Another Two Specialist Contractors Bite The Dust…But Who’s Counting?

Another One Bites The Dust…

(It’s two actually – but no-one seems to be counting)

Just read about not one, but two Specialist Contractors that have bit the dust this week…

McGrath Bros (Engineering) Group has ceased trading with the loss of 171 jobs.

The firm, founded in 1981, worked on major projects across the UK, including the London Olympics Aquatics Centre, with a London office in Tottenham handling a large order book in England and a Glasgow office covering Scotland.

And…

Hull-based offsite manufacturer Modular Space Limited has fallen into administration.

The firm specialised in site cabins supplying the Costain/Skanksa joint venture on Crossrail and Wates.  It also delivered prefabricated buildings for school and health projects.

Skills and High Profile Projects Do Not Equal Success

Clearly both firms had worked on high profile projects, they don’t come much bigger than the Olympics and Crossrail. And there was no shortage of skills and expertise in these two companies, Modular had even developed a special two-storey house design, which could be assembled from four basic units in just five hours.

So What’s Going Wrong?

The fact of the matter is that whilst Trade Associations and Build UK tinker around the edges of the major issues facing you and your business, and promote nonsensical solutions to the very real and business threatening payment problems facing the industry, more Specialist Contractors are going to fail.

As Brian McGrath is quoted as saying;

“Legacy contracts taken on during the recession have also taken their toll on main contractors and specialist subcontractors alike, all linking to underpayments of completed works and disputed final accounts.”

So, if you are not getting paid properly then don’t delay in getting it sorted.

Please don’t stand for late or underpayment.

Take action

Take action to safeguard your business from the catastrophic impact of reduced, late, or non-payment in 2016.

If you don’t then it could cost you your business…

Unscrupulous Contractors use every trick in the book, to reduce and delay payments. Specialist Contractor’s efforts to avoid or rectify this problem often come too late in the process.

Don’t be one of the casualties, take action now.

You can download a complimentary “How To Get Paid” report right now, and put an end to reduced, late and non-payment.

And you can call us for initial no cost advice on 01773 712116, and our Gold and Platinum Buddies can use their commercial and contractual consultancy to find an answer.

Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.

 

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When you’re not getting paid in construction, when is the problem not about payment?

Don’t confuse the two…

Question: When you’re not getting paid, when is the problem not about payment?

Answer: When it’s a dispute about valuation.

The two things are interconnected but they are not the same!

They are different problems that require different solutions.

Reasons for under valuation in construction

There are a wide range of reasons why you might not be getting paid properly, but the most common are the under valuation of your account including variations and valuation of the final account.

There are several steps that you can take to avoid under valuation.

First, know your contract: It is important to always check the terms and conditions of your contract and be fully aware of specification of the works, payment terms, variations and extensions of time clauses and adjudication clauses.

Secondly, keep in touch with the Contractor or Client: Always give regular progress updates to Contractors and inform them of any factors that may give rise to variations delays etc. This can be achieved by regular agreed meetings and effective management.

Thirdly, before carrying out any additional work, ensure that you receive written instructions from the Contractor or Client and do not wait until the end of the project to try and get values agreed.

Keep everything: You can never keep too many records. Respond effectively to any verbal requests and ensure that you take pictures of the site, retain email conversations and, importantly, document any reasons for delayed progress.

Please don’t stand for late or underpayment.

Take action!

Remember that problems never resolve themselves.

If your works are not being properly valued, take remedial action early. The sooner you tackle the problem the less impact it is likely to cause, and the sooner you get the money the better.

It’s an old adage but you need to get your money out of the tin before it’s empty!

Try going to the top: If discussions at site level are not addressing a certain issue, then go to someone senior in the Contractor or Client’s business. Senior management is often able to take a broader perspective and this wider view can often help resolve disputes before they escalate.

If you do encounter problems that are not getting fixed, discussing things at an early stage with one of our expert legal advisers can be cheaper and simpler than trying to resolve an escalated dispute further down the line.

Take action to safeguard your business from the catastrophic impact of reduced, late, or non-payment in 2016.

If you don’t then it could cost you your business!

