Late payment: why blaming contractors is missing the point

The new Supply Chain Charter, due to be launched by the government-industry Construction Leadership Council next month, is setting out to change the late payment practices in the industry, but with specific construction law already in place, and often ignored, how effective can it be? Also is it missing the point? Do we need to delve a little deeper to understand why late payment practices exist in the first place – because if it is a business model that the clients are forcing main contractors to resort to in order to drive a profit, how would the Supply Chain Charter address this?

When we first set out to try and change the way people were treated in industry we did it by sitting down and looking at how previous initiatives, both inside the sector and outside of it, had attempted to do the same thing. We found there to be a common theme in that quite often the focus was only on the generic  things that individual companies or organisations would need to do. The actual realities of how this affects the sector or if it would be taken up and enforced, were often missing.

So let’s imagine the responses to the question: What should be done about late payment?

We strongly believe that by focusing this Supply Chain Charter at main contractors we will only paper over the cracks; clients are an important part of the reasons that late payment terms exist and we need to start seeing them as part of this picture. By clients, contractors and government working together the industry can move forward but it needs more than a charter, we would suggest that it needs the CITB Be Fair Framework.

Chrissi McCarthy MCIOB is managing director of consultancy Constructing Equality. It is currently working with the CITB to develop and implement the Be Fair Framework, a new accreditation standard for construction companies that want to demonstrate fair and equal treatment for all staff, job applicants and subcontractors bidding for work. For more information see here.