A Consideration On The Improvement Of Payment Security System Of Construction Projects

The delay of project payments is a long-lasting problem in the construction industry, and has not yet been solved effectively. The perpetual problem not only has an adverse impact on the healthy development of the construction industry, but also leads to such severe consequences as the poor quality of construction projects and the delayed payment of the labors'salary which affects the quality of the people's life as well as the stability of the society. Although under the high attention of the Central Government, several rounds of the administrative measures did hold back the continue expansion of the delay of project payments, and however, the measures cannot solve the problem from its root. The problems such as"Owing alongside Paying","Owing after Paying"are still quite serious. Such conditions evoked the thoughts of the experts and scholars concerning how to solve the payment problem of construction projects more effectively. Taking this as the starting point, the paper studies on the security of payment system of construction projects by means of comparative study, historical analysis, systematic analysis and value appraisal, and seeks for the effective solution to the payment problem.Except for the introduction and the conclusion, the paper can be divided into five parts.Part One is the overview of the paper. It mainly introduces the aim and significance of the study, the current situation of the research and development on the theme at home and overseas, as well as the contribution and insufficiency of the paper. Part Two is the general discussion of the delay of payments of construction projects. The paper first elaborates on the current condition and harmfulness of the delay of payments in the construction industry, and further analyzes the causes for the delay of payments from two aspects. First, the paper discusses the objective causes of the delay of payments, including the characters of the construction projects, the problems existing in the construction industry and the defects in management of construction enterprises; then, the paper goes into the systematical causes of the delay and believes the incompletion and imperfection of the legislation concerning both the requirement of the project fund and the payment are also the main causes of the problem.Part Three studies on the conditions of the security measures of project payments in our current legal system and emphasizes on the analysis of the defects and inadequateness. The main security measures of project payments includes the legal provisions of the project fund, the legal provisions of the project payments, the Priority Right on the payment of construction projects, the Payment Guarantee from the Employer, the Litigation and Arbitration. Through the detailed analysis, the paper believes that these measures cannot effectively solve the payment problem in the construction industry due to the incomplete legal stipulations, the difficulty to implement, and the lack of agreement with construction projects.Part Four makes a relatively complete study of the legislations of other countries concerning the security of payments in construction industry. The relevant legislation in other countries comprises the mechanic's lien and payment bond in USA, the priority right on real estate in both France and Japan, the legal mortgage of the Contractor in Germany and our Taiwan, the Acts concerning the Security of Payment and the adjudication system in UK, Singapore and Australia. All the legislation safeguards the timely payment to the Contractor either by setting up real rights of security on the creditor's right of the Contractor, or by regulating the payment behavior of the Employer and accelerating the dispute resolution.Part Five puts forward the proposition on the build-up of the security of payment system of construction projects in our country. The paper believes the complete and systematic system of payment security should be built up in accordance with the principle of"Prevent in advance, regulate in the process, and relieve afterwards", since the payment problems go through the whole life cycle of the project. First, legal system concerning the project fund shall be improved and the Employer's payment bond system shall be set up so as to prevent the problems in advance; then, the legal system concerning the project payment shall be completed in order to regulate the payment behavior in the process; finally, the Priority Right on the payment of construction projects shall be perfected and the speedy Adjudication system shall be introduced in order to provide relief to the suffered creditor's right. In a word, the complete legal system of payment security shall be set up so as to safeguard the timely payment in our construction industry.