Plans to improve construction payment practices launched

Published:  12 July, 2007

Plans to improve payment practices throughout the construction industry have been announced by Margaret Hodge, Industry & Regions Minister. While the sector, which accounts for nearly 9% of the economy, has improved payment practices over the past decade, problems remain.

The consultation, developed with broad industry support and involvement, builds on the current system and has three objectives.

• Introduce greater clarity and transparency into the statutory payment framework to enable construction companies to better manage cash flow.
• Encourage parties to resolve disputes by adjudication.
• Identify how the costs and benefits of the package can be evaluated.

Margaret Hodge said, ‘It is essential for the construction industry that we have in place a system which delivers fair payment practices. The framework set out in the 1996 Construction Act has delivered some improvements, but recent industry surveys say that poor payment practices continue to be an issue for many in the industry. We must change that. I believe that this package represents good progress in securing a better payment system for the industry.’

Peter Rogers of Stanhope Plc, a member of the sounding board, says, ‘I am delighted that this consultation is being launched. The proposals it contains have been subject to detailed scrutiny by the sounding board, as well as more widely by the industry. Fair payment must underpin more integrated working practices. The construction industry now has the opportunity to consider measures which should be in the better interests of us all.’

The consultation aims to ensure that the payment framework creates a clear interim entitlement to payment and prohibits the use of pay-when-certified clauses.



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