Lawyer Warns Over Cashflow Pressures And Says Firms Cannot Be Complacent

A leading construction lawyer has welcomed the strong performance amongst Yorkshire construction companies in the first three months of 2015 - but warned about the pressures on cashflow and the dangers this can create.

According to JLL and Glenigan’s UK Commercial Construction Activity, the total starts in Yorkshire during Q1 totalled £2.4bn. This represents an increase of 30.6% compared with the previous quarter.

Despite Yorkshire outperforming other areas of the UK, concerns have been raised about increased construction costs. According to the survey, the inflationary pressures are greatest in mechanical and electrical services, curtain walling and demolition contractors.

The need to balance growth opportunities and cashflow managements were recently highlighted with the collapse of Hewlett Construction in May 2015. The business is reported to have suffered a number of issue including late payments from a number of companies.

It is understood that one business withheld payment once it became aware that Hewlett Construction was in financial difficulty. Another firm was involved in arbitration due to a disputed payment and this settled against Hewlett shortly before the company was placed into Administration.

A recent Supreme Court decision highlighted the complexities and financial issues in relation to the adjudication process in construction disputes. An analysis of the case is available here.