THE Scottish Government’s initiatives to improve payment performance in the construction sector have yet to make any major impact, according to a new survey from the Specialist Engineering Contractors’ (SEC) Group Scotland.
During the course of last year, the industry body carried out an extensive survey on payment practices as they affected engineering firms in Scottish construction, with the ‘overwhelming’ majority of respondents being SMEs. Companies were asked to indicate whether there were differences in payment performance in both public and private sector construction.
According to the survey results, 90% of firms supported the introduction of a construction regulator with powers to impose penalties on poor payers or, in the case of suppliers, to exclude them from bidding for public sector works.
60% of public bodies amend the payment provisions in standard forms of construction contract, which often involves extending the payment cycles, while the figure for the private sector was 69%.
Only 28% of firms reported that they were paid by public bodies within 30 day. For the private sector, it was 24%. Where firms were acting as subcontractors on public sector works, over 85% reported that they were not being paid within 30 days (76% in the private sector).
Almost 47% of companies working for public bodies reported that a tenth of their payments were late, 10% more than the private sector. 19% reported that at least a third of their payments from public bodies were late. 45% of subcontractors working in the public sector reported that their payments are made late.
Eddie Myles, SEC Group Scotland chairman has called on policy makers to tackle payment abuse in construction ‘as a matter of urgency’. He commented, “There is overwhelming support amongst firms for a construction regulator to challenge poor payment practices. I, therefore, urge Scottish Government to back this proposal by introducing legislation to create the office of regulator with extensive powers to penalise those guilty of bad practice.”
Ken Lewandowki, formerly co-chairman of the 2013 review of public sector construction, said he was ‘frustrated by the slow pace of progress in curbing payment abuse, particularly by the large construction companies’.
He said, “I have witnessed at first hand the appalling treatment of small firms in construction when it comes to payment. We depend on small businesses to invest in the future of the industry in Scotland.
“They are primarily responsible for contributing to their communities through offering apprenticeships, increasing local employment and upskilling their workforces. But we cannot expect them to continue such investment at current levels unless we are prepared to address this problem of payment abuse head-on.”
