In a move to increase efficiency, simplify procedures and cut wastage across the construction industry, Richard Lees Steel Decking has joined forces with five other companies to stop contractors retaining part of their payment until projects are completed
Kvaerner Construction’s specialist steel decking company and its competitors currently have to chase the final three to five per cent of their money for up to six years after their contracts have been completed, eventually receiving the sum in two payments.
This means that all companies involved must keep records of money owed, deal with unnecessary correspondence when payment is chased and then cover the cost of processing the two final payments with the associated tax vouchers, invoices and VAT receipts.
From December 31, Richard Lees Steel Decking, Composite Contracting, MSW (UK), Structural Metal Decks, Studwelders and Stud Welding Services will no longer accept the retention of final payment within their contracts.
Nick Grimsey, managing director of Richard Lees Steel Decking which is currently chasing almost £500,000 in withheld payments, including less than £12 each from two companies and under £50 each from a further eight, is sure that this is the type of industry-wide wastage that the Egan initiative is aiming to avoid.
He said: “If the companies involved in holding this money calculated fully the cost of administration they would find that it exceeded the interest benefit they get from holding onto the money. The retentions and their associated paperwork do nothing to add value to a project or help any company make a profit.
“Piling contractors, precast concrete suppliers, steelwork fabricators and lift manufacturers have already stopped allowing retentions on payments and now it is time for the steel deck flooring suppliers, whose product is a very small part of the total cost of a completed building, to apply the same principles.”
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