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Government claims that the reform of the Construction Act could save the industry 拢1bn through improved payment mechanisms have been dismissed as fantasy by legal experts.

The long-awaited changes to the 1996 act, which introduced adjudication and an statutory payment mechanism, were announced in the House of Lords last week as part of the Local Democracy, Economic Development and Construction Bill. They give greater protection to subcontractors鈥� payments (see box), although do not meet the demands of some specialist lobbying groups.

The department for business and enterprise (BERR) said the clauses could reduce the burden of adjudication payments by 拢5.8m, and save the industry 拢1bn through improved payment frameworks. However, lawyers have warned that any savings could be offset by the cost of amending contracts to conform with the bill.

Tony Bingham, a barrister and arbitrator, said he was 鈥渇ascinated鈥� by BERR鈥檚 calculations. He said some changes, such as an end to the requirement that contracts be in writing, would result in 鈥渆normous savings鈥�, but he added that he was unable to fathom how the department had reached the figure of 拢5.8m savings in adjudication.

Rupert Choat, a partner in CMS Cameron McKenna, described the estimates as 鈥渁wful鈥� (see below). He said it was admirable that the government had tried to calculate the costs and benefits, but said that the figures 鈥渄id not stack up鈥�.

鈥淚 just don鈥檛 know how BERR could cost that sort of thing,鈥� he said. 鈥淲hether there are net costs or net benefits remains to be seen.鈥�

Ann Minogue, a partner in Linklaters, said she could not begin to estimate how much it would cost the industry to amend contracts, but that it would be 鈥渕illions鈥�.

The bill has received a mixed response from the industry, sections of which have been at loggerheads over reform of the act since consultations began four and a half years ago.

Stephen Ratcliffe, chief executive of the Construction Confederation, said the proposed payment provisions were 鈥減oorly drafted鈥� and would not help contractors of any size.

A BERR official who worked on the reform said the department had walked a 鈥渟trict tightrope鈥� while compiling the clauses.