This guide is all about Construction Adjudication. We have tried to make it as comprehensive as possible and we have an online video course if you want to learn more.
Stravelles are not solicitors, barristers etc and we do not provide legal services. Some legal professionals (of course, not all) will try and convince you that formal legal action is the way to go because this is how they earn their fees. Its a trap that you must be at least aware of.
We simply provide an online video course to help people get an initial unbiased understanding of adjudication. The course gives you a good overall understanding of Adjudication and in fact gives you enough information that you can run your own adjudications.
You will be a better position to judge whether you want to hire a legal professional or maybe just run the construction adjudication yourself once you have completed the course.
Legal advisors have a financial interest in you pursuing a case as that’s how they earn their fees. And in a lot of cases they earn their compensation, so to make it clear we fully support the legal profession.
However, we do believe that in the majority of cases Adjudication can be carried out ‘DIY’ style especially when the facts of the dispute are clear and simple. We advise people if they have money coming out of their ears to simply hire a legal professional but if not, then don’t be afraid to be bold and to take on rogue Clients or other bad contractual parties.
The whole spirit behind Adjudication is that its supposed to be affordable for the little guy to take on the giant companies.
Yes, its not a fashionable thing to say, but if you have a dispute and you are in the right, you have a very good chance of getting justice in the UK. Especially in construction with adjudication which is such a powerful tool for construction people to fight for fairness and more importantly, a positive cashflow.
Simply put, adjudication is a legal process that involves one qualified person making a formal judgement on a dispute.
Adjudication is defined by various dictionaries in a number of different ways but it contains three key elements:
Firstly, there must be a judgement or a decision made.
Secondly, there is a dispute, argument, issue, competition upon which the judgement decides.
Thirdly, there is some element of formality to the process.
This word is used in a sentence such as ‘we are going to bring the dispute to the RICS for adjudication’.
Adjudication is a process that can be used in many different industries Construction Adjudication obviously refers to adjudications within the construction industry.
If you are interested further you can check out our course on adjudication specifically aimed at people working in construction and real estate.
Looking for an explanation of Adjudication ? Well, as we mention above, Adjudication means the formal judgement of a dispute.
In practice, both parties to a dispute agree to a third party judging or deciding the outcome of their dispute.
Adjudication is all about solving disputes formally
The process is formal — it is not a friend sitting down with two quarrelling companions to help decide their argument.
So, imagine an episode of Seinfield. Jerry and Elaine have a small argument about what movie they are going to watch. They ask George to settle it and he sides with Elaine. This is not an adjudication — there is no formality, Jerry can shrug his shoulders and refuse to go.
In adjudication the process is binding and will be enforced by the courts system if necessary.
So what exactly is adjudication in construction. Construction adjudication is a form of Alternate Dispute Resolution which is specific to construction disputes.
It is commonly used for resolving disputes between contractual parties in construction contracts.
Basically an independent expert judges the dispute and the decision is within 28 days and essentially binding. Both parties don’t have to agree to bring the dispute to adjudication or agree the adjudicator. One party can unilaterally start the adjudication an independent body picks the adjudicator.
All parties to (most non domestic residential construction contracts) have the statutory right to adjudication.
This right was created by the Construction act—the Housing Grants, Construction and Regeneration Act 1996 as amended (“the Construction Act”)
Legislation is always brought in for a specific reason, a purpose or intent, to solve some sort of problem or issue in wider society.
Construction adjudication was introduced to help:
The adjudication process in construction is based on the ‘Housing Grants, Construction and Regeneration Act 1996’. You can view the entire document here
Its interesting that the actual text that concerns the construction industry is quite a small section of the entire Act.
Nevertheless we are not going to quote the act in its entirety
If you go the legislation using the link you should navigate to part 2 of the act entitled construction contracts.
Most of the juicy parts of adjudication are stated in Section 108 of the act.
To be perfectly honest, if you read the section of the act you should be able to pursue an adjudication successfully by yourself.
But its like giving someone a recipe for a new meal to cook, the first time following the recipe or in this case, adjudication process may not be great.
The act gives any party to a construction contract the statutory right to refer any dispute to adjudication. So what is the definition of a ‘construction contract’?
Section 105 of the act defines a construction contract as
“an agreement with a person for any of the following—
(a) the carrying out of construction operations;
(b)arranging for the carrying out of construction operations by others, whether under sub-contract to him or otherwise;
(c)providing his own labour, or the labour of others, for the carrying out of construction operations”
Yes construction adjudication applies to Architects and consultants thanks to
Section 104 (2) which states “that a construction contract includes an agreement to ‘to do architectural, design, or surveying work’ or ‘to provide advice on building, engineering, interior or exterior decoration or on the laying-out of landscape, in relation to construction operations'” Section 104 (2)
It is worth pointing out that there are several other forms of dispute resolution that can be used to solve construction disputes.
