Launched earlier this week, the Construction Supply Chain Payment Charter sets out 11 “Fair Payment Commitments”. These include a commitment to reduce payment terms to a supply chain to 30 days from January 2018. The Charter also sets out stages before this: terms of 45 days from June 2015, and 60 days with immediate effect.
Other commitments in the Charter, which has been agreed with a number of major contractors including Barratt Developments, Berkeley Group, British Land, Imtech, Kier, Laing O’Rourke, Skanska, Stanford Industrial Concrete Flooring and Stepnell, includes an agreement not to withhold retentions and not delaying or withholding payment.
“Given that there have already been many initiatives aimed at curbing payment abuse which have come more or less to nothing, enforcing compliance with the Payment Charter is of paramount importance,” said SEC Group chief executive Professor Rudi Klein – adding that the construction industry’s payment record was worse than that of any other sector.
In this context, SEC Group is urging Government to make compliance with the Payment Charter a pre-qualifying requirement for all public works contracts.
“Public sector bodies should introduce a ‘yellow card/red card’ system in respect of firms that fail to comply,” Professor Klein explained – the issue of a “yellow card” requiring compliance within a specified period and, in the event of continuing non-compliance, the issue of a “red card” involving disqualification from working in the public sector for at least two years.
He went on to encourage business secretary Dr Vince Cable to contact the top 100 private sector construction clients, inviting them to sign up to – and to enforce – the Payment Charter along the supply chain.
“SEC Group also believes that a ‘charter ombudsman’ should be appointed to drive implementation and identify instances of non-compliance,” said Professor Klein – adding that one effective way of implementation would be the continued promotion of the use of project bank accounts across the public sector and utilities sectors.
“Such measures are essential if the Payment Charter is not to become yet another wasted opportunity,” he insisted.