NSW Stats Prove Adjudication Works

Saturday, 23 February 2008

The Department of Commerce recently released a second set of statistics for adjudications under the Building & Construction Industry Security of Payment Act 1999 (the Act).

Viewed as a whole, the statistics give some measure of the economic significance of the Act to the construction industry. They reveal the total amount claimed in adjudication applications since march 2003 is approximately $1.8 billion, and that of this $1.8 billion, Adjudicators awarded claimants approximately $1.5 billion.

'Second round' adjudications comprise 50% of all adjudications. The percentage of adjudication applications where the respondent has not provided a payment schedule (approximately two in every five), is surprising given the publicity given to the risks of failing to provide a payment schedule.

Just over $450 million was claimed and just over $400 million awarded in determinations over first half of 2006. Overall, approximately 78% of what was claimed was awarded. It is little wonder adjudication is so popular with claimants.

2006 first half showed a decline in the number of claims, but a 25% increase in the value of claims.

More than half of all adjudications result in an award between 80 – 100% of the amount claimed. With such consistent positive outcomes, there is little wonder security of payment adjudications are so popular with claimants for the resolution of payment claim disputes.

The benefits to a respondent in providing a payment schedule are clear. On average about 67% of all claims where no payment schedule was provided resulted in a 100% determination. In comparison, only 41% of all claims (on average) where a payment schedule was provided resulted in a 100% determination.

While adjudicator’s bills have increased, the statistics also confirm the fact that for almost every construction related payment claim dispute, adjudicator's costs are a mere fraction of the costs involved in more formal procedures such as arbitration or expert determination. Although there is no empirical evidence, the legal and expert evidence costs are also significantly reduced, as is the delay. Again, it is little wonder that adjudication is so popular with claimants.

The Act remains very ‘claimant friendly’ and continues to offer a fast and comparatively cheap method for resolving payment claim disputes.

This report was compiled by Gadens Lawyers.  If you would like a full copy of the report, email info@AIQSANA.com.au