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Construction Act consultation

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A second consultation on the review of the ‘Construction Act’ (Part II of the Housing Grants, Construction and Re- generation Act 1996) was launched at the end of June by the Department for Business Enterprise and Regula- tory Reform (BERR), formerly the De- partment of Trade and Industry.

This is the latest development in the long running saga that started with the Budget in March 2004. Mar- ion Rich, BCSA Director of Legal and Contractual Affairs, explained: ”At the government’s request, industry

produced two reports on the reforms required to the adjudication and pay- ment provisions of the Construction Act. Government consulted on initial proposals back in 2005 and has now produced firmer proposals. The con- sultation ends on 17 September and the industry has been told that there is no scope for extensions to this deadline.”

Mrs Rich said BERR’s proposals are sadly much reduced from those initially suggested by the industry.

“The good news is that government has listened to the industry and is proposing to abolish the neces- sity for construction contracts to be fully in writing for the Construction Act to apply at all,” she said. “It has, however, rowed back on its previous promises to get rid of the abusive practice whereby the referring party has to pay all the parties’ costs of the adjudication, no matter what the outcome. It is now proposing to allow agreements to this effect to stand, provided they are made after the ap- pointment of the adjudicator.”

BERR has accepted that there is a problem to be addressed regarding payments, but its proposals are com- plex and seem set to retain the cur- rent anomalous situation whereby the paying party decides how much is to be paid to the party who has done the work. Mrs Rich said: ”This is contrary to the universal practice of other industries.”

The consultation document can be found on BERR’s website at 39924.html 

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