Not Been Paid on a Construction Project? Try Adjudication
Struggling with non-payment on a construction project can quickly put pressure on your business. This article explains how adjudication offers a fast, legally binding route to recover money and restore cash flow. Learn when it works best, how the process runs, and why speed is critical to protecting your position.
Why does adjudication matter?
If you have not been paid on a construction project, cash flow can deteriorate fast. Within weeks, a single unpaid application can put pressure on wages, suppliers, and your wider project chain. For an SME contractor or subcontractor, a significant non-payment is not a paperwork inconvenience. It can become a genuine threat to the survival of the business within a matter of weeks.
Adjudication provides a fast, statutory route to recover payment. In England and Wales, it arises under the Housing Grants, Construction and Regeneration Act 1996 (as amended), commonly called the Construction Act. Parliament introduced it specifically to keep money moving through the construction industry by giving parties a right to refer disputes at any time.
Unlike court proceedings, which can take many months, adjudication typically produces a binding decision within 28 days of the full referral. The whole process from the first formal step to decision usually runs to four to six weeks. If the adjudicator decides in your favour, the Technology and Construction Court will usually enforce that decision promptly. This “pay now, argue later” approach, where the losing party must comply with the decision first and challenge it later if they wish, makes adjudication a powerful tool for contractors, subcontractors, and developers dealing with non-payment.
What is adjudication?
A fast-track dispute process
Adjudication is a private dispute resolution procedure widely used in construction disputes. An independent adjudicator decides the dispute on a compressed timetable, mainly on the basis of written submissions and supporting documents. That timetable is designed to give parties answers quickly enough to make a real difference to ongoing cash flow.
The decision is temporarily binding, meaning the parties must comply with it straight away. Either side can still ask a court or arbitrator to look at the dispute again later, but in the meantime, the decision must be honoured. In practice, many decisions are never revisited because the cost and disruption of reopening the dispute outweigh any perceived benefit.
Designed for cash flow disputes
Parliament introduced adjudication specifically to address late and disputed payments in construction. Before the Construction Act, businesses had little choice but to wait for full court or arbitration proceedings, which often outlasted the cash flow crisis itself. That left many smaller suppliers exposed to severe financial risk whenever a major payment stalled.
Adjudication was designed to fix that. By offering a binding decision in weeks rather than months, it allows businesses to keep money flowing on live projects and prevents payment disputes from becoming existential threats to smaller suppliers further down the chain. It sits alongside other tools, such as contractual suspension rights and court proceedings, as part of a broader strategy for managing payment risk.
Who can use adjudication?
You can usually adjudicate if your dispute arises under a construction contract for construction operations. This covers most building, engineering, fit-out, refurbishment, and specialist trade contracts. Many professional appointments also fall within the regime, depending on the services provided and whether they relate to construction operations.
“Construction operations” is a defined term under section 105 of the Construction Act, and some sectors and activities are excluded. These include drilling for oil and gas, certain process plants and engineering work in sectors such as chemicals, pharmaceuticals, and power generation, and pure supply-only arrangements that do not involve installation. It is therefore worth checking whether your contract falls within the statutory regime before committing to a particular strategy.
Even if your contract is silent on adjudication, the Construction Act may imply a right to adjudicate at any time. Where the contractual provisions are inadequate or non-compliant, a statutory set of default rules called the Scheme for Construction Contracts is implied into the agreement. The Scheme provides a workable adjudication procedure covering matters such as how the adjudicator is appointed, how the timetable runs, and what powers the adjudicator has to decide the dispute.
Adjudication is not suitable in every case. Some disputes, particularly those involving insolvency, fraud, or complex multi-issue claims, may require a forum better suited to detailed evidence and cross-examination. Early legal advice is important for confirming whether adjudication is available and for choosing the right route before key opportunities are lost.
When is adjudication effective?
Adjudication is at its most effective on payment-led disputes that turn primarily on documents, dates, and notices. The compressed timetable rewards focused claims that can be proved on the paper trail rather than on contested oral evidence or extensive expert input. The clearest use cases include:
- Unpaid interim applications
These are the lifeblood of most projects, and a missing payment in the middle of a job can quickly cascade through the supply chain. Adjudication is well-suited here because the dispute usually turns on whether the paying party complied with the contractual and statutory notice regime, a question that can be decided largely on the documents.
