8 Payment

8.1 Under DB16, the contractor has the right to be paid sums properly due, and the employer is obliged to ensure that the contractor is so paid. There are several safeguards in place, introduced through the Housing Grants, Construction and Regeneration Act (HGCRA) 1996 as amended by the Local Democracy, Economic Development and Construction Act (LDEDCA) 1999, to ensure that the contractor is dealt with fairly, so it is sensible for the employer (in the absence of any independent certifier) to make every effort to interpret the provisions objectively.

8.2 The payment provisions in DB16 are quite complex. However, as many of the provisions were introduced to comply with the above Act, and are compulsory for all contracts to which the Act applies, the clauses should not be amended without taking expert advice.

8.3 In summary, two ‘methods of payment’ are set out in the contract particulars, and the employer will indicate which will be used prior to tendering the contract (if nothing is selected, Alternative B applies). The methods are ‘by stages’ (Alternative A) or ‘periodically’ (Alternative B). However, the terminology is at first glance a little misleading, as in both cases payment is made monthly. The difference between the two methods lies in the way the amount to be paid is calculated. Essentially, under Alternative A the contractor is only paid for stages that are complete at the time the valuation is made, whereas under Alternative B all work correctly carried out is valued. This is a significant change to the system under DB11, where under Alterative A the contractor was paid ‘at completion of each stage’ (which very likely would have resulted in longer intervals between payment).

8.4 The timing of payments depends on ‘Interim Valuation Dates’. The first date is entered in the contract particulars, and subsequent dates are at monthly intervals (if no first date is entered, it is one month after the date of possession). If Alternative A is selected, details of the stages are set out either in the contract particulars or in a document identified in the contract particulars. In respect of design work for stage payments, the description of each stage should make allowance for design work to be completed by that stage. For periodic payments, provision is made for valuation of design work.

8.5 There is an optional provision for advance payment of the main contractor (cl 4.6). An entry must be made in the contract particulars to show whether or not the optional provision is to apply (the contract states that it is not applicable if the employer is a local or public authority). If advance payment is required, the amount will be entered as either a fixed sum or as a percentage of the contract sum. The entry must also show when payment is to be made to the contractor and when it is to be reimbursed to the employer. A bond may be required, and DB16 includes an advance payment bond in Part 1 of Schedule 6.

8.6 There is always a risk in making an advance payment on a construction contract, even when backed by a bond, and the procedure will inevitably cause extra expense to the employer. The employer should be quite clear as to what compensatory benefits, such as a reduction in the contract sum, will result before agreeing to any arrangement of this sort.

Timing of payments

8.7 The contractor is required to make applications for payment to the employer (an ‘Interim Payment Application’), which must state the sum the contractor considers is due and the basis on which it was calculated (cl 4.7.3) and should be accompanied by such information as is specified in the employer’s requirements (cl 4.7.4). If the contractor makes the application prior to or on the interim valuation date, the ‘due date’ is seven days after the valuation date. If the application arrives later than the interim valuation date, the due date is seven days after its receipt by the employer (cl 4.7.2 and 4.7.3). The employer must issue a payment notice within five days of the due date, stating the sum it considers due and the basis on which this was calculated (cl 4.7.5). The final date for payment is 14 days from the due date (cl 4.9.1). The overall effect of this system is that the contractor’s interim payment application is a condition precedent to its right to be paid.

Ascertainment of amounts due

8.8 The interim payment is calculated as the total amount ascertained under clause 4.12 (for Alternative A) or 4.13 (for Alternative B). The amount ascertained under clause 4.12 or 4.13 can be summarised as follows.

8.9 A total of 97 per cent (or as entered in the contract particulars) of the following (i.e. items subject to retention):

• for Alternative A:
  • – the cumulative value of stages completed (cl 4.12.1.1);
  • – the value of changes or of other work referred to in clause 5.2 that is relevant to the interim payment (cl 4.12.1.2; includes changes, work to be treated as a change and provisional sum work; excludes amounts referred to in clause 4.12.2.4, i.e. certain reinstatement work);
  • – where fluctuations Option C applies, the value of certain site materials (cl 4.12.1.4);
• for Alternative B:
  • – total value of work properly executed, including any design work (cl 4.13.1.1);
  • – the value of changes or of other work properly executed and referred to in clause 5.2 (cl 4.13.1.1; includes changes, work to be treated as a change and provisional sum work);
  • – total value of site materials (i.e. materials and goods properly on site) (cl 4.13.1.2);
• plus, for A and B:
  • – value of ‘listed items’ (cl 4.12.1.3/4.13.1.3).

