Specialists call for Ebay-style public works payment hub

Aaron Morby 8 years ago
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Specialist building services firms have called on Government to set up an online payment hub along the lines of Amazon and Ebay.

Subcontractors argue the move would radically change the industry payment culture at a stroke and allow full monitoring of payment performance on public contracts.

They also want to see poor payers on public sector jobs penalised using a yellow and red card system for delayed payment.

The plan is one of several measures proposed by the Building & Engineering Services Association in response to Government consultation aimed at giving its prompt payment initiatives real teeth.

The association also wants to see the present voluntary payment charter made compulsory and a mechanism to release payments for early upfront prefabrication works.

Rob Driscoll, head of Commercial & Legal at B&ES, said: “If the Government applied the same effort as is has done for BIM to late payment, it could eradicate the scourge of the industry.”

He added at present the Government has no means of monitoring implementation or the success of its prompt payment initiatives.

“An online data hub could at the point where public bodies issue contracts automatically issue payment schedules to the registered supplier stating when payments become due.”

He said that when a payment was late it would automatically include the interest in the payment to be made without the need for the supplier to request that interest be paid.

“All the information needed to determine whether prompt payment is being used and who is abusing the system would be available at the click of a button, saving Government huge amounts of cash in administering it systems and policing payment.”

B&ES also wants to see yellow and red cards issued to poorly paying contractors. A yellow card would be issued to a contractor failing to pay on time setting out when payment should be made.

Failure to do this would result on a red-card, excluding the firm from bidding for work for a period of say a year, said Driscoll.

Poor-performing public bodies like local authorities could see grants reduced by central Government.

The B&ES response concludes: “Late Payment, lengthy payment and general payment abuse in the construction industry have little to do with payment culture.

“They are fundamental to maintaining the business models of large companies which are dependent upon having access to their supply chain’s cash.

“The net cash balances of the five largest companies in construction, which sub-let billions of pounds worth of work annually, fell by almost 90% between 2011 and 2012- from £621m to £46m.”

It concludes: “Research carried out in 2013 for the Department of Business concluded: ‘construction firms are under capitalised, compared with firms across the rest of the UK economy…This is especially the case for tier-1 and large contractors.”

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