CICV research indicates continuing payment problems in the Scottish construction sector

Earlier this month, the Construction Industry Combined Voice (CICV) published the results of very recent research into payment practices in Scotland. The research was conducted in November this year through the CICV’s extensive 28 member organisations covering all interests in the construction sector.

Key Findings

Key findings from the research indicate the following:

1. Late Payments: 79% received payments later than the agreed payment terms either ‘very often’ (37%) or ‘often’ (42 %).
2. Payment reductions: 58% faced unexplained payment reductions either ‘very often’ (29%) or ‘often’ (29 %) thus intensifying their financial challenges.
3. Write-offs: 33% had to write off disputed sums either ‘often’ (30%) or ‘very often’ (3%). 32% reported that the relevant amounts written off ranged from £10,000 to £50,000, while 16% reported that the write-offs were between £50,001 to £100,000.
4. Retention Monies: 73% reported that they had experienced challenges in obtaining the release of retention monies in the past year.
5. Contra charges: 51% experienced contra charges that had been neither explained nor substantiated, whether ‘occasionally’ (28%), ‘often’ (14%) or ‘very often’ (9%).
6. Period for payment extended: 55% of respondents indicated that standard payment terms in tender documents were adjusted to delay the Final Payment Date either ‘very often’ (25%) or ‘often’ (35 %).

The results show that, despite various initiatives to improve matters, Scottish construction businesses ‘continue to struggle with late payments, payment reductions and unresolved disputes’.

It is clear that the release of retention monies remains a very significant issue in the industry. The recent attempt at new legislation to address this having hit the buffers, it may be time to re-visit that or consider other avenues to reduce this blight on the sector.

While the results of the research will be very disappointing to many who had hoped to see some material improvement in the position, it is clear that the efforts of the CICV and others to change things for the better will continue unabated so that the construction sector reduces the continuing adverse effects of bad payment practices.