A 2022 report into Construction Adjudication in the UK (Tracing trends and guiding reform by Kings College London) has strongly suggested that the project team are the biggest cause of construction disputes that end in adjudication.
The four most common causes cited by the 249 respondents were:
- inadequate contract administration (49%)
- changes by the client (46%)
- exaggerated claims (43%)
- lack of competence of project participants (41%).
Contract writers are not ‘off the hook’. As well as the adversarial culture of the sector (28%) which can be stoked by adversarial contracts or one-sided processes, further causes of disputes cited were:
- unclear risk allocation (24%)
- inadequate contract documentation (23%)
- unfair risk allocation (10%).
Except for the competence of project participants, the way we write our contracts can significantly change all of these outcomes. Contract administration, change mechanisms and claims processes are all determined by the terms of the contract.
Risk allocation is partly set by the risk response within the contract documentation, whether it is fair (as promoted by the Construction Playbook) or not.
We know that the length, complexity, and jargon of our contracts makes them harder to understand – which some respondents listed among their gripes.
What should you do?
As the Arcadis Global Disputes Reports have consistently shown, inadequate contract administration is a major cause of disputes.
We need experienced independent contract administrators to avoid disputes.
We should simplify the processes they need to implement, clarify the basis on which they make decisions, and reinforce their independence from the parties. (Perhaps we also need to consider removing their role as client’s agent so they can perform effectively and consistently?)
Lastly, we need to train them to properly understand and implement their duties and powers.
