The new Construction Act: views and perceptions of construction industry stakeholders

Abstract

PurposePart II of the Housing Grants, Construction and Regeneration Act 1996 introduced major changes to the way in which construction contracts are administered. The payment and adjudication provisions, in particular, have been well received by the United Kingdom construction industry and can be viewed as a success. However, avoidance tactics aimed at reducing liability for payment and discouraging payees away from adjudication became commonplace. The response from Parliament is contained in the Local Democracy, Economic Development and Construction Act 2009, which came into force on 1 October 2011. The purpose of this paper is to analyse stakeholders’ first impressions of the new Act and disseminate the insights gained to the industry and policymakers.Design/methodology/approachFollowing a review of the current and proposed legislation, industry views were collected by an electronically administered survey. The views of construction industry stakeholders on how the new Act will operate and its prospects of delivering the intended outcomes were ascertained and are presented.FindingsThe survey findings indicate there is broad support for the original Act and for the amendments made in the new Act, tempered with pessimism about the likely inability of the new measures to address issues around entrenched industry practice. Avoidance and evasion of key terms is contemplated, for instance in relation to extending payment terms and drafting contracts in favour of the paying party.Originality/valueThe conclusions reached call into question the extent to which improvement of this aspect of the construction industry can be achieved by statutory intervention alone, particularly in testing economic circumstances.