Nicola Hodgson

CICV Forum urges vital action to improve cashflow in Scotland's construction sector

The Construction Industry Coronavirus (CICV) Forum has presented the Scottish parliament with recommendations to ease the cashflow crisis in Scotland’s construction sector.

The paper outlines a series of urgently needed actions to improve liquidity in the industry and reinforces calls to ensure payments are made on time to safeguard its future.

It will go to both public and private sector clients, and the Scottish government will be kept informed and its support sought.

A recent survey revealed that cashflow had dried up for almost 80% of firms in the sector, and that close to two thirds of businesses were being hit by late payments.

Fiona Hodgson (pictured above), chief executive at Scottish and Northern Ireland Plumbing Employers’ Federation — a forum member — said: “The construction sector, as a whole, is currently facing extraordinary difficulties, which will only be exacerbated if companies and public bodies take unnecessary time to pay their suppliers.

“This paper outlines a multi-pronged strategy to improve cashflow and introduce some creative thinking on addressing what lies ahead.”

The report, agreed by all members of the forum, proposes:

  • an agreement of an effective final account between contractors and employers, as well as between public bodies and design teams, on the value of work completed by 30th March this year and compromise to resolve disputed issues
  • reduction in the payment cycle time frame for public bodies and agreed cash flow forecasts on recommencement
  • involvement of the whole supply chain
  • alternative methods of dispute resolution
  • dealing with liquidated and ascertained damages at final account stage
  • the release of 50% of retentions held by the public sector, and of sector-wide historic retentions. Also, a retentions embargo for six months
  • the reduction of PBA thresholds and the use of existing low-cost adjudication schemes.

Grahame Barn, chief executive at forum member Civil Engineering Contractors Association Scotland, added: “The construction industry needs to emerge from this crisis in the best shape it can and the best way of achieving this is for everyone to pay our suppliers in full and on time.”

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