The nature of payment problems in the new zealand construction industy.pdf

Table 2 gives a comparison of the amounts in disputes

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Table 2 gives a comparison of the amounts in disputes (column 5) with those awarded in the final judgement (column 6). This shows that there is a high probability (risk) that construction payments will either be delayed, paid partly/fully or both. Payment delays are obvious in court cases because the cases would have been through an adjudication process, the District Court enforcement, and subsequently to the High Court for appeal. Though, some cases could be filed directly at the High Court without necessarily going through an adjudication process. In reporting the figure, the paper therefore assumes that whether a claimant is paid fully or partially, since it was referred to the High Court, the project would have been delayed. Payment loss is assumed to have been experienced by a claimant when it loses the claim or was not paid by the defendant. The status of payment was classified as likely delay or loss if it was unresolved, pending further decision or determination. Figure 1 Distribution of amount claimed in disputes Table 3 provides the summary of payment status in final judgement and indicates that, in 40% of the cases claimants were paid fully but experienced delay in getting paid. In another 10% claimants were partially paid, experienced delay in the process while also losing the amount that was not paid. It was observed that 25% of the claimants lost their case for reasons traceable to their actions or inaction. For example some of the claimants failed to comply with contractual obligations; submitted invalid payment claims and statutory demands; and provided inappropriate payment schedules. For the 25% of claimants who lost their cases, the amount lost was mostly less than $100,000. A further 20% identified in the study are those companies that are likely to be delayed or lose money, because these few cases were unresolved and referred back to adjudication.
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