Crossing a lien

As a PBSC (Poor Bloody Specialist Contractor) I am incensed by the way that he glosses over the inequities of the construction industry.

Everyone knows that the working capital that oils the industry is provided by specialist contractors. Without our efforts, provided on credit terms often longer than it takes us to do our work, the industry would grind to a halt. When we install materials we have bought with the labour we have paid we give up any rights over our works. We may be working for a subcontractor of the contractor of the client and if any of these go bust we will have lost our money.

If we had a lien over our property then I am damn sure that the client would not part with its money unless it was sure that lien had been satisfied. Client should not be surprised that in the absence of any lien we ask for security of payment.

Rupert reasons that security would be expensive. If the parties are sound and properly financed, the cost would be small. But I suspect it is not the cost that is the problem but the industry’s under-financed contractors funding past jobs with working capital from current contracts. They would find security impossible to get at any cost.

His second reason is no less vacuous, being that the banks would ask for security, which again would be available if the industry were properly financed.

Third, Rupert says sub-subcontractor guarantees are self-defeating. I employ more than 90% of my staff directly. Most of my customers operate pay-when-paid by default. I have tried pay-when-paid with HM Revenue and Customs and it does not seem to work. Specialists have to pay on time because our suppliers are outside of the industry and do not have to give us seven days’ notice – they simply stop supplying us. So Rupert’s fourth point, that security would disadvantage other industries, which have the right to remove their services at a whim, was the final straw.

He then made it worst by making his fifth: why should we have something for nothing? After 25 years in contracting, most of them running my own £1-3m-turnover companies I have suffered more than £1m in bad debts owing to insolvency. If specialists are going to be able to continue financing the industry, we have got to be granted protection or be allowed to maintain a lien until we are paid.

Terry Wright, director, Troika Contracting