星空传媒

Plans to improve payment practices across the construction industry have been unveiled, but doubts have surfaced as to whether they will become law.

The proposed changes will be introduced as primary legislation rather than a legislative reform order: they will go through Parliament as a bill rather than being amended by ministers.

This will delay introduction until mid-2008 at the earliest, and some heads of industry believe this could lead to proposals being diluted or lost.

The consultation builds on the current system and seeks to introduce greater clarity and transparency into the statutory payment framework. The aim is to enable construction firms to better manage cashflow, encourage parties to resolve disputes by adjudication and identify how costs and benefits can be evaluated.

The Specialist Engineering Contractors鈥� (SEC) Group has welcomed the consultation.

The then Industry and Regions minister Margaret Hodge, who announced the proposals, said: 鈥淭he framework set out in the Construction Act 1996 has delivered some improvements, but recent industry surveys say that poor payment practices continue to be a key issue for many in the industry. We must change that. I believe this package represents good progress in securing a better payment system for industry.鈥�

The Department of Business Enterprise and Regulatory Reform has proposed:

On adjudication

• Access to the right to refer disputes for adjudication will be improved by:
• applying the legislation to oral and partly oral contracts;
• preventing the use of agreements that interim payment decisions will be conclusive to avoid adjudication of interim payment disputes;
• ensuring the costs involved in the process are fairly allocated.

On payment

• preventing unnecessary duplication of payment notices;
• clarifying the requirement to serve a section 110(2) payment notice;
• clarifying content of payment and withholding notices;
• ensuring the payment framework creates a clear interim entitlement to payment;
• prohibiting the use of pay when certified clauses exist.

On suspension

• improving the statutory right to suspend performance by allowing the suspending party to claim for the costs and delay that result.