8.10 The above amounts are, for both alternatives, to be adjusted in accordance with any fluctuations provisions and with any acceleration quotation that has been agreed (cl 4.12.1/4.13.1).

8.11 A total of 100 per cent of the following items, if applicable:

• for Alternative A and Alternative B (although set out separately in the form, these appear to be identical for both alternatives):
  • – costs associated with clause 2.5.2 (additional insurance premiums), clause 2.20 (royalties), clause 3.12 (opening up and tests), clauses 6.10.2, 6.10.3 and 6.11.3 (terrorism cover), clause 6.12.2 (employer’s insurance default) or clause 6.20 (joint fire code; cl 4.12.2.1/4.13.2.1);
  • – amounts payable under clause 4.11.2 (costs and expense reasonably incurred following suspension; cl 4.12.2.2/4.13.2.2);
  • – loss and/or expense due under clause 4.19.1 (cl 4.12.2.3/4.13.2.3);
  • – sums for restoration of damaged work under Insurance Option B or C, or under Option A to the extent that it is to be treated as a change (cl 4.12.2.4/4.13.2.4);
  • – amounts payable under any applicable fluctuations provision that have not been adjusted under clause 4.12.1/4.13.1 (cl 4.12.2.5/4.13.2.5).

8.12 Before reaching the total gross valuation, the contract requires some deductions to be made if applicable. These can be summarised as (for both Alternatives A and B):

• any amounts deductable under clause 2.35 (deductions in respect of defects agreed not to be made good), clause 3.6 (costs incurred by the employer where instructions not complied with), clause 6.12.2 (contractor’s insurance default) or clause 6.19.2 (joint fire code) (cl 4.12.3.1/4.13.3.1);
• amounts allowable by the contractor in respect of clause 6.10.2 (terrorism cover) or any applicable fluctuations (cl 4.12.3.2/4.13.3.2).

Value of work

8.13 Under Alternative A, the value of work will be the total of the amounts set out in the contract particulars for all completed stages, with no amounts included for any partially completed stages. There will be no need to revalue the work, as it will be irrelevant whether or not the apportionment of the contract sum allocated to each stage actually correlates with any contract sum analysis that the contractor has provided at tender. Under Alternative B, there is no requirement that the value of the work properly executed, etc. is to be calculated using the rates shown in the contractor’s contract sum analysis. However, it would be usual to base the application on this analysis, and it would be open to the employer to disagree with the application if it was made on some quite different basis.

8.14 In both Alternatives A and B, the employer should be careful not to pay for any work that appears not to have been properly executed, whether or not it is about to be remedied or the retention is adequate to cover remedial work. Clause 1.9 makes it clear that no interim payment is conclusive evidence that the work and materials paid for are in accordance with the contract; therefore, if work has been included in a payment and subsequently proves to be defective, the value can be omitted from the next payment. However, it is unlikely that this can be done to the extent that it produces a negative amount, i.e. a repayment by the contractor. Clause 4.7.1 refers to payments by the employer to the contractor and, unlike the final payment provisions, does not refer to a reverse payment. In addition, clause 4.10.3 states that the amount ‘may be zero’ but does not refer to negative amounts. This clause derives from the LDEDCA 2009 and, on balance, it seems unlikely that the contract will be interpreted to allow for negative payments. If such a situation arises, it may be sensible for the employer to seek legal advice, particularly if the amount is significant.

8.15 With respect to Alternative A, it is notable that there is no express proviso that the work in the relevant stage should have been properly completed, but it is suggested that the employer would be entitled to withhold payment for a stage where there were patent defects in the works (i.e. a court would construe the provision this way). If work which has been included in a payment subsequently proves to be defective, the employer may have to exercise its common law right of abatement to make a deduction from the payment due, provided it has issued the necessary notices.

Unfixed materials

8.16 Under Alternative B (but not Alternative A, except for specific items where Fluctuations Option C applies, cl 4.12.1.4), the payment should include materials which have been delivered to the site but not yet incorporated in the works (cl 4.13.1.2). In spite of detailed provisions aimed at protecting the employer, there remains some risk in including these items. Under common law, once materials have been built in, they will normally become the property of the owner of the land, irrespective of whether or not they have been paid for by the contractor. This would be the case even if there were a retention of title clause in the contract with the sub-contractor or supplier. A retention of title clause is one which stipulates that the goods sold do not become the property of the purchaser until they have been paid for, even if they are in the possession of the purchaser.

