Fenestration Systems designer Senior Architectural Systems has lent its support to the ‘Time for Change’ campaign to protect retentions in construction contracts by placing them in trust.

Right now in the UK over £3 Billion of construction retentions payments are outstanding, causing cash-flow problems and financial difficulties to small businesses and sub-contractors throughout the UK.

Not only does withholding or delaying payment of retention funds result in a significant number of business going bankrupt each year, but it also damages the reputation of the industry.

Chairman Lennart Jonsson explained why Senior are supporting the campaign “Retentions are a major problem for subcontractors like our fabricators. Normally 3%- 5% of payments are retained until ‘Practical Completion’ of the job, when half of the retention should be paid, with the remainder becoming due after 12 months.”

“The problem for the subcontractor is that he has to push his customer (the main contractor) for release of the retention but at the same time he might be chasing him for new work or other monies for ongoing contracts. This gives main contractors a very strong hand and they are often reluctant to release retentions.”

“As the retention might be small in relation to a new contract, the subcontractor is always worried about ‘upsetting’ his customer if he pushes too hard to get his retention. In reality these retentions build up to quite substantial amounts and they should not be part of the main contractor’s general cashflow.”

Indeed, retention funds are normally kept by the client in a bank account under their control, and with any interest accrued being retained by the client there is little incentive to make the final retentions payment in a timely manner. Disagreements over retention payments are commonplace with many businesses having to go to court to resolve the situation and subsequently facing large legal bills.

New legislation is needed to make sure that cash retentions are protected and paid at the appropriate time. The ‘Time for Change campaign’ launched by Dennis Flower, Editor of H&V News, has started an e-petition with the aim of getting enough signatures to achieve a Parliamentary debate on the issue of retention funds in construction contracts.

The e-petition calls on the government to introduce new legislation requiring all funds identified as retentions within construction industry project contracts be placed in a trust fund. Something that France, Germany, America and Australia already do.

This will guarantee that the ring-fenced funds are protected and paid out at the correct time.

“By supporting the campaign, we hope to make life easier for our fabricators in the future” said Lennart “Senior Architectural Systems have asked all our staff and customers to sign the e-petition to achieve the 100,000 signatures required for a parliamentary debate on the proposed legislation to be considered.”

If you would like to support the retentions protection campaign, please sign the e-petition.