Adjuducation of Construction Contracts - How's it going?

According to the third Construction Adjudication Report published in November 2024 by the Adjudication Society and King’s College, London, adjudication is functioning rather well.

The Report is based on a survey of 10 Adjudicator Nominating Bodies and another questionnaire which was responded to by 166 individuals involved in adjudications (for example, as lawyers).

Most readers will know that parties to a “construction contract” have had, since 1998, a statutory right to refer disputes under a construction contract to a fast-track alternative dispute resolution procedure, called adjudication. Once the adjudicator reaches a decision it is binding unless and until one party successfully applies to the court (or arbitration) to obtain a different outcome or to have the decision set aside on certain limited grounds.

The term “construction contract” is broadly defined by the Housing Grants, Construction and Regeneration Act 1996 (as since amended, and commonly known in construction circles as the “Construction Act”). It encompasses a lot of different operations. The result is that, for example, many professional appointments relating to construction, as well as building contracts, will be construction contracts and thus carry with them the right to adjudicate disputes.

Adjudication is intended to keep the construction work going – by rapid resolution of disputes, even if the dispute is subsequently referred to the courts or arbitration.

The Report reveals that there were more referrals to adjudication than ever in 2023 – at 2,264 referrals to the ten Adjudicator Nominating Bodies that responded to the survey. It’s clearly popular.

The number could be reduced, however. According to respondents to the surveys,, the leading causes of disputes referred to adjudication were inadequate contract administration (relevant in 50% of referrals), followed by (at 42%) lack of competence of the parties to the contract.

This hammers home the great importance of employing experienced, able and professional contract administrators (in the case of building contracts) and of both employer and contractor or professional having a thorough understanding of the relevant contract and how to comply with it or at least having appropriate professionals available to guide them throughout the contract’s duration.

An example is that “smash and grab adjudications” (relating to failure by an employer to serve a Payment Notice or Pay Less Notice in time) account for 63% of referrals. The failure to serve a Payment Notice or Pay Less Notice in time can quickly turn into an adjudication procedure and an adverse award to the contractor of the amount it demanded (even if unreasonable). The employer is unlikely to be able to successfully challenge the sum awarded to the contractor, by way of a second adjudication, until it has paid the amount awarded to the contractor in the first adjudication.

The vast majority of adjudication decisions are complied with (even if only until the issues are litigated or arbitrated). Only 219 adjudication decisions have come before the courts since October 2011 and the courts enforced 77% of those in full and another 3% in part. In the case of those not enforced, lack of jurisdiction was the problem in 15% of those and breach of natural justice in another 10%.

16% of respondents stated that the default period of 28 days under the Construction Act was the typical length of an adjudication for them. 48% of respondents reported that adjudications were completed within 29-42 days from the date of the referral notice.

Clearly adjudication has proved a great success in producing, at the least, a temporary resolution of disputes and ensuring that contractors get paid in reasonable time and the construction process is held up as little as possible. The Report states that other sectors are talking of adopting adjudication voluntarily, to enjoy the same benefits.

It will be interesting to see, in years to come, what impact the growth in mediation will have on the numbers of referrals to adjudication.

One disappointing point noted by the Report is that only 8.9% of adjudicators were women. Clearly much work remains to be done in that respect.

kcl-dpsl-construction-adjudication-report-3.0-2024-update-digital-aw1.pdf