Construction Adjudication: A Complete Guide

Before the Housing Grants, Construction and Regeneration Act 1996 came into force, a subcontractor who hadn’t been paid had two options: sue (taking years) or walk off site (taking work away, probably facing a damages claim). Neither was good. Cash flow in construction had become a crisis — main contractors routinely held back payment, disputed valuations without warning, and used the threat of insolvency to grind subcontractors into accepting pennies on the pound. The Latham Report of 1994, Constructing the Team, identified this explicitly. It recommended a statutory right to adjudication: fast, cheap, and binding.

The result was Part II of the Housing Grants, Construction and Regeneration Act 1996 — the HGCRA, usually called the Construction Act. It gave every party to a qualifying construction contract the right to refer any dispute to adjudication at any time. The adjudicator must decide within 28 days of referral. The decision is binding immediately. You comply with it, then argue about whether it was right.

This guide explains how the process works, what makes a referral succeed, what the courts will and won’t challenge, and what it actually costs.

Who Can Use Construction Adjudication — and Who Cannot

The right to adjudicate exists in any “construction contract” as defined by the Act. That covers contracts for construction operations — broadly: building, civil engineering, installation of mechanical and electrical services, demolition, scaffolding, painting, decorating. It also covers professional services agreements: architect, engineer, quantity surveyor, project manager — if those services relate to construction operations.

There are exceptions, and they matter. Section 106 of the Act excludes contracts where one of the parties is a residential occupier — meaning the owner of a dwelling who is having construction work done on their own home. If a homeowner commissions a builder to build an extension, the Act does not apply. The builder cannot compel adjudication. This is deliberate: the Act was designed to help businesses in the supply chain, not to drag homeowners into adjudication proceedings they don’t understand.

PFI contracts were historically problematic too, because the Crown was not originally bound by the Act. That position has changed over time for most public sector work, but if you’re working under a PFI or PPP agreement, check the specific contract and take advice. Certain operations related to mining, nuclear processing, and water-course diversion are also outside the Act’s scope.

The contract does not need to be in writing. The Construction Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009) applies to oral contracts too. So the fact that you agreed the job verbally over the phone doesn’t remove the right to adjudicate — though proving the terms of an oral contract in the referral is obviously harder.

Dispute Crystallisation: You Cannot Refer What Has Not Yet Been Refused

Adjudication requires an existing dispute. You cannot refer a claim that the other side hasn’t yet had a chance to consider and reject. This is the crystallisation requirement, and it catches out claimants who move too fast.

In Amec Civil Engineering Ltd v Secretary of State for Transport [2005] EWCA Civ 291, the Court of Appeal examined what crystallisation actually requires. The key proposition from that case: a dispute arises when a claim is made and is rejected, or when the circumstances are such that rejection must be implied. You do not need a formal written refusal. If you’ve sent a final account and the other side has simply sat on it for weeks without payment or engagement, a dispute has crystallised. But if you fire off a Notice of Adjudication the day after submitting a payment application, before the payment notice deadline has even passed, you’ll be met with a jurisdictional challenge and you’ll lose.

The practical rule: make your claim clearly in writing. Give the other side a reasonable opportunity to respond. If they don’t pay and don’t engage within a reasonable period (or if they formally reject your claim), the dispute has crystallised and you can move.

The Timetable: 28 Days from Referral

The timetable is one of adjudication’s defining features. It is extremely tight. Here is how it works in practice.

Notice of Adjudication

The process starts with a Notice of Adjudication — a document served on the responding party (and any other party to the contract who needs to know) setting out the nature and a brief description of the dispute, the parties involved, and the remedy sought. This document does not need to be long or detailed. Its purpose is to trigger the process and define the scope of the adjudication: the adjudicator’s jurisdiction is limited to the matters set out in the Notice, so you need to be broad enough to cover what you want decided, without being so vague that it’s unclear what you’re asking.

Appointing the Adjudicator: 7 Days

Within 7 days of service of the Notice of Adjudication, an adjudicator must be appointed. The parties can agree on someone directly — if you know a suitable adjudicator and both sides consent, this saves time. More commonly, one party applies to an Adjudicator Nominating Body (ANB), which nominates someone from its panel within a few days.

