ADJUDICATION SURVEY 2016

CONTRACTS l COMMERCIAL SUPPORT l DISPUTES l TRAINING

The MDA Adjudication Survey aims to provide some (albeit limited) statistical information regarding the state of adjudication in South Africa.

The survey consists of information collected by MDA in respect of adjudications where MDA were retained to represent one of the disputing parties.

The information collected relates to adjudications where a decision was issued between 1 January 2016 and 31 December 2016.

MDA Handled 27 adjudications during this period.

The survey does not attempt to provide a representation of statistics of all adjudications in Southern Africa but simply provides statistics taken from these 27 adjudications and provides some interesting insight.

INTRODUCTION

2016

JANUARY

01DECEMBER

31

The information collected relates to adjudications

where a decision was issued between

27ADJUDICATIONS

DURING THIS PERIOD

MDA HANDLED

1. PARTIES TO DISPUTE

4. CONTRACTS CREATING DISPUTE

2. NATURE OF DISPUTE 3. QUALIFICATIONS OF THE ADJUDICATORS

OVERVIEW

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

6. DECISION IN FAVOUR OF

5. MONETARY VALUE OF DISPUTE

RR

R

6. MONETARY VALUE OF DECISION

R

7. DECISION ISSUED ON TIME 9. NOTICE OF DISSATISFACTION ISSUED

01

1. PARTIES TO THE DISPUTE Whose fi ghting?

Similarly to 2015, the majority of the disputes handled by MDA involved disputes between contractors and employers, with only seven out of 27 disputes being between subcontractor and contractor. We have seen a slight increase in the number of contractor/subcontractor disputes year on year (from 2 to 7) indicating increased use of formal dispute resolution mechanisms by these parties.

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

Employer / Contractor Contractor / Subcontractor Employer / Consultant

50

20

15

10

5

0

EMPLOYER CONTRACTOR CONTRACTOR SUBCONTRACTOR EMPLOYER CONSULTANT

2. NATURE OF DISPUTE What are parties to construction contracts fi ghting about?

The most common disputes referred to adjudication during the 2016 year were those in respect of a claim for payment of outstanding monies or incorrect certifi cation. Interestingly this is in stark contrast to the 2015 year where the most common disputes were in respect of claims for extensions of time and time related costs.

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

Claim for outstanding payment /monies / incorrect certifi cation

Claim for an extension of time and time related cost

Defective workStanding time cost associated with EoT

Incorrect termination / repudiationReduction of delay damagesRe-assessing closed out compensation events to correct application of incorrect fee%Wether CERuling-manner in which P&G should be calculatedPenalty relief / reductionDispute as to how payment for hard materials is calculated under BOQ

RR

R

3. QUALIFICATIONS OF THE ADJUDICATORS?

Engineers and lawyers make up the majority of the adjudicators with attorneys making up 52% and engineers constituting 40% of the adjudicators.

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

ENGINEER

ATTORNEY / ADVOCATE

QUANTITY SURVEYOR

40%

52%

22%

25%

7.5%

7.5%

37%

4. WHAT CONTRACTS ARE CREATING THE DISPUTE?

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

Similarly to 2015, the NEC 3 made up a large portion of the contracts creating disputes at 37% with the FIDIC 1999 Edition at 22% and GCC 2010 at 25%. Interestingly we saw a marked increase on disputes on bespoke contracts in 2016.

GCC 10

BESPOKE

JBCC2000series

FIDIC

nec3

5. WHAT IS THE MONETARY VALUE OF THE DISPUTES?

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

The large majority of the disputes referred to adjudication dealt with monetary values between R1 and R5 million.

15 1 2 2 3< R 1 million4

R 1 million – 5 million

R 5 million – 10 million

R 10 million –20 million

R 20 million – 50 million

>R 50million

6. THE MONETARY VALUE OF THE DECISION

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

5 2 1 2 1 3R 1 million –

5 million

9< R 1 million R 5 million –

10 millionR 10 million –

20 millionNil Award Dismissed Principle

www.mdaconsulting.co.za

7. DECISION IN FAVOUR OF

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

Employer/ contractor disputesDispute in favour of:

Contractor/ subcontractor disputesDispute in favour of:

Contractors are still proving more successful than employers in disputes with 55% of decisions in favour of contractors. This is in contrast to disputes between contractors/ subcontractors where decisions are split equally between an award to the sub-contractor and settlement.

Employer Contractor 50/50 Settlement Contractor Subcontractor No decision Settlement

8. DECISION ISSUED ON TIME

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

With 78% of decisions being issued on time, this indicates good performance by adjudicators across the board.

NO YES

9. NOTICE OF DISSATISFACTION ISSUED

M D A A D J U D I C A T I O N S U R V E Y 2 0 1 6

Although a small number of Notice of Dissatisfaction were issued, this may not necessarily mean the dispute will go to arbitration.

Don’t know - the time period is yet to expire.

No

Yes