Bad payers drive poor behaviour
UK: Dame Judith Hackitt’s review of building regulations and fire safety following the the Grenfell Tower fire has stated that payment terms can drive poor behaviour.
The report, Building a Safer Future – Independent Review of Building Regulations and Fire Safety finds that payment terms, such as retentions, within contracts can put financial strain into the supply chain. “For example, non-payment of invoices and consequent cash flow issues can cause subcontractors to substitute materials purely on price rather than value for money or suitability for purpose,” the report states.
Speaking on behalf of the Specialist Engineering Contractors’ (SEC) Group Professor Rudi Klein maintained that this was further confirmation of the damaging impact that payment abuse was having on industry performance.
“There cannot be any excuse now to delay much-needed action to improve payment security for SMEs in construction supply chains,” he said.
The SEC Group has been urging the government to insist on a requirement for project bank accounts throughout public sector construction. In addition, it is calling for a statutory 30-day payment on public contracts, the introduction of a yellow/red card system to ban poor payers from public procurement for 3 years, and also supports the private member’s bill now in the House of Commons to protect retention monies.