The choice of ANB matters more than people realise. The major ANBs are the RICS (Royal Institution of Chartered Surveyors), the CIOB (Chartered Institute of Building), CIArb (Chartered Institute of Arbitrators), TeCSA (the Technology and Construction Solicitors’ Association), and the ICE (Institution of Civil Engineers). RICS has by far the largest panel and is appropriate for most general building and civil engineering disputes. CIOB tends to work well for building disputes where a quantity surveyor background is most relevant. CIArb nominates for more legally complex matters and tends to have more legally-qualified adjudicators on its panel. TeCSA is the right choice when your dispute involves engineering systems, software, or highly technical construction — their panel is heavily weighted towards specialist solicitors and engineers with dual expertise.

Speed of appointment varies. RICS typically appoints within 3–4 days of receiving a complete application. If the other side is being obstructive about nomination, courts can intervene, but in practice the ANB process is smooth.

The Referral Notice: 7 Days from Appointment

Within 7 days of the adjudicator’s appointment, the referring party must serve the Referral Notice. This is the most important document in the adjudication. Get it wrong and you may not get another chance. The adjudicator can decide the case on the Referral Notice alone if the responding party fails to engage.

The Referral Notice is your full statement of case. It must include: a detailed factual narrative of the dispute; all documents you rely on (contract documents, correspondence, valuations, payment notices, programmes, drawings); supporting calculations showing how your loss or entitlement is calculated; expert evidence if the claim involves professional opinion (delay analysis, quantum calculations); any legal submissions on points of contract interpretation or law; and a precise statement of the remedies you are seeking — the exact sum, the declaration, or whatever you want the adjudicator to order.

You have 7 days to prepare this from the moment the adjudicator is appointed. Seven days. Including weekends. This is why you need to be substantially ready before you serve the Notice of Adjudication. If you serve the Notice without having the Referral Notice more or less drafted, you will run out of time.

The Response

The responding party typically has 7 days from receipt of the Referral Notice to serve a Response. Under most contractual adjudication provisions (and the Scheme for Construction Contracts where the contract has no adequate adjudication procedure), the responding party can ask for more time, and the adjudicator can grant it — but only with the consent of the referring party, or by extension of the overall 28-day period with the referring party’s consent. Typically adjudicators allow 7–14 days for a full response and sometimes a further period for the referring party to reply.

The Decision: 28 Days from Referral

The adjudicator must reach a decision within 28 days of the Referral Notice. That period can be extended by 14 days with the referring party’s consent, or by any period agreed by both parties. In practice, extensions to 42 days are common in complex disputes. The adjudicator is entitled to open up, revise, and review any certificate, payment, or decision made under the contract. Their decision is binding.

The Referral Notice in Practice: What Makes a Strong One

The Referral Notice is where most adjudications are won or lost. A few practical points from experienced adjudication practitioners:

Start with a clear executive summary. Adjudicators are busy professionals who receive hundreds of pages. A clear 2–3 page summary explaining the dispute, the key facts, and the sum claimed means the adjudicator goes into the bundle knowing what they’re looking for. Do not make them hunt for your case.

Structure the claim so that the quantum flows directly from the narrative. If you’re claiming for variations, each variation should have a narrative explanation (why it was instructed, when, how it was valued), the contractual basis for the entitlement, and the supporting calculation. Separate sections for each head of claim, each with supporting documents clearly cross-referenced. Tabs and indexes are not just helpful — in a heavily documented adjudication, they’re essential.

Deal with the anticipated defences in your Referral. You know what the other side will say. If they’ve rejected your claim on the basis that the works were defective, address that directly with your expert evidence. If they’re going to argue you’re out of time, deal with the limitation point. An adjudicator who reads your Referral and then reads the Response finding it raises entirely new points you haven’t considered will not feel confident awarding in your favour.

Expert evidence should be properly qualified and presented. For quantum claims, a surveyor’s report setting out the methodology and calculation is far more persuasive than a spreadsheet without explanation. For delay, a proper delay analysis — critical path analysis, cause and effect — is necessary in anything beyond a simple, single-event claim.

