“Carillion defends payment terms”, about Carillion’s 65-day terms for subcontractors, has sparked furious debate. Here’s a snapshot of your opinions

I agree with Rudi Klein’s views regarding Carillion’s 65-day payment period proposed for their sub-contractors. This was likely to occur once the large consortiums, which were being formed during the early days of the MoD Prime Contracting proposals, had the opportunity to consolidate.

It does nothing to further partnerships and is bad for the industry. The implication and effect of such a policy is obvious. Costs must rise and delays will be inevitable while sub-contractors wait for payment before progressing.

In my opinion, under no circumstances should the government consider placing any further contracts with Carillion, regardless of whether they are of a major builds or infrastructure nature, it is going to blatantly disregard the government’s 30-day recommendation on payment.

John Manley

Who is going to pick up the additional costs that sub contractors are going to incur under Carillion’s payment terms? The likely results of this action will be:

Additional interest costs incurred by the subcontractors will either be absorbed by them in the long-term (unlikely) or passed on to Carillion;

  • Carillion will either absorb the costs (unlikely) or pass them on to the client or building owner;
  • The building owner will either absorb the costs (unlikely) or pass them on to their clients;
  • The clients will either absorb the costs (unlikely) or pass them on to their customers;
  • Customers, ie you and me, will eventually be asked to pay more. We will then insist on a large pay rise to cover it.
  • We will then continue to go round the same maypole.
  • Wake up Carillion, all you are doing is increasing prices due to your lack of foresight and commercial expertise.
Or is it that you are so dominant in the industry that you are just going to ride roughshod over everyone? So much for being a team player.

In the fullness of time this action is likely to rebound, leading you to increase your tender prices and become uneconomic in the market. I have seen this happen in the past, which resulted in the contractor having to back off with a certain amount of loss of face.

Ex-Carillion employee, name and address supplied

Source

Construction Manager