Disputes in the Construction Industry
How the tools can help you - Adjudication
Published in the FSB Business Network magazine in October 2014
When a construction dispute arises it usually means that the customer doesn't want to pay the proper
value for the work that has been completed or worse still believes, often misguidedly, that payments should be
returned because of contra charges and counterclaims.
There is a way that contractors and subcontractors can resolve such disputes quickly and cost effectively, the
tool available is adjudication.
In 1998, the Government introduced the Housing Grants Construction and Regeneration Act 1996 and then to make
it more effective it was amended in 2011 by the Local Democracy, Economic Development and Construction Act 2009
[collectively 'the Construction Act'].
The Construction Act provides for construction disputes to be resolved by adjudications which are very often
completed in 28 days from commencement. Used wisely the Construction Act can be a significant tool in getting
paid for the work that was completed because the Adjudicator issues a decision ordering payment by the
contractor's clients so there is no need to go 'cap in hand' when faced with unreasonable clients and bogus
Case Study: In a recent case, a subcontractor undertook a £200,000 package of work for
a main contractor.
For reasons that suited both the contractor and the subcontractor, the parties agreed 75% of the way through
the works to bring their agreement to an end and for the contractor to complete the works using others who were
on the site at the time.
At the time of the agreement to separate, the subcontractor had been paid nothing but had applied for and
expected to be paid £145,000. Within days of the agreement the contractor wrote to the subcontractor saying
that there was no such agreement and it issued a document alleging that it would cost £160,000 to complete
the last £50,000 of work and that consequently the subcontractor was due nothing and that the £145,000
would never be paid.
Faced with such conduct, negotiation is unlikely to be the answer, in this case the subcontractor took the
contractor to adjudication.
The Adjudicator decided that he 'preferred' the evidence of the subcontractor and agreed that there was an
agreement. The Adjudicator also decided that the contractor should pay the £145,000 plus interest and all of the
Adjudicator's fees and expenses.
This is one of many such success stories. Adjudication is the principle avenue for resolving construction
Armed with the Construction Act, what is now needed is for contractors and subcontractors alike to understand
what the provisions are and apply them wisely so that cash flows better and more reliably through the industry.
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