It has been over 25 years since statutory adjudication was introduced under the Housing Grants, Construction and Regeneration Act 1996 and it remains one of the principal ways of resolving disputes in the UK construction industry. The recent annual report on adjudication for 2022 prepared by King’s College London and the Adjudication Society, takes a look at the latest trends and challenges facing adjudication. The report analyses data from two separate questionnaires addressed to Adjudicator Nominating Bodies and individuals involved with statutory adjudication.
Time and fees for adjudication
The report found that most adjudications take between 29 and 42 days.
The median total fees charged by adjudicators was between £12,000 and £14,000, with the median adjudicator’s hourly rates between £251 to £400.
What is being disputed?
The most common head of claim was extensions of time, followed by final accounts, interim payment disputes and variations. These results highlight the difficulty managing projects, with Lord Justice Coulson commenting in the forward: “…it appears that construction professionals still have much to learn about the ways to ensure the smooth running of any project”. The results show that care must be taken to follow contractual procedures when managing the contract and project. For more information on effectively managing a contract you can listen to our podcast on the subject here.
The most common value of claims is between £125,000 and £500,000 – at 42%, although 16% of claims were above £5m.
Challenges facing adjudication
The report raises concerns about a perception of bias by adjudicators and the potential for this to undermine the legitimacy of adjudication. 31% of respondents stated that adjudicators rarely voluntarily disclose information, facts or circumstances that might give rise to an appearance of bias in the eyes of the parties, and 14% said that adjudicators never do so. Furthermore, when asked whether the respondents had ever suspected that an adjudicator was biased towards one party, 40% reported that they had. We can perhaps expect the courts to take quite a hard line on any allegations of procedural unfairness in future cases.
There is also concern expressed about the current position on smash and grab adjudications, which in some cases, forces a second true value adjudication. This effectively duplicates the proceedings and results in increased costs. How this will be addressed is difficult to see without significantly undermining the driving principal behind the Construction Act of facilitating cash flow through the industry.
Summary
Generally, the report highlights that adjudication remains a success despite the challenges it faces. The number of adjudications has remained largely the same as in 2021 and 78% of respondents believed that adjudicators ensure the parties are on an equal footing. Accordingly, adjudication remains a key method of efficiently resolving disputes in the construction industry.