Jacob Austin 00:00:00 Hi there everyone! Jacob Austin here and welcome to episode 150 of The Subcontractors Blueprint, the show where subcontractors learn how to ensure profitability, improve cash flow and grow their business. Today's episode is all about the mechanics of adjudication, and it's continuing our mini series on construction disputes. So today we'll be taking a look at how you actually run an adjudication from the notice all the way through to the decision and how to try and drive that so that it hopefully works for you. So let's dig in. Here is something that main contractors would rather you didn't work out in adjudication. Whoever moves first has won half the fight before the other side even knows there's a fight on. That is because you get weeks to build your case and then they get days to answer it. It's the biggest single advantage you'll ever be handed in a dispute, and some subcontractors will throw that in the bin just because they fire the notice too soon. So are two episodes into our miniseries now. You know your options and you know the gate that you've got to walk through first before you've got a genuine adjudicator dispute.
Jacob Austin 00:01:38 And now we get into the machine itself, start to finish. And I'm calling it a machine on purpose because that's essentially what it is. You feed it in a dispute at one end and 28 days later, a binding decision comes out of the other one that you can take to court and enforce. Now, here's the commercial truth that matters. The money doesn't move because you're owed it. You were probably owed it before, but it moves because you drive that process properly. Two firms can walk in with an almost identical claim and get different results. And the difference isn't necessarily the merits. It's that one of them knows how to work the machine, and the other one is just pulling levers and hoping that the right thing happens. So today isn't going to be a dry walk through the paperwork. It's about how you get that machine working for you instead of against you. And it starts with one advantage that you, as the referring party, should really take advantage of. And here's that advantage you choose when the fight starts.
Jacob Austin 00:02:46 You can spend weeks months quietly building your case in the background, getting your record straight, lining the numbers up, documenting where everything is, printing it, filing it, referencing it, drafting every bit of narrative. And then when you're ready and only once you're ready, you fire the notice. The other side has got no luxury in that respect. They're reacting to your notice that's just landed on their desk. The clock starts immediately, and they're on the back foot from the first second. Because within a week of your notice, the whole thing is live and it's moving fast. So the single most important thing I can tell you about adjudication mechanics is this do not serve your notice until your entire case is built and it's ready to go. Not half ready, ready. And you'll see exactly why in a second. The machine starts with a notice of adjudication, and that document does one job that you have to understand. It sets the scope. Whatever dispute you describe in that notice and whatever you ask the adjudicator to give you, that is the box the adjudicator has got to work to deliver.
Jacob Austin 00:04:03 They don't go outside it. They can't hand you something that you haven't asked for. So two things have to be spot on the description of the dispute and the redress. The redress is the thing you actually want. It's this sum of money value, this account at this figure, whatever it is, it has to be in the notice. And it has to be right because you're stuck with it. That means if you win every argument throughout the adjudication, if you've put the wrong number in the redress section, you're going to get the wrong number as an outcome or because you asked for the wrong thing on day one. Next, you need an adjudicator. And there's a choice here that a lot of people don't even realise is a choice. Your contract might name an adjudicator or more likely, name nominating body. So check that first because it may already be decided for you. But if the choice is yours or you're relying on the scheme in the background, you apply to what's called an adjudicator nominating body, and then they appoint one two that you'll see quite often are the risks and the CSA.
Jacob Austin 00:05:18 But there are others. And here's the thing different bodies will draw from different panels of adjudicators. If your dispute is about valuation, about the numbers, about what the account is really worth, you're going to want an adjudicator who thinks like a quantity surveyor, not one that thinks like a barrister. But if it's a knotty point of contract interpretation, maybe you do want that legal brain and you get some influence over that through which body you choose. Don't just take whoever lands in your inbox. Think about who you want holding the pen when it comes to your money. The adjudicator has to be in place within seven days of your notice so that it's all moves quickly. Then comes the referral and this is the big one. The referral is your full case. Your particulars, everything. The narrative, the contract, the numbers, the evidence, the witness material, all of it laid out to win easily references by the adjudicator. And you've got seven days from the notice to serve it. Seven days. That is a tight deadline.
Jacob Austin 00:06:29 And now you've got to see why I told you not to serve the notice until you're ready. Because if you fire that notice in a fit of temper and start building the referral, you've got one week to assemble your entire case. That is how these documents go out the door, thin and rushed, and perhaps lacking some of the evidence that you would have thought about if you'd have had more time to do it. But if you'd done it the smart way, the referral is already sitting there, finished the day the notice goes out, you serve, and days later the finished article goes in calm, complete. Hard to beat. You need to keep the referral inside the scope of the notice. It can't introduce or change the dispute for a bigger or a different dispute than the one the notice describes. The notice sets the sandbox and you've then got to work within it, as has the adjudicator. Serving that referral starts the real clock, because the adjudicator now has 28 days to reach a decision. Inside those 28 days.
