Publication - Research and analysis

Cash retention under construction contracts: consultation analysis

Published: 5 Nov 2020
From:
Director-General Economy
Directorate:
Chief Economist Directorate
Part of:
Public sector, Research
ISBN:
9781800042780

Findings of a public consultation on the practice of cash retention in public and private sector construction contracts in Scotland and to gather views on the findings of the supporting documentation.

47 page PDF

932.6 kB

47 page PDF

932.6 kB

Contents
Cash retention under construction contracts: consultation analysis
3. Summary of respondents

47 page PDF

932.6 kB

3. Summary of respondents

A total of thirty-three responses to the consultation document were received via Citizen Space – the online portal for government consultations – or the electronic response form (respondents who agreed to having their names published are listed in Annex A). The nature of the respondents is set out below (organisation by SIC codes are listed in Annex B):

Respondent Type:

  • The majority of respondents were organisation: twenty-five organisations compared to eight individuals.
  • Of the organisations that responded, half worked on construction projects across the UK, the other half worked exclusively in Scotland. 
  • The majority (79%) of all respondents had their headquarters in Scotland (twenty-six respondents out of thirty).

Nature of Business in Construction Sector:

Most of the respondent's role in the construction sector were as 'sub-contractors' (n14), with 'client' and 'Tier 1 contractor / sub-contractor' having seven and six respondents, respectively. Only one respondent was a 'Tier 1 contractor' (Figure 1).

Direct Employees (Excluding Sub-Contractors)

As shown in Figure 2, the number of respondent's direct employees were mostly spread across 'micro', 'small', 'medium' and 'large' categories. There were only three sole trader respondents.

Figure 1: nature of business
Alternate text for the figure
Figure 2: number of direct employees
Alternate text for the figure

Contracts Won and Experience of Using Retentions

The majority of respondents were 'businesses that were subject to retentions' (n13), and 'business that uses / subject to retentions' (n8) ('Client who used retentions' and 'not exposed to retentions' had six respondents each.)

Fifteen respondents had contracts secured[8] in the twelve months preceding the survey, ranging from 6 to 400 contracts. The average number per respondent was 73, but this number is skewed by a few respondents; a more representative number is the median which was 26. Three respondents had also secured no contracts during this timeframe.

Eleven respondents had issued contracts, with the average being 133 issued. It is worth noting thought that this figure was also skewed by a few respondents and the more telling figure is the median which was 25

The combined total of all these contracts was £467,550,000, the average was £49,215,789, but the median was £14,000,000.[9]

Of the total construction contracts over the past twelve months, 16 respondents had won contracts that subjected them to a retention (a total of 895 contracts); 7 had issued contracts that had imposed a retention on others (a total of 672 contracts).[10]

Of the current contracts with retentions (where you are holding a retention or are subject to a retention) 19 were public sector and 17 were private sector.[11]


Contact

Email: covid.construction@gov.scot