The five methods of dispute resolutions are:
Yes, that’s six forms of dispute resolution but although an advanced topic in itself, negotiation is the less formal form of dispute resolution.
This process of dispute resolution, Adjudication can be used to solve disputes in construction where the parties have tried to agree but failed.
Once a dispute has been referred to adjudication then the dispute will be decided upon with 28 days.
Adjudication is a fast, low cost way of solving disputes in construction.
There is a statutory right of all parties to a construction contract (there are some limited exceptions) to refer a dispute to adjudication.
Construction adjudication is used regularly to solve disputes over time, cost, quality.
Examples might include Client:
1. does not pay on time or at all
2. underpays or overpays!
3. will not agree to an extension of time
4. has issue with the quality of the completed works
5. wants to terminate the contract
6. Is unhappy with the service provided by the consultant e.g. Architect
7. will not make the final payment for the works or has reduced this payment down
8. believes there are a number of defective works
9. contends the contractor has breached the contract
Construction adjudication is suitable for simple, straightforward disputes like payment issues. Its main purpose is to solve cashflow problems between contracting parties to keep the project rolling and to keep the parties talking and working with each other.
If there are complex issues regarding programme, quality and so on which will require length expert witness testimonial it is not appropriate to try and squeeze these issues into a 28 day process.
Adjudication is fast compared to other forms of dispute resolution like Arbitration or the courts system (litigation).
A typical adjudication should take 28 days from start to finish. This means that say a builder who has their payment cut by 50% can have a binding decision against their Client within 28 days. Adjudication was introduced into the construction industry as a way of reducing the regular, lengthy disputes about payment within the construction industry.
This form of dispute resolution is also less expensive than Arbitration or the courts system.
Neither party to an adjudication must appoint legal representatives so the cost of a solicitor or barrister can be avoided. There is also no need for hire of an expensive venue for the adjudication to take place in. Unlike Arbitration, Adjudication rarely takes place in person or in an informal setting.
Adjudication does not require an unbearable amount of resources to participate in the process. A small builder or tradesperson can equally participate in an adjudication against the largest construction company in the land. Whereas Arbitration and the courts system demand a lot more resources.
The entire process can be completed by email and post.
Legal costs are not recoverable — the advantage to smaller companies is that they can tackle a larger company without worrying about losing. For example, if a small bricklayer might be worried that a national contractor could spend £100,000 on legal fees and the bricklayer would be liable for it. This does not happen in adjudication.
It is hoped that by referring a dispute to adjudication that the project can still continue whilst the issue is still being resolved.
Also, in the same spirit adjudication can keep a business relationship from falling apart. In the real world however this is perhaps unlikely.
For example, if a Client refuses to pay the interim payment should the contractor be forced to dip into their own pocket to keep funding the project? If a business relationship cannot internally resolve a dispute, is there really a relationship to continue.
Construction Adjudication is private so it stops any issues reaching the public domain which could damage both parties reputations.
The ‘Judge’ is going to be an expert in construction
In adjudication, the adjudicator referred to the case will be an expert within that industry.
So in a construction adjudication, the adjudicator will be an experienced quantity surveyor or contracts manager who will intimately understand the issues in dispute.
Overall, adjudication gives smaller businesses a means to prevent larger, better funded businesses bullying them into accepting lessor payments or unfair conditions. It stops rogue clients saying ‘lets sort it out at the end of the project’.
Adjudication is not perfect but its very useful.
Either party can just go into administration leaving other party liable for the cost of the adjudication
One of the advantages of adjudication is that legal costs are not recoverable.
The reason this is a good thing is because it allows one small party to take on a large party with massive legal resources.
Some small businesses are too scared to take a large company to court because if they lose they may have to pay their legal bills!
In Adjudication if you win, there is no mechanism for forcing legal costs on other party – so whatever you spend on lawyers you probably are not getting back. Its a slight disadvantage. Its benefit outweighs its negative.
Adjudication is great for issues that are straightforward like payment — the Client has either paid you or not, payment or payless notices were issued or not.
But if the issue in question is very complex it might be difficult for the adjudicator to resolve the dispute within the 28 days allotted. It could easily go over the mandated time with agreement from both parties.