8.17 The employer could be at risk, however, where materials have not yet been built in, even where the materials have been certified and paid for. The contractor might not actually own the materials paid for because of a retention of title clause in the sale of materials contract. Under the Sale of Goods Act 1979, sections 16 to 19, property in goods normally passes when the purchaser takes possession of them, but a retention of title clause will be effective between a supplier and a contractor even where the contractor has been paid for the goods, provided they have not yet been built in. It should be noted, however, that the employer may have some protection through the operation of section 25 of the Act, which in some circumstances allows the employer to treat the contractor as having authority to transfer the title in the goods, even though this may not in fact be the case (Archivent v Strathclyde Regional Council).

8.18 Another risk relating to rightful ownership occurs where the contractor fails to pay a domestic sub-contractor who has purchased materials, and the sub-contractor claims ownership of the unfixed materials. Here the risk may be higher, as a work and materials contract is not governed by the Sale of Goods Act 1979. Therefore, there can be no assumption that property in the materials would pass on possession.

8.19 DB16 attempts to deal with the issues surrounding ownership in several ways. First, unfixed materials and goods, which have been delivered to the site and are intended for the works, may not be removed without the written consent of the employer (cl 2.21). Removal would be a breach of contract and therefore the employer could claim from the contractor for any losses suffered through unauthorised removal. This would apply even though the materials or goods may not yet have been included in any payment. Second, unfixed materials and goods, either on or off site, which have been included in an interim payment will become the property of the employer, and the contractor is thereby prevented from disputing ownership (cl 2.21 and 2.22).

8.20 Clause 2.21 of the main contract, however, is binding only between the parties to the contract, and does not place obligations on any sub-contractor. The employer faces the risk that, if the contractor becomes insolvent, a sub-contractor or supplier may still have a rightful claim to ownership of the unfixed goods, even though they have been paid for by the employer (see Dawber Williamson Roofing v Humberside County Council below). The main contract therefore requires that all sub-contracts include similar clauses to clause 2.21 regarding non-removal from site, and ownership passing upon payment (cl 3.4.2.1). Sub-contracts must also include a clause stating that, once materials and goods have been certified and paid for under the main contract, they become the property of the employer and that the sub-contractor ‘shall not deny’ this (cl 3.4.2.1.1). This clause would operate even where the main contractor has become insolvent. Even this provision might not protect the employer in some circumstances because, if the sub-contractor does not have ‘good title’, it cannot pass it on. Thus, for example, it might not prevent a sub-subcontractor claiming ownership.

8.21 Under the DB16 Alternative B provisions, the employer is obliged to include the unfixed materials payment, even though a limited risk remains, provided that the materials are not prematurely delivered to site and are adequately protected. Employers should pay careful attention to the exact wording of this condition.

'Listed items'

8.22 Alternatives A and B both refer to provisions for ‘listed items’. These provisions allow for the contractor to be paid for materials or goods prior to their delivery to site (cl 4.15). If this is to apply, then a list of these items must be attached to the employer’s requirements. The listed items may or may not be ‘uniquely identified’ (i.e. materials or goods or items prefabricated for inclusion in the works). The value of items listed must be included in an interim payment prior to delivery on site, provided that certain preconditions are fulfilled:

• the listed items are in accordance with the contract (cl 4.15.1);
• the contractor has provided reasonable proof that the property is vested in it (cl 4.15.2.1);
• the contractor provides proof that the items are insured against specified perils until delivery on site (cl 4.15.2.2).
• the listed items are ‘set apart’ or clearly marked and identified (cl 4.15.3);
• if the item is not ‘uniquely identified’ or if required in the contract particulars, the contractor has provided a bond (cl 4.15.4, 4.15.5).

8.23 The employer has no obligation to pay for any off-site items, other than those that have been listed. The employer should, therefore, be careful to avoid paying for any unlisted off-site materials, as only listed items are covered by the clause 4.15 safeguards regarding ownership and responsibility for loss or damage.