Unscrupulous Contractors use every trick in the book, to reduce and delay payments. Specialist Contractor’s efforts to avoid or rectify this problem often come too late in the process.

Don’t be one of the casualties, take action now.

Download “How To Get Paid” for free right now, and put an end to reduced, late and non-payment!

Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.

 

I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought, and please don’t hesitate to grab your Free Report at “How To Get Paid” and if you need any help with any of your business problems pick up the phone and give us a call on 01773 712116.

Payment Still Major Concern Despite Increased Workload

Specialist Contractors are still suffering from late payment on public sector projects despite an upturn in workload.

According to the latest survey payment remains a major concern for building services firms, with just 8 per cent of Specialist Contractors saying that public sector work was paid on time. And the private sector was even worse with just six per cent of respondents being paid within 30 days.

ECA CEO Steve Bratt said: “… payment continues to be a major concern to Specialist Contractors across the industry, with the overwhelming majority indicating that they are not paid within 30 days, which is now the widely understood measure of good practice”.

So, if you are not getting paid properly then don’t fall for the Contractor’s BS, because it is highly likely (there are some exceptions), that what they are telling you is a pack of lies.

Please don’t stand for late or underpayment.

Take action!

Take action to safeguard your business from the catastrophic impact of reduced, late, or non-payment in 2016.

If you don’t then it could cost you your business!

Unscrupulous Contractors use every trick in the book, to reduce and delay payments. Specialist Contractor’s efforts to avoid or rectify this problem often come too late in the process.

Don’t be one of the casualties, take action now.

Download “How To Get Paid” for free right now, and put an end to reduced, late and non-payment!

Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.

Our Very Best Ideas To Help Protect and Grow Your Business

We’d like you to have our very best ideas to help protect and grow your business over the next 12 months, and they’re now available in a set of 10 Relevant, Informative, No-Nonsense Video Presentations That Will Boost Your Success as a Specialist Contractor.

“Win Work-Get Paid-Make Money” was recorded live at our Conference this year, on one AMAZING DAY of presentations designed exclusively for Specialist Contractors by top industry experts.

It reveals all the business secrets you need to know about “Winning Work”, “Getting Paid” and “Making Money” in the Construction and Engineering Industries. But don’t take my word for it, here are a just a couple of the dozens of comments we got on the day;

“It was a fantastic conference with lots of useful information and actions to take away” Ollie Yeo – Security Direct Ltd

“Very interesting with excellent tips on sales and marketing, business planning and getting paid” Graham Holmes – Ground Control

** Why Else Should You Take a Look? **

Specialist Contractors make things happen. You have all the skills, you take all the risks, and incur all the costs, and it’s no exaggeration to say that without you nothing would ever get built.

Unfortunately, for many Specialist Contractors business is full of struggle. Financial struggle, personal struggle, dealing with staff and suppliers struggle. And most importantly, getting paid from tight fisted Contractors struggle. It’s a long list…

So if you would like some great ideas and information to help you and your staff avoid that struggle then please take a look at this; http://conferencevideo.streetwisesubbie.com/

You don’t need me to tell you how difficult it is to turn those jobs, and all your hard work into decent profits. But with profit margins for the top 25 firms dipping below 1.5 per cent, you can be sure that the Contractors aren’t going to make your life any easier just yet!

What we are going to share together is the expertise you need to turn all your hard work into better and worthwhile profits, whilst protecting your contractual interests.

Gain access today to “Win Work-Get Paid-Make-Money” recorded live at the exclusive StreetwiseSubbie Conference July 2015.

Simply click this link; http://conferencevideo.streetwisesubbie.com

And Watch At Your Leisure As Many Times As You Like!

Best regards

Barry

P. S. The presentations were eloquently summed up in three words by one of our Gold Buddies “Enjoyable, useful, informative!” Trevor Kirby – Anglian Architectural

Why Specialist Contractors Aren’t Getting Paid…

Sadly yet another Specialist Contractor went to the wall  this week as Wrexham-based specialist steelwork contractor L M Engineering Services went into administration.

No doubt that when the details come out they will show that the firm, which specialised in stainless steel structures for the nuclear and process industries, didn’t get paid on time!

