Friday, 22 April 2016. The Society are pleased to announce that the Construction Contracts Act 2013 has been signed into law by Minister Ged Nash. The provisions of the Act will apply to all construction contracts entered into after 25 July 2016.
This Act, which introduces a statutory payment process, will aid cash flow in the construction industry and ensure parties have effective remedies where disputes arise with the introduction of the new statutory dispute resolution process known as adjudication.
Already widely used in the UK and other jurisdictions, adjudication offers a quick and efficient alternative to the current forms of dispute resolution and litigation, where the processes were often abused by the parties to delay paying otherwise legitimate claims.
Adjudication is fundamentally different, providing a temporarily binding decision within a 28-day to 42 day period from the issue of the referral to the adjudicator. This requires a party to pay now and argue later and this helps balance the financial inequality that often exists between the parties.
For example, before the introduction of the Act, a small main contractor with a favourable conciliator’s recommendation for disputed payment of say €100,000 by the client had no way of enforcing the finding. The process could have taken 5 months and cost the contractor approximately €15,000. The only option available was to commence arbitration at an additional cost of €25,000 and at least another 6 months for an award. Small contractors cannot this delay or expense and often go out of business. With statutory adjudication it is expected that this situation should not arise and successful parties will be able to enforce decisions summarily in a prompt manner.
The assessments of construction contract payments is a fundamental element of a Chartered Quantity Surveyor’s job. Therefore where there is a dispute relating to payment, a Chartered Quantity Surveyors will generally be best suited to act in the role as the adjudicator or party advisor. In response to industry demand, we are launching a Fixed Fee Adjudication Scheme for Low Value Claims. The scheme will be cover disputes up to a value of €75,000 with a fixed fee set at the outset, starting at €3,000 plus V.A.T., depending on the value and complexity of the claim. This fixed price scheme will provide parties with cost certainty at very affordable rates so we expect significant take-up of this service to parties unfortunate enough to end up in dispute.
We are currently in the process of forming an expert panel from which potential parties to a dispute can choose an adjudicator. The parties can either agree and chose from the panel directly or we can nominate on their behalf. The panel of adjudicators will be available on the SCSI’s website shortly. We will also be hosting CPD events during the summer to inform members of the operation of the new Act and scheme