Willmott Dixon has sparked anger among its preferred supply chain after introducing fees for a series of “management services” including the processing of payments.
Construction News has seen a copy of the tier one contractor’s Charter and Schedule of Management Services, which outlines 12 services offered to “category A subcontractors” in return for a fee.
Among the services for which it charges is the “valuation, certification and payment in accordance with Willmott Dixon’s Fair Payment Charter”.
Other listed services include an invitation to the Annual Supply Chain Conference and the opportunity to assist Willmott Dixon in developing business practices to align with objectives such as sustainable development, health and safety and the environment.
A Willmott Dixon subcontractor who did not wish to be identified said: “Willmott Dixon has in the past made a big issue with regard to how well they treat their subbies, when in fact judging by this document they just pay lip service and the opposite would seem to be the case.”
National Specialist Contractors Council chief executive Suzannah Nichol said: “It is extremely disappointing to see a well-known and respected contractor issue an agreement such as this, which is clearly seeking to make money from specialist contractors - the very supply chain that delivers the quality end-product the Willmott Dixon reputation is founded upon.
“I would hope that the Willmott Dixon board of directors review this document and take the opportunity to withdraw it as soon as possible.”
Specialist Engineering Contractors Group chief executive Rudi Klein warned such practices were becoming a “cancer” in the industry, with tier one contractors emulating each others’ bad practices so as not to lose competitive advantage.
Professor Klein said: “Willmott Dixon traditionally has a good reputation and I just think it’s very disappointing that they have seen it necessary to resort to this sort of behaviour.
“They are a very respected body but maybe it’s a sign of the times; the sooner they dump this, the better for everybody else.
“Clearly some of their category one subcontractors are very angry about this.”
Professor Klein said tier one contractors should look to restore their margins by working with supply chains to eliminate waste instead of making “spurious” charges on them.
He said a lot of waste in the construction industry is generated by poor payment practices and eliminating such behaviour would “help the industry become more efficient”.
A Willmott Dixon spokesman defended the charter, saying the contractor had undergone extensive consultation with its supply chain in a series of road shows over the past year.
He said: “They are not being charged as such; what we have agreed with them is that out of their turnover with us, 1 per cent will come back to us to help enable better collaboration.
“We have been upfront and honest about it and the feedback we are getting is generally quite positive and constructive.”
The spokesman said the company is committed to paying within 42 days - substantially less time than some of its competitors - a commitment which has been unchanged by the recession.
And he said Willmott Dixon had not asked for 10 or 20 per cent retrospective rebates from suppliers, as has been widely reported in the facilities management sector.
He added: “We have just asked category A suppliers for a rebate of 1 per cent of turnover, which we are reinvesting back in our relationship in terms of shared systems.
“The money is there to help us become even more efficient, which helps us and our suppliers win more work.
“The more work we win going forward the more we can work with them on big projects.
“We haven’t introduced this as a way of using the economic situation to our advantage; it is to get something positive from our supply chain.
“We have outlined this at road shows around the country,” the spokesman said.
* Construction News top 2011 stories