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Build UK ‘disappointed’ to see contractors squeeze supply chains

14 July 2020

Build UK has seen “extremely disappointing” evidence that some construction companies are squeezing their supply chains rather than working collaboratively as the industry emerges from the coronavirus lockdown.

In an update issued yesterday, Build UK said that with everything the industry has been through over the last few months, and with more uncertainty ahead, the sector’s “long-term resilience depends on working collaboratively”.

It added: “It is therefore extremely disappointing to receive evidence that some companies are reverting to bad habits and squeezing their supply chains, rather than taking the opportunity to revolutionise the way in which construction projects are delivered.”

Build UK warned firms that their reputation could be damaged “by not doing the right thing”.

In April this year, Build UK added its support to the Construction Leadership Council’s statement on payment and contracts.

In its statement, the CLC warned that it was “increasingly concerned about the management of payment in the supply chain, and the risk that clients and firms will seek to invoke contractual clauses to the detriment of other firms”.

It highlighted the importance of maintaining cashflow to ensure the financial health of the industry. The CLC added: “This applies to all businesses in the sector, including those in the materials and products distribution supply chain. As a result, every business, large and small, has a critical role in the making sure that cash continues to flow throughout the industry. However, our Construction Industry Task Force colleagues have brought to our attention that there are number of businesses that have chosen to unilaterally delay payment or extend credit terms. We do not believe this is acceptable or appropriate – particularly at this time of great stress.”

Comments

In my own experience, there is more ‘subbie bashing’ going on now than I have ever experienced. Subbies I speak to feel they are hamstrung by litigation costs, even the use of special ‘contract claims’ specialists to invoke alternative dispute resolution methods are far too costly. Debts below £30K are routinely written off by hard pressed small businesses in the sector.

Peter Griffiths, 14 July 2020

When I started work in the long distant 1950’s the company instructions to all departments were

You pay all invoices on time, pay the correct ammount, not a penny less, not a penny more!

A philosophy that has stuck with me since then, including some of the largest contracts in London.

John Albert Lyons, 14 July 2020

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