Climate regulations could increase construction disputes

06 June 2022
New laws must be clearly defined to minimise the risk of disputes in sustainable construction

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The mounting pressure to reduce carbon dioxide and greenhouse gas (GHG) emissions to comply with global reduction pledges will increase the scope of construction disputes, says construction management consultant HKA.

In an interview with MEED, HKA partner Bill Haggart said that as project owners scramble to meet ever-stricter regulatory requirements for action against climate change, an increase in late changes to project designs will trigger more disputes.

In nearly half of the instances reviewed by HKA, the biggest cause of disputes in construction projects is change in scope. Project disputes are common on construction projects and could result from a change in design, differences in contract interpretation, or payment issues,” says Haggart.

The increased government focus on action to reduce the impact of climate change is set to introduce new regulations that could see significant late changes to projects, and which could open up a new area of claims and disputes.

“This has already started happening,” says Haggart. “I recently had a situation where the [sustainability] requirements changed midway through the project. The client called for a hiatus in the process and asked the design team to re-engineer elements of the building to help achieve a higher level of sustainability rating.”

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Poorly defined or vague environmental regulations, aimed at reducing energy consumption in the built environment and promoting sustainable development, risk introducing ambiguity and confusion over responsibilities on construction projects. 

Taking action

Governments in the Middle East and North Africa are taking action to reduce their carbon footprint, with states such as Saudi Arabia and the UAE seeking to play a leading role in the world’s energy transition markets. 

Across the region, new regulations are being introduced to improve the performance of buildings by reducing the consumption of energy, water and materials, improving public health, safety and general welfare, and enhancing the planning, design, construction and operation of buildings.

Such actions are becoming more evident through new policies and regulations, such as developing green building codes in the UAE, Qatar and Lebanon.

According to the World Economic Forum, buildings and construction are responsible for 39 per cent of carbon emissions globally, out of which 28 per cent is from energy consumption and 11 per cent from construction materials.

The latest MEED-HKA Market Talk, “Disruptive Learnings”, explores the impact of environmental and sustainability issues on disputes in the region. It also discusses the commonly recurring causes of project disputes and the golden rules for setting up a project correctly. HKA is a global consultancy in risk mitigation and dispute resolution.

Watch the full interview

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