Lost in Politics 2019 - still in transition and that political uncertainty

17 Jan 2019

It is ironic that, on the day the elected government suffered the greatest defeat in modern times, creating great uncertainty, a private member's bill that would create much greater financial security for the construction supply chain was introduced into the House of Commons. Another private member's bill seeks to address retentions.

In terms of government policy nothing has changed since 2018. The government consultations on payment, retentions and adjudication have been lost in politics. BIM, off site construction and digital transformation move at a slow pace with more written about them than implemented in the industry. 

So much of the concentration has been and will be for the foreseeable future on the fundamental risk issues around payment, with an added touch of fall-out from the political risks. Last year successful adjudications unlocked significant sums of money and resolved some technical issues for clients. Looking forward to 2019, the CA decision in Grove Developments may create some difficulties for those seeking a quick cash flow solution. The Hackitt report may give some impetus to standardising building information in the context of the suggested "golden thread ". 

Developments in the relationship between insolvency and adjudication will have procedural implications. It will become even more important for directors to carefully consider where the company is on the payment cycle before you instigate any insolvency process, if the underlying work in progress is to be protected. The loss of adjudication as a mechanism for recovering unpaid applications, once the company has become insolvent, changes the balance in favour of the solvent party.

Let us hope the private members' bills make progress and that the political deadlock can be resolved to allow a government to progress its business. Cash flow remains the life-blood of the industry and the current payment structures and practices need attention if that is to be preserved.