It’s Wise up Wednesday – Check it…

Please, please, please, check it. The contract that is!

This weeks’s Wise Up Wednesday is inspired by the fact that time and time again, Specialist Contractors are getting shafted because they haven’t checked the fundamental basis on which they are starting work, or haven’t checked the contract they are being asked to enter into!

You Have No Protection

There is no legislation to protect you! You are not a consumer, you are a business, and in business to business contracts you can sign away virtually all your rights, and put your entire business at a massive commercial risk.

And guess what? Most Contractors don’t care about you, or your business or your staff, or your family.

They only care about one thing. Profit. Because profit is what they are incentivised to achieve. Not great buildings, not innovation, not inclusion, not the skills shortage, not the future of the industry. Just profit!

Don’t Misunderstand

Please don’t misunderstand me. I like my business, and my exclusively Subcontractor Client’s businesses to make profits. But, not at the expense of others. Not by taking money wrongly from other businesses. Not by stacking the cards against those with whom they work in onerous contracts.

So Check That Contract!

Once you have signed that contract, or entered into contract by conduct, you are legally bound by its terms. So, here are 7 key things you MUST check before it’s too late!

  1. Who Are You Actually Contracting With?

More Contractors will become insolvent in 2018

If the Contractor you’re working for goes bust you will get nothing!

Watch out for contracts that allow the Contractor not to pay you if the Employer becomes insolvent. Do you know if the Employer is solvent?

  1. Scope of the Works

It’s a chore but you MUST should carefully check that the scope of works in the contract matches what you have priced.

At best Contractors don’t care if you get it wrong – their terms will protect them.

At worst some Contractors will deliberately manipulate the scope of works to increase their profits.

  1. Time/Programme

Make sure the contract period is agreed and properly documented before you start the works.

Don’t agree to work “in accordance with the Contractor’s programme”, or “in accordance with his directions”, or notice within 3 days being a “condition precedent to time and money”

When you are delayed, you MUST issue notices. Failing to protect your interests in respect to time will result in a massive set off!

  1. Price and Discount

If you have made important qualifications in your tender make sure they are not lost when the contract is formed.

Make sure you know the fundamental basis of the contract (e.g. lump sum, re-measurable, cost plus) and therefore who is taking the risk of quantifying the scope of the works.

Don’t allow one off discounts to be applied to all variations.

  1. Payment Terms

Make sure the payment terms are clear and unambiguous.

If the payment process is linked to valuation dates make sure these are agreed and recorded and go beyond the end of the anticipated contract period.

You MUST understand what you are agreeing to!

  1. Design Liability

It is very easy to acquire design liability even when you think you haven’t got any responsibility for design.

If the contract is silent on design, and does not expressly limit your liability to “reasonable skill and care” you will get the more onerous liability of “fitness for purpose.”

You MUST NOT accept “fitness for purpose” obligations. They will void your professional indemnity or product liability insurance cover!

  1. Dispute Resolution!

Being able to suspend performance for non payment is a very effective remedy. Don’t lose that right.

Adjudication (used correctly) is a very effective legal solution.

Neither remedy is automatically available and you MUST ensure that these rights are not taken away by onerous drafting of the contract.

WANT TO KNOW MORE?

So, there you have it. Some very real reasons why you MUST check that contract, letter of intent, or any other warranty or guarantee, or document you are agreeing to.

With the right assistance and application of the right principles at the appropriate time, you can make sure you protect your business!

I have been assisting Specialist Contractors just like you, to resolve commercial and contractual problems for the last 28 years. And, StreetwiseSubbie.com has been providing services to improve the lives of our Buddies (members) for the last 10 years.

We are pretty confident that we can help you, so please feel free to call any time. Initial advice is free, subject to you meeting certain criteria.

As ever, please remember that we are here to provide solutions exclusively for Subcontractors. If you  want to access professional solutions that work, then please give us a call on 01773 712116, or email info@streetwisesubbie.com today.

 

Advertisements

Why Some Subbies Get Paid And Some Don’t!

Life would be much simpler if you did the work, sent in your application and received your payment in full and on time!

But in reality, as a Specialist Subcontractor you will often find that your works are not being valued properly by the QS and you are not getting paid.

You can’t write out cheques from the Contractor, but you can take positive steps to make it more likely that you will be paid the right amount of money at the right time.

As a Sub-Contractor getting paid on time could mean the difference between survival and insolvency!

So Why Do Some Get Paid and Some Don’t?

Here are a few thoughts based on 28 years of resolving payment problems for Subbies;

  • Know the dates your payments are due and make the Contractor aware that you know.
  • Make sure that all applications are in on time and comply with the contract
  • Contact the Contractor before the payment is due to make certain they know when you are expecting payment
  • Make sure the Contractor knows that;
  • if payment is late, you will suspend your works in accordance with your contract, or
  • if he pays less than he should you will take prompt action

Can Subcontractors Suspend Performance?

Suspending performance of the works is a powerful incentive to make the Contractor put you at the top of the list when it comes to making payment.

But you MUST follow the contract!

Used properly, suspension is your best solution to prevent late payment.

You need to be careful and we would always recommend that you take our specific advice before suspending performance.

Remember our team includes Specialist Quantity Surveyors and Construction Contracts Consultants, so we have the capability to resolve your problem fast. Click here now for details

Set Off and Contra Charges

If the Contractor is making a set off from your account or is deducting contra charges, there are steps you can take to resolve the situation.

First and foremost, you need to take action and fast, because the situation is not going to get better of its own accord.

