Delayed and disputed payments throughout the infrastructure supply chain are significant industry issues.
Governments are model clients when it comes to paying parties where there is a direct contractual relationship. However, issues with payment certainty and security are more prominent down the infrastructure supply chain for businesses that are indirectly contracted.79 Over recent decades, there have been attempts to address this with legislation, but the challenge remains unresolved. This situation has contributed to comparatively high rates of insolvency for businesses across the sector.80
Given the volume of upcoming work in public infrastructure in response to the COVID-19 pandemic, it is critical this issue is addressed using compliance and enforcement, or by using progressive commercial practices.
For example, government can take a more active role by working directly with sub-prime contractors and consultants working on government infrastructure projects to verify whether payments have been made.81 If payment issues continue, government should consider interventions such as advanced payment or project bank accounts that pay sub-prime suppliers, contractors and consultants directly.