Open mike Graham Watts is furious that the industry is wasting an opportunity to reform the Construction Act, but Rudi Klein says we may lose the chance forever if we jump in without thinking
In a radio broadcast to the nation in 1941, Winston Churchill tried to allay concerns about German U-boats. “I am glad to tell you, the heat of their fury has far exceeded the accuracy of their aim,” he said.
I was reminded of this when reading Graham Watts’ Open Mike column (3 August, page 31). Let’s distil his points: A rare opportunity has arisen to amend the Construction Act – let’s go with the current proposals.
This opportunity didn’t emerge by magic.
It was created by intense lobbying by the industry to highlight that payment delays and abuses of the system are major barriers to collaboration and are increasing the costs of delivery. I was, therefore, disappointed when the Construction Industry Council, Construction Confederation and Construction Products Association told the trade and industry committee that they did not wish for changes to the act’s payment provisions.
The point of the current consultation is to consider new proposals by the Department for Business, Enterprise and Regulatory Reform (BERR). At a BERR conference in July a message emerged: the machinery for defining payment should be simple, logical and reflect commercial practice.
The success of this legislation is dependent upon getting this right. If, in a rush to take advantage of a legislative window, we allow amendments to go forward that are not supported by SMEs (which bear the brunt of poor practice), they will not thank us for it.
The payment proposals are an improvement.
How? Watts does not give an answer. There has been significant progress – the BERR now acknowledges that the “sum due is the cornerstone on which the payment framework is built” – but translating a principle into a workable, simple proposal is always problematic (see my column, 20 July, page 53).
If, in a rush to take advantage of a window, we let through amendments that aren’t supported by SMEs they won’t thank us
Watts refers to the “excessive demands” of trade associations. Asking for changes to the act to reinforce its original intent cannot be described as excessive. Trade associations cannot be blamed for insisting on the proposals supported by Sir Michael Latham’s review or the consultation in 2005. For example, it was accepted that cross-contract set-off should be outlawed, but the reasons for dropping this were never made clear.
The proposals for eradicating adjudication abuse alone are worth all the effort.
Many SMEs are wary of adjudication – it is perceived as a “luxury”. They prefer to get the payment provisions right to avoid it. Changes that would cut costs are not being addressed, for example, a single adjudication procedure or enlarging adjudicators’ jurisdiction.
Abolishing the requirement for written contracts will reduce jurisdictional challenges and is welcome, but there are concerns about the practicability of proposals outlawing clauses that make interim payment decisions final and proposals dealing with costs in adjudication.
So where does this leave us? The consultation is close to the Queen’s speech in November, but the industry did not set the timetable.
In the past three years, new proposals have emerged and old ones have been dropped. If the consultation is to have any meaning, the new proposals require careful consideration.
If a legislative window emerges in autumn, we have to get our skates on to ensure the proposals work for the industry. If we fail, we may not get another chance to put it right. Once the heat of Watts’ fury has evaporated we will, hopefully, agree on this point.
Rudi Klein is the chief executive of the Specialist Engineering Contractors’ Group