Construction Act and Retention consultations published by the Government

The Government has recently published two consultations to review (i) the implementation of the 2011 changes to the Construction Act; and (ii) the practice of cash retention under construction contracts.

2011 changes to the 'Construction Act'

In 2011 changes to the Construction Act were predominantly concerned with payment provisions and adjudication. The Government said at the time that it would undertake a review after five years to assess the effectiveness of the changes.  It has now launched this consultation. Many will feel it is timely particularly given the issues created by the development of the "smash and grab" adjudication.

The purpose of the consultation is to review the impact of the 2011 changes with questions split into the following sections:

1. the effectiveness of the 2011 changes;

    

2. general questions about the whole framework set out under Part 2 of the Construction Act;

    

3. the affordability of adjudication, its misuse and its continuing relevance.

Responses to the consultation must be submitted by 11:45 p.m. on 19 January 2018 and the questions can be accessed here.

Retention payments in the construction industry

A recent research paper, commissioned by the Government regarding retention in the industry highlighted some interesting points (including the average amount of retention typically held by clients equates to 4.8% of the contract value) and challenges facing the industry in relation to retentions. The research found that payment of retentions was sometimes being held conditional on performance of obligations under other contracts (contrary to the Construction Act). Moreover, it is evident that some contractors have been paid the retention unjustifiably late or not at all.

The consultation on retention payments therefore aims to obtain views on:

1. the findings by the independent research paper outlined above;

    

2. the effectiveness of existing prompt and fair payment mechanisms for retentions; and

    

3. the effectiveness of alternative mechanisms to retentions.

The consultation is to run alongside the consultation on the 2011 changes to the Construction Act. Responses must also be submitted by 11:45 p.m. on 19 January 2018 and the questions can be accessed here.