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Drink responsibly, source ethically, be sustainable. Ah, virtues. But what about 'good business ethics'?

Let's include valuing the work of contractors and sub-contractors fairly and paying on time!

When construction industry leaders talk about working ethically and with integrity, the discussion is dominated by high level ambitions to improve environmental sustainability, support the communities in which businesses operate and EDI (equality, diversity and inclusion) objectives.

Unfortunately, however, there is one huge ethical void at the heart of the way many clients and main contractors work that causes untold harm to individuals and their families: adopting working practices that seek to avoid paying their appointed contractors and sub-contractors what is due to them, when it is due. Truth is, the supply chain funds the job!

Construction businesses operate in a highly competitive, cut-throat environment, so it is understandable that managers and the board of directors will do what they can to pay the shareholders and gain a competitive advantage. But a deliberate move to delay a payment to a sub-contractor or challenge what they are owed to boost short-term cashflow or profitability on a project - which in our experience we see every day - is a step too far ethically.

Employees of a business are protected legally by contracts so they know that they should be getting paid for their work at the end of the month. That means they can plan their lives well and gives them confidence to do things like arranging a mortgage, signing a lease to rent a home or buy a car using finance.

Of course, most self-employed people go into business knowing that they don't have such certainty, but that doesn't make their need to receive payment when promised any less important. And the major players in the construction industry seem to have lost sight of this as they pursue ethical agendas that tick all the right PR boxes at a high level, but turn a blind eye to what goes on at a site level on a daily basis.

Construction seems to have adopted a culture where it is okay not to pay a contractor or sub-contractor, as if it is some kind of a commercially astute decision - 'good business', right?. However, if an employer does not pay a sub-contractor as they expect, that means they may be unable to pay their team their weekly or monthly wages, and financial hardship could result. That has potentially damaging human costs if it means that individuals fall behind on their loan repayments or rent - they could end up on a path to financial stress and suffer all the emotional and health costs that go with it.

How does the industry break this habit? Various initiatives and best practices have been implemented in recent years to address the issue of late payments, but the deliberate avoidance of payments has never been tackled effectively. And relying on culture change amongst Tier 1 contractors and clients that commission projects is not something we can depend on given that things usually only change at a snail's pace in construction. Isn't true virtuosity grounded in doing right by everyone? That's the kind of utopian construction industry we'd like to see.

If you are the employer, you should, of course, be offering fair contracts to contractors and sub-contractors in the first place and honouring the terms you have agreed. Playing fair with your supply chain partners will pay dividends in the long term as they will be more motivated and make a bigger contribution to the commercial success of your business. That's true sustainability.

What contractors and subcontractors can do is protect themselves in both proactive and reactive ways. It all starts with ensuring you have a contract in place that you understand and, ideally, does not contain any unfavourable terms and conditions. If it does, you should attempt to negotiate amendments before you sign the contract and/or seek specialist guidance from our Quantum CPM team through their contract vetting service.

Unfortunately, however, even with the best care and attention devising a fair contract, disagreements and disputes will always arise in construction given the numerous variables that quickly turn a straightforward contract into one that is complex and messy. And when you do find yourself in such situations, it is important to seek specialist advice to achieve a satisfactory resolution. We're not naïve to reality with high minded dreams. We deal with it all the time.

We can help. The Quantum Consult team is highly experienced in helping employers, contractors and sub-contractors to resolve their contract issues, often without the need for costly and lengthy court action.

If you would like to discuss how to protect your business wherever you are in the construction supply chain, please contact us.