Latest Construction Adjudication Stats Show Better Contract Management is Needed

For the past few years, King’s College London, in collaboration with The Adjudication Society, has published annual reports on adjudications within the industry, diving deeper into the latest statistics and trends. The third and final report of this project examining construction adjudication from the industry’s stakeholders has now been published – allowing us to see a clearer picture of the disputes that have taken place in relation to construction projects.

The number of adjudication referrals was the highest recorded thus far – with 2,264 reported – showing a 9% increase on the year prior.

42% of referral claim values were between £125k and £500k, with a further 28% between £500k and £1m. The data shows that referral claim values were at either end of the scale, peaking at those two value bands. However, there was still a significant percentage of higher value referral claims, including 16% of those cited in the report as being between £2m and £5m. With contracts of all scales and sizes continuing to be referred to adjudication – and the top billed reason for dispute – it’s clear that there are still gaps to plug in contract management processes across the sector.

What were the most notable reasons for disputes?

Moving into the top billing for reasons was ‘inadequate contract management’ – with 50% of respondents flagging this as a notable cause. Most notably, a large portion of the notable reasons recorded in the report are areas that effective contract management should alleviate and address. These are those areas of unnecessary risk that our software solution is designed to tackle.

For example, 17% of respondents cited ‘poor communication’ as a notable cause of dispute. Our contract management tool is specifically developed to centralise all documentation and communication, offering version control and making sure that all project parties benefit from transparency and compliancy.

19% cited ‘inadequate contract documentation’ as a concern leading to dispute – which demonstrates the importance of getting the contract set up correctly. This sets not only the foundation of the project progress to come, but also the clarity required throughout the duration of the project for effective management – which is why we have our free NEC4 ECC Checklist, designed to take you through compliant contract set up, step-by-step.

The setting up of a contract is a key step in avoiding disputes escalating, making sure that everything is covered when laying out terms and specific amendments to suit individual schemes. However, without that clarity from the outset, it can create problems down the line – and with 17% of people citing unclear risk allocation, and 8% highlighting unfair risk allocation, it’s easy to see these examples coming through in the data.

The second most commonly cited cause of disputes was a ‘lack of competence from project participants’, which was noted by 42% of respondents – down on 48% in the previous year.

This gives hope that the reduction in this statistic reflects better understanding of how to effectively manage contracts across the sector – or better adoption of tools like Sypro that help remove those unnecessary risks and guide people through effective and compliant contract management.

Plus – our Sypro Knowledge Hub continues to provide free resources to build best practice in contract management processes, no matter what contract type you use.

What’s the key takeaway?

The report has provided useful insights into trends across the sector and – by extension – where the greatest levels of risk may continue to lie. The data released in the past three years has showcased where trends have appeared and where improvements can be made across practices – and most importantly where improving processes or people’s understanding may significantly reduce such risk.

The authors also detail that the overall picture that emerged from the latest annual data built on the previous two years – that “adjudication is and continues to be in good shape, within a clear and robust legal framework, strongly supported by the courts.”

Escalation of any dispute is stressful for those involved, so it is of course positive to see this summary – and important to know that processes are holding up for the cases that do go to adjudication. However, our goal at Sypro is to protect projects and teams through effective contract management – minimising the escalation of unnecessary risks.

How can Sypro help?

Our contract management software has been built specifically to address the main areas of contention listed in the KCL report as reasons why disputes have escalated in the past year.

Its centralised system brings everything together with complete transparency, guidance, communication, and audit trails to ensure that the contract set up is adhered to, and compliance is kept throughout the process.

Automations and reminders keep activity on track, with clear roles and responsibilities across various project stakeholders. Meanwhile, all communication is recorded in real-time, and all parties can access the latest information at any point, creating accountability and a clear project history that removes errors or discrepancies.

The system comes with protective elements baked into its core, adding an extra layer of security for your projects, teams – and by extension your business too.

See how Sypro protects against disputes by taking an online tour.