May 22, 2022 By Retention Back

A row over payments at a major construction development has highlighted the growing problems for sub-contractors in the sector, industry sources have warned.

The latest row involves up to €7m in fees that sub-contractors claim have not been paid by the main contractor on the development for a high-profile client.

In a letter seen by the Sunday Independent, sent in recent days by a sub-contracting firm to the contractor that is leading the development, it claimed it alone was owed more than €3.5m.

“Since January 2022, there have been ongoing issues with payment claim notices which are being assessed at a greatly reduced amount without any explanation whilst the certified amounts are being paid sporadically and not in a timely fashion as stipulated by the Construction Contracts Act,” said the letter.

The sub-contractor said it was increasingly concerned at “the fact that the number of sub-contractors having payment difficulties” with the contractor was “increasing” and that since December “there has been a dramatic cut on every payment claim notice submitted”.

“For a number of months you have been saying that you will discuss the matter with the current commercial director. However, I have had no feedback from these discussions and there has been no resolution or agreement reached. Our forbearance is waning,” wrote the sub-contractor.

It was becoming increasingly evident that the contractor was having difficulties making payments “a situation which appears to be a recurring position with…a large number of subcontractors on site,” the letter said.

The letter outlined in detail attempts by the smaller company to get paid and how at one meeting, representatives of the contractor claimed it had “priced the job on the back of a packet of fags”.

Sources with knowledge of the matter said the contractor had been given an ultimatum to set out by this weekend how the outstanding bill is to be paid or it could lead to delays in opening the overall project, which is due to be finished soon.

The situation is becoming increasingly typical across the construction sector with many sub-contractors finding it difficult to get timely payment and contractors often holding on to so-called retention money for long periods, said an industry source.

Fearghal O’Connor, Deputy Business Editor

May 22 2022 02:30 AM