It said delayed payments affect contractors, who often  borrow working capital from banks in order to finance their  construction operations and invariably end up having to pay  interest on these borrowings.

“Delayed payments increases credit default tendencies and  actual defaults. Consequently, it becomes more difficult for  construction firms to access credit from the banks,” the  statement said.

It said most banks now consider government projects as  risky because of the common issues of delayed payments associated  with them and have therefore become increasing disinterested in  lending to the construction sector; thus, threatening the  sustainability of the already low-capitalised local contractors.  The statement said the passage of the construction industry  Delayed Payment Law would ensure that funds for construction  projects are well budgeted for and available before the  commencement of the project.

It would also help in making provisions for compensation to  be paid to contractors in the event of delayed payments to ensure  justice in the construction industry and promote the  sustainability and development of firms and the industry.

On the Acceptance of Bid Declaration as replacement of Bid  Security, the statement said Bid Securities / Guarantees come at  a great cost to the Bidder, often set either as a percentage of  the bidder’s offer or as a percentage of the allocated budget for  the procurement requirement.

It said high insurance cost, high bank charges and  collateral security requirements had introduced inefficiencies  into the construction industry, constraining the ability of local  contractors to compete for bidding opportunities.

“When bids are successful, the financing cost and cash flow  problems associated with bid security requirements threaten the  sustainability of Local Ghanaian Contractors,” it said.The statement said a replacement of bid securities with bid  declaration documents would help improve contractor liquidity;  reduced cost of projects and business operations; enhance the  competitive bidding process to include more local contracts; and  reduce delays in procurement procedures.

The AGI Construction Sector was established with the vision  to be the most active and vibrant construction industry  mouthpiece in championing construction industry development  initiatives.

To achieve this, it seeks to influence the development and  growth of the construction industry, through effective  stakeholder engagements and policy reform initiatives that will  enhance the capacity and competitiveness of construction sector  service providers in Ghana.

Since its establishment, it has championed a number of  initiatives with the support of the Business Sector Advocacy  Challenge (BUSAC) Fund and its Partners: Danida, the EU and  USAID.