There is a significant difference between them saying it has cost £”x”,  for whatever reason and them being able to prove that;

  1. a) it is your responsibility and
  2. b) they have actually incurred those costs

In both cases their claims, are exactly that “claims”, and the burden of proof falls on them.In other words; they have to prove that these matters are your responsibility and that any costs they say they have incurred have actually been incurred, and that they are reasonable costs reasonably incurred.

Think of it this way. How much trouble do they put you to when you claim for variations?

Pay When Paid

These clauses are intended to avoid payment to the subcontractor entirely if the money isn’t received from the Employer. Since the Construction Act came into force such clauses are made “ineffective” unless non-payment is due to the insolvency of the Employer.

Either make sure you don’t accept such clauses, or you need to know about the financial stability of the Employer!

Late Payment

If payment is made late, interest becomes due on the outstanding money in accordance with Late Payment of Commercial Debts (Interest) Act 1998 which applies to all contracts as from 1st November 2002.

The rate of interest payable is 8% above bank minimum lending rate unless the contract itself provides a substantial remedy for late payment.

WANT TO KNOW MORE?

So, there we have it. Some reasons why some Subcontractors get paid, and some don’t. But, with the right assistance and application of the right principles at the appropriate time, you can make sure you do!

I have been assisting Specialist Contractors just like you, to resolve payment problems for the last 28 years. And, StreetwiseSubbie.com has been providing services to our Buddies (members) for the last 10 years.

We are pretty confident that we can help you, so please feel free to call any time. Initial advice is free, subject to you meeting certain criteria.

Thanks and best regards

Barry

StreetwiseSubbie.com

P.S. Please remember that we are here to provide solutions exclusively for Subcontractors. If you want access to professional solutions that work, then please give us a call on 01773 712116, or email info@streetwisesubbie.com today.

Your March Wise up Wednesday summary download is here

If you’ve missed any Wise up Wednesday emails during March, or if you just want to keep them all together, then you can download a single publication containing all of the March emails here.

Get copy now

If you don’t already receive a regular weekly copy of Wise up Wednesday’, then simply email StreetwiseSubbie via this link and we’ll add you to the list.

How do I join StreetwiseSubbie?

To find out more or to become a StreetwiseSubbie Gold Buddy, please click on the link below. You will then join dozens of other Specialist Contractors who are benefiting from being one of our Streetwise Buddies! There’s no long term tie-in and you choose the level of support you need. Here are the links to more information:

For faster success choose Gold Buddy status

Gold Buddy status unlocks a multitude of benefits including a free review of your business by expert consultants, free consultancy each month and valuable and extensive practical resources that help you to stay on top of your contractual and commercial obligations, sales and business development. We look forward to welcoming you to all this support.

Read previous publications:

And finally, you can also join our call for a full Public Inquiry into Construction by clicking the link in the story on page 8 of the February edition. You can read a flip book version here.

Visit the StreetwiseSubbie website

Agreeing Variations Is Easy Right?

If agreeing variations was easy, then it wouldn’t be the greatest source of problems for Specialist Sub-Contractors in the construction and engineering industries!

So, no agreeing variations is NOT always easy.

It’s therefore essential to have a clear understanding of the contractual framework governing the instruction, execution and valuation of variations.

BHC and Galliford Try thought they had a clear understanding of what the contract said, but their valuations were an eye watering £13 million apart. Ouch!

OFF TO COURT THEN…

The dispute was part of the development of a gas processing plant in the Laggan Tormore gas fields off the Shetland Isles: one of the biggest UK construction projects.

BHC brought the action in order to clarify the rules relating to valuation of certain variations issued under the contract.

Galliford Try (trading as Morrison) had engaged the claimant BHC to carry out structural steelwork (including associated design works), roof and wall cladding, and precast concrete flooring works.

The principal issue was whether certain variations, provided for re-measurement of the entire works contained in the change order, or alternatively whether the starting point for measurement was to take the lump sum quote and to make additions to and omissions from that quote, a process known as ad-measurement.

The Judge, Mrs Justice O’Farrell, held that the proper construction of the variations  was that they provided for complete re-measurement of the entire works as opposed to ad-measurement.

HOW SHOULD VARIATIONS BE VALUED?

Unfortunately a common misunderstanding made by many Specialist Contractors is to assume that all contracts are the same.

Let’s be clear on that; not all contracts are the same!

Instructions may merely confirm or clarify that which was originally required, whilst the Specialist Sub-Contractor may argue that it is a change which entitles him to additional monies.

Such differences of opinion can be minimised by ensuring that the description of the work in the Contract Documents is as clear as possible. And, that the rules regarding valuation are fully understood by both parties.

As BHC shows, this is very much a case of easier said than done. However, attention to detail at contract formation stage, will be well worth the effort when it is becomes necessary for you to demonstrate that the work constitutes a variation, and how it should be valued.

WANT TO KNOW MORE?

So, there we have it. Definitive proof that agreeing variations is not easy! But, with the right assistance and application of the right principles at the appropriate time, you can make it “easier”.

I have been assisting Specialist Contractors just like you, to resolve problems just like this, for the last 28 years. And, Streetwisesubbie.com has been providing services to our Buddies (members) for the last 10 years.

We are pretty confident that we can help you, so please feel free to call any time. Initial advice is free, subject to you meeting certain criteria.

Thanks and best regards,

Barry

StreetwiseSubbie.com

P.S. Please remember that we are here to provide solutions exclusively for Subcontractors. If you want access to professional solutions that work, then please give us a call on 01773 712116, or email info@streetwisesubbie.com today.