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How to save the construction industry: Forum outlines Five Key Points in plea to Government Minister

Posted: 8th May 2020

The supraorganisation fighting to save the construction industry in Scotland has written to Holyrood urging the Government to adopt a five-point plan to assist contractors through the worst of the COVID-19 crisis.

The Construction Industry Coronavirus (CICV) Forum, made up of 23 trade and professional bodies as well as scores of companies and individuals, has addressed its appeal to Kevin Stewart MSP, Minister for Local Government, Housing and Planning.

The letter asks the Scottish Government to implement the following five key points, along with desired aims:

  • Agreement by public sector procurers on all project costs at March 31, including resolution of disputes, and payment within 14 days.
    • Aim: Release cash to the industry and the supply chain.
  • Public sector procurers to consider release of all or part of retentions.
    • Aim: As above.
  • Introduction of 14-day payment period when construction recommences.
    • Aim: Improvement of cashflow.
  • Introduction of Project Bank Accounts (PBAs) when construction recommences.
    • Aim: Ensuring rapid cashflow.
  • Lowering PBA threshold on public sector procurement to £250,000.
    • Aim: As above.

The urgency of the appeal was highlighted by the fate of the latest victim of the building industry shutdown – Central Building Contractors (Glasgow), which went into administration at the end of April, making 148 staff redundant and sending shivers down the supply chain.

Len Bunton, head of the CICV Forum Clients sub-group, said: “Even before the sudden shutdown of the construction industry in Scotland, the sector was experiencing extreme difficulties in relation to cashflow and payment. Urgent attention to payment cash flow and fairness is now needed by the public and private sector in Scotland.”

Ian Honeyman, Commercial Director of Forum member the Scottish Building Federation, said: “From the end of March, most contractors and the supply chain in Scotland have been unable to generate work in progress on sites. This situation will continue for a significant period beyond the date of a return to operational sites.

“The Forum has produced realistic recommendations on improving cashflow and if there was co-ordination on these matters between local authorities, Scottish Government procurement departments and the Scottish Futures Trust, this would give a significant lead to the Industry on to how to sensibly manage a way through this crisis.”

The Forum’s plea to the Minister also follows a major survey which showed that cash flow has completely dried up for nearly 80% of firms in the construction industry in Scotland and that close to two thirds of businesses are being hit by late payments.

Fiona Hodgson, Chief Executive of the Scottish and Northern Ireland Plumbing Employers’ Federation (SNIPEF), said: “Retentions are something we have to look closely at in the future, but even a temporary release of public sector contract retentions would generate significant cash flow throughout the industry.”

The CICV Forum, which was set up two months ago, now has 23 trade and professional body members. It has established a series of influential sub-groups dealing with mission-critical aspects such as Health and Safety, Skills, Communication and Future Planning.

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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