Commitments to publish figures on payment times every six months is broadly welcomed by SEC Group, which has expressed concern over the initial findings
Some of the UK’s largest construction companies have begun to publish figures on their recent payment performance as part of new commitments by industry body BuildUK to address industry and government concerns.
Large companies working across the industry will now have a ‘Duty to Report’ the average time they are taking to pay invoices to try and improve transparency in the construction supply chain. The figures will be published every six months.
The commitments, which have been announced as part of a response to the recently unveiled Construction Sector Deal, have been made as building services organisations continue to push for payment reforms focused on issues such as retention. Some industry stakeholders have cautiously welcomed the initial performance data, which shows a widespread failure to ensure commitments for prompt payments to be made within 30 days to sub-contractors are being met.
BuildUK’s chief executive Suzannah Nichol said that 24 of its 27 members that are in scope to publish their performance data had so far provided figures, with a full set of information set to be published in October.
She argued that the organisation’s members had the opportunity to work together on addressing concerns over construction payment practices.
“Transparency is essential to changing the industry culture around payment and the Duty to Report has provided a consistent means of comparing performance. This bold first step by Build UK and its members shows that the leaders within the sector are serious about changing the way they do business.”
Government minister for implementation Oliver Dowden said that he hoped to see a wider number of initiatives being supported by industry bodies such as BuildUK in a drive to eliminate poor payment practices.
He said, “Government is leading by example in fair payment practices. All public sector organisations are required to pay undisputed invoices in 30 days and ensure this payment term is passed down the supply chain.
The Specialist Engineering Contractors’ (SEC) Group said that the publication of the performance data showed that not one organisation included in its scope had ensured payments were made within 30 days.
SEC Group chief executive Rudi Klein said that the companies, which represent the largest construction groups in the UK, would fail to comply with the Public Contracts Regulations 2015 that requires payments for public sector works to be received in 30 days.
Mr Klein said, ““I am concerned that the existing legal requirements and charters are being ignored. We are urging the government to put in place project bank accounts on all public sector projects.”
“These will enable SMEs in these companies’ supply chains to be paid within 12 to 15 days; everybody gets paid from the same ‘pot’ without cash having to travel along the cascading layers of contracting.”
Mr Klein also cited recent findings from parliament’s Public Accounts Committee that recommended opening consultations with SMEs on how best to ring-fence cash retentions and introduce project bank accounts.
The conclusions were made as part of an investigation by the committee into current stability in the construction supply chain following the collapse earlier this year of Carillion. It looked at the potential impact on procurement as a result.