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Fair payment charter: Progress or process?

Nine months on from its launch, the impact of the Construction Supply Chain Payment Charter is already being questioned by many in the industry.

While the jury is out as to whether the charter can go on to be a game-changer, this and any other voluntary payment charter faces the same two challenges: what to say and how to achieve industry-wide support.

Some of the charter’s 11 commitments can have a bigger impact than others.

As you might expect, we are big fans of the commitment to pay promptly, and particularly keen on the commitment spelled out in the charter to achieve 30-day payment terms by 2018.

This commitment effectively defines ‘under 30-day’ payment terms as good industry practice for public and, crucially, commercial activity.

Too much ambition

But then later on we get: “Our ambition is to move to zero retentions by 2025”. Quite simply, an “ambition to do something by 2025” is not a commitment.

If anything, this particular commitment seems to underline industry resistance to abolishing retentions, rather than pointing to industry progress.

When the charter launched in April, the ECA looked at the 11 commitments and gave each one a score for game-changing potential.

“With so few signatories, the KPIs that really matter are how many have signed up and how many public sector and commercial clients have got on board?”

Payment terms got 8/10, retentions got 1/10, and we came up with a total score of 60/110, so from our perspective the glass is just over half full – or at least it was until we considered the second challenge, which is achieving industry buy-in.

We genuinely appreciate the small group of industry leaders who effectively signed up to the charter on day one – but where is everyone else?

Does anyone else know how to express support for the charter?

What does ‘signing up’ really mean – and do you have to back all 11 commitments, or can you simply avoid the tough ones?

Nine months in, the answers are brutally disappointing.

The most importance targets

There is currently lots of talk about key performance indicators for the charter.

Yet with so few signatories, the KPIs that really matter are how many have signed up and, more notably, how many public sector and commercial clients have got on board?

The charter has already helped to define key aspects of good payment practice, but as we head into 2015 there will be more questions about whether a charter, or legislation, offers the best route to fair and prompt payment in our industry.

The charter needs urgent attention if it is going to be part of the solution to the perennial payment problems in our industry.

Paul Reeve is director of business services at the Electrical Contractors’ Association.

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