Speaking to Construction News this week, ECA Director of Legal and Business Rob Driscoll warned of the continued impact of retentions on sub-contractors, unless new legislation is brought in to reform the practice.
Cash retentions are deducted from payments owed in respect of labour, materials and works already delivered and carried out, and therefore legally belong to the companies that carried out the work. Retentions are on average worth 5% of a contract's total value, but can be up to 20%.
Construction News reports that the continued use of retentions in the construction industry is contributing to company failures and insolvencies.
Rob Driscoll said, “With no policy or position in place from government to reform retentions, this long-running bone of contention will fail to be resolved and continue to inhibit productivity and performance by the industry.
“We know that if economic performance in construction declines, cashflow is squeezed and insolvencies rise.”
ECA contnues to campaign for fairer payment practices for its Members and the wider sector - learn more about our work in this area here.
Last updated 30 January 24