Adjudication for UK SMEs: How To Avoid Common Mistakes
Construction disputes drain resources and halt progress. Payment disagreements, contract interpretation issues, and quality concerns need swift resolution to keep businesses operational. The UK’s statutory adjudication system delivers decisions within 28 days, but technical errors during the process can leave you unable to enforce what you’ve won.
For construction SMEs managing tight budgets and deadlines, knowing where businesses typically go wrong makes the difference between protecting your interests and suffering costly setbacks.
If you are facing a construction dispute, our specialist team can provide the strategic legal support you need to navigate adjudication successfully.
The SME Adjudication Process: Why Mistakes Matter
Construction contracts carry a statutory right to adjudication for all parties under the Housing Grants, Construction and Regeneration Act 1996. An independent adjudicator examines the evidence and issues a binding decision quickly, trading thoroughness for speed.
Construction SMEs face amplified risks in this process. Limited resources mean less margin for error. Cash flow pressures make delays particularly damaging. The compressed timeline leaves little room to correct mistakes once proceedings begin. Getting the technical requirements wrong can void your entire case, even when the facts support your position.
Common Adjudication Errors That Derail Construction Disputes
Starting Proceedings Without Checking Your Contract
Businesses frequently launch adjudication based on assumptions rather than contractual facts. Your contract may specify particular procedures, deadlines, or methods for selecting an adjudicator that differ from standard approaches.
Before taking action, verify your contract grants adjudication rights, identify required procedures and notices, and confirm applicable timescales. Missing these details creates vulnerabilities that can unravel your case. Understanding your contractual framework first gives you solid ground to build on.
Waiting Too Long to Act
Many disputes begin small but compound while businesses hope they will resolve themselves. A minor disagreement becomes a substantial claim with accumulated delays. Worse, you may miss contractual deadlines for formal notices regarding time extensions or additional costs. Miss these windows and you lose rights, regardless of merit.
Act when issues first emerge. Document everything immediately and send required notices within contractual deadlines. Taking measured action early prevents small problems from becoming major disputes.
Submitting Poorly Organised Evidence
You have seven days after serving your Notice of Adjudication to appoint an adjudicator and submit your full Referral Notice with supporting evidence. Some businesses respond by submitting hundreds of pages with no clear organisation. Others fail to specify exactly what they want the adjudicator to decide.
The adjudicator works only with what you provide and will not search through disorganised files. Give specific questions requiring answers. Present evidence logically with simple cross-references. Focus on relevant materials presented clearly rather than submitting excessive documentation.
Making Decisions Based on Frustration
Construction projects involve ongoing relationships. When disputes arise, they often feel personal. Years of accumulated frustrations can surface. Letting anger drive your approach rarely serves your business well. You might reject reasonable settlements or escalate disputes when commercial compromise would better protect your interests.
Focus on business outcomes rather than proving a point, keeping your commercial position as the priority.
Failing to Establish a Genuine Dispute
A valid dispute requires more than just raising a claim. The other party must know about your position and must have either disputed it or failed to respond to it.
If starting proceedings, ensure you have given clear notice of your claim and a reasonable opportunity to address it. If responding, act immediately upon receiving notices. You typically have seven to fourteen days to submit your complete response. Both parties must raise procedural challenges immediately. Courts take a dim view of parties who wait until they lose before raising technical objections.
Not Planning for Availability Requirements
Adjudication runs on a strict 28-day clock, including weekends and non-bank holidays. Adjudicators expect prompt responses to requests, often within 24 to 48 hours. Holidays, other work commitments, or unavailable key team members can seriously weaken your position.
Ensure you and all essential personnel clear your schedules and remain fully available before starting proceedings.
Assuming Litigation is Your Only Alternative
Many construction SMEs view disputes as having only two outcomes, either reaching an agreement or going to court, but this overlooks intermediate options that often work better.
Court proceedings involve substantial costs, extended timescales, and an adversarial process that damages relationships.
Before choosing this route, consider direct negotiation and mediation. These approaches cost less, deliver quicker outcomes, and frequently preserve working relationships you need for future projects. Choosing the right dispute resolution method requires careful assessment of what will best protect your business interests.
Cost Implications for Construction SMEs
Technical mistakes waste money regardless of the outcome. Winning parties cannot recover their legal costs from the losing side. Both parties pay their own professional fees and contribute towards the adjudicator’s costs. An unenforceable decision due to procedural errors means paying for proceedings that deliver no benefit.
These cost concerns affect the entire sector. With nearly 300,000 construction businesses operating across the UK, many SMEs have reported that adjudication has become prohibitively expensive for smaller disputes. Recognising this problem, the Construction Industry Council created the Low Value Disputes Model Adjudication Procedure specifically for claims of £50,000 or less, capping adjudicator fees at £6,000 to make the process more accessible.
Practical Steps for Effective Dispute Resolution
Start with prevention. Strong contracts that clearly define scope, variations, and payment provide your first line of defence. Include stepped dispute resolution clauses and ensure payment terms comply with Construction Act requirements.
When disputes develop, follow a structured approach:
Take immediate action:
- Begin with direct commercial discussions using “without prejudice” correspondence to explore settlement
- Start collecting and organising evidence immediately, building a clear chronology
- Send required contractual notices within specified deadlines
- Evaluate whether mediation might resolve the matter while preserving the relationship
If formal adjudication becomes necessary:
- Gather all evidence and prepare your full case before issuing notices
- Present only relevant materials in a clear, organised format
- Keep yourself and key personnel available and responsive throughout
- Obtain legal advice before starting proceedings, not after problems emerge
Protecting Your Construction Business Through Proper Procedure
Adjudication works effectively for construction SMEs when handled with proper attention to process and timing. The speed that makes it valuable also makes it unforgiving of errors. Understanding these common pitfalls helps you avoid them.
Success requires thorough preparation before you start, precise adherence to procedural requirements throughout, and professional guidance from those who understand the technical demands.
If you are facing a construction dispute, our experienced solicitors and barristers provide clear, strategic legal support focused on achieving effective resolutions within appropriate timescales and budgets.