Key Cases You Need to Know

Adjudication law has been shaped by a steady stream of enforcement decisions in the Technology and Construction Court. The broad picture is one of strong judicial support for adjudication.

The foundational case is Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93 — the first major adjudication enforcement decision. Dyson J (as he then was) made it unambiguous: the courts will enforce adjudicators’ decisions. The policy behind the Act requires it. A party cannot refuse to comply with a decision simply because they think it’s wrong. The purpose of adjudication is precisely to provide binding interim decisions pending final resolution.

The most quoted passage in construction adjudication comes from Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358: “If the adjudicator has answered the right question in the wrong way, his decision will be binding. If he has answered the wrong question, his decision will be a nullity.” This distinction between jurisdiction (answering the wrong question) and error (answering the right question badly) is fundamental. Courts refuse to enforce decisions where the adjudicator has gone outside their jurisdiction — decided something they weren’t asked to decide. But an adjudicator who makes a mistake of fact or law within their jurisdiction? That decision stands. You comply with it and argue the merits in arbitration or litigation later.

The insolvency question was settled by the Supreme Court in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25. The question was whether a company in liquidation could bring adjudication proceedings. The Supreme Court said yes, it can. The adjudicator can decide the dispute. Whether the court will then enforce the decision is a separate question — courts may decline to enforce where there is a real risk the paying party could not recover money back if the decision was later reversed — but the adjudication itself can proceed. This matters to insolvency practitioners and their creditors.

On natural justice, Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] BLR 522 established that decisions can be challenged where the adjudicator has committed a serious procedural irregularity — but the bar is high. In that case, the adjudicator made a computational error that led to a perverse result, but the Court of Appeal still enforced the decision because the adjudicator had addressed the right question. Natural justice arguments typically fail. The courts are firmly of the view that if Parliament wanted adjudication to be a full, reviewable process, it would not have set a 28-day timetable.

Natural Justice Challenges: When They Work and When They Don’t

A party seeking to resist enforcement will almost always raise a natural justice argument. The argument takes one of two forms: either the adjudicator went outside their jurisdiction (decided something not referred), or there was a procedural irregularity that caused unfairness (the party wasn’t given an opportunity to address a key point the adjudicator decided on).

The courts apply these challenges with a very strict eye. The reason is obvious: if every losing party could get an enforcement resisted by crying “natural justice”, the entire adjudication regime would collapse. In practice, successful challenges are rare. The most common scenario where a challenge does succeed is where the adjudicator has decided a case on a basis that neither party argued and neither had a chance to address. If the adjudicator receives the referral, reads the response, and then invents a third theory that he uses to reach his conclusion — without putting that theory to the parties — there is a real natural justice point there. But if the responding party simply didn’t get around to engaging properly, or chose not to serve a detailed response, that is not a natural justice failure.

When you’re on the receiving end of an adjudication you think is being conducted unfairly, write to the adjudicator and object in real time. Don’t save the natural justice argument for enforcement — by then you’ve arguably waived the right to complain.

Costs: What Adjudication Actually Costs

Two categories of costs: the adjudicator’s fees, and your own legal costs.

Adjudicator fees are typically charged at an hourly rate (usually £200–£350 per hour for experienced adjudicators) and the total depends on complexity. A straightforward payment dispute resolved on documents might cost £5,000–£8,000 in adjudicator fees. A complex dispute with multiple issues, expert evidence, and a multi-day hearing could run to £20,000–£30,000 or more. The default position under the Scheme for Construction Contracts is that the adjudicator can decide how to apportion their fees. In practice, most adjudicators split their fees equally or apportion them to the losing party, but there is no rule equivalent to the general litigation principle that costs follow the event.

Your own legal costs — solicitors, counsel, expert witnesses — are each party’s own burden. There is no power for an adjudicator to award legal costs to the winning party (absent specific contractual provision, and even then it’s contested). If you spend £30,000 on solicitors and win a £50,000 adjudication, you walk away with £20,000 net. This is the single biggest practical argument for keeping adjudication lean: the costs cannot be recovered.

