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'No retentions' promise at 2012 Olympics

The delivery body for the London Olympics is setting an example for others to follow by not deducting retentions on any of its contracts and keeping a close eye on main contractors to ensure this is enforced along the supply chain.

The Specialist Engineering Contractors (SEC) group and the National Specialist Contractors’ Council (NSCC) have welcomed a statement from the Olympics Delivery Authority (ODA) confirming its policy.

The ODA statement confirms contractual arrangements with Tier 1 contractors will allow monitoring of accounts and records to check retentions are not being deducted along the supply chain.

The ODA statement said “policy is not to deduct cash retentions in any of its contracts” and added: “The contracts that the ODA executes with its Tier 1 contractors do not discuss whether the Tier 1 contractors should hold retentions in their commercial arrangements with their sub-contractors or not.

“The ODA has however created a contractual environment in which Tier 1 contractors should recognise there are fewer commercial reasons for deducting retention monies from payments to their sub-contractors.”

It claims this can be achieved by encouraging contractors to adopt the 2012 Construction commitments which state there should be “no unfair withholding of retentions” and ensuring payment procedures do not allow Tier 1 contractors to gain any benefit from retentions.

Chairman of the SEC Group Trevor Hursthouse said: “The ODA’s retentions policy on Olympic projects will immediately benefit the cash flow of SMEs and make a significant contribution to the successful delivery of Olympic projects”.

Speaking on behalf of NSCC past president Graham Wren said: “The outdated practice of deducting retentions has already been condemned as poor practice by a House of Commons select committee. 

“I am delighted that the ODA has acknowledged this and will be monitoring compliance with its retentions policy along the supply chain.”