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Tracing trends and guiding reform
King’s College London recently published its “2024 Construction Adjudication in the United Kingdom: Tracing trends and guiding reform“.
As stated by the foreword, the report has become required reading for anyone practising or interested in the field of construction adjudication. The report provides an insight into the practicalities of adjudication in the UK, including details of the types of disputes and through what bodies adjudicators are being nominated.
Key headlines
In its third year of publication, the report provides the following interesting statistics identified through the submission of questionnaires from a range of adjudication users:
- Of referrals: The number of referrals has increased from 2,078 last year to 2,264 (in the period May 2023 and April 2024), representing a 9% increase year on year.
- Nominating bodies: The Royal Institution of Chartered Surveyors (RICS) remained the most popular nominating body for adjudicators with 1,340 referrals, followed some way behind by UK Adjudicators with 461 referrals and the Technology and Construction Solicitors’ Association (TECSA) with 148 referrals.
- Value of claims: The most common claim value was between £125k to £500k (reported by 42% of respondents). The number of responses start to drop thereafter, with 28% of respondents reporting claim values between £500k to £1m, 18% of respondents reporting a claim value of between £1m and £2m and so on.
- Causes of disputes: The most common cause of adjudicated disputes (reported by 50% of respondents) arises from inadequate contract administration (e.g. because of a failure to issue timely notices or follow contractual procedures), followed closely by a lack of competency of project participants, exaggerated claims and changes made by clients/employers to the project scope.
- Categories of claims: In order of the most common claims experienced by respondents, the types of referrals issued include ‘smash-and-grab’/technical payment claims (experienced by 63%), true value claims (experienced by 35-38%, dependent on whether it related to an interim payment or final account), loss and expense & delay and disruption (experienced 35%), extensions of time (experienced by 26%), variations at (experienced by 21%), defects (experienced be 14%) and termination (experienced by 10%).
- Duration of adjudication: Nearly half of adjudication proceedings lasted between 29 and 42 days, with approximately a further third lasting between 43 and 75 days in some instances.
- Costs: The length of adjudication proceedings will typically have an impact on the total costs of adjudication and the nature of the dispute. However, adjudication proceedings were most commonly reported to cost in the region of £20k to £50k (26% of respondents), with only a handful of disputes costing more than this.
- Insolvency: Given continuing high levels of insolvency in the construction industry, and despite facing certain additional hurdles in seeking recovery, up to 18% of respondents had been involved in adjudication proceedings commenced by or against an insolvent party.
Michelmores’ comments
Adjudication continues to be an ever-growing tool used by many as a quicker and sometimes more cost-effective means of resolving disputes in place of more formal court or arbitration proceedings. This is notwithstanding the general rules that govern costs recovery under each of the different dispute resolution mechanisms.
It appears parties are more commonly considering the use of adjudication in building safety matters; particularly so following the recent judgment in BDW Trading Ltd v Ardmore Construction Ltd [2024] EWHC 3235 (TCC). Amongst other issues, the Court found that adjudication remained an entirely suitable forum to resolve disputes being brought up to 30 years after practical completion (e.g. claims that might be advanced under the Defective Premises Act 1972). The passage of time does not make adjudication “inherently unfair” just because there might be a lack of relevant contemporaneous documentation. Nor does a historic dispute necessarily in itself give rise to a ‘breach of natural justice’ objection that may prevent the enforcement of an adjudication decision.
Though it remains adjudication may not always be the best option, this will depend on the facts of each case and the objectives of the parties involved.
Should you have any queries or need assistance with potential or pending adjudication proceedings, please do not hesitate to contact Ashley Pigott (Partner and an Adjudicator on TECSA’s panel since 1998) or Andrew Pratten in Michelmores’ specialist Construction and Engineering team.
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