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Retentions must stay, clients tell MPs

CONSTRUCTION CLIENTS last week rubbished claims that the industry was 'mature' enough to scrap the use of retentions on construction projects.

The Confederation of Construction Clients (CCC) told MPs on the Commons trade and industry select committee that their members were not ready to do away with the system yet.

Retention money is cash which is withheld by clients to cover repairs to defective work carried out by contractors.

Retentions are often blamed for causing conflict on construction projects as disputes can arise over reasons for withholding money.

'It's an imperfect system but they know it and understand how it operates, ' said CCC chief executive Zara Lamont. 'They need some form of redress for poor delivery. It works.

'If there were no retentions there would have to be some other system of insurance or warranty put in place which would be much more expensive.' Professional indemnity insurance premiums have risen sharply over the last 12 months.

Lamont's comments clashed with evidence from the subcontractors. The Specialist Engineering Contractors' Group (SECG) claimed greater partnering between clients and contractors now rendered retentions irrelevant.

'Progressive' clients such as the Highways Agency, Tesco, Sainsbury and Boots had already scrapped them and the estimated £3bn currently kept back from subcontractors was unfair, it said.

The SECG urged the government to abolish retentions on public sector projects by 2007.

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