The 28 days time limit does not allow a huge amount of time for the responding party to gather its response together and so it could be argued its not entirely fair on them — Adjudication can be seen as rough justice – pay first, argue later. Seen as a bit rough and ready because of this.
In most adjudications there is no cross examination of the key players in the dispute. They can hide behind written statements and reports.
An example of an adjudication in construction is when a Client does not pay the builder at the end of the month.
The builder, anxious about his cashflow meets the Client to discuss.
The Client argues that he is not happy with the quality of the work and therefore will only pay 30% of the payment due.
The builder, not agreeing with this assessment at all files refers this dispute to adjudication. 28 days later the builder wins the adjudication and the Client is ordered to pay.
Yes, an adjudicators decision is binding but it is still just an interim decision. It can be either 1) agreed to by both parties or 2) appealed to arbitration or litigation (the courts process) by one of the parties.
However, it is generally recognised that an adjudicator’s decision will not be overturned so most parties just abide by the adjudicator’s decision. So if you lose a decision in an adjudication there is little point appealing it unless you can prove some form of bias or fraud. The actual decision by the adjudicator will not be reviewed.
Just a little note regarding homework — It is important that both parties formally agree to the adjudicators decision. If the losing party pays up according to the decision but does not formally agree to the decision there is always the option they can bring the dispute to Arbitration or Litigation later.
Adjudication is always an interim decision.
Interestingly, regarding construction contracts, there can sometimes be a clause that states that if an Adjudicators decision is not challenged within a certain amount of time it is deemed to be accepted.
A good example of a case study on this issue is Macob Civil Engineering v Morrison Construction Limited 1999
If you are the winning party and the losing party does not pay according to the Adjudicators decision then you can take it to the technology and construction court.
It is not a difficult process and you can get an enforceable court order relatively fast.
This is like asking how much petrol will your car use each month? Adjudication costs vary in accordance with several factors including:
There is a relatively small cost due to the adjudicator nominating body (e.g. the RICS or RIBA) for appointing a particular adjudicator to your dispute.
This is paid by the referring party and is generally not recoverable. Its usually under £500.
It is worth noting here that legal costs are not recoverable for either party. So if you are the winning party you still won’t be able to get back your legal costs.
Please also note that the both parties are ‘jointly and severally’ liable for the adjudicators costs.
In most cases, the adjudicators costs will be paid by the losing party. But if the losing party fails to pay and for example, goes out of business, the winning party must pay the adjudicators fees.
If you are not running the adjudication yourself you will have to pay legal fees. These could easily be £300 per hour. You would have to contact your solicitor and ask for some advice on these costs.
Remember you don’t need legal advice for smaller disputes based on facts but you may need them for more technical disputes.
If you enrol on our course you will be able to run your own adjudication for most straightforward disputes over money.
If there is some weird, very technical issue then you might need some legal advice. But, even then, they might just ‘bring in an expert’ at your cost.
We have nothing against legal advisors, they cost a lot of money but if you have the cash then why not? But if you don’t have the funds you can still win an adjudication by just doing it yourself.
As we have mentioned already we recommend hiring legal professionals when the issues being debated are quite technical, legal issues.
Be believe that for most straightforward issues, a reasonably competent administrator can pursue a successful adjudication.
However, we say its like painting your house. If you have the money, hire someone. If you don’t have the money then you can do it yourself.
Legal professionals like solicitors and barristers bring experience, professionalism to any legal dispute.
If you have the money, can afford the fees and the money in dispute is quite a lot (say over £50,000) then there is certainly no harm hiring legal representation.
It depends on how complex the case is.
If the dispute hinges on fact, e.g. the Client has not paid on time, then the lawyers will not provide much value.
But if the dispute will be decided on a complex legal technicality then you should use lawyers.
Other things to take into account when hiring a legal professional are:
Are they experienced in construction adjudication (not just adjudication generally)
There is no point hiring your local solicitor who helps you with buying a house running your adjudication. They will do an ok job but you are better off using someone very experienced with construction adjudication.
Of course, are lots of solicitors who specialise in construction adjudication. Just remember their fees are not recoverable even if you win so carefully weight these costs against your potential income should you win.
Adjudication typically takes 28 days from the date the dispute is referred to adjudication.
This is the amount of time the construction act states it must take.
But the adjudicator can request from both parties agreement to extend this time frame.
This would be if say a national holiday like Christmas fell during the Adjudication time frame.
An example of a smash and grab adjudication is when one party notices an opportunity to get overpaid on a legal technicality.
They refer a dispute to adjudication to enforce their right to this overpayment.
For example, a subcontractor knows that they have only completed works to a value of £100,000.
