Construction Act review was a ‘missed opportunity' says Pollock

New government proposals aiming to improve payments to firms in the construction industry have been welcomed by the building services sector. However, the ECA believes that scope exists to expand further on these proposals.

The changes include:

• introducing a requirement that certification of the sum due, by one of the contracting parties or a third party, becomes an essential feature of contractual payment mechanisms;

• removing requirement for a payer notice;

• introducing a right to apply for payment where a certificate is not issued by the due date;

• making certain payment mechanisms, include pay-when-certified clauses, ineffective.

Announcing the proposals, construction minister Alun Michael said: "These changes will improve the existing framework, which clearly makes a valuable contribution to fairness in the way construction contracts are agreed and operated."

ECA director David Pollock said: "The ECA is pleased to support the government's review of the Construction Act and will continue contributing to the development of proposals that both ensure fair payment practices occur throughout the supply chain, and address anomalies within the adjudication process. Many of the key issues that concern ECA members have been identified in the report.

"However, I am disappointed that the opportunity has been deferred to consider the implications of the recent judgement over what constitutes ‘a contract in writing'. There appeared to be widespread industry support for addressing this matter. Currently considerable doubt exists over whether the Act applies in particular situations or not. There is still time to do something about this."

Other proposals include:

• enhancing the existing right of suspension under the Construction Act to allow the suspending party to claim for loss and expense;

• prohibiting the use of trustee stakeholder accounts for awards made by adjudicators;

• making ‘final and conclusive' clauses unenforcable where they apply to decisions under the contract that are only of substance to interim payments;

• taking forward the government's existing commitment to make contractual agreements on adjudication costs unenforcable and to provide a statutory framework for allocating them, including cases where adjudicators resign in response to a challenge to jurisdiction.