Frustrated with the lack of progress in improving construction payment performance, the Western Australian government has recently announced tough new measures to deal with the problem.
From 30 September 2016 project bank accounts (PBAs) will become mandatory on all state government projects valued between A$1.5m (£860k) and A$100m (£58m).
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.
Ceo of the Specialist Engineering Contractors’ (SEC) Group, Professor Rudi Klein, has applauded these measures and 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.
Professor Klein added: “Those advocating unenforceable payment charters are living in dreamland. 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 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.
SEC Group has also been leading a high profile campaign for statutory protection of cash retentions.