Blog.
Contract administration in the Middle East construction industry is broken.
Contract administration in the Middle East construction industry is broken.
Contract drafting is broken.
Contracts are drafted by people who have no idea how to write a contract. They butcher standard forms of contract like FIDIC beyond recognition, write clauses that contradict one another, use complex language, assign roles incorrectly, and transfer enormous risks to their counterparts. Poorly written contracts are usually the project owner's fault. They are the ones who initiate a project and write the first contract with the architect or project manager, which generally results in a cascading effect of poorly written contracts with everyone on a project, including those with the engineer, main contractor and subcontractors.
Contract administration is broken.
Contracts are administered by incompetent contract administrators. First, they fail to read contracts to identify problems in the contract and alert their management and project counterparts of these problems. Contract clauses aren't interpreted correctly, notices aren't issued on time, letters are written in adversarial tones, and a strategy of relationship building and negotiation is lacking. Records of correspondence, events and general documentation is disorganized. This applies to contract administrators who work for the owner, the project manager, the engineer, the main contractor and subcontractors.
Claims preparation is broken.
Claims are written with lack of clarity and precision. The overall presentation is weak and there is no structure to the claim. The flow of ideas and arguments is incoherent, references are left out, and there's insufficient evidence to create a compelling case. Calculations are incorrect, delay analysis techniques are improperly applied. People with weak legal backgrounds are entrusted to write key parts of the claim. Excessive emotion and egos infiltrate every section of the claim, drastically reducing the persuasiveness of the final document. Again, this applies to claims "specialists" who work for the owner, the project manager, the engineer, the main contractor and subcontractors.
Statistics reinforce the adversarial, dispute-ridden culture in Middle Eastern construction, which stems from poorly written and poorly administered contracts.
According to the Arcadis Global Construction Disputes Report, in 2022, compared to the world, the Middle East had the highest regional average dispute value of $90.4 million.
According to the same report, the average dispute length in the Middle East is 15.8 months.
According to the Saudi Contractors Authority, 80% of disputes in commercial courts are linked to construction.
These statistics and the overall adversarial nature of the construction industry are clear signs that contract administration in the Middle East is broken and needs to be fixed by instilling a culture of education in drafting and administering contracts, and by employing competent contract professionals.