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ANNEX 2 - BREAKDOWN OF RESPONSES TO THE STATISTICAL QUESTIONS WITHIN THE CONSULTATION RESPONSE FORM

This Annex shows the breakdown of responses to the statistical questions contained in the Consultation Response Form. Due to the low number of responses received no analysis of these responses has been carried out therefore the detail in this Annex is purely for information.

Chapter 2

1. Removing the requirement that the Construction Act should only apply to contracts in writing.

Q1d: What proportion of contracts as a whole do you consider contain non-trivial terms which have been subject to oral agreement or variation?

Answers are illustrated in the table below.

*One respondent noted it varied with responses received but noted it was between i) and ii).
**One respondent noted it was between ii) and iii).

3. Introduction of a statutory framework for the costs of adjudication

Q3e: What proportion of contracts do you think contain an agreement that the referring party (or a specified party) should pay all or part of the costs of the adjudication?

Answers are illustrated in the table below.

*One respondent noted it varied with responses they received, any of iv), v), or vi)

Q3f - What proportion of adjudications do you think are conducted under contracts containing an agreement that the referring party (or a specified party) should pay all or part of the costs of the adjudication?

Answers are illustrated in the table below.

* one respondent noted it varied with responses they received, any of iv), v), or vi)

Chapter 3

2. Clarification of the requirement that a section 110(2) notice should be served

Q2b: Responses to Improving payment practices in the construction industry in 2005 suggested that a section 110(2) payment notice is only issued for 40% of payments. What proportion of payments where the notice is not issued do you think can be explained by the current deficiencies in the requirements in section 110(2) of the Act?

Answers are illustrated in the table below.

* One respondent noted that it varied with organisation but it was less than 66% of all cases

3. Clarity of the content of payment and withholding notices

Q3c: Responses to Improving payment practices in the construction industry in 2005 suggested that a section 110(2) payment notice is only issued for 40% of payments. In what proportion of cases where the notice is issued do you believe it is later supplemented by a separate section 111 withholding notice because the payer is unclear about how the section 110(2) notice should act as a section 111 withholding notice?

Answers are illustrated in the table below.

* One organisation noted that their responses varied, selecting i), iii), and iv), but felt it was more than 30% of cases

4. Clarity of sum due

Q4c: For the purposes of this consultation, we have assumed that on average across the industry, one in 30 payments that are (or should have been) notified under section 100(2) are later abated. Do you consider that this proportion:

Answers are illustrated in the table below.

* One organisation commented that the question was not clear.

Q4e: Notwithstanding your answer to question (d) what percentage of the amount of each payment finally due under a construction contract do you consider is lost on account of the cost and delay involved in obtaining proper payment?

Answers are illustrated in the table below.

* One organisation noted it varied between iii) and iv)

Q4f: If changes to the payment framework were introduced as proposed in this chapter, what percentage of the amount of each payment finally due under a construction contract do you consider would be lost on account of the cost and delay involved in obtaining proper payment?

Answers are illustrated in the table below.

Q4g: If, as proposed, the sum due under a construction contract were to be viewed in law as the amount paid or proposed to be paid as specified in a Section 110(2) payment notice, (with the amount in a claim for payment becoming due if no notice were issued), what effect do you think this would have on the cost of resolving payment disputes at adjudication?

Answers are illustrated in the graph below.

Chapter 4 Improving the right to suspension

Q4d: What would you estimate to be the reasonable one-off costs of suspending performance on a typical construction project?

Answers are illustrated in the table below.

*Scottish CASEC and SEC Group stated it was not possible to quantify such costs.

The NSCC said it varied considerably across the specialist trades they represented, but did not select any of i) to vi)

Q4e: What would you estimate to be the reasonable monthly ongoing costs while in suspension on a typical construction project?

Answers are illustrated in the table below.

*Scottish CASEC and SEC Group stated it was impossible to estimate.

The NSCC said it varied considerably across the specialist trades they represented, but did not select any of i) to iv)

Q4f: What would you estimate to be the reasonable costs of remobilising performance on a typical construction project?

Answers are illustrated in the table below.

*Scottish CASEC and SEC Group stated it was impossible to estimate.

The NSCC said it varied considerably across the specialist trades they represented, but did not select any of i) to vi)

Respondents were asked to reconsider their answers to question 3d, 3e and 3f if the suspending party was not required to be ready to remobilise immediately, as at present, when the defaulted payment was eventually made, but was allowed an additional extension of time for any delay caused by the exercise of the right of suspension.

Q4g: In the light of the Scottish Governments's proposed amendment, what would you estimate to be the reasonable one-off costs of suspending performance on a typical construction project?

Answers are illustrated in the table below:

*Scottish CASEC and SEC Group stated it was impossible to estimate.

The NSCC said it varied considerably across the specialist trades they represented, but did not select any of i) to vi)

Q4h: In the light of the Scottish Government's proposed amendment, what would you estimate to be the reasonable monthly ongoing costs while in suspension on a typical construction project?

Answers are illustrated in the table below.

*Scottish CASEC and SEC Group stated it was impossible to estimate.

The NSCC said it varied considerably across the specialist trades they represented, but did not select any of i) to iv)

Q4i: In the light of the Scottish Government's proposed amendment, what would you estimate to be the reasonable costs of remobilising performance on a typical construction project?

Answers are illustrated in the table below.

*Scottish CASEC and SEC Group stated it was impossible to estimate.

The NSCC said it varied considerably across the specialist trades they represented, but did not select any of i) to vi)

As well as covering the regulatory impact of the proposals described in Chapter 3 on the costs of suspension, the following questions also covered the impacts of the proposal in Chapter 2 on the transparency of the sum due and its effect on right to suspend.

In reading the responses to questions (j) to (i) you should bear in mind the finding of Improving payment practices in the construction industry that the right to suspend performance is exercised in fewer than one in a 100 cases of defaulted payment at present.

Q4j: Following the introduction of both:

• our proposals to reduce the costs of suspending performance in cases of non-payment; and,
• our proposals to improve the transparency of the sum due.…

…how frequently do you believe the right to suspend performance would be exercised?

Answers are illustrated in the table below.

Q4k: Following the introduction of only our proposal to reduce the costs of suspending performance in cases of non-payment how frequently do you believe the right to suspend performance would be exercised?

Answers are illustrated in the table below.

Q4l: Following the introduction of only our proposal to improve the transparency of the sum due in respect of the right to suspend performance, how frequently do you believe the right would be exercised?

i) In more than one in five cases of defaulted payment?

ii) In between one in five and one in 20 cases of defaulted payment?

iii) In between one in 20 and one in 100 cases of defaulted payment?

iv) In fewer than one in 100 cases of defaulted payment? (i.e. no significant change)

Answers are illustrated in the table below.

Q4m: What do you consider is the incidence of non-payment of a sum due in the construction industry?

Answers are illustrated in the table below.

Q4n: What do you consider would be the incidence of non-payment following the introduction of both:

• our proposals to reduce the costs of suspending performance in cases of non-payment; and
• our proposals to improve the transparency of the sum due?

Answers are illustrated in the table below.

Q4o: What do you consider would be the incidence of non-payment following the introduction of only our proposals to reduce the costs of suspending performance?

Answers are illustrated in the table below.

Q4p: What do you consider would be the incidence of non-payment following the introduction of only our proposals to improve the transparency of the sum due in respect of the right to suspend performance?

Answers are illustrated in the table below.

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