What Are the Most Common Problems Leading to Adjudication?

If you’re owed money on a construction contract, or you’re an employer facing a payment dispute you didn’t see coming, adjudication may already be on the table.

Most construction problems come down to money.

We act for project owners, contractors, and subcontractors who are owed money, feel that there’s a dispute brewing, or are already stuck in a contentious situation. If you want clear advice on your options and whether adjudication is the right choice for you (or might be), contact our specialist construction litigation team. Our team act nationally and we’d love to help you.

Why Most Adjudications Come Down to Payment 

Section 108 of The Housing Grants, Construction and Regeneration Act (HGCRA) 1996 also known as the Construction Act, provides a statutory right to adjudicate at any time for most construction contracts, with a decision required within 28 days of referral. Although,this can be extended to 42 days with the referring party’s consent, or longer if both parties agree. This right doesn’t extend to contracts with a residential occupier, which Section 106 of the Act excludes from the adjudication provisions.

Any dispute involving payment, defective works, or delay automatically triggers the right to adjudicate. The Act’s primary goal is to keep cash flowing and ensure projects proceed smoothly to a conclusion protecting the development and the businesses involved.

Most construction disputes come down to payment even if they didn’t start there (and many do) because withholding payment is one of the first things an employer does if there’s a delay or a dispute over defective works, project variations, or valuations.

Poor project management and contract administration play a big part in disputes and are often the starting point for financial disagreements, originating from incorrect service, missed payment notices, late payments, and other problems.

Missed Pay Less Notices and Smash and Grab Adjudications 

Contracts under the Construction Act have a prescribed payment-notice regime. Under Section 111 of the Act, the paying party must pay the ‘notified’ sum. The only way to avoid this is by serving a valid payment notice (under Section 110A) or pay less notice within the prescribed timeframe.

A pay less notice is a formal notification from a payer to a payee that they intend to pay less than the amount claimed.

If the employer or project owner misses a pay less notice deadline, it means the amount applied for is payable. A contractor can adjudicate for the full amount applied for, regardless of the work done or the quality of workmanship.

These are called ‘smash and grab’ adjudications because the adjudicator simply rubber stamps the notified sum as the employer has no notice-based defence. They must take the hit and defer any argument until later.

Employers can respond with a ‘true value’ adjudication at a later date, following S&T (UK) Ltd v Grove Developments Ltd. However, they must pay the notified sum first.

If you’ve missed a pay less notice deadline, or one is bearing down on you, the timing matters more than almost anything else in adjudication. We act for contractors and employers in exactly this position, can tell you quickly where you stand, and (subject to case assessment and our funding criteria) we may be able to support your claim on a No Win, No Fee basis.

Disputed Interim Payment Applications 

Interim payments help manage vital cashflow in lengthy construction projects. However, these stage payments are often the cause of disputes. Clients may withhold interim payments if they believe the work is not in line with contractual specifications.

Disagreements may arise from a failure to follow correct contract procedures, different interpretations of the work completed, or the value of variations, all of which can lead to a dispute which ends up in adjudication.

Retention Disputes 

Retaining money is a standard construction industry practice to ensure that work is properly completed and any defects rectified before the final account. 

Disputes arise when retained money isn’t released. Common reasons include:

• Dissatisfaction with remedial work
• Ongoing disagreements between the parties
• Contractor insolvency

In 2026, the Government confirmed plans to ban retentions in construction contracts via the Small Business Protections (Late Payments) Bill, though the change isn’t expected to take effect before 2027.

The intention is to protect smaller firms from losing money held back against defects, particularly where contractors higher up the chain refuse to release funds or become insolvent.

Variation and Final Account Disagreements 

Many construction contracts experience some alterations to the schedule of works especially in lengthy and complex projects. These variations sometimes give rise to payment disagreements over the value of the works or whether they were even necessary.

Variations often create disputes at the point of final account because they directly impact the final sum payable for the completed work.

Delay, Extensions of Time, and Liquidated Damages 

Contractors may be held liable for delays caused by their actions or inactions. Variations are a common cause of delays.

Delays are usually managed via provisions in the contract which may allow for time extensions and allocate responsibility for a delay. Time extensions may create knock-on problems.

Unscheduled delays occur frequently due to overrunning which could be caused by things like weather or supplier problems, factors which may be unforeseen and are no-one’s fault.

Delays are always a fertile ground for disputes over who is at fault particularly as they feed into liquidated damages (LDs). Liquidated damages are set amounts of money designed to compensate the employer or owner if the contractor fails to meet specific date-sensitive obligations.

LDs are managed by specific clauses but sometimes these are unenforceable. Disputes can also occur over the amount of compensation where there are no liquidated damages provisions in the contract..

Practical Completion and Defect Disputes 

There is no standard definition of practical completion but loosely it means the point in time at which a building is sufficiently complete to be usable for its intended purpose even if minor defects remain.

There are lots of potential areas for dispute around practical completion and defects are one of the major causes of disagreements. Defects may arise from non-compliance with specified standards or simply be a point of argument between parties.

Defect disputes almost inevitably lead to refusals to pay and requests for compensation.

When the Commercial Relationship Has Broken Down 

Poor communication is one of the leading causes of a referral to adjudication. Cooperation and negotiation are the glue that holds successful relationships together and without these, disputes escalate.

A breakdown in commercial relations elevates even minor disputes to the next level. They don’t have to be about money either.

A broken relationship loses the ability to problem solve and collaborate to get projects over the line. It creates delays which almost inevitably cause financial friction. 

Frequently Asked Questions 

What Is the Most Common Reason for Construction Adjudication? 

Smash and grab adjudications (seeking immediate payment without full dispute resolution) are the most common adjudication referrals. These often have a background in payment disputes but can also be linked to administrative failures and poor contract administration. Inadequate project management often underpins multiple issues which trigger the statutory adjudication process.

Can an Employer Adjudicate Against a Contractor?

If a construction contract is a qualifying contract under the Housing Grants, Construction and Regeneration Act 1996 (HGCRA) then an employer can adjudicate against a contractor. 

What Disputes Cannot Be Referred to Adjudication? 

Disputes involving residential occupiers may not be eligible for adjudication, since there’s no statutory right to refer a construction dispute where the contract is with a residential owner-occupier. Only disputes that have ‘crystallised’ (where the other party knows about it and has had a chance to respond) can be referred, and adjudication isn’t always suitable for complex disputes that may need arbitration or litigation instead. You can usually only refer one dispute to adjudication at a time.

How Long Does a Construction Adjudication Take?

Designed to be fast, construction adjudication takes around 28 days from the point of referral to an adjudicator to their decision. There is a possible extension to 42 days if the referring party agrees, or longer with the consent of both parties.

Need Advice? Contact Helix Law.

Adjudication is a fast and effective mechanism to resolve disputes in construction. It provides interim binding decisions that can be challenged later. However, not all disputes are eligible or suitable for adjudication and this is specialist work.

We are a team of specialist litigation solicitors who see these disputes regularly, especially in construction projects. Our advice focuses on protecting your position, with cost-effective solutions designed to de-escalate the situation while preserving your commercial objectives. Adjudication may be one of a range of options open to you.

No Win No Fee (CFA) and Damages-Based Agreement funding may be available for qualifying construction disputes, subject to case assessment and our funding criteria, typically disputes valued over £10,000 with strong prospects of success.

If you’re in dispute and want to know if adjudication is right for you, speak to our specialist construction litigation solicitors today for a no-cost, no-obligation initial conversation. Our construction team would love to help you.