Travelling in the right direction – by Philip King FCICM
28 June 2018
I was overjoyed by some great news last week in the drive to change the late payment culture about which we read and talk so much.
Network Rail announced that it is revamping its terms and conditions for all tier one contractors that win work in the £48bn Control Period 6 covering projects in the five-year period from 2019 to 2024. The changes mean that tier one contractors will be banned from using retentions and told to pay suppliers within 28 days of work being carried out.
Contractors failing to adhere to the terms will risk being in breach of contract. Network Rail is also introducing project bank accounts for the first time.
The intention to abolish retentions completely by 2025 as set out in the Construction Supply Chain Payment Charter, and endorsed by the Construction Leadership Council, has long been supported by the CICM, Build UK, and others. This preemptive action by Network Rail is a massive stride.
On Thursday, I presented at a conference organised by Heathrow for its strategic suppliers by Andy Haynes, Procurement Director. As part of its recently launched Sustainability 2.0 programme, Heathrow expects suppliers to sign up to the Prompt Payment Code and ensure suppliers are paid on time. Andy is passionate about responsibly buying and ensuring the supply chain is sustainable.
This is exactly what we need; businesses that will step up to the plate and lead by example. And, just as important, we need to make more of their great initiatives so that they are noticed and other businesses follow.