In the last session of Parliament, close to 200 Members of the House of Commons signed the Early Day Motion 1941 on "˜Improving payment practices in the construction industry. The SEC (Specialist Engineering Contractor) Group has been targeting the Construction Act an Act of Parliament that was enacted in 1996 and is now being reviewed for some time. The Early Day Motion 1941 calls for legislative changes to the Construction Act. The SEC Group is pushing for two changes in particular:Adjudication: a simplified system is needed.
At the moment, it is open to abuse and sub-contractors can still suffer if main contractors refuse to adhere to the adjudication judgement, for example by going to appeal.Insolvency: SEC Group is advocating the creation of project bank accounts, rather than the main contractor being paid all the money, and then distributing it to sub-contractors.
A project bank account would allow sub-contractors to be paid the right amount on time, no matter what happened to the main contractor. Clive Dickin, CEO of APHC, comments: "I urge everyone in the Association, and beyond, to contact their MP and ask them to sign the Early Day Motion (EDM) that has been put forward to Parliament by Claire Curtis-Thomas MP, who works closely with the SEC Group. Now is the time to act. If we miss out this time, it will be a long wait to try and put things right and make things fairer for sub-contractors."
Claire Curtis-Thomas MP stated: "That this House believes that security of payment in the construction industry especially for small and medium sized businesses is a prerequisite to achieving trust and collaboration in the industry; therefore, urges the Secretary of State for Trade and Industry to use the opportunity presented by the current review of Part II of the Housing Grants, Construction and Regeneration Act 1996, initiated by the Chancellor of the Exchequer, to amend the Act to ensure that there is a statutory mechanism for defining the amount to be paid at the date for payment, that all conditional payment provisionsand cross contract set-off are outlawed, that progress payments start from commencement of contract and that the Act provides effective protection for firms in the supply chain from "upstream insolvencies. That this House believes that payment security will be a major factor in the successful delivery of the construction projects for the 2012 London Olympics.
SEC Group says that current payment practices could have an impact on the 2012 Olympic Games Almost 60% of firms responding to a recent survey indicated that theyexperienced payment problems and abuse as sub-contractors on the majority of projects. As a result, this impedes the trust and collaboration necessary to achieve a critical mass of teamworking and partnering. It also reduces the industrys capacity at a time when the industry is at its busiest for many years. The consequences of all this have been demonstrated by the Wembley Stadium saga.
The SEC Group is committed to playing a crucial role in delivering the 2012 Olympic Games by helping to build the venues and infrastructure. The Group recognises that there is a big challenge here for the UK construction industry over the next six years. The SECGroup says it will meet the challenge but that this is not just about a month of sport in 2012. This is about the UK construction industry using the opportunity presented by the Games as a catalyst for the implementation of best practice. This is an opportunity that must not be missed.