Campaign for cash retentions reform - Revision history

Designing Buildings at 07:44, 19 January 2021

2021-01-19T07:44:44Z

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	* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.		* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.

−	[[Category:~~Organisations~~]] [[Category:~~DCN_Organisation~~]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Commentary]] [[Category:DCN_Policy]] [[Category:Organisations]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Editor at 14:34, 15 March 2019

2019-03-15T14:34:14Z

← Older revision		Revision as of 14:34, 15 March 2019
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	= About this article =		= About this article =

−	This article is an amalgamation of two articles that first appeared on the website of the Electrical Contractors’ Association (ECA): 'About the campaign' can be accessed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign here] ; the 'Impact of retentions' can be accesed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign/impact-of-retentions here].	+	This article is an amalgamation of two articles that first appeared on the website of the Electrical Contractors’ Association (ECA) in March 2019: 'About the campaign' can be accessed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign here] ; the 'Impact of retentions' can be accesed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign/impact-of-retentions here].

	--[[User:ECA\|ECA]]		--[[User:ECA\|ECA]]
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	* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.		* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.

−	[[Category:Organisations]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]	+	[[Category:Organisations]] [[Category:DCN_Organisation]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Designing Buildings at 12:22, 15 March 2019

2019-03-15T12:22:20Z

← Older revision		Revision as of 12:22, 15 March 2019
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	This article is an amalgamation of two articles that first appeared on the website of the Electrical Contractors’ Association (ECA): 'About the campaign' can be accessed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign here] ; the 'Impact of retentions' can be accesed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign/impact-of-retentions here].		This article is an amalgamation of two articles that first appeared on the website of the Electrical Contractors’ Association (ECA): 'About the campaign' can be accessed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign here] ; the 'Impact of retentions' can be accesed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign/impact-of-retentions here].
		+
		+	--[[User:ECA\|ECA]]

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =
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	* Defects in construction		* Defects in construction
	* Bonds in construction contracts		* Bonds in construction contracts
		+	* ECA articles
	* Final account		* Final account
	* Final certificate for construction contracts		* Final certificate for construction contracts

Editor at 11:42, 15 March 2019

2019-03-15T11:42:09Z

← Older revision		Revision as of 11:42, 15 March 2019
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	\| A total of 271 MPs across all parties support the reform of cash retentions.		\| A total of 271 MPs across all parties support the reform of cash retentions.
	\|}		\|}
		+
		+	= Introduction =

	Cash retentions are monies held back by larger contractors and clients from subcontractors where issues of non-performance arise, such as defects arising on work undertaken.		Cash retentions are monies held back by larger contractors and clients from subcontractors where issues of non-performance arise, such as defects arising on work undertaken.

Editor at 11:40, 15 March 2019

2019-03-15T11:40:30Z

← Older revision		Revision as of 11:40, 15 March 2019
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	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

−	* Interim certificates in construction contracts
	* Retention bond		* Retention bond
	* Retention in construction contracts		* Retention in construction contracts
−	* Practical completion
	* Defects liability period DLP		* Defects liability period DLP
	* Construction (Retention Deposit Schemes) Bill 2017-19		* Construction (Retention Deposit Schemes) Bill 2017-19
	* Performance bond for construction		* Performance bond for construction
−	* Nominated sub-contractor
−	* Certificate of making good defects
	* Defects in construction		* Defects in construction
	* Bonds in construction contracts		* Bonds in construction contracts
−	* Contingencies in construction
	* Final account		* Final account
	* Final certificate for construction contracts		* Final certificate for construction contracts
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	* Contract sum		* Contract sum
	* Domestic sub-contractor		* Domestic sub-contractor
−	* JCT
−	* Project bank account
	* Insolvency in the construction industry		* Insolvency in the construction industry
−	* External references	+
		+	= External references =
		+
	* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.		* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.
		+
		+	[[Category:Organisations]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Editor at 11:37, 15 March 2019

2019-03-15T11:37:36Z

← Older revision		Revision as of 11:37, 15 March 2019
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	{\|		{\|
−	\| [[File:Cash-~~retentions pt 1~~.jpg]]	+	\| [[File:Cash-retentions_pt_1.jpg\|link=File:Cash-retentions_pt_1.jpg]]
	\|-		\|-
	\| A total of 271 MPs across all parties support the reform of cash retentions.		\| A total of 271 MPs across all parties support the reform of cash retentions.
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	As a result, ECA, BESA and various partner organisations have been pressing Government to reform this practice. Reform of cash retentions in construction is now supported by a broad range of politicians, business bodies, construction trade associations, and professional bodies.		As a result, ECA, BESA and various partner organisations have been pressing Government to reform this practice. Reform of cash retentions in construction is now supported by a broad range of politicians, business bodies, construction trade associations, and professional bodies.

