PFI sub-contracts: adjudication costs

First tier PFI construction sub-contracts are excluded from the Construction Act’s changes to the pay-when-certified provisions. However, those sub-contracts are not excluded from the changes introduced by section 108A, which deals with adjudication costs. It is common for the parties to a PFI project agreement to pre-agree who will be responsible for the adjudication costs. Banks usually insist that those provisions are stepped-down into the sub-contract. This may no longer be possible as section 108A appears to prohibit this, although the way the section has been drafted could create a loophole. Therefore, project companies and banks may insist that the head contract is amended to make sure that there is no mismatch with the sub-contract. Alternatively, they may want to include alternative drafting in the sub-contract to reduce the effect of the mismatch. It will be interesting to see how this develops.

Tags

Mills & Reeve Sites navigation
A tabbed collection of Mills & Reeve sites.
Sites
My Mills & Reeve navigation
Subscribe to, or manage your My Mills & Reeve account.
My M&R

Visitors

Register for My M&R to stay up-to-date with legal news and events, create brochures and bookmark pages.

Existing clients

Log in to your client extranet for free matter information, know-how and documents.

Staff

Mills & Reeve system for employees.