Sir Michael Latham has submitted his review into the Construction Act, giving recommendations for improving industry payment practices and adjudication.
The five-month review, which was handed over to the DTI last Friday (17 September), made recommendations on payment that included improving the effectiveness of the right of suspension and limiting the right of cross-contract set-off.
It also recommended the following changes to be made to adjudication:
- Preventing the practice of one party requiring that the referring party pay both parties’ legal costs irrespective of the outcome of the adjudication
- A reinforcement of the requirement for impartiality
- The prohibition of trustee stakeholder accounts
- Clarification of the requirement for a contract to be “in writing”.
Latham recommended that the government issue a consultation paper on the Construction Act in the autumn. He admitted that work on the review, undertaken by two working groups, had been hard going.
He said: “The review has found that there are some difficulties in the operation of the act, and agreements on a way forward have been hard to reach at times. But we are all agreed the industry is better off for the framework the legislation has provided.”
Nigel Griffiths, the construction minister, welcomed the review. He said: “The reports form an excellent basis on which the DTI can draw up consultation proposals on improving the act.”