Costs and expenses due to suspension

8.24 Clause 4.11.2 states that ‘Where the Contractor exercises his right of suspension under clause 4.11.1, he shall be entitled to a reasonable amount in respect of costs and expenses reasonably incurred by him as a result of exercising the right’. These amounts are also to be included in interim valuations. The phrase ‘costs and expenses’ is taken from the LDEDCA 2009, and suggests something more limited than the range of losses that could be claimed under a clause 4.19 loss and/or expense claim; for example, that it is limited to direct and ascertainable costs. However, a valid suspension would be due to a breach of contract by the employer, for which the contractor would be able to claim damages at common law, so it may be sensible for administrators not to interpret this clause too strictly.

Other items in the gross valuation

8.25 As noted above, in addition to the value of work properly executed and of materials properly on the site, clauses 4.12 and 4.13 list other amounts that must be included in the gross valuation for an interim payment. For example, payments ascertained as due to the contractor under clause 4.19 (direct loss and/or expense) are to be added to the contract sum (cl 4.12.2.3/ cl 4.13.2.3). Where adjustments to the contract sum have been made in accordance with the terms of the contract then these must be taken into account at the next interim payment (cl 4.3).

Deductions from the gross valuation

Withheld percentage

8.26 Some of the items that must be included in the gross valuation are subject to a reduction of 3 per cent, or any other amount entered in the contract particulars (cl 4.18). As an alternative, the contractor may be required to provide a retention bond (cl 4.17). If this is to be used, the contract particulars must state that clause 4.17 is to apply, and the details must be set out at tender stage. DB16 includes a form of bond in Part 3 of Schedule 6.

8.27 Where a retention bond is not used, the retention should be applied as appropriate to interim valuations. The rate is 3 per cent (unless another figure is inserted in the contract particulars) for all payments up till practical completion (cl 4.18.1). Half of the retention rate is withheld from certificates during the rectification period (cl 4.18.2; effectively half of the withheld amount is released in the first payment after practical completion). The remaining retention is released with the final payment. The employer is trustee of the withheld percentage for the contractor (cl 4.16.1), and must keep it in a separate bank account (unless the employer is a local or public authority), but is not obliged to invest it for the contractor, and will have the benefit of any interest which accrues (cl 4.16.2).

Advance payments and bond

8.28 If the parties have elected to use the advance payment provisions, the payment indicated in the contract particulars is made to the contractor before the first interim payment is due, but only after the contractor has provided the bond required (cl 4.6; DB16 includes a form of bond in Part 1 of Schedule 6). Details of when the reimbursements are to take place will also be set out in the contract particulars and could, for example, occur in stages throughout the project. The reimbursement is deducted from the gross valuation under the relevant payment. It should be noted that the amount to be deducted each month should be a cumulative total of the reimbursements, with the final deduction equalling the original advance payment, and that final deduction being made from all subsequent valuations.

Payment procedure

8.29 As noted in paragraph 8.7, the final date for payment is 14 days from ‘its due date’ (cl 4.9.1). The amount to be paid on that date is subject to provisions regarding notices, which are required by the Housing Grants, Construction and Regeneration Act 1996 (as amended) and which apply also to the final payment. Under clause 4.7.5, no later than five days after the due date for payment the employer must give the contractor a notice (the ‘Payment Notice’) which states how much it intends to pay. The notice is required whether or not the employer intends to make any deduction from the amount applied for (see Figure 8.1). If the employer fails to issue a payment notice, clause 4.9.3 states that ‘the Employer shall, subject to any Pay Less Notice under clause 4.9.5, pay the Contractor the sum stated as due in the Interim Payment Application’.

8.30 Should the employer decide that it wishes to withhold any amount from the sum stated in its payment notice (or, if no payment notice was issued, from the amount in the interim payment application), then it must give written notice of this intention no later than five days before the final date for payment, in the form of a ‘Pay Less Notice’ (cl 4.9.5). The pay less notice should state the sum considered to be due and the basis on which that sum has been calculated (cl 4.10.1). It is suggested that if it is known in advance that a deduction is intended from the amount applied for, then the payment notice should take account of this, and the pay less notice will then be unnecessary. Contractors should note that, always provided the payment notice includes all the necessary information required under clause 4.7.5, there is no requirement for the employer to issue a pay less notice simply because it disagrees with the amount shown in the contractor’s application.

