technical issues should be considered minimal as all infrastructure and construction programmes always face some problems during the project life cycle. There has been a concerted effort by some government departments to reduce problems faced by contractors and consultant with some of the standard government forms of contract; these are now being reviewed and revised to improve the contracting environment in the country and ultimately help reduce contractor claims.
Jolo said prompt payments act model from Ireland is a good example of legislation that could help the country’s various government departments reduce the period of payment to contractors. Experienced contractors in Qatar, however, appear to understand how to correctly calim payments from government, and thereby experience less delays with their payments than those who submit incorrect documentation to support their interim payment applications. In its latest financial stability report, Qatar Central Bank (QCB) noted the payment defaults by the contractors and real estate companies are giving worries to the banks.The Peninsula