Jacob Austin 00:07:35 The other side gets to put in their response their defence. The adjudicator sets that timetable and it's tight. It's usually a week at the most too. You'll often get a chance to reply and the adjudicator might ask questions, call for documents and sometimes hold a meeting. Although normally there's no full hearing like you get in court, that 28 days can be stretched but carefully you as the referring party can agree to give the adjudicator another 14 days. Beyond that, it takes both sides agreeing. So at the margins, the timetable is largely in your gift, which is one more reason the referring party holds more of the cards. At the end of it, the decision is binding straight away. It's pay now, argue later. As we've covered many times the decisions enforceable in court if they don't comply with it. One thing to keep in your head through all of this is the cost. In adjudication. You carry your own legal and expert costs. Win or lose, the adjudicators own fee usually falls on the loser, but your representation has to be funded by you either way.
Jacob Austin 00:08:52 So the machine is fast, it's powerful, but it isn't free, and that can shape whether it's worth firing it up or not. For a small sum, even if it's a principal matter, the costs can swallow the win. Now, before you get fully carried away with that first mover advantage, let me put a ceiling on it because there is one. You get to pick your moment. Yes, but you can't use the speed to deny the other side a fair chance to answer if the dispute is genuinely huge and complex, and you fire in a monster referral that nobody could reasonably respond to in time, the other side can turn around and argue that there's a breach of natural justice, that the process is so rushed it simply isn't fair. And then if they're right, one of two things happens. The adjudicator decides the job can't be done fairly in the timescale and steps away, or you get your decision and then it falls over it. Enforcement. Because the court doesn't put its weight behind a process that wasn't fair.
Jacob Austin 00:09:59 So picking your timing is fine. That's part of the game. But ambushing somebody with a case that's so big that it can't be answered. That is a different thing, and that can cost you. So be careful. Prepare fully. Serve when you're ready, but keep the fight proportionate to the time scale. So where does this go wrong? The first and the worst thing that can happen is serving the notice before your case is built. I've mentioned this already, but it's the cardinal error so I have to repeat it. You give away your biggest single advantage and hand yourself a seven day scramble to find documents, put together narratives, print and reference records and it will turn into a mess. The second is a sloppy process, a dispute that you've described too vaguely or redress that's woolly or just plain wrong. If you built the initial sandbox badly, then you're playing inside it, perhaps with no hope of getting the right answer. The third thing is not thinking about who decides. Taking the default adjudicator without a second thought about whether they're a right person for you, for your kind of dispute, and with knowledge and a background that will help to arrive at the right answer.
Jacob Austin 00:11:20 The fourth thing that goes wrong is trying to cram everything in. Remember from last week one dispute per adjudication. Unless both sides agree, a Subi who is owed on five different fronts might sometimes try to bundle the lot into one notice and hand the other side a jurisdictional challenge for free just because they've overcooked it. If you've got genuinely separate disputes, that might mean separate adjudications or a conversation about agreeing to combine them upfront. The fifth big issue is going quiet. Once it's ruling, the adjudicator sets directions and deadlines. If you miss them, if you ignore them, if you turn up late with your reply, then you're doing the other side's job for them. You're letting yourself down. Once the machine is running, you need to feed it. You need to feed it like clockwork on time. Every time. Let's just knock up a scenario, picture a groundwork. Subi. And he's got, I don't know, 140 grand on a certified account that's simply not being paid. The excuses have run out and the claims have been put.
Jacob Austin 00:12:29 It's been rejected. So clearly now a dispute has been crystallised. That gate is behind them. Now they want their money. The wrong thing to do first would be firing too early. They're furious. They've just got back from a meeting on site. It got heated. They've argued the whys and wherefores of this dispute. The contractors said, I'm having none of it. I'm not paying you. So they fired off that notice. Then they start sitting down to actually build the case and realise they've got seven days to pull. Two years of records, valuations, correspondence, meeting minutes, the lot of it into a referral. It gets rushed and it goes in thin. The other side, who've now had a few days to get organized, start picking holes in it and the sub is on the back foot in their own adjudication. Self-inflicted injury. Now to do that the right way. The same subcontractor with the same 140 grand dispute. Before they go anywhere near the notice, they build the whole thing.
