Construction Payment Charter fails to make double figures
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Photo Credit: Graeme Darbyshire via Compfight cc

 The newly created Construction Supply Chain Payment Charter, which sets out 11 standards for fair payment by construction firms, has failed to reach double figures in terms of the number of companies supporting it at launch.

 

 Just nine firms were ready to commit to its targets at launch on April 22nd, including:

 

  • Barratt Developments
  • Berkeley Group
  • British Land
  • Imtech UK
  • Kier
  • Laing O’Rourke
  • Skanska
  • Stanford Industrial Concrete Flooring
  • Stepnell

 

While these firms are to be applauded for making clear their commitment to fair payment practice (assuming they can meet the targets outlined by the Charter), the remaining 20+ members of the Construction Leadership Council have met with criticism for failing to do the same.

 

This is in spite of the fact that the Charter sets out phased introduction for key principles like prompt payment, and committing to it now would only require firms to promise 60-day payment terms.

 

From June 2015 this falls to 45-day terms, and from January 2018 all companies that have signed up to the Charter should make supply chain payments within 30 days.

 

Peter Hansford, the government’s chief construction advisor, said: “This Charter signifies the Construction Leadership Council’s commitment to small and medium-sized businesses, and the important role they play in the construction industry.

 

“Through the Council, the government is working very closely with industry to give businesses of all sizes the confidence to invest – securing high-skilled jobs and a stronger economy for everyone.”

 

But with fewer than a third of the Council’s members committing to the Charter, it may feel like another toothless instrument to SMBs working within construction supply chains.

 

And even for those who have signed up, it is four years before the standards on prompt payment come into full effect, meaning cash flow problems are likely to remain a major concern for construction SMBs in the short term.

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