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Farmer Review - Recognises Unfair Payment Practices for Specialist Contractors!

Published 17 October 2016

The well-received Farmer Review of the UK Construction Labour Model, has identified many unjust payment practices that specialist contractors are unfairly subjected to and must contend with whilst contracting as part of a supply chain:

  • "...multiple on-costing, downward and often inappropriate risk transfer" (p.17)
  • "...Clients tend to fixate on lowest initial tendered price and this is often perpetuated by their advisors, who, in a traditional procurement model, are implicitly employed (at least partly) to manage a fixed and adversarial transactional interface between clients and industry" (p.24)
  • "...The multiple and tiered sub-contracting interfaces within the industry and between industry and its clients has generated a further non-value add process whereby some businesses higher up the supply chain will use other businesses’ money lower down to temporarily support and enhance their own cash flow." (p. 24). I guess this may be the answer to why the Robertson Group are predicting the rebalancing of margins if project bank accounts become commonplace:

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Specialist Contractors Need Lower Thresholds on Project Bank Accounts!

Published 8 October 2016

It has been widely reported that the Scottish Government, on public work projects, to protect subcontractors from insolvency and payment abuse, is introducing Project Bank Accounts. Clearly this is a step in the right direction. However, it does not go nearly far enough to protect Specialist Contractors from payment abuse.

Project Bank Accounts will be a requirement from October 31 on building projects over £4m and civil engineering projects over £10m in Scotland. However, we at the Confederation of Construction Specialists believe these thresholds are far too high and do little to protect the most financially vulnerable members of a Main Contractor’s supply chain. It is obvious to us that there should be Project Bank Accounts operating on all projects (Government and Private) with a project value in excess of £1m.

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Fair Payment Terms for Specialist Contractors!

Published 21 September 2016

Referring to the Dunne Group collapse, SNP MP Martyn Day, according to the Construction Enquirer, has asked for a “… ministerial statement or debate in Government time on what steps the Government is taking to ensure better payment standards for contractors”. Well, we at the Confederation of Construction Specialists can think of a few steps that should be immediately taken to ensure better payment standards for specialist contractors:

  • Automatic compensation (at a punitive rate) for any late payment receipt (beyond agreed terms).

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