- Underpaid or disputed final accounts
Final account disputes often drag on for months and tie up significant sums. A targeted adjudication can resolve headline points of valuation or narrow the issues so that at least part of the outstanding sum is recovered sooner, even if some elements remain in dispute for later resolution.
- Disputed variations
Disagreements over whether work qualifies as a variation or how it should be valued are among the most common construction disputes. A focused adjudication can address entitlement and valuation in a way that prevents variations from becoming a running source of tension or a barrier to project close-out.
- Overdue retention
Retention not released on time can create real cash flow strain, particularly for subcontractors at the end of long payment chains. Adjudication can determine whether the contractual preconditions for release have been met and bring matters to a head when retention is being withheld without proper justification.
- Failure to serve valid payment or pay less notices
Where the paying party has not served a compliant notice within the contractual deadline, the party applying for payment may be entitled to the full amount claimed, regardless of the true valuation. This kind of claim is often referred to as a “smash and grab” adjudication, and it can be a powerful remedy where the notice regime has been mishandled.
Adjudication can also break a deadlock where the other party delays payment, revalues work without justification, or disputes what you are owed without proper basis. A clear timetable and the prospect of a binding decision often encourage more realistic discussions, and many disputes settle once the adjudication notice has been served, sometimes even before the decision is issued.
How does the adjudication process work?
The process is structured but accelerated. Each stage matters, and small errors at the start can have significant consequences later.
Dispute crystallisation
A dispute must exist before adjudication can be started. This usually means a claim has been made and rejected, ignored, or not properly addressed within a reasonable time. The exact point at which a dispute crystallises can be fact-sensitive, particularly where the other party remains silent rather than expressly rejecting the claim. Getting this wrong is one of the most common grounds for jurisdictional challenge in adjudication enforcement, so it is worth taking care over.
Notice of adjudication
The claiming party serves a notice identifying the parties, the dispute, and the remedy sought. The notice defines the scope of the adjudication and the limits of what the adjudicator can decide. A notice that is too narrow may leave key issues unresolved, while one that is too broad or vague may attract jurisdictional challenge.
Appointment of the adjudicator
The adjudicator is appointed either under the contract’s adjudication provisions or by an adjudicator-nominating body if the contract does not specify one. This usually happens within a few days of the notice, allowing the substantive process to start quickly.
Referral notice
The claimant submits its full case, including factual narrative, contractual and statutory references, and supporting evidence such as applications, notices, certificates, programmes, and correspondence. The referral is the backbone of the claim and usually the document the adjudicator engages with most closely.
Response and further submissions
The responding party serves its response on a short timetable. There may be limited further exchanges, such as a reply and rejoinder, depending on the adjudicator’s directions and the complexity of the issues.
Decision
The adjudicator must usually issue a decision within 28 days of the referral notice, although the parties can agree limited extensions where necessary. Most adjudications are conducted on written submissions without a full hearing, though some adjudicators may hold a short meeting or call to clarify key points.
How quickly can you recover payment?
Adjudication can usually produce a decision within four to six weeks from the start of the formal process. That speed can transform your position, because you move from arguing over entitlement to holding a binding decision in your favour that the other party is expected to comply with.
It is important to distinguish between receiving the decision and receiving the money. In some cases, payment is made even before the decision, once the strength of the claim becomes clear from the referral and supporting evidence. In others, the losing party pays promptly after the decision to avoid further cost and reputational damage, particularly where they wish to preserve an ongoing commercial relationship.
Where the losing party does not pay voluntarily, the decision becomes a powerful tool in the Technology and Construction Court. Enforcement is usually pursued by way of summary judgment on a tightly compressed timetable, often producing a result within weeks rather than months. The court generally enforces adjudicators’ decisions robustly, with limited grounds for challenge, primarily jurisdictional issues or a material breach of natural justice in how the adjudication was conducted.
Enforcement can be more complex where one party is insolvent or close to insolvency. The court will take account of the practical realities of recovery, the position of other creditors, and whether immediate enforcement would be fair in the insolvency context, so the financial health of your counterparty should always form part of your strategy.
