Specialist contractors get behind government’s new Fair Payment Charter in bid to cut disputes

The National Specialist Contractors Council is launching a campaign to persuade contractors to give its members a better deal. In particular, they want to reverse the apparent trend among some main contractors towards longer payment periods.

The NSCC campaign has been designed to support the Fair Payment Charter devised by the Office of Government Commerce (OGC), which will impose stringent payment conditions on government projects from January. The NSCC campaign, which covers private and public projects, calls on clients and contractors to sign up to three key practices:

  • A maximum payment period of 30 days
  • Certainty of payment – agreeing how much should be paid and when
  • Removal of cash retentions in favour of alternatives, including retention bonds.

The renewed drive to improve payment practices comes after it emerged that several large contractors had extended payment periods to their supply chains over the past year.

The latest data from the Institute of Credit Management shows that Carillion, which has previously been attacked for having a contractual payment period of 65 days, took an average of 80 days to pay subcontractors. Galliford Try’s payment period also lengthened from 37 to 43 days.

As part of the campaign, the NSCC is offering a number of payment services to members, including guaranteed retention bonds with HCC International Insurance Company and free adjudicator nominations to help settle disputes.

Suzannah Nichol, chief executive of the NSCC, said that it initially wanted recognition from contractors and clients that a “culture change” was required but could eventually use the charter to identify firms with consistently poor payment practices.

She said: “We have picked out the three most tangible elements of the OGC charter and want to make sure these are fully implemented by every construction client.”