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An Examination into the Current Status of Adjudication Practice on Public Sector Construction Contracts in South Africa
Abstract
Purpose
The concept of adjudication is no longer new in the South African construction space. All the modern forms of contract in use incorporate adjudication as a standard form of dispute resolution. However, a careful observation indicates that sufficient attention
has not been given to adopting the adjudication provisions by contracting parties on public sector projects. This paper discusses the existing adjudication provisions in the standard forms of contract, review current practices of contractual adjudication and thereafter evaluate the potential of adjudication as an alternative dispute resolution process in resolving disputes among public sector contracting parties.
Design/methodology
The paper analyses the current status of adjudication practice in South Africa by systematically reviewing selected articles and documents on both contractual and statutory adjudication with emphasis on the South African construction industry. The
methodology involves the examination and analysis of selected
documents and published literatures.
Findings
The analysis of the selected documents reveals that there are adequate provisions for adjudication in the current forms of contract endorsed for usage in the South African construction industry. However, the public sector contracting parties rarely
invoke adjudication provisions when disputes arise. This paper therefore provides a future direction by indicating the need to identify the constraints to effective adoption and invocation of adjudication provisions by public sector contracting parties.
Original/value of paper
The study adds to the body of knowledge by creating an insight into the potential of adjudication in resolving disputes among public sector contracting parties in South Africa. The study also alerts the industry to give adequate consideration to factors that
can promote more effective usage of adjudication provisions by public sector contracting parties.
Keywords:
Adjudication, disputes, public sector, South Africa
... The South African construction industry is not spared in this unhealthy act (CIDB annual report, 2012;Maritz, 2014). In South Africa, delayed payments have traditionally been particularly common especially in public sector projects (Mewomo and Maritz, 2015;CIDB, 2015;Maritz and Mewomo, 2016). Often, the issue of delayed payments has not only resulted in protracted disputes and adversarial relationship between contracting parties but has significantly threatened the social and economic objectives of the country, thus affecting the national economic growth (CIDB, 2015;Rahman and Ye, 2010). ...
Payment default in form of delayed payment or non-payment is a key barrier to the survival of both contractors and sub-contractors in the construction industry. Delayed
payments have not only negatively affected cash flow and progress of construction project but have, in some instances, resulted in protracted disputes thereby affecting
the growth and performance of the construction industry. At present, payment default
remains a chronic issue in the South African construction industry. This has become
a source of concern to both the government and the construction industry. Following
the successful adoption of the security of payment and statutory adjudication
legislation in the United Kingdom (UK) and some other jurisdictions across the globe,
the South African (SA) construction industry through the Construction Industry
Development Board (CIDB) has prepared a prompt payment and statutory
adjudication draft regulations. The regulation aims to address the peeved issues of
late payment and provides a quick and cheaper means of resolving construction
disputes through adjudication. At the moment, the draft regulation is awaiting
approval. In anticipation of converting the draft regulations into law, this study
investigates the industry stakeholders' first impressions of the proposed draft
regulations, assesses their level of awareness and knowledge of the regulations and
finally seeks their views on whether the regulations will be able to deliver its intended
outcomes to secure timely payments in the industry. The study employs a
quantitative research approach using a semi-structured questionnaire to gather
information from various industry stakeholders within the KwaZulu-Natal Province
of South Africa. The collected data was statistically analysed. The research revealed
that the level of awareness is still very low. Moreover, opinion spilt as to the level of
impressions that the respondents have regarding the regulations. Notwithstanding,
majority of the respondents believed that the regulation should be able to deliver its
intended outcome by providing remedy to the delayed payment problems in the
industry
This article explores the use and potential benefits of Quick Response (QR) Codes on construction materials in an attempt to ensure that the construction industry continues to be more technologically advanced. This qualitative research study consisted of interviews and case studies. A sample of 30 construction material suppliers in the Durban region were purposively selected and interviewed, using a semi-structured interview
schedule. Five case studies were randomly sampled from the Durban region where QR Codes were implemented for selected material samples. Knowledge, experience and the impact of QR Codes on construction materials were examined. The investigation chiefly found that most of the participants are in favour of the concept of using QR Codes, even though these are currently not widely used for construction materials in South Africa. Positive feedback was obtained from those participants who are using QR Codes on products. The findings provided the opportunity to improve the construction materials sector by introducing and implementing QR Codes as a technological advancement in the construction industry.