It’s that simple!

Businesses fail because they don’t get paid when they should!

Businesses fail if they don’t get paid, even when they are profitable!

Scarily businesses fail faster when they are growing!

We see a lot of discussions about payment, in our free  LinkedIn group (see below) the complexities of the payment process, the penalties that late payment should attract and the difficulties of using existing dispute resolution processes.

As one of our contributors rightly said;

“You can make the punishments as tough as you like but if you can’t establish your basic entitlement to payment quickly and cheaply, the penalties just won’t be pursued.

When the amount “Due” and the “Final Date for Payment” are clear, existing remedies such as Adjudication, Late Payment of Commercial Debts and Small Claims are quick and easy to use and effective.”

Justin went on to suggest that to make effective use of these tools you need to know only 2 things

HOW MUCH? (am I due to be paid)

and

WHEN? (am I entitled to receive it).

And I absolutely agree with him. If you know these two things with certainty then the process of ensuring you get paid what you are entitled to, and on time, gets a lot easier.

Notice that I said “the process of ensuring you get paid” and “gets a lot easier”.

That’s because getting paid has to be treated as a process and it’s a process that’s never entirely easy!

One of the biggest obstacles to overcome is the determination and ingenuity of certain unscrupulous Contractors when it comes to finding ways not to pay. As a result, many contractors have drafted payment regimes that comply with the letter of the Construction Act but completely avoid its intent.

So, the first part of the “process” is ensuring that you DO NOT sign up to contracts that you do not understand.

If You Don’t Understand It – Don’t Agree To It!

Very often that’s easier said than done!

Contractors know this and have put such convoluted payment terms in their “standard” contracts that it is very difficult to show that a payment actually became due at all.

Watch out for their ridiculous requirements for a “valid application” which is a precursor to a payment becoming “due.” These include full substantiation of all amounts applied for, copies of invoices, forecast final accounts with every interim application, etc.

That way they can say that your application doesn’t comply with the contractual requirements and no payment becomes “due”!

Don’t agree to these clauses unless you fully appreciate their impact. And don’t allow yourself to be pressured into doing so because you think you have no option because you want the work.

Do you want the work so much that you are prepared to do it for nothing?

Because that might very well be how it turns out!

Onerous Terms That Still Meet the Act!

If the contract complies with the Act then it is the contract which applies.

But remember, and beware, because the Act does not preclude the onerous requirements for substantiation and the like that certain Contractors may have put there!

If you are in any doubt about what the payment terms mean, or whether or not the terms and conditions are onerous you need to take professional advice and StreetwiseSubbie’s Nationwide Network of Consultants are experts in helping you to deal with such matters.

If you need help, you can call us for initial free advice on 01773 712116.

Are UK Trade Associations Failing Their Members?

Trade Associations, are by definition “organisations that represent the interests of the member firms of an industry”.

But when I look at what some of the trade associations in the UK construction industry are doing, or rather not doing, I begin to question the extent to which they are matching up to this definition.

Take for example this quote from one of their leading lights;

“Subbies are up in arms over [late payment] and are calling for the government to act. The public sector has an opportunity to play a very important role in making sure fair payment performance goes right the way down the line. This surely is an area where the industry has to perform well.”

What’s wrong with that I hear you say?

What’s wrong with it, is that it’s a quote from August 2002. That’s right 12 long years ago!

The report went on to quote them as saying “The cash flow problems caused by slow payment and retentions make it harder for specialists to fund the improvements the government and industry want to see. It also leaves them at greater financial risk of upstream insolvencies.”

Sadly, thousands of firms (and trade association members), have gone to the wall in those 12 years.

For all the talk, the payment situation is even worse now than it was then.

As Albert Einstein said “Insanity is doing the same thing over and over again and expecting different results.”

We need a new and radically different approach!

The ‘Construction Supply Chain Fair Payment Charter’ launched in April this year, sets out an aim to reduce standard payment terms in construction to 30 days by 2018. “It’s a work in progress” says Suzannah Nichol of the NSCC.