−	[[File:Cash-~~retentions pt 2~~.jpg]]	+	[[File:Cash-retentions_pt_2.jpg\|link=File:Cash-retentions_pt_2.jpg]]

	= Impact of retentions =		= Impact of retentions =
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	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

−	Interim certificates in construction contracts	+	* Interim certificates in construction contracts
−		+	* Retention bond
−	Retention bond	+	* Retention in construction contracts
−		+	* Practical completion
−	Retention in construction contracts	+	* Defects liability period DLP
−		+	* Construction (Retention Deposit Schemes) Bill 2017-19
−	Practical completion	+	* Performance bond for construction
−		+	* Nominated sub-contractor
−	Defects liability period DLP	+	* Certificate of making good defects
−		+	* Defects in construction
−	Construction (Retention Deposit Schemes) Bill 2017-19	+	* Bonds in construction contracts
−		+	* Contingencies in construction
−	Performance bond for construction	+	* Final account
−		+	* Final certificate for construction contracts
−	Nominated sub-contractor	+	* Liquidated damages in construction contracts
−		+	* Valuation of interim payments
−	Certificate of making good defects	+	* Right to payment
−		+	* Variations in construction contracts
−	Defects in construction	+	* Contract sum
−		+	* Domestic sub-contractor
−	Bonds in construction contracts	+	* JCT
−		+	* Project bank account
−	Contingencies in construction	+	* Insolvency in the construction industry
−		+	* External references
−	Final account	+	* Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.
−		+
−	Final certificate for construction contracts	+
−		+
−	Liquidated damages in construction contracts	+
−		+
−	Valuation of interim payments	+
−		+
−	Right to payment	+
−		+
−	Variations in construction contracts	+
−		+
−	Contract sum	+
−		+
−	Domestic sub-contractor	+
−		+
−	JCT	+
−		+
−	Project bank account	+
−		+
−	Insolvency in the construction industry	+
−		+
−	External references	+
−		+
−	Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.	+

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2019-03-15T11:36:59Z

Created page with "{| | File:Cash-retentions pt 1.jpg |- | A total of 271 MPs across all parties support the reform of cash retentions. |} Cash retentions are monies held back by larger contra..."

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{|
| [[File:Cash-retentions pt 1.jpg]]
|-
| A total of 271 MPs across all parties support the reform of cash retentions.
|}

Cash retentions are monies held back by larger contractors and clients from subcontractors where issues of non-performance arise, such as defects arising on work undertaken.

Retentions are held by private and public sector clients against their subcontractors, with over £10.5bn of SME working capital locked in retentions annually. Some £7.8 billion of this has been unpaid in the last three years.

However, the system is often abused, negatively impacting many businesses in construction, particularly SMEs.

As a result, ECA, BESA and various partner organisations have been pressing Government to reform this practice. Reform of cash retentions in construction is now supported by a broad range of politicians, business bodies, construction trade associations, and professional bodies.

[[File:Cash-retentions pt 2.jpg]]

= Impact of retentions =

Deprivation of working capital leaves businesses unable to grow (bid for new work), invest (engineering R&D and investment in digital transformation), recruit (new workers and apprentices), pay tax bills, and therefore precludes productivity improvement.

As retention monies are not protected, ring-fenced or held in trust, if a contractor goes bust, the money is lost by subcontractors, and goes to other creditors, often outside the industry.

In the UK, recent government research shows £700m of retentions were lost from upstream insolvency over a three-year period (prior to the collapse of Carillion). For each working day, the industry loses almost £1m, £4.5m per week or £20m per month.

Research has found that SMEs spend on average 130 hours per year chasing late payment from larger firms. And 34% of SMEs borrow to cover cash-flow issues caused by cash retentions. Often this is written off as bad debt, due to the resource implications of chasing monies due.

Cash flow issues leave businesses unable to:

* bid for new work
* take on new workers and apprentices
* pay tax bills, and
* improve productivity.

The knock-on effects of cash retentions can also include stress and mental health issues.

The current system is also a causal factor in bringing about a less efficient public procurement system and results in lower tax receipts for the public purse.

= About this article =

This article is an amalgamation of two articles that first appeared on the website of the Electrical Contractors’ Association (ECA): 'About the campaign' can be accessed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign here] ; the 'Impact of retentions' can be accesed [https://www.eca.co.uk/business-industry-support/improving-our-industry-representation/about-the-retentions-campaign/impact-of-retentions here].

= Related articles on Designing Buildings Wiki =

Interim certificates in construction contracts

Retention bond

Retention in construction contracts

Practical completion

Defects liability period DLP

Construction (Retention Deposit Schemes) Bill 2017-19

Performance bond for construction

Nominated sub-contractor

Certificate of making good defects

Defects in construction

Bonds in construction contracts

Contingencies in construction

Final account

Final certificate for construction contracts

Liquidated damages in construction contracts

Valuation of interim payments

Right to payment

Variations in construction contracts

Contract sum

Domestic sub-contractor

JCT

Project bank account

Insolvency in the construction industry

External references

Construction Manager, 20 November 2017, 60% of engineering firms say turnover is held in retentions.