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Crossrail supports small firms’ tough stance over retentions

Specialist contractors have been called on to stand together to refuse to work on projects where the client holds a retention fee.

The National Specialist Contractors Council launched its “no retention policy” last week, telling smaller construction firms to have the confidence to turn down projects where the client withholds cash.

The council suggested contractors instead offered a retention bond or, where clients would not negotiate, considered whether they were prepared to offer a discount for work without a cash retention.

The formal launch of the policy, which has long been recommended by the NSCC, has the support of some major clients, including Crossrail.

Crossrail’s head of procurement Martin Rowark, speaking at the formal launch of the policy, pledged that it would not hold cash retentions for any of its contracts. Instead it would be looking for a 2.5 per cent retention bond to be paid for by main contractors.

“That’s a challenge to the industry, particularly to tier one contractors,” he said.

Mr Rowark told Construction News he hoped Crossrail could set an example others would fall into line behind.

“I would not be surprised if most other public sector clients don’t follow suit,” he said.

“It’s the time to do it, when there is so much competition in the market.” It would be “a lot more efficient because it means the cash can move through the supply chain”, he added.

Mr Rowark announced that Crossrail had “every intention” of publishing the NEC form of contract with Crossrail provisions, once it had agreed issues of copyright.

“Also we have undertaken to publish a form of subcontract that we recommend for use.”

Its most recent contracts also contained the requirement for all parties to use project bank accounts, he said.

In a statement, the NSCC said it believed the withholding of retention was “an outdated practice”. “The best guarantee of quality lies in the choice of a competent and qualified supply chain,” it said.

 

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