Requirements for the effective statutory adjudication practice in the South African construction industry

Abstract

The concept of adjudication was introduced into the South African construction industry as a result of payment default, which is one of the crippling constraints to effective project delivery, as well as a major cause of dispute within the South African construction industry. The general poor payment practices and unpredictability of payments in the industry have not only given rise to substantial additional financing and transactional cost, but have also generated an extremely negative contracting environment. To mitigate this problem, Prompt Payment Regulations and Adjudication Standards were proposed by the Construction Industry Development Board (CIDB). The proposed Prompt Payment Regulations and Adjudication Standards identify statutory adjudication as a promising solution to the payment problem. The regulations have been gazetted for public comment and might soon receive final approval for their introduction and usage. However, for statutory adjudication to be effective in any jurisdiction, it is important to identify and provide the supporting structures that have to be in place. This research specifically determines the institutional requirements for effective implementation of statutory adjudication in the South African construction industry. To achieve this aim, the research identifies the specific institutional roles in the effective implementation of statutory adjudication, examines the key features of the proposed CIDB Prompt Payment Regulations and Adjudication Standards in comparison with similar standards in other jurisdictions, identifies teething problems and critical challenges to effective implementation of statutory adjudication and suggests ways of combating the challenges, determines institutional requirements needed for effective statutory adjudication implementation and develops an implementation framework that will enhance the effectiveness of statutory adjudication practice in South Africa. The set objectives were achieved using a qualitative research approach informed by the interpretivist philosophical paradigm. Data were collected through documents and semi-structured interviews from leading professionals that are directly involved in statutory adjudication implementation in selected jurisdictions where statutory adjudication is practiced. The study employed the thematic analytic approach to identify, analyse and report patterns within data received. The main findings from the analysis show that institutions play strategic roles in promoting the effective implementation of the legislation supporting statutory adjudication. Also, the features within the proposed CIDB payment and adjudication regulations are encompassing enough to provide the necessary legal framework needed for effective statutory adjudication performance in South Africa, if adequately implemented. Furthermore, the findings revealed that the effectiveness of statutory adjudication and the realization of the benefits it has to offer are hinge on a number of factors. These factors are: (i) the features of the legislation itself (i.e., policy objectives and the application of the legislation), (ii) the process of implementation, (iii) institutional support and (iv) the presence of success factors (i.e., the drivers and enablers of successful implementation). The findings led to the development of an effective framework for successful implementation of adjudication in South Africa. The framework can help give informed choices and directions on practices and processes of effective statutory adjudication. Thus, the findings in this research would benefit the South African construction industry and serve as guide to other jurisdictions contemplating introducing statutory adjudication.