Jacob Austin 00:13:36 The draft referral, the valuation watertight records assembled into folders indexed, ready to go. When they refer to them in their document. They even tell the adjudicator which page and paragraph of the appendix document to go to. They've decided they want to show minded adjudicator because this is all about a numbers fight, so they already know which nominating body they're applying to. Everything's loaded. Everything's waiting. Then they served the notice. Clean description of the dispute. Precise redress. Pay the notified sum of £140,000. The other side now has that matter of days to respond to a complete professional case that they can see is probably good enough to win. The adjudicator works the 28 day process and on day 28 as a binding decision, confirming the amount and it's enforceable in court. The same money, the same facts, came to a completely different outcome because the preparation was done at the right time. The notice was served when they were ready. So here's what you actually do. Here's the discipline. Build first, serve second.
Jacob Austin 00:14:52 Before the notice goes anywhere near the other side, your referral needs to be finished. That one habit alone puts you ahead of some people that you'll never be up against. Draft that notice with real care. Have a real clear description of the dispute and nail it. Nail the address, the specific thing you want the adjudicator to order. Read it back as if you're the other side, hunting for a way out of it. Double check it. Revise it. Make it perfect. Choose your decision maker on purpose. Check whether your contract names in adjudicator or a nominating body. If the choice is yours. Then pick the body whose panel suits your dispute. Numbers. Fight. Shape. Brain a technical issue with some structural engineering a structural engineer. Then die. Arise the clock. The second you serve seven days to the referral. The response window. That decision date. In a process this fast. You don't want to be the one who's missed a deadline. Finally, you keep it to one dispute that you've cleanly framed, unless you've agreed to do otherwise in writing with the other party.
Jacob Austin 00:16:07 Now, some things to remember. Build your entire referral before you serve the notice. The referring party's real edge is that preparation time. You can use weeks to prepare, to revise, to refine, to generate the evidence, to document all your records, line them up, reference them, incorporate them properly into your document. The seven day window to refer is going to punish anyone who serves first and prepares later. Remember also the notice of adjudication sets the scope. Get the dispute description and the redress right because the adjudicator is deciding on exactly that and they can only give you what you've asked for. Choose your nominating body deliberately. You want an adjudicator with a background, with a knowledge that is going to match the dispute that you are asking them to decide. You don't just want whoever turns up and hope they can do a decent job and know the adjudication clock. The adjudicator will be in place within seven days of the notice referral within seven days. Decision within 28 days of the referral. That's extendable by 14 days only with your consent.
Jacob Austin 00:17:22 The adjudicator will set a timetable that you will need to work to. They will ask questions and give you timescales to respond. If you don't respond to them, you're giving up the argument. So once that process is running, hit every direction and every deadline in the 28 day process. A missed deadline is a self-inflicted injury and it might be a big one. Remember also that you carry your own legal and expert costs. Win or lose. So weigh in the spend against the sum that you're disputing before you fire. And lastly, one dispute per adjudication unless both sides agree. Otherwise, don't bundle arguments that are too abstracted together and give the other party a jurisdiction challenge. A final final thought. One for three is. All of this is going to depend on the strength of your own records that you've been keeping throughout the job, starting with inquiry documents, through tender responses and any negotiations. The actual subcontract order itself, pre start meetings, meetings with other subcontractors or general site catch ups that the contractor organizes important emails, letters, photographs, site diaries, dates and times that key things happen.
Jacob Austin 00:18:43 I've spoken about records at length previously and it will still remain one of the biggest deciding factors when it comes to an adjudication. Your case is built on what you can evidence. You've got the advantage. If you're the referring party of time to get all that evidence together. But crucially, it has to exist already for you to be able to pull it together, for you to be able to file it and reference it. And critically, you might not know at the time how important a particular record is going to be, but you can bet your bottom dollar when it comes to it. If there's a missing record, that will be the pivotal piece of information that could change the outcome of your adjudication. So the more records, the more comprehensive, the better than that there is the adjudication machine and how you drive it. Next week, we will be pointing straight at the most common fight of the lot the payment battle, the smash and grab versus a true value adjudication. What happens when the contractor misses their payment? Notice why that can hand you the full sum, whether they like it or not.
Jacob Austin 00:19:47 And the rule that says they've got to pay you first before they're even allowed to argue about what the work was really worth. That's the episode that's going to connect everything we've discussed so far to your monthly application. Don't miss it. One of the worst things about these processes is the lack of knowledge about them. so I genuinely hope that helps. And my mission with this podcast is to help the million SME contractors working out there in our industry. If you've taken some value away from today's show, then I really need your help to share the show and pass that value on to somebody else who'd benefit from hearing it, so that I can help as many people as possible. And thanks for tuning in. If you like what you've heard and you want to learn more, then please do find us at www.SubcontractorsBlueprint.UK and we're also on all your favourite socials at @SubcontractorsBlueprint. And remember, miss the contract detail and the commercial risk falls on you. Thanks all. I've been Jacob Austin and you've been awesome.
