How to avoid adjudication

Niall Lawless

Chartered Arbitrator and Engineer, Adjudicator, Mediator

This week the CIC today published a new ‘Users’ Guide to Adjudication’, which replaces the Construction Umbrella Bodies Adjudication Task Group “Users’ Guide to Adjudication” produced in April 2003.

When I am asked how to avoid adjudication, I reply that competent contractors avoid adjudication by using the Contract properly, they keep good records, and use a formal method for evaluating commercial risk. In this blog, I discuss the importance of good records.

Competent contractors have the right combination of experience, knowledge and skills required to carry out the work safely. What is right will depend on the complexity and scale of the project. Well-organised, complete and co-ordinated production information is a prerequisite for the proper management of construction. To effectively control and monitor a project, capable contractors maintain good, accurate and complete records. They have a change control system, and maintain a fit-for-purpose project documentation and record keeping system. Record-keeping will enable the contractor to comply with the contractual reporting obligations, as well as to establish and/or defend claims.

Documentation can provide contemporaneous records of what actually happening on a project and the parties’ positions regarding past events. “A party to a dispute, particularly if there is “adjudication”, will learn three lessons (often too late): the importance of records, the importance of records and the importance of records”. It is for the Party making a claim to satisfy the adjudicator to the civil standard of proof, on the balance of probabilities, that it enjoys entitlement. The adjudicator will not know about the project, which must be reconstructed for him with all its complexities and nuances. If not backed by meticulously established records, lawyers are ingenious in finding grounds, often quite real, on which to cast doubt on evidence. (1)

In an adjudication, involving the design, procurement, supply, installation and commissioning of PV systems onto about 3,000 roofs there was a dispute about how many damaged tiles the contractor had to replace. The contractor’s works were accelerated; it employed additional resources and more sub-contractors. It extended weekday business hours and worked weekends. The contractor argued that neither it nor the employer could keep up with the administrative burden of authorising or recording tile replacements, and a requirement to follow strictly the contractual procedure would have rendered any programme impossible to maintain.

The contractor paid not enough attention to record keeping, and it only had evidence to support claims on about half the properties. The contractor said that the records it had were indicative of the tile replacement work for other properties where it was without records, and that it was reasonable to use the records it had to establish the total quantity of tile replacement.

It asked the adjudicator to calculate an average number of tiles/slates replaced per property based on the records it had, and then to pro-rata an average cost across the remaining properties to estimate its total entitlement. In the circumstances, without contemporary records I decided that this methodology was without merit, and the contractor’s claim in respect of replacing tiles was not successful.

Contemporary records are “original or primary documents, or copies thereof, produced or prepared at or about the time giving rise to a claim, whether by or for the contractor or the employer.” Witness statements can record the recollections of those who were involved with the works, but are not a substitute for contemporary records. (2)

Compensable delay and disruption can be the ‘Holy Grail’ in claims preparation, particularly in infrastructure projects, where the contractor will want to claim or recover for head office and site overheads. However, such claims can be complex to prove, and the degree of success of such claims is often related to the quality of records available.

The conundrum is this. With good record keeping there is less likely to be a dispute. With poor record keeping, there is more likely to be a dispute, and it is less likely that a claim for loss and expense for delay and disruption can be adequately substantiated.

Information and the Zone of Ambiguity

One area I am intrigued with exploring and learning more about in the interconnection between BIM and disputes arising and being resolved.

Traditional CAD uses software tools to generate digital 2D and/or 3D drawings. BIM changes the way construction and engineering professionals work. Typically, the BIM process uses three-dimensional modelling software to increase the productivity of consultants and contractors during design and construction. BIM is the process of generating and managing building data during design, construction and during the building’s or asset’s life cycle, in a single source model. (3) BIM facilitates design and management using intelligent objects. The object represents a single entity and describes both the structure and behaviour of that construction or engineering component.

One anecdote from my time working in Hong Kong is of a contractor taking 2D CAD drawings from consultants, and developing its own BIM model to identify clashes and the possibility for claims. What a creative use of evolving technology?

1. Engineering Law and the I.C.E. Contract Max Abrahamson Fourth Edition 1979 ISBN 0 419 16080 9 Routledge
2. Attorney General for the Falkland Islands v Gordon Forbes Construction (Falklands) Limited (2003) 6 BLR 280
3. CIC Building Information Modelling Standards Draft 6.2

Contributor: Niall is Chair of the CIC Adjudicator Nominating Body Management Board. He is a Chartered Arbitrator, Building Services Engineer, Mechanical Engineer, Information Systems Engineer and Chartered Builder. He provides arbitration, adjudication and mediation services in commercial technology, engineering and construction disputes. https://www.linkedin.com/in/adjudicator