The consultation comes after a review of the system of cash retentions carried out by consultants Pye Tait.
The Specialist Engineering Contractors’ Group in Scotland has been lobbying for curbs on the abuse of the retention system.
It has argued that retentions are used to bolster the cashflow of large companies and even many public sector bodies such as local authorities.
Various estimates put the loss of cash retentions following the collapse of Carillion at between £250m and £500 million.
SEC Group Scotland has been carrying out extensive lobbying amongst members of the Scottish Parliament to encourage them to support legislation to ring-fence the monies.
Alan Wilson, chief of SEC Group Scotland, said that all firms in Scotland’s construction industry were encouraged to participate in the consultation.
He said: “Our message is clear. Cash retentions must be put in a ring-fenced account or scheme. In this way we are more likely to see the end of a 200-year-old practice which has been abused to the detriment of small firms which often wait years to get their retentions released.”
The consultation closes on 25 March.