Making the people you deal with wait for payment and extracting retention money from them in advance are part of the construction sector’s DNA, with cash undoubtedly king. But the building blocks on which much of the financial success of some firms in the sector has been built are under threat.

One of the country’s biggest spenders on construction, Network Rail, is taking a hard line on payment practices in a bid to ensure that cash flows throughout the supply chain. The decision to ban retentions and insist that its suppliers abide by 28-day payment periods was announced last month. It also revealed that project bank accounts will be introduced in its future contracts, starting from next year. The move has intensified the debate over fair payment practices throughout the supply chain.

Network Rail has some of Britain’s largest contractors in its employment, including Amey, Balfour Beatty, Kier and Skanska, to name but a few.

Stephen Blakey, Network Rail’s commercial director, thinks that somewhere along the line those contractors who agree to support Network Rail’s terms and conditions will face questions such as “Why wouldn’t they do it in Highways England’s portfolio? Why wouldn’t they do it in the HS2 portfolio?” But he adds: “It’s for other clients and other sectors to determine whether now is the right time for them to follow suit.”

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