HA using arbitration to delay pay, claim civils

Civils contractors' cashflow is being hit by a dramatic tenfold increase in claims going to arbitration at the Highways Agency.

The contractors lay the blame squarely at the feet of the Agency which they say is deliberately delaying contractor payments totalling perhaps as much as œ140 million.

FCEC director of industrial and environmental affairs Maurice Webb said: 'We've heard that there are 32-35 arbitration cases going on at the moment. In the past there were never more than three in a year.'

The Highways Agency confirmed this week that arbitration cases had risen but not as sharply as contractors claim. A spokesman told CJ: 'There are 17 unresolved arbitration references on going at the moment.' But he added that more may be coming through. The 17 cases amount to over œ70 million with claims ranging from œ74,000 upwards.

He denied the increase was the result of a deliberate policy to withold contractor payment. 'We recognise there has been an increase, but we don't like to speculate as to why that is, it tends to be cyclical,' said the spokesman. He added that the Agency was unable to say what the increase is.

Angry contractors say the Agency is leaning on engineers to fight claims because budgets are so tight.

'Engineers are getting very nervous about settling any claim incase the Agency disputes it and surcharges them,' said one leading civils contractor. 'As a result they are settling sod-all these days.'

The FCEC's external affairs director Jim Turner echoed these claims this week. 'Our opinion is that the claims queue has lengthened, principally because of the tightness of the budget at the Highways Agency. That has impinged on the engineer - where previously he took responsibility for settling a claim he will now pass it back to the client.'

Contractors also cite fee competition among engineers as a factor.

'This has affected the quality of documentation coming from the engineer. When it comes to settling claims, with so little work around, the engineer's first concern is to stay on the Agency's bid list,' said a top civils managing director.

But engineers say contractors are reaping the effects of the cutthroat bids they made in the depths of the recession.

'These contracts are flowing through and we are seeing an increase in claims as contractors try to recover the value of these contracts,' said the Association of Consulting Engineers' business affairs director Mike Springett.