Home >> Resources >> Security of payment - Can the blockchain help us avoid another Carillion?

Access to resources

Most of the documents in this section are only available to members. If you do not see a link to a file, this means that you are not logged in as a member of the Society. You can log in here.

If you would like to join SoCLA, you can find out about it here.

Security of payment - Can the blockchain help us avoid another Carillion?

Friday 17 Aug 2018
In January 2018 Carillion, the second largest construction company in the United Kingdom at the time, collapsed. With an estimated 30,000 of Carillion's small and medium-sized suppliers owed hundreds of millions of pounds, the economic impact will be profound and long-lasting. A warning sign in the preceding years may have been Carillion's policy of paying sub-contractors on 120 day payment terms, even on public contracts where there is a contractual requirement to use 30 day terms. Whatever caused the eventual collapse, it is clear that the construction industry in the UK now has some lessons to learn.
In Australia, the so-called "security of payment" legislation in our states and territories can be said to go some way in preventing a Carillion-type situation occurring, because it gives many contractors and sub-contractors the right to seek an adjudicator's decision in disputes over non-payment and to receive that decision within a matter of weeks. Unfortunately, our legislation has its origins in the UK's Housing Grants and Regeneration Act 1996 and is similar in many ways. If such a spectacular failure to achieve security of payment for Carillion's sub-contractors could occur in the land that invented security of payment legislation, then Australian sub-contractors can rightly question the extent that they are protected. One solution to this problem could be found in blockchain technology, and specifically the technology of smart contracts.
Angus Faulkner
Resource type: 
Access to resource: 
Members only

Share this page

Join button