REUTERS |

Say hello to 2016, wave goodbye to 2015

This is the seventh new year since I started writing this blog (and my seventh new year piece!). It feels like a lot has changed in those seven years, but has it really? The coalition government may have come and gone, and we may be used to George Osborne’s austerity plans (whether we like them or not), but how far has the construction industry moved from where it was in 2009?

I thought it would be interesting to see.

Back in 2009, we were still waiting for the amendments to the Construction Act 1996 (and we had to wait another two years before they came into force). At the time, I anticipated even more adjudications as a result of dropping the “in writing” rule, and an increase in the number of disputes about the terms of an oral contract. Again, we’ve had to wait for that to happen, but we are certainly starting to see the consequences of the Act’s changes.

Perhaps the biggest shift in practice has occurred as a result of the payment changes. It might have taken us a while to get to grips with what they actually mean (and even longer to get guidance from the TCC), but we have all got used to “smash and grab” adjudications over the last few years. Now the courts have confirmed that the lack of an employer’s payment or pay less notice means the employer really must pay up (and it can’t counter-adjudicate), the balance in the industry is shifting once again.

Back in 2009, I suggested we would see:

“a continued squeeze on cash flow, with the competition for new work becoming more intense.”

Cashflow is an ever-present problem in the construction industry, as is the need to win the next job. The public spending cuts have taken their toll, with even more belt-tightening, but work hasn’t stopped. Everywhere you look in the City, on every street corner, there seems to be a building site and a tower crane (or three). The Shard is open for business (even if £25.95 is a bit steep to pay to go on the viewing platform) and even the Cheesegrater got there in the end (despite its troubled path).

Also, Crossrail appears to be proceeding to plan (and the Mayor is talking about Crossrail 2) and work on HS2 looks set to start shortly. We are also seeing the continued regeneration of and investment in the areas around the new Crossrail stations and Kings Cross. The government is investing hundreds of millions in a “Northern Powerhouse“, and the associated infrastructure projects necessary to better connect the regions.

We’ve also seen the 2012 Olympics come and go, and a number of the Olympics’ legacy projects implemented. For example, the athletes’ village has been converted to residential units as part of the regeneration of the Stratford area. The Olympic park looks amazing now that it is fully open to the public, and the facilities left behind for everyone to use, like the aquatics centre, are fantastic. Of course, we can’t forget that West Ham have secured the lease on the Olympic stadium and (more importantly) have managed to stay in the Premiership for the last few years (another recurrent theme of mine over the last seven years!).

lnterestingly, back in 2009, one of my wish list items was:

“To get paid, either within a reasonable time of issuing a decision or (in some instances) at all.”

Thanks to a number of judgments, such as Linnett v Halliwells  (which really was ground-breaking), and PC Harrington v Systech, this is now a reality in the majority of adjudications.

Other things I was talking about in 2009, included:

  • Using CPR 8 to deal with jurisdictional challenges before or during an adjudication. I thought this might reduce the number of cases that end up before TCC judges for enforcement, although I’m not sure whether, in practice, it has done so.
  • An increase in the use of adjudication internationally. Both Ireland and Hong Kong have new Construction Acts and adjudication will soon be a reality for parties contracting in both countries.
  • A pupillage system for adjudicators (to address the fact that the process is now far more complex than was originally envisaged). I’ve subsequently suggested the need for an effective and independent system of monitoring the performance of adjudicators and nominating bodies (ANBs).
  • Fewer ANBs. Perhaps we should follow Ireland’s lead, where there is only one ANB.
  • The abolition of four-hole dividers. Really, do I need to say more in 2016??

Happy new year.

MCMS Ltd Matt Molloy

Leave a Reply

Your email address will not be published. Required fields are marked *