They put through an application of £500,000 and the Client does not issue a negative payment notice.
Technically the client should pay this amount or issue a negative payment notice.
When the Client does not pay this amount, the subcontractor brings the dispute to adjudication and the Client is forced to pay.
The Client can of course reduce the next payment down to reflect the overpayment but is at serious risk of that subcontractor just going out of business.
This can of course be prevented by the Client issuing negative payment notices (as they are contractually obliged to) in the first place.
There are lots of way an adjudication can go wrong for either party:
The referring party can refer a dispute to adjudication without making a decent attempt of solving the issue with the other party.
This is called allowing ‘crystallisation’ of the dispute. If the referring party cannot prove there is a dispute and that they have at least tried to resolve it (e.g. an email exchange) then the adjudication may be struck out.
The referral notice should only mention one clear concise issue. For example it should say ‘the issue in dispute is that the Responding Party________ has not paid the Referring party Invoice No 6 totalling £100,000 plus VAT’.
It is accepted law that the issue may be about several separate invoices e.g. the issue in dispute is that the Responding Party________ has not paid the Referring party Invoice No 6 totalling £100,000, Invoice Nr 7 totalling £50,000, Invoice Nr 8 totalling £55,000 plus VAT’.
But if you say that there are two issues 1) hat the Responding Party________ has not paid the Referring party Invoice No 6 totalling £100,000 plus VAT and 2) that the Client has rejected an extension of time request then the responding party can quite rightly state ‘ the adjudicator does not have jurisdiction on this matter as there are too many issues in the referral notice’. This basically means that the whole process has to be begin again.
A good case-study for this issue is Quadro Services Ltd v Creagh Concrete Products 2021.
Sometimes a referring party will bring a dispute to adjudication even though they know the other party is going or will go out of business.
So, when the responding party loses, the referring party has to pay the adjudicators costs and their own legal costs.
A good referral notice is not quite a work of art, but close!
Remember, the Adjudication knows nothing about your dispute. He or she will have seen 1) your nomination form plus 2) your notice of intention to refer a dispute to adjudication.
This referral document is the one opportunity for you to outline the dispute in your own words and prove that you are right.
You need to be clear and concise in what your write.
Outline the issue. Its important to note that there should only be one issue. (can be one issue made up of several sub-issues that are the same issue e.g. three separate invoices not paid).
State what remedy you want, boldly state exactly what is it that you want whether it is an extension of time or money or whatever.
The document should be thorough — pretend that you will never have an opportunity to state your case and provide more information. In reality, this is pretty much the truth. Once you have submitted a referral document the responding party will issue their response.
You can then respond to their response but technically you should not be introducing new arguments or documentation unless if refers exactly to something in the response.
Be fair to the adjudication — he or she has 28 days to review the information and make a decision.
They want to read your referral notice to get your side and then read the response to get the other side. Do the adjudicator a a favour and make the referral notice as complete as possible.
If you want to get paid fast to sort your cashflow use adjudication.
Now, if the dispute is over a factual issue e.g. has the client paid the subcontractor fairly then for sure, go to adjudication. Its simple to prove a linear yes or no and does not need a lawyer.
However, if the issues is about something more complex then you might want to avoid it – why burn through cash on legal fees or expert fees when you cannot get those fees back.
You have to balance how much you will spend versus how much you will earn should you win.
Other options include negotiation, mediation, conciliation, expert determination.
Simply put, an adjudicator can be accurately described as someone who receives formal training and qualification in the process of adjudication.
They offer their services as an adjudicator to formally decide issues between contractual parties.
A party to a contract who wishes to refer a dispute to adjudication must contact a professional body for referral.
If you are working in business this could be one of several organisations including the RICS, RIBA and The Chartered Institute of Arbitrators.
In construction, the RICS, RIBA and several other organisations can appoint Adjudicators on your behalf.
Most construction contracts will mention the RICS or RIBA as the referring body.
So what is the pathway to becoming a construction adjudicator?
If you are interested in becoming an adjudicator you can take one of many courses on adjudication. They usually take one calendar year part-time/night school and are aimed at working professionals.
Then, once qualified, you can apply to a relevant body for membership. For example, you can apply to the RICS or RIBA for membership of their approved list of adjudicators.
Please make sure you check with the body you want to work with that they approve the course you intend to take.
Its difficult to be accepted onto the list for the RICS and RIBA however. You must be able to prove that you are experienced in construction and real estate as well having your adjudication qualifications.
Just because you have your qualification it does not mean you will get work as an adjudicator. So, for example, if you successfully complete an adjudication course you may well get accepted onto a referring bodies list.