Practical steps before starting adjudication
Preparation often makes the difference between a strong claim and a rushed one. Before serving a notice of adjudication, work through the following:
Gather every relevant document
Collect the contract and any amendments, payment terms, applications for payment, payment notices, pay less notices, certificates, programmes, and material correspondence. Make sure you understand how the contract says notices must be served, and whether those requirements were actually followed in practice, because formal compliance is often decisive.
Define the dispute carefully
A focused claim is usually more effective than an overloaded one that tries to address every grievance from the project. Targeting a specific issue, such as a particular unpaid application or an invalid notice, makes the adjudication more manageable for the adjudicator and increases the chances of a clear, decisive outcome.
Check key dates
Payment cycles, due dates, final dates for payment, and notice deadlines often determine the result. Small errors in timing or service can be fatal, particularly in cases that rely on the notice regime to establish entitlement under the “pay now, argue later” principle.
Assess recovery prospects
Consider whether the other party is solvent and able to pay if you obtain a favourable decision. A strong award has limited practical value if enforcement is likely to be blocked or delayed by insolvency, so this analysis should sit alongside the legal merits from the start.
Think about strategy
Consider whether one targeted adjudication or a series of smaller, sequential adjudications will work better for your position. Dealing with discrete issues step by step can sometimes deliver better and quicker results than trying to resolve everything in one go, especially where cash flow is under immediate pressure.
Common mistakes to avoid
Even strong claims can be derailed by avoidable errors. The most common pitfalls include:
Starting too early
If the dispute has not crystallised, the adjudication may fail on jurisdictional grounds. Taking one clear step first, such as setting out your claim in writing and giving the other party a short opportunity to respond, often strengthens your position and reduces the risk of a successful challenge later.
Naming the wrong party
Complex corporate structures can lead to claims being brought against the wrong legal entity. If you adjudicate against someone who is not your contractual counterparty, the adjudicator may have no jurisdiction at all, and the entire process can fail before the merits are reached.
Defining the dispute poorly
The notice of adjudication sets the boundaries of the case, and a lack of clarity creates serious risk. If you change the dispute significantly during the process, for example, by shifting to a different payment cycle or claim basis, the other side may argue that the adjudicator no longer has jurisdiction to decide it.
Relying on weak evidence
Clear documentation is far more persuasive than general assertions that money is owed. If your applications, valuations, and correspondence do not support the figures claimed, the adjudicator may feel unable to award the full amount, even if the underlying complaint is justified.
Ignoring the likely defence
Many referrals focus only on the claimant’s case and do not engage with the arguments they know will be raised in response. Anticipating points on valuation, notices, set-off, and jurisdiction, and dealing with them in your referral, can reduce the impact of the defence and help the adjudicator reach a clearer view in your favour.
Costs and commercial considerations
Adjudication is generally cheaper than litigation, but still involves real costs. The main components are legal fees for preparing the notice, referral, and any further submissions, expert input on valuation or delay where needed, and the adjudicator’s fees for dealing with the case.
The adjudicator usually decides who pays their fees, often making both parties jointly and severally liable in the first instance and then apportioning responsibility between them. By contrast, legal costs are not usually recoverable unless there is a valid post-dispute agreement about them. Pre-dispute agreements that try to fix who will pay legal costs in adjudication are generally ineffective under the Construction Act, so each party should assume it will bear its own legal costs when deciding whether to proceed.
Despite this, adjudication often delivers strong commercial value because of its speed and impact on cash flow. For many businesses, the ability to obtain a binding decision within a few weeks, even on an interim basis, is more important than the prospect of recovering legal costs at the end of a longer court process.
Risks and limitations
Adjudication is powerful but not unlimited. The key risks to weigh up before proceeding are:
Interim binding effect
Decisions are binding unless overturned in later proceedings, but they do not necessarily provide the final word on the dispute. Either party can still issue court or arbitration proceedings if the sums involved or the complexity of the issues justify a fuller examination.
Compressed timetable
The short timetable can make complex disputes harder to present fully, particularly where there are extensive factual or expert issues. Careful planning and realistic scoping are needed to ensure the key points can be covered properly within the time available.
