Persistent payment challenges plague Scottish construction sector, CICV survey finds

07/12/2023

DESPITE concerted efforts by the government and industry to address financial challenges in the Scottish construction sector, a recent survey conducted by the Construction Industry Collective Voice (CICV) has exposed ongoing issues related to late payments, payment reductions, and unresolved disputes. The findings highlight a substantial gap between purported initiatives and the actual improvement of payment practices, urging urgent reforms to alleviate financial strain on construction businesses.

Key Survey Findings:

  • Delayed Payments:
    • 80% of respondents reported experiencing occasional to frequent delays or adjustments in receiving final payments.
  • Late Final Payments:
    • 70% encountered occasional to frequent delays in final payments, with 24% facing outstanding values exceeding £100,000, leading to cash flow challenges.
  • Payment Reductions:
    • 63% faced unexplained payment reductions, exacerbating financial difficulties.
  • Write-offs:
    • 43% had to write off disputed sums, with 47% reporting amounts ranging from £10,000 to over £100,000.

Ian Honeyman, Co-Chair of CICV’s Procurement, Quality, and Pipeline Group, expressed the severity of the situation, emphasising the profound impact that delayed or non-payments have on businesses. He noted, “Despite commitments to address unfair payment practices, we continue to observe poor behaviour in this area. Without substantial changes, achieving a financially stable and sustainable construction sector remains challenging.”

In response, Len Bunton, Co-Chair of CICV’s Procurement, Quality, and Pipeline Group, called for a radical overhaul of payment practices in Scotland’s construction sector. Bunton stated, “Given that existing legislation and initiatives have not resolved these persistent issues, it is clear that we require more robust practical measures. The current state of affairs is unsustainable and demands immediate action.”

Looking ahead, both Ian Honeyman and Len Bunton underscored CICV’s determination to address these challenges. They emphasised CICV’s commitment to providing targeted, practical guidance and advice to tackle pressing payment issues, aiming to improve cash flow and foster sustainable practices in the construction sector. This approach aims to transform sector issues into opportunities for positive change, enhancing the overall health of Scotland’s construction industry.

For further details, download the full payment practices survey results.

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