Sorry for being cynical, but if the last 12 years are anything to go by “work in progress” is the last thing Specialist Contractors want to hear. And I’m not the only one who feels short changed by the Charter, judging by the responses in our recent survey of 216 Specialist Contractors;

“Worthless piece of paper that all the major main contractor payment abusers have ignored.”

“…in reality hardly ever works the way it’s intended to.”

“Supply chains are rarely monitored and clients that may question it are normally fobbed off with meaningless guarantees from main contractors.”

Indeed other industry bodies have also been critical of the Charter;

“Only a supreme, and poorly informed, optimist would take the view that the Charter is the panacea of all payment ills within the industry. It is not.”

Needless to say our 3rd annual survey also revealed that despite all the fine words, the late payment culture is worse than ever before, and 95% of Specialist Contractors are still waiting well in excess of 30 days on tax-payer funded projects!

So come on trade associations come and talk to us, our door is always open.

And if you are one of the 78% of Specialist Contractors who said your Trade Association wasn’t doing enough to support you on the issue of late payment and retention, then maybe you should talk to us too!

You can find us on Twitter, LinkedIn and at http://www.streetwisesubbie.com, or just call us on 01773 712116.

Bursting The Construction “Growth” Bubble: Why Subbies Should Be Wary Of The Hidden Dangers of a “Growing” Industry

According to the headlines the industry is seeing the best growth it’s enjoyed in many a long year. And if you read enough of them, you could actually be forgiven for starting to believe that the industry is on the mend, and everything in the garden is rosy.

Well, sorry to burst the feel good ‘growth’ bubble, but from what we are hearing and seeing first hand on a daily basis, things are just as bad, if not worse than ever before.

With 1,921 Specialist Contractors in our LinkedIn Group, and 2,687 Twitter followers, not to mention our small army of exclusively Specialist Contractor StreetwiseSubbie Buddies, we have a pretty good handle on what’s really happening in the industry.

Payment problems, insolvencies and contractual disputes still abound and Specialist Contractors are not being treated any better than they were during the worst of the recession. But, what’s really sounding alarm bells, is the “merger” talks between Balfour Beatty and Carillion!

Is this really indicative of a healthy growing industry?

Balfour Beatty issued their 4th profit warning in July this year, with profits £65m below forecasts. And is it a coincidence that they have increased the paper value of 37 UK PPP (Public Private Partnership) contracts by a whopping 63%?

So, I ask the question, if these two companies were to merge, where would the money for the merger and any future growth come from?

What also sticks in my craw, is that the only reasons these two leviathans seem to be giving for the merger being worthwhile are financial and investor focused. Nowhere does it say how the “merger” will make a stronger, more competent Contractor, drawing on the skills and expertise of the two.

Where does it say how it will benefit the UK construction industry, or help to achieve the objectives of “Bull S**t 2025”, sorry I mean “Construction 2025”?

There is no mention of these things, because there doesn’t appear to be any to be mentioned.

All the talk of “growth” doesn’t solve the industry’s problems. We can’t sit back and relax!

Dig a bit deeper and you will find mixed reports about the health of the UK’s construction industry. Sisk has revealed its construction arm saw revenue and pre-tax profit fall last year, whilst there is some good financial news from North Midland and Galliford Try.

The only thing one can say with certainty is that the industry seems to be on a roller coaster ride. Some firms have increased revenues whilst others have diminishing turnovers and wafer thin or non-existent profits.

So, what are we to make of it all?

My advice is be careful!

In times like these there is no substitute for caution. Irrespective of who is inviting you to tender, or dangling the carrot of an order, please do your research.

Because no profits means no cash, and growth with no money to fuel it could well make monsters out of the most benign of Contractors. And those monsters may well develop a veracious appetite for feasting on small Specialist Contractors. Only capable of growing by sucking money out of their own supply chain.

Sadly, some Contractors will continue to use every trick in the book to hold onto as much cash as possible and continue to make withdrawals from the ‘Bank of Specialist Contractors’! And whilst some Contractors bottom lines begin to improve, too many Specialist Contractors will struggle to keep a hold on their cashflow and eventually go under.

But you won’t see that in the headlines will you?