Another benefit from using Adjudication is that the costs are cheaper than the costs associated with arbitration. Will Jones4 says, “An adjudicators fees are a little cheaper than those of an arbitrator… the big savings accrue over the reduced timescale – most adjudications are resolved within 28 days while arbitration can run on and on”.
Also there is also an improved cashflow, as disputes are settled when they occur, money does not get ‘tied up’ until the end of the contract. Whereas, before the Construction Act, contractors could hold money back until the dispute was resolved after the contract had finished, using arbitration. With adjudication the monies are paid and then can be claimed back if the courts found (through arbitration) that the adjudication decision was wrong. The main advantage of this is that small sub-contractors get paid the amount owed to them in the short-term and can carry on working on site. Without the Adjudication provisions main contractors could hold back money for a long period of time (until the dispute had been resolved) and often the small contractor would go bankrupt during that period.
The fact that there is a binding decision at any time, as disputes are settled when they occur ensures there are less ‘hold ups’ to the project and this means there is more of a flow throughout the construction programme, and less delay. There is also the fact of the simplicity of the process, which means it is a lot easier than going to arbitration through the courts, and all the parties focus on the dispute. Adjudication has not actually had that much of an impact on relationships (see Appendix II), where 66% in the survey believe their relationships on site are no different, and 15% believe they have improved.
Despite all these strengths there are however weaknesses to the Adjudication provisions within the ‘Construction Act’ (see Appendix III). The main weakness is the tight time scale of the referral. The whole point of the Act was to shorten the timescale of dispute resolution, but this means there is less time to investigate the different aspects of the dispute, which means the overall accuracy of the decisions may be compromised.
Also the quality of the adjudicator is a factor, as Richard Hawkins5 stated that, “the success of the adjudication process will only be as good as the quality of those who purport to call themselves adjudicators.” The decision of the adjudication depends completely on the competence of the individual adjudicator (if the adjudicator is incompetent then the decision is more likely to be wrong). There is also the fact that an adjudicator may not be qualified to make decisions on matters that only an expert on the subject can decide. For instance, John Uff6 states, “A contractor who disputes the opinion of the structural engineer, is entitled to have the matter reviewed by an adjudicator, who is not required to hold any particular qualification or to have any particular experience. The potential for disaster is plain to see."
It is also quite unclear who bears the costs of the Adjudication and there is the factor of rough justice in the final decision.
Since the Construction Act came into force on 1st May 1998, more and more disputes have been settled by using adjudication, as opposed to other forms of alternative dispute resolution, such as litigation and arbitration (see Appendix IV). The majority of construction professionals, 80% in the survey, believe that adjudication is better than its pre-Act alternatives (see Appendix V), and 92% believe it is an effective (either satisfactory or better) means of resolving construction disputes (see Appendix VI). Richard Hawkins5 suggests that, “If adjudication is to work, adjudicators must acknowledge that they are appointed to make a decision that will enable two disputing parties to resolve their differences. Adjudicators should take the initiative in ascertaining for themselves the facts and the law. If they are unable to do this, they should seek training immediately.”
After looking at all the facts involved with the strengths and weaknesses of the Adjudication provisions within the ‘Construction Act’, and the survey results in the Appendix, I believe it will be accepted and will continue to be used as the main form of alternative dispute resolution over the next decade. The fact that the courts are backing the adjudicators decisions if it goes on to arbitration show that they are determined to make this system work.
Bibliography.
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Contemporary Issues in Construction Law Volume II.
Construction Contract Reform: A plea for sanity.
A collection of papers in opposition to the 1995-1997 reform proposals.
Edited by John Uff QC. 1997.
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The Construction Act.
Time for review.
Editors Frances A Patterson & Philip Britton. November 2000.
- Construction Law.
John Uff. 1999.
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The Housing, Grants, Construction and Regeneration Act 1996.
Haley Somerset Consulting – Professional Development.
Workshop Handbook.
Simon Courtney. July 2001.
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Construction Manager (Journal).
December 2000.
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Electrical and Mechanical Contractor (Journal).
July – August 1999. September 2000. September 2001.
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The Facilities Business (Journal).
February 2001.
References.
1 Cobb, Laurence. ‘Adjudication made simple’, Constructions Manager, December 2000.
- Jones, Will. ‘Constructive criticism’, Electrical and Mechanical Contractor, September 2000.
- Bunton Len, ‘Judgement day’, The Facilities Business,
February 2001.
- Jones, Will. ‘Don’t let’s fight’, Electrical and Mechanical Contractor, July-August 1999.
5 Hawkins, Richard. ‘Judge dread’, Electrical and Mechanical Contractor, September 2001.
6 Uff, John. ‘Is the Construction Act achieving its Purpose?’ Time for review, November 2000.
List of Appendixes.
Appendixes I – VI
Source – The Construction Act Time for Review.
Chapter Eleven - Statutory adjudication – the success of rough justice
Liam Holder – The survey on which these Appendixes are based formed part of his MSc dissertation for the Centre of Construction Law & Management, King’s College London, September 2000.
“questionnaires were sent out to a variety of people across the country, including main contractors, subcontractors, architects, engineers and solicitors… the responses do give a valuable indication of how adjudication is working and how it is perceived.”
Appendix I – What are the main benefits of adjudication?
Appendix II – What impact has adjudication had upon relationships?
Appendix III – What are the main criticisms of adjudication?
Appendix IV – What has adjudication replaced?
Appendix V – How does adjudication compare with its pre-Act alternative?
Appendix VI – Rate the adjudication process as an effective means of resolving construction disputes.
Measurement and Practice 1
BSc (Hons) Quantity Surveying
