Three Step Plan to Rebuild Construction
Step 1: Return to the principle of unamended contracts.
In 1931 we agreed that risk should be shared fairly through the supply chain. To this end we established and set up a suite of contracts that defined the roles and responsibilities of the various parts of our industry from design through to specialist, the JCT contracts. Yet since day one we have abused and manipulated this system and now we see contracts that have reams of amendments often larger that the initial contract and invariably designed to squeeze risk down the supply chain. In a sector where margins are measly why on earth do we allow legal fees almost double the industry average to remove vital waste.
Step 2: Move to Integrated Project Insurance.
Whilst our contracts bounce risk around like a game of pinball, our insurance does little to protect or manage it. A move towards project insurance would start to ensure that risks are clearly thought through from the outset and managed throughout, ensuring that the details are considered and we move away from the Build and Design culture that we find ourselves in.
Step 3: Fair Payment is critical
In 2023 FIS is stepping up our work on Fair Payment. The organisation holds that Duty to Report and the Prompt Payment Code masks what is actually happening the ground and issues associated with delaying tactics, payment applications, pay less notices, certification and underpaying all of which is not being picked up in this reporting.
Read the FIS Position Paper on Retentions which FIS advocates are an archaic way to manage quality and no longer fit for purpose. They undermine a positive culture in construction and engender a lack of trust. At the end of last year, the House of Lords debated how the Government could support the implementation of the Build UK Roadmap to Zero Retentions. The Government confirmed it favoured an approach taken forward by the CLC and we will be raising this issue with the Task Force in due course.
Read more about the work FIS is doing with the Small Business Commisioner on prompt payment.
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