Friday, September 9, 2016

BESA welcomes a tough stance on payments


It’s encouraging to see that the Western Australian government has recently announced tough new measures to deal with the industry wide problem of construction payment performance.

The measures include:

  • Project bank accounts (PBAs), which will become mandatory on all state government projects valued between A$1.5m (£860k) and A$100m (£58m) from 30 September 2016.
  • 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.
  • Existing construction payment legislation will be amended to reduce payment times from 50 days to 30 days.
  • Detailed statutory arrangements for ring-fencing retention monies will be introduced.

Rob Driscoll, Director of Legal and Commercial at the BESA comments:

“In years gone by, Australia adopted the UK Construction Act and has recently implemented a rigorous legislative trust based retentions system. These progressive initiatives, build on and surpass the recent work of UK Government on introducing project bank accounts and mystery shopper scheme (reporting procurement and payment malpractice) and will provide a solid foundation from which their construction economy can thrive.”

Professor Rudi Klein, CEO of the Specialist Engineering Contractors’ (SEC) Group applauds these measures, saying: 

"The UK Government and the devolved governments should take note of these developments. 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.”

The BESA uses its links into its Australian sister organisation to gather intelligence and, during these uncertain economic times, inform colleagues in the UK department for Business, Energy and Industrial Strategy to influence policy makers for the benefit of the BESA members and their market positioning.

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

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