Rudi Klein talks about the issue of the moment -
Protection of cash retentions
Every year thousands of small businesses in construction lose millions of pounds handed over by way of cash retentions.
Cash retentions are withheld from progress payments ostensibly as security against failure to remedy defects. In practice they are deducted to support the cashflow of the paying party.
The amount withheld is normally 5% but, in some cases, it is up to 10% (and even beyond this figure). Half of the withheld retention should be released on handover of the work but even this is not always the case.
For most small businesses the wait for the release of their retentions can be up to 3 or 4 years after handing over their works. In the meantime the paying party may have gone into insolvency. The monies are lost even though they belong to the firm which has carried out the work.
What are we waiting for?
The Enterprise Bill provides another opportunity to address this issue. Would you support the inclusion in this bill of a provision that requires that cash retentions are placed in trust (or that alternative security such as a bank guarantee is provided)?
SEC GROUP LIFTS LID ON POOR PUBLIC CONSTRUCTION PROCUREMENT
New research from the Specialist Engineering Contractors’ (SEC) Group has painted a worrying picture about the state of procurement in public sector construction in the UK.
The year-long survey, based on questions submitted under the Freedom of Information Act (FOI) involved almost every public body in the UK (other than central government) – local councils, universities, fire and police services and NHS Trusts.
The results of the survey were launched at an event at the House of Commons on 11 February 2015, attended by industry leaders, members of government, civil servants and the press. The reports are available on the website click here.
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