Sub-contractors set to gain security at cost of investors in proposed legislation

A new bill on investments drafted by the government is causing anxiety in the construction sector. The bill would mean that the responsibility of final payment to sub-contractors would be placed on both the investor and the general contractor. In practice this would mean that an investor would be obliged to cover the debts of the general contractor, if the latter fails to pay to his sub-contractors. This dramatically increases the risks for property developers and investors. Another decidedly controversial clause of the bill concerns public investments. If passed, the bill could create a situation where the State Treasury could end up paying twice for investment projects, that is to a general contractor and the sub-contractors if they are not paid by the general contractor. With government plans to accelerate the construction of motorways, this could have a huge negative impact on the state budget as several thousand sub-contractors would be used to actually build the motorways. "If an investor has to work directly with sub-contractors, a giant bureaucratic machine would have to be created, with no guarantee that it would help improve the situation," said Zbigniew Kotlarek, a deputy director in the National Roads and Highways Authority. (Puls Biznesu, pp. 1, 11) A.D.