Construction disputes are one of the most common sources of commercial litigation in the UK. Research consistently shows that the majority of construction contracts result in some form of commercial dispute, with a significant proportion ending up in adjudication, arbitration, or litigation. Understanding how disputes arise and how they can be resolved saves significant time and money.
Why Construction Disputes Happen
Construction disputes typically arise from one or more of the following causes:
Scope ambiguity. Contracts that do not clearly define the scope of works create fertile ground for disputes. Contractors claim extras; employers resist. Poorly drafted employer's requirements or specification documents are a common cause.
Variations and change orders. Changes to the agreed scope during construction are a frequent source of dispute. Without proper change management processes, the extent and value of variations becomes contested.
Payment disputes. The most common category of construction dispute. These arise from disagreement about the value of interim applications, deductions from payments, or refusal to pay.
Programme and delay. When construction is delayed, the parties dispute who caused the delay and what the financial consequences are. Extension of time claims and loss and expense claims follow.
Defects. At the end of a project, disputes often arise about what constitutes a defect, who is responsible for rectification, and what cost deductions are justified.
Insolvency. When a contractor or subcontractor becomes insolvent, disputes arise over retention, materials on site, and the cost of completion by others.
The UK Construction Act
The Housing Grants, Construction and Regeneration Act 1996 (and its 2011 amendments) — commonly called "the Construction Act" — is the most important piece of legislation governing payment in UK construction contracts.
Key provisions include:
Right to payment notices: Every construction contract must include provisions for payment notices. The paying party must issue a payment notice or pay-less notice, failing which the sum applied for becomes due.
Prompt payment: The final date for payment (FDP) is typically 14–30 days after the due date for payment, depending on the contract.
Prohibition of pay-when-paid: Except in insolvency, main contractors cannot make subcontractor payment conditional on receipt of payment from the employer.
Right to adjudication: Any party to a construction contract has the right to refer a dispute to adjudication at any time.
Adjudication: The UK's Preferred Dispute Resolution Route
Adjudication is by far the most commonly used dispute resolution procedure in UK construction. It is quick (typically 28 days from referral to decision), relatively cost-effective, and available as a right under the Construction Act.
The adjudicator's decision is temporarily binding — meaning the losing party must comply with it immediately, even if they intend to challenge it in court or arbitration. This gives adjudication real commercial teeth.
Adam Whitehouse MCIArb at Volarex provides quantum support for construction adjudications. We prepare and review quantum submissions, analyse loss and expense claims, and provide expert input on the valuation of disputed works.
Arbitration
Arbitration is a private, formal dispute resolution process where the parties appoint an arbitrator (or panel) to make a binding decision. It is used less frequently in construction than adjudication but is appropriate for:
Adam Whitehouse MCIArb is trained in arbitration and can advise on whether arbitration is appropriate for your dispute.
Litigation
Construction disputes can also be resolved through the courts — typically the Technology and Construction Court (TCC), which specialises in construction matters. Litigation is generally the last resort, being slower and more expensive than adjudication or arbitration.
Mediation
Mediation is a voluntary, non-binding process where a neutral mediator helps the parties reach a negotiated settlement. It can be used at any stage of a dispute and has a high success rate when both parties engage genuinely. Many construction contracts now require parties to attempt mediation before proceeding to adjudication or arbitration.
Preventing Disputes
The best approach to construction disputes is to prevent them. Key prevention strategies include:
Volarex provides contract review services, payment advice, and proactive commercial management to help clients avoid disputes before they arise. If a dispute does arise, we provide the expert quantum analysis needed to resolve it.