SEC urges UK to introduce tough Australian-style rules to improve construction payments

Specialist Engineering Contractors Group ScotlandThe Specialist Engineering Contractors’ Group (SEC Group) has applauded the Western Australian government for showing the way with tough new measures to deal with improving construction payment performance.

From September 30, project bank accounts (PBAs) in Western Australian will become mandatory on all state government projects valued between A$1.5m (£860k) and A$100m (£58m).

The SEC Group, which includes Scottish electrical contractors’ association SELECT and the Scottish & Northern Ireland Plumbing Employers’ Federation, has been a leading exponent of PBAs which ensure that progress payments are held in one ring-fenced “pot” to be discharged simultaneously to all supply chain firms. PBAs have been adopted by the UK government and by the UK devolved governments

Another measure being introduced in Western Australia is a new code of conduct for tenderers will enable prospective tenderers to be barred from tendering for payment malpractice. Consideration is also being given to legislation to fine companies guilty of repetitive payment abuse of their supply chains.

In addition, existing construction payment legislation will be amended to reduce payment times from 50 days to 30 days and there will be detailed statutory arrangements for ring-fencing retention monies will be introduced.

SEC Group has also been leading a high profile campaign for statutory protection of cash retentions.

Professor Rudi Klein, CEO of the SEC Group, said UK construction is the worst performing sector as far as payment is concerned and that the UK and devolved governments should take note of these developments.

He added: “Those advocating unenforceable payment charters are living in dreamland. We need to follow the example of Western Australia if we are serious about helping SMEs to invest in the skills and technologies desperately needed by the industry and its clients.”

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