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Thu June 24 2021

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SEC calls for tough Australian-style rules to improve construction payments

31 Aug 16 The Specialist Engineering Contractors’ (SEC) Group has called for the UK to copy tough new rules introduced in Western Australia to improve construction payments.

Professor Rudi Klein, CEO of the UK's Specialist Engineering Contractors’ (SEC) Group, applauded the measures. “Those advocating unenforceable payment charters are living in dreamland,” he said. “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.”

SEC Group comprises the Plumbing and Heating Contractors’ Alliance, British Constructional Steelwork Association, Electrical Contractors’ Association, Building and Engineering Services Association, Lift and Escalator Industry Association and Select – the Electrical Contractors’ Association for Scotland.

The Western Australian government has recently announced a series of measures designed to tackle the issue.From 30 September 2016 project bank accounts (PBAs) will become mandatory on all state government projects valued between AU$1.5m (£860,000) and AU$100m (£58m). SEC Group has been advocating the use of PBAs, which ensure that progress payments are held in one ring-fenced “pot” to be discharged simultaneously to all supply chain firms. PBAs have been adopted by the UK Government and by the UK devolved governments.  They are mandatory in Northern Ireland for public sector projects over £2m.  PBAs are used on all Highways England projects; as a result third-tier contractors are receiving their payments within 19 days.

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Another measure being introduced in Western Australia is 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.

In addition, existing construction payment legislation will be amended to reduce payment times from 50 days to 30 days and there will be detailed statutory arrangements for ring-fencing retention monies will be introduced.

Klein said that the UK government and the devolved governments should take note of these developments. UK construction is the worst performing sector as far as payment is concerned, he said.

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