How common are the problems that the reform of the Construction Act addresses? Some are common, others not so.
But as act-avoidance methods will survive, the real issue is: will we see an upsurge in their use? Quite possibly. Act avoiders may, for example, be spurred on by the failure to ban interim payment decisions that are made “final and binding”, so as to prevent adjudicators from revising them.
How much will addressing those problems cost/save the industry? Admirably, the government has tried to do a cost–benefit impact analysis, but the figures do not stack up. For instance, we are told that improving the adjudication regime should save £1m a year. Over half of that comes from banning clauses that require a referring party to pay both sides’ costs, but all this will mean is that costs are reallocated, not saved.
But perhaps the most important question about the bill is whether, in these difficult times, the cost to the industry of changing standard forms and established payment practices (as well as the extra training and advice that will be needed) is worth preventing some of the malpractices of the few.
It is heartening that the government is prepared to spare parliamentary time for the industry, but it remains to be seen whether there is a net financial benefit or cost to the industry of this bill.
Rupert Choat is a partner and solicitor advocate at CMS Cameron McKenna