This also means that for smaller disputes — say, under £20,000 — adjudication with professional legal representation often doesn’t make financial sense. Experienced main contractors and subcontractors regularly handle adjudications themselves for straightforward payment disputes. For anything above £50,000, or any dispute with legal complexity, a specialist adjudication solicitor will almost always recoup their cost in a better outcome.

After the Decision: “Pay Now, Argue Later”

An adjudicator’s decision is immediately binding. The losing party must comply, even if they intend to challenge the merits in litigation or arbitration. This is the “pay now, argue later” principle and it is non-negotiable.

If the paying party refuses to comply, the other side can apply to the TCC for summary judgment to enforce the decision. The courts grant enforcement very quickly — typically within weeks. Grounds for resisting enforcement are extremely limited: jurisdiction, natural justice, and that’s essentially it. A defence that the decision was wrong on the merits will not succeed in enforcement proceedings.

Once the decision is complied with, the dispute is not over. Either party can take the same dispute to arbitration or litigation for a final determination. This is called a “true value” adjudication, and the party who received the interim payment under the first adjudication may find themselves paying it back after the final determination. Conversely, the party who lost the adjudication may start fresh litigation and recover the money they had to pay out. The adjudicator’s decision is a binding interim decision, not a final one.

In practice, many disputes settle after adjudication. The party who loses faces the commercial reality that they’ve had to pay (or comply), the dispute has been ventilated in front of an expert adjudicator, and the appetite for more litigation often diminishes. About 65–70% of adjudication decisions are complied with without enforcement proceedings, and a significant proportion of those that result in enforcement lead to settlement before further litigation.

When to Use a Specialist Adjudication Solicitor

Experienced construction contractors sometimes handle their own adjudications for straightforward payment disputes. If you’re a main contractor dealing with a subcontractor over an unpaid final account, you know the contract, you know the documents, and you know the facts. A well-organised Referral Notice prepared in-house, with a good QS, can work perfectly well for a simple valuation dispute.

The calculus changes where: there is a legal dispute about contract terms or statutory rights; the other side is using solicitors; the quantum involves complex expert analysis (delay, loss and expense); there are natural justice or jurisdictional arguments in play; or the sum justifies professional fees. In those cases, an adjudication solicitor — ideally one who does nothing but adjudication — is not a luxury. They know the procedural rules cold, they know the relevant cases, and they know what adjudicators respond to. Construction adjudication is a specialist discipline. The solicitors at the commercial general practice firm down the road may be excellent, but if they’ve never run an adjudication, you don’t want to discover that under a 28-day timetable.

A Note on Multiple Adjudications

There is no limit on the number of times you can adjudicate. Parties to a large project often run successive adjudications on different disputes as they arise. One dispute might concern whether a particular item was a variation. A second might concern the valuation of that variation. A third might concern loss and expense arising from delay. Each is a separate referral, each with its own 28-day timetable, each with its own enforceable decision.

This can be used strategically. If a paying party is using procedural delay to avoid a final account resolution, multiple targeted adjudications — each on a self-contained and well-documented dispute — can put significant financial pressure on them while keeping each referral simple and clean.

Adjudication Versus Litigation and Arbitration

Adjudication is not a final determination. It is an interim measure — the most powerful interim measure available in construction, but interim nonetheless. For final resolution, parties use arbitration (if the contract provides for it) or litigation in the TCC. Both are slower and more expensive, but both result in final, binding decisions that can be appealed.

Many parties never reach that stage. The interim nature of adjudication, combined with the cash flow relief it provides, means the dispute often resolves commercially after the decision. But if you have a genuine dispute about the final account on a major project, adjudication gives you leverage and cash flow — it doesn’t give you finality. Keep that in mind when planning your strategy.

Practical Checklist Before You Serve the Notice of Adjudication

Before you serve that Notice, run through these questions: Is the contract a qualifying construction contract? Has the dispute actually crystallised — have you made a clear claim and been refused, or has the deadline for payment passed? Do you know which ANB you’re going to apply to, and do you have your application ready? Is the Referral Notice substantially drafted? Do you have all your documents organised and indexed? Have you identified all the remedies you want and made sure the Notice is broad enough to cover them? If the answer to any of these is no, take a few more days to prepare before pulling the trigger. Once you serve the Notice, the clock starts.