Valuations for Statutory Adjudication, represents more than 80 per cent of our core business.

Expertise in these types of valuations requires familiarity with the appropriate methods needed to determine works value under the particular types of construction contract. It is not simply an average industry rate (market value) which may bear no resemblance to particular construction contract. The contract rates (whether given or derived) are specific to that contract. This is central to the proper methodology needed for a Construction Valuation under the Security of Payment Acts 

Table 1 below shows that Applicants/Claimants in Australia continue to feel the pinch of adopting incorrect methods of valuation. This is multiplied when combined with the limitations of the various Security of Payment legislations like the lack of any requirement for substantive explanation to be given by Adjudicators with respect to how they arrive at their assessment of a Construction Valuation. Although this is particularly evident when the claim values are significant as shown by the statistics below, further investigation shows these limitations could also be significant for values of claims submitted that range between the 200K and 500K, as the award values for those claims on average are 30%-40% less than the claimed values – Significant?

At the heart of these statistics is the fact that Adjudicators hail from many different professions and valuation methodology is not something that they have all been schooled in. Therefore it is essential that Applicants (and Respondents) under the Security of Payment legislation ensure that they have a properly prepared construction valuation provided by an independent 3rd party specialist. This is similar to what has been done (accepted as best practice) in other parts of the world like the U.K. for instance. That’s the technical reason but there is a legal purpose to this as well, which is to discharge the ‘burden of proof’ that would otherwise be in question if the Adjudicator received a construction valuation prepared by the Applicant’s/Claimant’s own staff . 

The reasons and purpose for having a properly prepared construction valuation provided by an independent 3rd party specialist is clear and this failure rates shown by the statistics could easily be avoided if the Adjudicator were to be provided with Expert Independent Construction Valuations to measure his/her assessment against – adjusting only for items based on legal merit only.

* Extrapolated from Article written by Peter Merity Lawyers
1Adjudication Activity Statistics published by Victorian Building Authority
2 Adjudication Monthly Statistical Reports published by Queensland Building and Construction Commission
3 CCA Adjudications Reports  published by the Building Commissioner (W.A)