Figure 8.1 Interim payment procedure

Deductions

8.31 The contract expressly gives the employer the right to make certain deductions from any amount due to the contractor. These are listed in clauses 4.12.3 and 4.13.3; for example deductions from the contract sum where defective work has been accepted (see paragraphs 6.41 and 6.60). These should normally be deducted before reaching the gross valuation in an application for payment or payment notice. It is suggested, however, that the pay less notice may also make these deductions, if not already accounted for in the payment notice. For example, if not all information was available at the time of the payment notice, or new circumstances develop following the payment notice, then the deduction could be effected by means of a pay less notice. The only other deduction authorised by the contract, and not set out in clauses 4.12.3 and 4.13.3, arises in respect of payment or allowance of liquidated damages (cl 2.29.2.2). Should the employer wish to use the pay less notice to make any other claim, for example to set off an amount it believes it is owed from another project, it should not do so without taking legal advice.

8.32 It should be noted that no application for payment, and no payment by the employer, offers conclusive proof of the amount due, except for the final statement, as discussed below (cl 1.9). Despite having paid a specific amount, it would always subsequently be open to the employer to disagree with this figure. The employer may decide to make a deduction from a further payment, or to raise the matter in adjudication. In particular, having made payment does not preclude the employer from exercising any common law right, such as abatement.

Employer's obligation to pay

8.33 As stated above, the employer is required to pay the amount due by the final payment date. The amount paid should be ‘not less than’ the amount set out in any employer’s pay less notice (clause 4.9.5). If no pay less notice has been given, it will be the amount stated in the employer’s payment notice or, if none has been issued, the amount in the contractor’s application.

8.34 In addition to the contractual rights to make deductions by means of a notice as discussed above, the employer may have other rights to withhold payment under common law. Prior to the HGCRA 1996, it was clear that, if the employer had an arguable case that the certificate included work which was defective, and therefore had been overvalued, then, rather than paying the full amount, the employer could have raised the losses due to the defects either as a counterclaim in any action brought by the contractor or as a defence to the claim. The latter process is often termed ‘abatement’ by lawyers.

8.35 It is now generally agreed that, in cases where such a right may exist, it can only be exercised through the use of the ‘Pay Less Notice’ procedure, as discussed above. The employer would therefore be unable to withhold amounts to cover any defective work included in a payment notice unless the deduction is covered by a notice (Rupert Morgan Building Services (LLC) Ltd v David Jervis and Harriet Jervis). The rights of the employer when defects appear after the expiry of the time limits for notices but before the final date for payment are unclear, but it is arguable that, in such situations, the employer would retain a right to abatement of the amount due.

Contractor's position if the amount applied for is not paid

8.36 DB16 includes several provisions which protect the contractor if the employer fails to pay the contractor any amounts due. Clause 4.9.6 makes provision for simple interest on late payments. This is set at 5 per cent over the base rate of the Bank of England, and the interest accrues from the final date for payment until the amount is paid. Similar provisions are included for the final payment. (It should be noted that if the provision were deleted the contractor would normally have a statutory right to interest under the Late Payment of Commercial Debts (Interest) Act 1998.) If the employer makes a valid deduction following a notice, it is suggested that interest would not be due on this amount. The contract makes it clear that acceptance of a payment of interest does not constitute a waiver by the contractor of its right to proper payment of the amount due (cl 4.9.7).

8.37 The contractor is also given a ‘right of suspension’ under clause 4.11. This right is required by the HGCRA 1996. If the employer fails to pay the contractor by the final date for payment, then the contractor has a right to suspend performance of all its obligations under the contract, which would include not only the carrying out of the work but, for example, could also extend to any insurance obligations. This sum payable is to be in accordance with cl 4.9, therefore the contractor may not suspend work if a pay less notice has been given by the employer and the employer has paid the amount set out in that notice. In order to exercise the right of suspension, the contractor must have given the employer written notice of its intention and stated the grounds for the suspension, and the employer’s default must have continued for a further seven days (cl 4.11.1). The contractor must resume work when the payment is made. Under these circumstances, the suspension would not give the employer the right to terminate the contractor’s employment. Any delay caused by the suspension could be a relevant event (cl 2.26.5) and the contractor ‘shall be entitled to a reasonable amount in respect of costs and expenses reasonably incurred by him as a result of exercising the right’ (cl 4.11.2).

8.38 The contractor also has the right to terminate the contract if the employer does not pay any amounts due (cl 8.9.1.1). The contractor must give notice of this intention, and must specify the default, as required by the contract (see paragraph 10.26).

