HKA has released its 9th edition of the CRUX Insight report, revealing that renewable energy, nuclear, and data centre projects are increasingly identified as risk hotspots amid the global energy transition. The report highlights ongoing challenges in risk management across construction and engineering sectors, despite some improvements.
The CRUX Insight report, which analyzes 2,410 projects across 122 countries with a combined investment of $2.56 trillion, indicates that while risk management is improving, the costs associated with project distress remain high. Design failures and scope changes were identified as the leading causes of claims and disputes, with cash flow conflicts becoming more prominent in recent projects.
Key Findings from the Report
Among the significant findings, the report noted that claims on contracts averaged two-thirds of project schedules and one-third of budgets. Specifically, scope changes were responsible for disputes in 33.4% of projects, while design-related failures accounted for 40.5%. The report also highlighted that megaprojects are more susceptible to various types of claims and disputes.
- 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 across the dataset.
- Megaprojects were more prone to most types of claims or disputes.
- Renewables face heightened risks from new entrants and site-specific factors.
- Data centre delays halved on later projects, but sums in dispute tripled.
- Nuclear projects saw smaller time savings, but costs have ballooned.
The report also revealed that cost claims on contracts averaged 33% of budgets, with extensions of time (EOTs) amounting to 65.8% of planned schedules. While these figures have remained relatively stable compared to previous years, they are still significantly higher than outcomes for more recent projects.
Sector-Specific Insights
HKA’s report delves into the distinct risk profiles associated with various sectors involved in the energy transition:
- Data Centres: The rapid rollout of data centres is straining contractors and local infrastructure. Incomplete designs have led to significant delays, with overruns more than doubling planned schedules.
- Nuclear: Historically long overruns have approached 50% of contract schedules, often exacerbated by political pressures. Although later projects have seen less time lost, costs have surged.
- Renewable Energy: Projects face uncertainties related to national policies and supply chains, with unforeseen conditions disrupting nearly a quarter of projects.
Overall, the report indicates that while there are improvements in project outcomes, challenges remain, particularly as projects grow in scale and complexity. HKA Partner and CEO Steve Culp emphasized the importance of learning from evolving risk profiles to mitigate potential disputes and enhance project delivery.
For further insights, the full report can be accessed through HKA’s official channels. According to HKA, understanding the shifting risk profiles across sectors is crucial for stakeholders aiming to secure better project outcomes.
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