This article explores the use and potential benefits of Quick Response (QR) Codes on construction materials in an attempt to ensure that the construction industry continues to be more technologically advanced. This qualitative research study consisted of interviews and case studies. A sample of 30 construction material suppliers in the Durban region were purposively selected and interviewed, using a semi-structured interviewschedule. Five case studies were randomly sampled from the Durban region where QR Codes were implemented for selected material samples. Knowledge, experience and the impact of QR Codes on construction materials were examined. The investigation chiefly found that most of the participants are in favour of the concept of using QR Codes, even though these are currently not widely used for construction materials in South Africa. Positive feedback was obtained from those participants who are using QR Codes on products. The findings provided the opportunity to improve the construction materials sector by introducing and implementing QR Codes as a technological advancement in the construction industry.
Disputes have been identified as one of the epidemics of the construction industry. Many studies have found that risks, uncertainties, inadequate contract documentation, and behavioral factors are notable dispute sources. Many have described disputes with reference to the subject matter. This approach is pragmatic but has not yet lead to any form of conceptualization. The study contributes to the construction dispute research domain in (1) proposing an anatomy of construction disputes, (2) identifying the key factors contributing to the happening of construction disputes, and (3) providing an example on the use of the anatomy through a dispute occurrence likelihood evaluation exercise. The proposed anatomy distinguishes two types of construction dispute: contractual and speculative. Contract incompleteness is the root cause and underpins both types of construction disputes. In addition, task and people factors fuel contractual and speculative disputes, respectively. The proposed anatomy is arranged under a fault-tree framework whereby the events are linked by logic gates. In this format, construction participants could understand how these events contribute to the occurrence likelihood of disputes. As an illustration, a web-based assessment tool was developed to collect occurrence likelihood assessments of dispute artifacts. The fuzzy occurrence likelihood of construction disputes was then computed. The dispute occurrence likelihood evaluation exercise supports the observation that construction disputes are inevitable. DOI: 10.1061/(ASCE)CO.1943-7862.0000532. (C) 2013 American Society of Civil Engineers.
Hong Kong (under the "One Country Two Systems" Policy, Hong Kong, although an administrative region of the PRC operates a separate legal system, whose roots lie in the English common law system) has a justified reputation for being at the forefront of developments in techniques to avoid and resolve disputes in the construction industry. [This is illustrated by the adoption of the UNITRCAL Model Law by the Arbitration (Amendment) Ordinance 1996, specific powers given to Arbitral Tribunals under the Arbitration Ordinance (Cap. 341) including powers to consolidate, and the development of the dispute resolution adviser system. See the genesis, development and future use of the dispute resolution adviser system by Colin J Wall, Hong Kong Society of Construction Law dated November 17, 2004]. However, it has not, to date, seen the widespread adoption of adjudication as a means of resolving disputes. This article examines the history of the use of adjudication in Hong Kong, current trends, and offers some possible reasons for the limited adoption of adjudication.
A Dispute Review Board (DRB) is a panel of three respected, experienced industry professionals jointly selected by the owner and contractor of a project and established at the beginning of a construction project. It meets regularly at the job site to be briefed on the work, the schedule, and any potential issues in dispute. With the use of DRB growing, a pilot study was undertaken to determine the attitudes of industry members concerning its effectiveness in preventing and contemporaneously resolving disputes.
With the surge of increasingly complex and fast-track construction projects, disputes are inevitable. Skills in dispute resolution should be part of the tool kit of any practitioner in a managerial position. The perceived shortcomings of litigation and arbitration, with their concomitant rise in costs, delays, and adversarial relationships, have encouraged the rapid growth of alternative dispute-resolution processes, namely, conciliation, mediation, adjudication, and other hybrid processes that have been widely used and well received by the Hong Kong construction industry. For example, mediation is now an integral part of most conditions of contracts published by the government of the Hong Kong Special Administration Region. However, the last decade evidenced the incorporation of increasingly complex dispute-resolution clauses in construction contracts, typically involving several alternative dispute resolution (ADR) techniques and arbitration arranged in sequential tiers. These dispute-resolution procedures render the supposedly more economic and speedy ADR process ineffective. In this study, a hierarchical model is developed to organize attributes of ADR processes. This presentation fits with the use of analytical hierarchy process methodology by a panel of experts to prioritize ADR process attributes. The top-ranked attributes identified as critical include, among others, preservation of relationships, enforceability, neutrality, and consensus. The experts also suggested means to establish these attributes. By focusing on these critical attributes, the dispute-resolution process can be kept simple and effective.
This paper sets out an overview of the development of statutory adjudication, noting its origin in the UK and comparing adjudication in different jurisdictions, including Australia, New Zealand, Singapore, Hong Kong and South Africa. Through appraisal of the statistics of case workload referred to different dispute resolution methods, this paper considers the impact this procedure has had upon other dispute resolution processes. From the UK experience, the adoption of a statutory adjudication scheme by any jurisdiction is likely to result in significant reductions in most other forms of dispute resolution.
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