Interim payment after practical completion

8.39 Under both Alternatives A and B, an interim payment will be made at the end of the period in which practical completion falls. As noted above, the amount due will include 98.5 per cent of the value referred to in clause 4.12.1/4.13.1. The contract provides for further payments at monthly intervals between practical completion and the final payment (cl 4.7.2). In some cases no amounts may be due, but a payment certificate should still be issued, even if the amount is zero (cl 4.10.3). A payment may arise from, for example, a claim for loss and/or expense or the amount due as a result of the valuation of a change that had not been resolved prior to practical completion.

Final payment

8.40 Following practical completion the contractor is required to send a final statement to the employer for agreement, together with such supporting information as the employer may reasonably require (cl 4.24.1; see Figure 8.2). The final statement sets out the adjustments to the contract sum already made, the contract sum as so adjusted, the sum of amounts already paid, the balance resulting from the two and ‘the basis on which that amount has been calculated’ (cl 4.24.2). The adjustments will include amounts relating to:

• provisional sums;
• corrections of divergences;
• changes in statutory requirements;
• employer’s instructions effecting a change;
• insurance;
• loss and/or expense;
• fluctuations;
• costs and expense reasonably incurred under clause 4.11.2 following suspension.

8.41 If the contractor fails to provide the final statement within three months of practical completion, the employer may take steps to prepare this document (cl 4.24.3). The employer must issue a two-month notice to the contractor stating its intention to do so and, once that period has elapsed, may issue the employer’s final statement at any time, assuming that in the meantime the contractor has not submitted a final statement (cl 4.24.3 and 4.24.4).

8.42 The final statement can be for a negative amount – in other words, it can state that payment is due from the contractor to the employer. This may occur, for example, where there are revisions to the calculation of adjustments, or where an agreement has been reached regarding the acceptance of defective work.

8.43 The final date for payment of the balance is 14 days from the due date (clause 4.9.1). The due date is one month after either the date of submission of the final statement, the date of the end of the defects period, or the date stated in the notice of completion of making good, whichever of these occurs last (cl 4.24.5).

Conclusive effect of final statement

8.44 The final statement becomes conclusive as to the balance due for the final payment (cl 4.24.6 and 1.8.1). (More precisely, it acquires the status of ‘conclusive evidence’ of the amount due in that, although a party could later initiate a claim regarding the amount due, it would not be entitled to bring any evidence to challenge the amount in the statement.)

Figure 8.2 Finid payment procedure

The conclusive status of the final statement starts on the due date, but is said to be ‘except to the extent that’ the employer (in the case of a statement prepared by the contractor) or the contractor (in the case of a statement prepared by the employer) issues a notice disputing anything in the relevant statement prior to the due date (cl 4.24.6). This exception is ‘subject to clause 1.8.2’ which states that the conclusiveness of the statement ‘shall in relation to the subject matter of any adjudication, arbitration, or other proceedings be suspended pending the conclusion of such proceedings ... where those proceedings are commenced before or within 28 days after the date of issue of the relevant statement’. It therefore appears that two notices are required in order to prevent the statement from becoming conclusive, an initial one prior to the due date, and a formal initiation of dispute resolution proceedings within 28 days of the date of issue of the final statement.

8.45 It should be noted that the suspension is only ‘to the extent that’ the statement is disputed. The final statement, when it becomes conclusive of amounts due between the parties, is also conclusive with respect to the extensions of time awarded and loss and/or expense ascertained, and the contractor is prevented from seeking to raise any further claims regarding these matters (cl 1.8.1.2 and 1.8.1.3). It is also conclusive evidence, where matters have been expressly stated to be for the approval of the employer, that they have been approved, but, those matters aside, it is not conclusive evidence that any other materials, workmanship, etc. comply with any contractual requirement (cl 1.8.1.2, see also the case of London Borough of Barking & Dagenham v Terrapin Construction Ltd discussed at paragraph 4.15). It would also not be conclusive evidence that the design complies with the contractual requirements. If only one of these items is disputed, the statement will become conclusive as to the others.

8.46 The suspension will apply to adjudication provisions, if they are commenced within the stipulated time limits. The decision of an adjudicator is binding on the parties, unless and until it is challenged by means of arbitration or litigation. In order to achieve some finality, DB16 states that the suspension on conclusiveness will cease unless such proceedings are commenced within 28 days of the adjudicator’s decision (cl 1.8.2.2). To deal with the common situation where a party initiates proceedings, but then takes no further action, the contract sets a long stop of 12 months from the issue of the relevant statement – if no further action is taken the statement then becomes conclusive (cl 1.8.2.3).