Construction reforms greeted with scepticism

THE construction industry – famed for its long and complicated disputes – has taken a dim view of the new legislation which has been designed to improve the situation, according to a survey carried out by Cameron Mckenna.

Just 16 per cent of the industry was pleased with the new Construction Act.

And the survey also found that many in the construction industry believe that the new legislation will increase rather than decrease the number of disputes.

The changes came into force on 1 May 1998 and are based partly on the recommendations of Sir Michael Latham's 1994 report into the problems afflicting the industry.

The two principal areas for change are adjudication of disputes and payments, with the new Act proposing a statutory adjudication scheme if the parties fail to agree their own.

The new Act also requires the parties to a construction contract to include stage payments and notices of payments to be made and sums to be withheld.

Cameron Mckenna's construction partner Ann Minogue said: “It is very disappointing that despite the enthusiastic response to the Latham Report, the industry now appears to be so pessimistic about the prospects of success.”

Other construction lawyers are also urging the industry to give the recent changes in the law a chance to work.

Rowe & Maw partner Michael Regan said: “The Act will hopefully have the effect of improving communications between the parties to a construction contract, be it a client and his architect or a main contractor and his sub-contractor, so that adjudication, and all that it entails, can be avoided.”

And Jenny Wigley, a construction law specialist at Stephenson Harwood, said that the success of the reforms depended on whether the industry gained confidence and used adjudication for the small, defined disputes for which it is appropriate.