It is widely regarded as received wisdom that the Scottish construction industry suffers from bad payment practices – undervaluation of work done, underpayment for work done, non-timeous payment and unjustified or unexplained deductions from payments when they are eventually made.
Many hoped that the availability of adjudication, including some low-cost adjudication schemes, as well as a number of other initiatives such as the RICS-inspired Conflict Avoidance Process, might change how the industry operates in relation to payment. In the absence of proper research and data, however, it is sometimes difficult to separate fact from fiction.
It’s against that background that the results from a recent survey by the Construction Industry Collective Voice (CICV) on ‘Payment and cashflow in construction’ are to be welcomed. The survey is the latest in a series of excellent initiatives by the CICV, formerly the Construction Industry Coronavirus (CICV) Forum, since its creation in March 2020. The impressive, wide-ranging membership of the CICV is made up of 28 trade associations, professional bodies and many others involved in the Scottish construction sector.
The results of the survey of main contractors and subcontractors indicate that bad payment practices are still rife in the construction sector in Scotland.
Some of the key findings from the research are:
- 93% of respondents indicated that payment periods in Standard Form Contracts are amended to lengthen them.
- 72% are aware they might have the right to suspend work when proper payment has not been made but do not exercise that right.
- 69% indicated that the time and cost of chasing outstanding monies was their most significant problem when it came to payment.
- 62% are aware of project bank accounts, but only 17% have been involved in their use.
- 54% have had to refer payment disputes to adjudication.
- 52% reported that they still have problems getting retentions paid.
- 50% said they needed external assistance to deal with payment disputes.
- 40% disclosed that they “always” or “often” have payments reduced.
- 30% said payment delays have a “major impact” on their business.
It is to be hoped that the results of the research will strengthen the hand of those who lobby for the eradication of bad payment practices. However, without a genuine desire for and action to effect fundamental change in payment practices right across the construction sector, the good work being done by some to improve the position will remain an uphill struggle.
