Analysis Construction Mena construction industry braced for rise in disputes By Megha Merani January 28, 2025, 2:58 PM Alamy via Reuters Legal experts say the volume of projects in the Middle East is causing 'issues within joint ventures' Design changes causing delays Unrealistic time and cost estimates Concerns over poor arbitration Construction professionals working in the Middle East and North Africa are bracing themselves for a surge in disputes, driven by delays, cost overruns and changes in scope, research has found. In a survey of Mena businesses including contractors and developers, more than 80 percent of the 95 respondents said they anticipated a rise in disputes over the next three years. This is despite the strategic importance of many of the mega-projects under construction in Mena, which include smart cities, transportation networks and renewable energy facilities. The research, conducted by law firm Hogan Lovells and Middlesex University Dubai, pointed to mounting concerns in Saudi Arabia, where project complexity, high financial stakes and aggressive timelines are increasing the likelihood of disputes. Mena is also one of the worst-performing regions for project delays, according to a separate 2024 study by consultancy HKA. Overruns add 83 percent to average timelines in the Middle East, compared to a global average of 68 percent, said HKA. It analysed the causes of claims and disputes on 2,002 projects across 107 countries. The universal top cause of claims and disputes – change in scope – loomed larger in Mena than elsewhere, affecting more than half of construction projects. “We are aware of several mega-projects in Saudi Arabia and elsewhere in Mena that are in, or have been in, delay and have overrun anticipated budgets,” Emerson Holmes, partner at Hogan Lovells and co-author of the Mena Arbitration Survey, tells AGBI. “These projects tend to have no fixed design before the contractor is engaged, unrealistic time and cost estimates, and a lack of effective communication between key personnel.” Holmes adds that the volume of projects is causing “issues within joint ventures”, which often involve companies from different cultures that have not worked together before. “Any project which has been fast tracked is at a higher risk of ending in a formal dispute,” says Julian Haslam-Jones, senior director dispute and investigation, Dubai, at Alvarez and Marsal. “Historically, the Middle East has had a higher number of disputes compared to the UK and Europe. The largest causation factor is design change.” Alvarez and Marsal’s research shows that 70 percent of projects have claims and 85 percent have cost overruns, equating to 28 percent of the initial budget on average. Arbitration remains critical for resolving disputes. William Kirtley, managing partner at arbitration specialist Aceris Law, says enforcement of arbitration awards in the region “remains a serious concern”. “Far too many awards are not enforced based on mere technicalities, such as whether the arbitral tribunal has signed every page of the final award,” he says. “We have an arbitration award that was enforced in 2018 but has still not been executed in Saudi Arabia. The speed of domestic court proceedings must be accelerated.” Antonia Birt, partner in the global commercial disputes group at Reed Smith in Dubai, says enforcement challenges remain “manageable” but require further progress. “Enforcement of awards is essential for arbitration to be an effective dispute resolution mechanism,” she says, adding that Reed Smith analysis found only 10 percent of awards in the UAE and 6 percent in Bahrain were set aside in recent years. “To compete more effectively on a global scale, further co-ordination among Mena arbitration centres is essential to improve the enforceability of awards,” Birt says. Delays and cost overruns have been “exacerbated” in recent years by the “rapid pace of new projects, and the scale and ambition of giga-projects,” she adds. “Highly complex mega or giga-projects, which were tendered quickly and competitively, leading to unusually low tenders, are more likely to face disputes.” Saudi Arabia pushes to end construction payment issues Neom ‘uses one fifth of world’s steel’ Neom replaces CEO in bid to move past negative headlines Kirtley says Mena arbitration centres need to improve their efficiency when dealing with foreign parties, including high-quality English and Arabic communication. “They must also embrace new technologies, such as holding case management conferences via video conference – we have had arbitration centres refuse this,” he says. “They will not compete globally until they meet the standards of the London Court of International Arbitration, International Chamber of Commerce and Singapore International Arbitration Centre.” Tim L’Estrange, an arbitrator and mediator with Newman’s Row, a London-based hub of independent international arbitrators, says the construction professionals’ survey reflects clients’ “anxieties” when navigating disputes. “Will I get a fair hearing, how long will it take and what will it cost?” he says. “Confidence in arbitration depends on experienced arbitrators delivering efficient, fair and timely outcomes. If those objectives are not met, then invariably the parties’ confidence in the system erodes.” Construction in the Gulf Construction is one of the leading economic sectors in the Gulf. It was valued at $178 billion in 2025 and is projected to reach $227 billion by 2030, according to Mordor Intelligence. The growth is being driven by a substantial backlog of projects across transportation, infrastructure and residential and commercial real estate. With a $1.5 trillion backlog of unawarded construction projects, Saudi Arabia accounts for the lion’s share (39 percent) of the total $4 trillion Mena pipeline, according to real estate consultancy JLL. A Knight Frank analysis predicts the construction output value in Saudi Arabia will reach $150 billion by 2025.