Construction businesses in Scotland are still suffering from late payments, outstanding retentions and unexpected charges.
That's according to a new survey by the Construction Industry Collective Voice (CICV), which revealed that 68% of respondents said their payment terms were altered negatively, with 60% claiming adjustments were made with little or no explanation.
A further 69% of those surveyed said the time and cost of chasing outstanding money was their most significant problem when it came to payment.
Answered by those businesses which operate both as main and sub-contractors in the public and private sectors, the research also showed that 52% have problems getting retentions paid, while 44% have been hit with unexpected charges.
Half of respondents said they required external assistance to deal with payment disputes, with 54% saying they had referred a dispute to adjudication.
Len Bunton, chair of the CICV’s pipeline and commercial sub-group, said: “From these findings, it is clear - and also rather depressing - that cashflow and payment issues are still major problems in the construction industry in Scotland.
“It is especially frustrating to see so many financial disputed still going to costly adjudication and so little take-up of solutions like project bank accounts and the Conflict Avoidance Process – despite evidence that they do work and help to improve all-important cashflow.”
The survey also invited respondents to provide anecdotal evidence of cashflow and payment issues, along with suggestions of how to improve the current situation.
One said: “I’d like to see less sub-contracting and more directly employed trades so there’s a joined-up process and effectively one large purse with collective ownership – the minute we sub-contract we divide, priorities, focus and responsibility aren’t truly shared.”
Another told the poll: “We have problems with the public sector with too many authorisations that prolong and delay payment – a simplified process would help.”
A third added: “Many years ago, main contractors had to show proof of payment to sub-contractors before they received their next payment – implementing such a practice for all sub-contractors would hugely improve the payment process.”
The CICV is now devising measures to help combat issues highlighted in the survey, including the imminent publication of a best practice guide.
David MacDonald, who is also a member of the CICV’s pipeline and commercial sub-group, added: “The many troubling issues highlighted by this survey simply reinforce the need for the industry to resolve matters before they escalate into disputes.
“The best practice guide, to be published by the CICV shortly, is designed to be used to eliminate poor commercial management and assist contractors to be much more alert to potential problems and risks.
“A planned webinar will also help contractors navigate the perilous waters of payment, which are clearly still littered with many difficulties.”
The survey - which received around 100 responses during January - is the latest initiative launched by the CICV since its creation in March 2020, as a response to the Covid-19 threat to people and business.
Made up of 28 trade associations, professional services bodies and companies, it has maintained a supply of information and practical advice to the sector, as well as carrying out surveys and maintaining dialogue with Scottish Government ministers.
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