Unfair Delayed Payment Practices

INTRODUCTION

Good day, as part of my research to submit a thesis in the area of unfair delayed payment practices on projects, I am conducting a survey in the form of a short questionnaire on the issue:

"FAIR PAYMENT SECURITY STRATEGY FOR THE TRINIDAD and TOBAGO CONSTRUCTION INDUSTRY"

I will be very thankful if you could spend 5-10 minutes of your valuable time to participate in my research by completing the enclosed questionnaire and sending it back to me, your participation will be greatly appreciated and you should note that your response will be treated with strict confidence.

Poor payment practices throughout the construction industry have been a long standing issue on many projects and not only gives rise to substantial additional financing costs and transaction costs, but also diminishes the trust built between client, contractors and suppliers.

This is an evaluation of the impact of unfair delayed payment on the Trinidad and Tobago Construction Industry.

Several strategies and mechanisms have been implemented by various countries to resolve and off-set the adverse consequences of unfair payments. Some of these are as follows:

Fair Payment Charter

The fair payment charter is a Model Form to be signed by the client and main supply chain members which is non-binding. It allows Fair payment” to apply equally between the client and lead contractor and throughout the supply chain. It will also enable the process to be transparent in that members of the supply chain will know how much is being and when.

Fair Payment Practices

A policy introduced to reduce the reoccurrences of unfair payment practices and bring about fair and efficient payment to all parties as well as harmonising payment procedures and cycle and involving specialist contractors and suppliers in the design and planning stage.

Project Bank Accounts (PBA)

This measure is one of the proposed elements in the Fair Payment Charter. Its sole purpose is to act as a channel for payment on construction projects to ensure that contractors, key subcontractors and key members of the supply chain are paid on the contractually agreed dates. The PBA is the medium through which payments are made on the project but it is not the contractor’s account, but rather an account established in trust for the entire supply chain.

Prompt Payment Code/Protocol

A “Prompt Payment Code” (PPC) was established to assist small suppliers to recover monies owed to them by some of the largest companies. The introduction of a voluntary Prompt Payment Protocol (PPP) to deal with delays in payments between businesses which aims to reconfigure the late payment culture and establish core principles which will foster good payment practices such as payment on time, communicate clearly, encourage good business relation, adopt compliant resolution process and identify clients as a prompt payment leader.

Legislation for Prompt Payment

Many Countries have introduces Prompt Payment legislation to tackle the negative impact of unfair payment on the country’s economy. The prompt payment legislation in the form of Directive aimed at combating late payment in commercial transactions which includes works of construction and which involve public authorities. The Prompt Payment Directive is meant to harmonize and eliminate the late payment for goods and services within the European Union.

The UK Government introduced legislative initiatives aimed at ensuring fair payment. Firstly they introduced the Construction Act of 1996 and then implemented the Late Payment of Commercial Debt (Interest) Act of 1998. Later legislation was developed in the form of the Construction Act 2009, which was introduced to outlaw contingent payment clauses such as “pay when paid” or “pay if paid” in contracts. The Act also makes provision for an expedited adjudication system to settle performance disputes.

Statutory Adjudication

The introduction of statutory adjudication for the resolution of payment disputes in which the courts maintain that parties are bound by the decision of the adjudicator and as such have adopted a “hands off” approach. It is important to note that only the party demanding progress payments is permitted to initiate adjudication. There are those adjudication methods that give the contractor the right to suspend work as a result of non-payment.

Please indicate your choice by typing or writing in the box provided for each option.

NB: Please note that the information provided in this questionnaire is strictly confidential and shall be used for academic purposes only.