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Review highlights alarming number of non-compliant contracts since introduction of Construction Act


SUBCONTRACTORS are demanding changes to the Construction Act on the eve of the dispute-busting legislation's second birthday.

Members of the Constructors Liaison Group are currently undertaking a review of the act in conjunction with the University of Northumbria and will present their findings to construction minister Nick Raynsford in June.

The research, looking at around 100 subcontract forms drawn up by main contractors, has so far highlighted some worrying trends that have developed since the introduction of the act on May 1, 1998.

The act was designed to stamp out contractual and payment abuses and provide a speedy mechanism for the resolution of disputes through adjudication.

But one of the report's main findings will be that a substantial number of the contracts examined are non-compliant.

The act outlawed pay-when-paid clauses but the group has discovered that they have simply been replaced by new pay-when-certified clauses.

Rudi Klein, chief executive of the group, said the organisation has taken the view that pay-when-certified is against the act and is equally as onerous as pay-when-paid.

He said: 'Pay-when-certified goes completely against what the act was set out for and its notable increase in contracts concerns us because it does not provide an adequate framework for payment. We will push hard for it to be eradicated.'

The group is set to demand more protection for firms by tightening up provisions contained in section 113 of the act. Mr Klein added: 'We are very unhappy with this section of the act because it provides subbies with no protection if a firm goes bust further up the chain. It is standard in nearly every subcontract we have come across. It even appears in government contracts.'

The group is also concerned that firms are being discouraged from going through adjudication because contracts contain clauses requiring a party to pay the adjudicator's fee.

Jennie Price, chief executive of the Construction Confederation, said that the legislation still needed time to bed in and any review should encompass the whole industry.

She said: 'The act is a positive piece of legislation and has provided more clarity in regard to payment periods.'