Construction, Dispute Resolution

The Sunk-Cost Fallacy: When a project dispute becomes a financial spiral

Written by: Samuel Okoronkwo

Published on: May 26, 2026

Many construction professionals assume that winning an adjudication means the dispute is effectively over. In reality, it is often only the end of the first chapter.

The real pressure begins when the losing party refuses to pay and the matter moves toward enforcement in the Technology and Construction Court (TCC).

This is the stage where many project directors and commercial teams fall into a dangerous trap: the sunk-cost fallacy.

By this point, the business has already invested substantial management time, legal spend, and commercial focus into securing the adjudicator’s decision. The instinct becomes emotional rather than strategic:

“We have come this far, we cannot stop now.”

But enforcement without a clear commercial assessment can become more damaging than the original dispute itself.

A successful TCC judgment is only valuable if it delivers a commercially recoverable outcome. Before commencing enforcement, or deciding whether to resist it, there are several critical issues every construction business must evaluate.

1. Assess the Real BATNA

Your Best Alternative to a Negotiated Agreement (BATNA) matters more than the strength of your legal argument.

In high-value construction developments, liquid assets and cash flow dictate project survival.

If the opposing party is approaching insolvency, even a successful enforcement judgment may leave you with an uncollectable debt, additional legal costs, and further disruption to project cash flow.

Winning on paper is not always the same as achieving a commercial victory. If the money is not there to be recovered, prolonging the legal process simply drains your remaining margins.

2. Understand the Strategic Role of Security for Costs

Although security for costs applications are relatively uncommon in adjudication enforcement proceedings, they may arise where there are genuine concerns regarding solvency, recoverability of costs, or parallel substantive proceedings.

In the TCC, timeframes are tight, and decisions are typically reached within weeks.

However, if you are defending against an enforcement action brought by a counterparty whose financial position is precarious, seeking an order for security for costs can protect your business from spending money on legal fees that you may never recover.

In appropriate cases, it may influence the commercial dynamics of the dispute and encourage earlier resolution.

3. Use Commercial Pressure Before Formal Enforcement

TCC enforcement moves quickly, but court proceedings are not the only mechanism for securing payment.

Well-structured without-prejudice proposals, commercial settlement frameworks, and early strategic correspondence can often resolve a deadlock before formal proceedings are issued.

This approach can save weeks of disruption, significant legal expenditure, and internal management distraction.

Savvy professionals understand that legal force is most effective when deployed with precision rather than emotion.

The Path Forward

In high-value construction disputes, the strongest outcomes are rarely achieved through emotional escalation. They are achieved when legal strategy is aligned with commercial reality.

A barrister’s role should not simply be to prolong litigation or win an abstract argument. The real value lies in structuring a path that protects cash flow, limits exposure, and secures the best commercial outcome with the least operational risk.

If you are currently managing an unenforced adjudication decision, or anticipating a TCC enforcement challenge, obtaining strategic advice early can materially change the trajectory of your project.

I would be happy to discuss this further if it applies to your project.