A Forum of 23 trade and professional bodies have appealed to the Scottish government to adopt a five-point plan to help contractors through the worst of the COVID-19 crisis.
The Construction Industry Coronavirus (CICV) Forum made appeals to Kevin Stewart MSP, Minister for Local Government, Housing and Planning.
In order to increase cashflow a 14-day payment period should be introduced when construction restarts.
More Project Bank Accounts (PBAs) should be introduced, ring-fenced bank accounts for payment on construction projects, while the PBA threshold on public sector procurement should be reduced to £250,000.
These changes would improve and ensure rapid cashflow, the forum said.
Meanwhile public sector procurers should make agreements within 14 days, including resolution of disputes.
And public sector procurers should consider release of all or part of retentions (money released when construction projects meet milestones).
Len Bunton, head of the CICV Forum Clients sub-group, said: “Even before the sudden shutdown of the construction industry in Scotland, the sector was experiencing extreme difficulties in relation to cashflow and payment.
“Urgent attention to payment cashflow and fairness is now needed by the public and private sector in Scotland.”
The Forum said the appeal is urgent, highlighted Central Building Contractors (Glasgow) going into administration at the end of April, making 148 members of staff redundant in the process.
Cashflow has completely dried up for nearly 80% of firms in the construction industry in Scotland and two thirds of businesses are being hit by late payments.
Ian Honeyman, commercial director of Forum member the Scottish Building Federation, said: “From the end of March, most contractors and the supply chain in Scotland have been unable to generate work in progress on sites. This situation will continue for a significant period beyond the date of a return to operational sites.
“The Forum has produced realistic recommendations on improving cashflow and if there was co-ordination on these matters between local authorities, Scottish government procurement departments and the Scottish Futures Trust, this would give a significant lead to the Industry on to how to sensibly manage a way through this crisis.”
This post has originally been featured in Property Wire.