Everyone has a story to tell about payment abuse in construction. Here’s one from Graham Watts of the Construction Industry Council. At the height of the recession, when businesses were crashing on a daily basis, Watts was sitting in the offices of a fairly large firm. The chairman showed him a substantial amount of cash in the company’s bank account. Then added that most of that money didn’t even belong to the company – it belonged to someone else.

“We just haven’t paid them yet. And 20% of that we will never pay because the companies we’re supposed to pay just won’t exist.” Ain’t business cruel?

Unfortunately payment abuse is not limited to just the recession. For years the bigger companies have been using their financial clout and big muscles to bully their smaller counterparts into doing work. That’s part and parcel of business, right?

However, some people think the situation is getting worse, while others believe it has radically improved over the years. One thing we can all agree on, is that it still happens. Maybe this is why the government is seeking to reform payment practices in construction (see page 26).

No prizes then for the two groups most vocal about possible changes to legislation. Main Contractors want the Construction Act left alone and the specialists are advocating nothing short of a revamp. But the problems are bigger than these two sparring partners. Just ask anyone lower down in the chain than you.

So what happens now? Well the answer lies with the Government. And it better make sure it’s up to date with its magic circle subscription because even David Copperfield would find it hard to make these problems disappear. All we can do is wait and see if the DTI manages to pull out a cute little bunny rabbit from its hat.

In the meantime, there are things the industry can do, that are not totally alien to the sector. Strive to form strong relationships, implement project bank accounts and most of all spread the word that payment abuse will not be tolerated.

Payment on time never hurt anyone. Non payment causes good companies to go bust, good people to leave industry and never come back. And as we all know, no amount of money can change that.

Source

Construction Manager