Construction act changes divide the industry

The RICS has clashed with contracting trade body the Construction Confederation over planned changes by the government to the Construction Act.

The RICS has broadly backed changes to improving payment practices in the industry, whilst the CC has branded them “ill-conceived” and claimed that they would increase costs “substantially with little or no perceived benefit”.

The two bodies issued responses to the consultation paper issued by the Department of Trade and Industry in March, last Friday.

In its response, the RICS said that the act must be much more tightly worded to prevent firms avoiding adhering to it.

It said: “For the act to retain its effectiveness the capacity for avoiding its provisions must be reduced at every opportunity.”

The response called for a widening of the definition of a contract, pointing to recent case law demanding all the provisions of the contract to be agreed and recorded which was “at odds with the original principles” of the act.

The RICS agreed with calls for a better definition of an adequate mechanism of payment and that the current requirement for a payment notice was ineffective, both set out in the DTI review.

However the CC hit out at plans to change the act, first introduced by the Conservative government in 1996. It claimed that payment problems were not rife in the industry and took issue with claims that payment notices were ineffective. Legal director John Bradley said: “Attempting to legislate to deal with the minority, to the detriment of the rest of the industry, is inappropriate and unfair.”

The CC response added: “Many of these proposals would result in significant additional regulatory burden whilst others would not be properly implemented without significant cost to the industry; the proposal regarding payment notices alone would increase construction costs substantially with little or no perceived benefit.”

This response led to an angry reaction from specialist contracting representatives. Rudi Klein, chief executive of the Specialist Engineering Group, said: “The CC’s response is almost not worth commenting on. There is a massive payment problem in the industry. The review is about trying to introduce certainty over payment in terms of timing and procedure.”

The RICS and CC broadly supported changes to adjudication in their responses. To see the CC response go to www.construction confederation.co.uk