BT : Construction payment disputes resolved more efficiently now

Business Times - 31 Aug 2010

Construction payment disputes resolved more efficiently now

By LYNN KAN

THE number of payment dispute cases between building contractors and sub-contractors soared last year on the back of the property and construction boom.

169 cases were lodged with the Singapore Mediation Centre (SMC), the body that administers the adjudication process, compared with 91 cases in 2008.

The number of cases has risen exponentially since the Building and Construction Security of Payment (SOP) Act was enacted in 2005 to ensure projects would not be stalled due to inadequate cash flow.

In 2005, only one case was lodged - but the number has grown to 421 to date. Disputed claims range from $4,900 to $63 million.

SMC aims to resolve disputes quickly. To speed up the process, contractors and sub-contractors can submit claims for adjudication during construction, rather than after a project is completed.

Within a fortnight of the date specified in a contract, one of SMC's 134 independent adjudicators is required to issue a binding determination on the issue. The amount, if any, must then be paid by a specified due date.

The chief executive of the Building and Construction Authority (BCA), John Keung, said 'reducing the incidence of firms facing financial difficulties that could disrupt projects makes for a healthier and more productive construction industry'.

Because of growing interest, details of how some disputes have been resolved have been published in the second volume of the Singapore Construction Adjudication Review. Launched yesterday, Volume 2 contains 87 selected decisions made in 2008, adding to the first volume's 46 cases and decisions from 2005 to 2007.

Both volumes were edited by experienced adjudicators: former Changi Airports International chief executive Chow Kok Fong, WongPartnership partner Christopher Chuah, and MPillay managing partner Mohan R Pillay.

Justice Andrew Ang, a Supreme Court judge and SMC chairman, wrote in a foreword to the first volume that the SOP Act has transformed the dispute resolution landscape in Singapore's construction industry by providing 'very affordable access to the adjudication of payment disputes between parties to a contract while construction work continues on site, and it does so with remarkable economy of time and effort'.

Singapore is one of only four countries that has a legal regime to help contractors and sub-contractors with cash-flow problems. Alongside its administrative operations, SMC trains, certifies and maintains a panel of 134 adjudicators drawn from the construction and related industries and legal specialists in building disputes.

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