INDUSTRY NEWS


SELECT has its say in retentions debate


● Association responds to Scottish Government


consultation ●


Scheme aims to brings quicker


end to disputes A new scheme that aims to make adjudicating payment disputes quicker and easier has been launched by the Construction Industries Council (CIC). Introduced on 18 March, the Low


Value Disputes Model Adjudication Procedure is designed to be introduced into subcontracts to avoid delays and frustration. Under the UK-wide scheme, an


adjudicator’s decision must be issued no later than 28 days from the submission of the referral. T is adjudication is based on documents only, unless the adjudicator decides a meeting or site visit is necessary. Adjudicator costs are fi xed


depending on the claim value, with the adjudicator deciding who is liable for the fee. Both sides will also be liable for their own costs of the adjudication. Len Bunton of the SEC Group


Scotland said: “T ere have been serious concerns about the cost of adjudication and adjudicator fees for a long time, so this is good news for the supply chain.” Details of the new procedure can be


downloaded from the CIC website at www.cic.co.uk


i


Len Bunton’s column: Pages 34&35


10 CABLEtalk APRIL/MAY 2020


Calls for ring-fenced deposit scheme to


protect small fi rms ●


S Businesses ‘should


be selected on competence, not price’


ELECT has added its infl uential voice to the Scottish Government’s consultation on the use of cash retentions in construction. In a detailed response


on the practice, we fi rmly stated our long-held view that Holyrood should introduce a statutory obligation to place cash retentions in a ring-fenced retention deposit scheme. Cash retentions are deducted from


due payments, ostensibly as security in case a fi rm fails to return to remedy non-compliant work.


In practice, the monies – which belong to the fi rms from whom they have been withheld – are often used to bolster the cashfl ow of clients and Tier 1 contractors.


In our response to the consultation – which has been extended to 13 May – SELECT said: “We must aim to bring all value contracts within scope of our proposed deposit scheme so that small businesses which bear the brunt of retentions abuse are protected.


“A suggestion to place a cap on the value of contracts


subject to the scheme, or any other type of cap,


could exclude the very fi rms that require most protection.” In our response, we also listed the


many benefi ts of a ring-fenced scheme backed by adjudication: ●Monies ring-fenced in the scheme can provide collateral for borrowing, thus increasing liquidity for SMEs ●Disputes over the release of cash retentions will be resolved quickly, since neither party has control over the monies ●Since retention monies will not be available to be used and abused, the demand for cash retentions is likely to be reduced, thus placing a greater focus on selecting competent fi rms. Our statement added: “We must


change procurement strategies so the supply chain is involved in the design process from the outset to reduce the incidence of defects. Furthermore, fi rms should be selected on their demonstration of competence rather than on their ability to off er lowest price. Until the procurement process is altered, these issues will remain in


Most public sector jobs


‘still paid alarmingly late’ T e latest quarterly sector-wide Building Engineering Business Survey shows that payment conditions in the industry remain poor, with the majority of public sector work being paid for after more than 30 days. T e survey, which included data from


SELECT and other leading industry trade bodies ECA, BESA and SNIPEF, found that, in Q4 2019, 65% of direct public sector and 84% of indirect public sector jobs were paid for after more than 30 days.


Around half (49%) of respondents said that, in their organisation’s public sector work, clients typically inserted under-30- day payment clauses. Ensuring payment within this timeframe is mandated under


Alan Wilson


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