œ150 million to be untied by new bonding scheme

Concrete frame contractors are about to scrap retention in order to release up to œ150 million a year in tied-up cash.

Members of Construct (the Concrete Structures Group) are planning a new bonding scheme, to operate from March next year, to replace 3% the retention system.

Construct hopes to win clients over to the idea by offering them a 5% bond giving them protection from the day the contractor arrives on site until the end of the defects liability period.

Similar schemes in piling have offered only a straight 3% swap and the move follows the decision of steelwork specialists to scrap retention in September in favour of bonds (CJ 18 July).

"Our members have up to œ150 million tied up in retentions. They want to replace retentions with a bond that releases cash into the industry and gives clients better protection," said Nick Fitzgerald vice chairman of Construct.

Construct will also set up a fund to subsidise smaller members that might object to the scheme on the grounds of cost. The size of the subsidy is yet to be determined.

Construct members will be encouraged to apply the scheme to all contracts above œ150,000 - an instruction that will need to be registered with the Office of Fair Trading.