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Sun June 20 2021

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Late payment hampers recovery for specialists

4 May 12 Specialist contractors are getting busier but are still dogged by late payment, their latest state of trade survey has found.

The National Specialist Contractors’ Council (NSCC) Q1 survey found that 44% of respondents have seen enquiries rise in the first quarter of 2012, up from 32% last quarter. And 37% reported an increase in orders, up from 30%.

Although changing seasons usually brings more work at this time of year, this is the highest rate of improvement in enquiries and orders that has been seen for three years.

This has generated ‘cautious optimism’ within the specialist sector and 47% of respondents are anticipating an increase in workload over the next 12 months. However, the majority are still planning less than three months ahead.

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One member of the Rural & Industrial Design & Building Association commented: “It feels as though the economic spring [has] sprung - however as we have seen you can have the best March on record only to be hit by a snowball in early April - who really knows what is going on?”

Late payment continues to be the biggest issue affecting specialist contractors with only 3% being paid within 30 days. The situation is significantly better in the public sector where payment periods have improved for the fifth quarter in a row and 41% are now receiving payment within 30 days.

NSCC chief executive Suzannah Nichol said: “To overcome the effects of the recession, the construction industry needs to work together to protect the supply chain. Without a knowledgeable, efficient and skilled workforce, employed by a multitude of specialist contractors, the industry cannot deliver the infrastructure, facilities and services necessary for our economy to function let alone grow. Unsurprisingly, this is why fair payment continues to be cited by specialist contractors as the number one measure that would provide support.”

Summary of NSCC Q1 survey findings

  • 44% report an increase in enquiries, up from 32% last quarter. 27% report a decrease in enquiries, down from 37%.
  • 37% report an increase in orders, up from 30% last quarter. 34% report a decrease in orders, down from 46%.
  • 12% report more difficulty in recruiting skilled labour, down from 15% last quarter. 14% found it less difficult to recruit. 4% were unable to bid for work due to skills shortages.
  • 55% report working at over 75% capacity, down from 62% last quarter. 28% report working at over 90% capacity, down from 30% last quarter.
  • 30% expect an increase in workload, up slightly from 29% last quarter. 23% anticipate a decrease in workload, down from 29% last quarter. 54% have a business planning horizon of less than 3 months.
  • 22% expect to expand their businesses compared to 15% last quarter. 17% expect to contract their businesses, compared to 22% last quarter.
  • 46% report falling tender prices compared to 51% last quarter. 15% report increasing tender prices compared to 18% last quarter.
  • 79% report increased suppliers’ prices compared to 84% last quarter. 1% report lower prices compared to 4% last quarter.
  • 60% report falling margins. 4% report increasing margins.
  • 3% are being paid within 30 days, down from 6% last quarter. 77% received payment between 30 and 60 days, up from 75% last quarter. 20% were paid between 60 and 90 days, up from 16% last quarter.
  • 55% report that they carried out public sector work in the last quarter and, of those, 41% are being paid within 30 days on all these contracts.
  • 83% have retention monies withheld from them and 33% of these retention monies are overdue for release. On average, 15% of outstanding retentions are written off as bad debts. 17% have used a retention bond as an alternative to cash retention.

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