But it might have hundreds of other adjudicators on that list, you might get one or no jobs per year.
That unfortunately is life!
Like everything, you will have to build experience and reputation with the referring body you list with.
Do adjudicators make a lot of money ? Anyone can become an adjudicator. However, like we mention above, you can have all the qualifications but never get any work.
To become a construction adjudication you must get your qualifications and then essentially work your way from the bottom building your reputation and contacts.
You must have some form of quantity surveying, architectural, engineering or legal background.
If you have all the qualifications and experience and are registered on say the RICS list of adjudicators there is no guarantee you will get work.
No absolutely not. An adjudicator is not a lawyer. All you need to be an adjudicator is to complete a course in adjudication that is recognised by the body you wish to work with.
So, if you want to get onto RICS list of approved adjudicators you need to find out which courses the RICS recognise and enrol on one of those!
But remember, you need to be experienced in construction and real estate to get onto a list that will genuinely refer you work.
A judge is someone who is appointed to the courts system. They are usually some one who has a law degree, are qualified as a solicitor or barrister and then who have decades of experience working within the courts system.
An adjudicator is someone who completes an adjudication course, has lots of experience in one particular industry e.g. construction and finds work as an adjudicator helping ‘judge’ disputes within that industry.
A judge will just work one role within the courts system. An adjudicator can be a qualified MRICS quantity surveyor or a qualified RIBA Architect and be an adjudicator as a ‘side-gig’.
So they are totally two different things.
An adjudicator needs to be organised, patient and willing to listen.
1. they should be fully qualified. This means they should have completed their adjudicator course and have some experience in running an adjudication process. It also means they should be experienced within the industry that they will be running an adjudication through
2. impartial, unbiased – obviously, an adjudicator is like a judge, they need to view each case on its merits and leave any personal issues at the door e.g. racism, sexism, personal bad experiences
3. Organised and Great time management – an adjudication only lasts 28 days so the adjudicator must be able to organise and run this adjudication within this timeframe.
4. They need to be able to absorb and digest lots of information and then apply that to recent case history to make a decision.
5. They must have high integrity, with a strong moral and ethical code that they follow in their work and be open and honest at all times
The Royal Institution of Chartered Surveyors (RICS) is just one of the bodies that you can refer a dispute to adjudication to.
When a construction contract is created, there will be a section outlining which body will be contacted in the event of a dispute.
Other possible bodies include the Royal Institute of British Architect (RIBA).
So if the contract states the RIBA then you will have to contact the RIBA.
At Stravelles we are slightly biased because we are RICS Chartered quantity surveyors but the RIBA will provide just as good of a service.
Remember the RIBA and RICS are just referring bodies. You refer a dispute to them and for a fixed fee they will choose one of their panel of adjudicators to be the adjudicator.
An example of another referring body would be ‘The Chartered Institute of Arbitrators’ but as we work within Real Estate and Construction we have mentioned the RICS and the RIBA.
We feel comfortable recommending the RICS and the RIBA but would not recommend anyone else. (this does not mean other bodies are not good, we just have no experience dealing with them).
You can still veto that adjudicator if you know them or have dealt with them previously.
We would recommend visiting the following sources for more information about adjudication in construction:
• RICS website (nominating service)
• RIBA website (nominating service)
• The Chartered Institute of Arbitrators Website (nominating service)
• Lexis Nexus website (general legal source)
• Thomson Reuters website (general legal source)
• NEC contract
• NEC adjudicators
• Association of Independent Construction Adjudicators.
• PACE Guide to the Appointment of Consultants and Contractors P383.
• Technology and Construction Solicitors Association (TeSCA).
There are a large number of books available online that deal with construction adjudication.
There is no point listing them out here as most legal books that get published are quite decent.
We would recommend trying Amazon as the first port of call and filter for second hand books.
Legal books are high priced because they don’t sell in volume like say fiction, so buy second hand to save yourself some pennies !
If you want to learn about adjudication then Stravelles.com run an affordable online course on Adjudication specifically for construction.
Our course is suitable for anyone who wants to understand construction adjudication as a method of dispute resolution in the construction industry.
This would include:
1. Property developers
In most construction contracts both parties have a statutory right to refer a dispute to adjudication.
This right was introduced by the Housing Grants, Construction and Regeneration Act 1996.
It cannot be contracted out of e.g. the contract cannot say ‘both parties waive their right to adjudication’.
The exceptions include when the client is a homeowner. If there is not a clause in the contract mentioning adjudication the contractor does not have a right.