Claimants' view of the performance of adjudication in new South Wales

Abstract

PurposeThis paper forms part of on‐going research project being undertaken by the authors into performance of the Building and Construction Industry Security of Payment Act 1999 (NSW) (hereafter referred to as “the act”), which commenced in amended form on 3 March 2003. The aim of the research was to examine the performance of the act and observe what trends, if any, have emerged in the adjudication process in New South Wales from a claimants' viewpoint.Design/methodology/approachA cross‐sectional survey of claimants was undertaken using a comprehensive multiple‐choice questionnaire administered by post. In answering the questions, the sampled claimants were required to draw on their experience with the adjudication process in their “most recent” payment claim dispute case. Crosstabs were used to determine a frequency distribution of selected variables. The Chi‐square test of independence was performed for the data collected to measure a degree of independence between the selected variables. The nil hypothesis (H0) tested is whether variables are independent. Where appropriate, Pearson and Spearman correlation coefficients were calculated.FindingsThe research reveals that: subcontractors' payment claims are generally smaller in value than those made by general contractors; that degree of lawyer involvement in the adjudication process is substantial in terms of document preparation; that the higher the amount of payment claim, the greater the time input on part of claimants in the preparation of an adjudication application; that a positive correlation exists between the actual value of payment claim and its adjudicated amount and the amount of adjudication fees and the adjudicated amount, and that filing of an adjudication certificate in a court is the most successful means of payment recovery.Originality/valueIt is generally accepted that the parties in the construction industry who carry out construction work, or supply goods and services under a construction contract are afforded little or no security of payment. The object of act is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services. Thus, the research looks to contribute to existing knowledge for the purpose of concluding whether or not the Act produces the expected result of increasing security of payment, and whether the results are consistent with the reason for the act.