Kier axes plan to charge subcontractors to work with them

Aaron Morby 5 months ago
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Kier has shelved controversial plans to charge subcontractors 1.5% of their package turnovers to become closer strategic partners.

Commercial chiefs told to push for extra discount before signing subcontracts

The supply chain discount plan was to be piloted in the south east before being rolled out across the country as part of its new Working as One initiative.

But it was greeted with uproar from the wider subcontractor community after being highlighted by a report in the Enquirer three months ago.

New Kier chief executive Andrew Davies, who inherited the initiative from the previous board, has now abandoned the ‘pay to get paid’ plan, which hoped to raise over £5m in the next financial year.

After the U-turn, commercial managers are being told to adopt a ‘last call’ regime to extract further discounts from final bid prices.

This would see commercial chiefs calling subcontractors prior to any order being placed to lever a further discount.

It is understood Guy Smithson, commercial director at Kier Regional Building, will be leading the new push.

A subcontractor told the Enquirer: “This is great news for the industry. What Kier was planning, risked setting other main contractors on the pay to get paid course.”

Over 14,000 suppliers and contractors ranging from Tier 1 to micro SMEs work with Kier, with subcontractors alone accounting for £2.4bn of spending each year.

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