Robert Downes, FSB Development Manager for Greater Manchester, said: “This a very worrying development, and a lot of businesses - and their workers - will be very concerned as to the implications. The $60 million dollar question is obviously how long is this going to delay completion of a very key piece of GM road infrastructure?
He added: “There are certainly echoes of Carillion here and we know that saw huge delays to the completion of the A555 road project in south Manchester.
“I think there are other important follow up questions too that need addressing. Is this another classic case of public sector procurement going wrong? Time after time we have seen key public sector contracts across the country awarded to the cheapest provider, who give themselves impossible margins just to win the contract, and in reality they have little hope of fulfilling them on time, on budget, and without squeezing smaller firms right down the supply chain.
“With money so tight at local authority level, you can appreciate their dilemma.
“In this case though, Dawnus’s failure to pay its supply chain appears to have resulted in very visible chaos to Joe Public here, as disgruntled workers downed tools on Tuesday and blocked Regent Road with diggers. That’s the chickens coming home to roost, and perhaps bears out the old adage, buy cheap, pay twice.”
Downes also said the latest debacle showed project bank accounts should be adopted as the default choice for major procurement projects, which would allow proper Local Authority oversight to ensure accountability and lessen the risks.
“These would allow awarding bodies to monitor projects, make sure the money is there to make payments and ensure there’s sufficient credit to pay suppliers. While this might not have prevented the current situation with Dawliss, it would have certain raised warning signs long before now that something was wrong and enabled faster resolution.”
He added: “Poor payments are a problem that many of our small businesses can relate to. In fact, 84% tell us they have been paid late. As a country, we are behind almost every other industrialised nation in our ability to pay small businesses on time.
“This problem isn’t a new one and despite some positive action from Government, far too many of our small firms are still subjected to late payments and bullying from some big businesses who take advantage of their dominant position.
“Big businesses use tactics such as extending payment terms, retrospective discounting and even going as far as asking for a discount if they pay on time.”