Jurisdiction challenges
Errors in timing, scope, or identifying the correct parties can invalidate the process and leave you with an unenforceable decision. Jurisdictional issues are commonly raised as a defence in enforcement proceedings, so they should be anticipated and managed from the very start.
Insolvency risk
A favourable decision has limited value if the other party cannot pay. Enforcement may also be refused or complicated where paying over the money would clash with insolvency rules or be unfair to other creditors, so the financial position of your counterparty is a key strategic factor.
Relationship impact
Adjudication can strain commercial relationships on live projects. Sometimes the cash flow risk means you must proceed regardless, but in other cases it may be worth attempting negotiation or a without-prejudice meeting first to preserve the relationship if commercially possible. With the right preparation and advice, many of these risks can be managed, and adjudication can still be used to good effect as part of a wider strategy.
Adjudication or court proceedings?
For most construction payment disputes, adjudication is the fastest practical route to recovery. Court or arbitration proceedings typically take significantly longer and involve more procedure, which can be disproportionate where the main concern is immediate cash flow rather than a final ruling on every issue.
That said, court proceedings may be preferable where a final determination is required, where extensive disclosure or oral evidence is needed, or where the dispute is genuinely too complex to fit within a 28-day timetable. Arbitration can also be suitable for large or technically complex disputes, particularly on international projects, but will rarely match adjudication for speed.
Many businesses adopt a two-stage approach. They adjudicate first to secure cash flow and improve negotiating leverage, and then pursue final resolution only if it remains necessary afterwards. In practice, many disputes settle after the adjudication decision or once enforcement pressure begins, because the binding interim ruling encourages both parties to recalibrate their positions.
When to seek legal advice
Early legal advice is critical because several important advantages are lost if you wait too long. A solicitor can confirm whether the contract qualifies under the Construction Act and whether a dispute has crystallised, which helps avoid jurisdictional challenges later. They can also identify invalid payment or pay less notices while there is still time to correct or reissue them, and ensure key evidence is preserved before documents are misplaced or staff move on.
A solicitor can help structure the claim so that it focuses on the strongest issues and is supported by clear, well-organised evidence. They can also identify leverage points such as missed deadlines, gaps in the other side’s notices, or weaknesses in their valuations, which may influence not only the adjudication itself but also any settlement discussions that follow.
If you have received, or expect to receive, a notice of adjudication, prompt advice is equally important because of the tight timetable. The other side may have been preparing their case for weeks or months before serving the notice. Getting help early improves your chances of responding effectively, protecting your position, and identifying any jurisdictional objections that should be raised.
How JLN can help
If you have not been paid on a construction project, JLN can help you act quickly and strategically. Our construction and commercial disputes team can review your contract, payment position, and project history, and advise on the most effective route to recovery, whether through adjudication, negotiation, or targeted enforcement action such as court proceedings to turn an adjudicator’s decision into payment.
We act for contractors, subcontractors, developers, and property businesses across England and Wales. Our focus is on clear advice, practical strategy, and commercially sensible outcomes that recognise both the legal position and the realities of project delivery and cash flow.
Where adjudication is the right move, we prepare and run the process with urgency and precision, from drafting the notice and referral to managing timetable pressures and enforcement strategy. We also defend adjudications, including jurisdiction challenges, notice issues, valuation disputes, and enforcement planning, to protect clients who find themselves on the receiving end of a claim.
Contact us
If you are facing non-payment or are concerned that an adjudication may be on the horizon, you do not need to navigate it alone. Contact our team to discuss the facts of your project and the options available before positions harden and important adjudication or payment deadlines start to pass.
We will respond to most enquiries with both an indicative scope of work and a fee estimate, as well as the offer of a complimentary 20-minute discovery video call to discuss your issues and how we can help, before sending a more considered formal fee estimate via email.
In some limited cases, if you would just like initial advice and guidance on a call, we may instead offer a fixed fee appointment (commonly charged between £280 to £500 + VAT) whereby we will review the information you provide, hold a video call consultation and then follow up with an advisory email (as well as a fee estimate for any further work identified)
Please email wewillhelp@jonathanlea.net or call us on 01444 708640 as a first step. We first need an overview of the background and your issues, together with any significant documents, to provide an indicative scope of work and fee estimate.
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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.