RICS: Record year for adjudications as industry regains its taste for disputes

Figures from the RICS show a steep rise in the number of adjudications in 2013 and the likelihood of a record total for 2014 – as the industry once again turns to disputes and claims as a means of boosting margins. 

Companies seeking to have a dispute heard by an adjudicator can turn to the RICS Dispute Resolution Service, which will nominate an adjudicator from its expert panel.

Its figures show a 21% increase in the number of nominations in 2012 compared to 2011 – up to 780 compared to 641. In 2013, the trend continued upwards, although the percentage increase was only 4.6%. 

But the DRS has recorded 633 nominations in just the first six months of 2014, roughly equal to the 641 it dealt with during whole of recession-hit 2011. That suggests the full-year total is likely to far exceed the most popular year for adjudications in 2009, when just over a thousand nominations were made.

Although other professional bodies, including the CIOB and Institution of Civil Engineers, also offer adjudicator nomination services, the RICS is agreed to have the largest presence in the market.

An RICS spokeswoman said it was difficult to discern any particular trends about the type of disputes, projects and contracts driving the increase, but said there was evidence of more disputes in the regions.

“Typically, over 50% of applications are London-based, but in the past six months we’ve started to see increases outside London,” she said. “During the recession, there was also a more marked slowdown in regional areas.”

Adjudicator and CM columnist Peter Gracia FCIOB said that he was currently juggling four adjudications at the moment, possibly a symptom of construction businesses losing the inhibitions about entering disputes that prevailed during the recession. 

“I spoke to a QS recently who said it’s like being back in the 1970s, everyone is hoping to make up money on claims – we’re seeing the tail-end of partnering,” he said.

Gracia also felt that disputes arising from NEC3 contracts were making up a large proportion of recent adjudications. 

Meanwhile, adjudicator Richard Hildrick MRICS MCIOB FCIArb agrees that adjudicators are suddenly highly in demand. “At RJH we are currently experiencing our highest ever volumes of adjudications for clients, particularly in the engineering fields. The values of the sums in dispute are also currently very high, with several current matters of over £1m in dispute.” 

Hildrick pointed to “poor contract drafting” as the underlying cause of most disputes. 

Andy Monteith, head of construction at accountant and business adviser Baker Tilly, told CM that he had seen a sea change in attitudes from clients. “Clients are becoming much more robust in rebutting claims from contractors. The climate has changed – claims and variations are taking longer to settle,” he said. “We’ve got a team in-house that looks entirely at construction risk management, so we know how these things manifest themselves.”