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.

Subby Bashing Is Alive And Well…  

This week’s Wise Up Wednesday is about Subby Bashing, which sadly is alive and well. Even as I write this I have just put the phone down from a joinery subcontractor who is suffering and needs our help!

For many Specialist Sub-Contractors getting paid late, under-valuation and unjustified set off, is an everyday problem. Some almost take it for granted that Main Contractors are entitled to insist on long payment periods, or find unethical reasons to delay payment or pay less than you are entitled to.

According to some reports, SME’s in the UK are owed in excess of £50 billion in late payments, but the majority are reluctant to chase slow-paying customers because they are worried about upsetting them and losing future work.

You should ask yourself: ‘Do you really want to work for someone that does not pay?’

Stop The Subby Bashing

The fact of the matter is that the Contractors are not making any money! In the current economy, margins are so slender it only takes something minor to go wrong, for the Contractor to start losing money on a project.

Aggressive commercial managers demand that their staff use any means possible to recover margins and reduce or withhold payment to their sub-contractors by:

  • Under valuing payment certificates
  • Creating a contra charge account
  • Keeping hold of retention monies
  • Making false or illegal damages claims
  • Refusing substantial final payments until a ransom deal is struck
  • Invoking onerous contract terms

What Can You Do?

If you think that there is nothing that can be done to improve your financial position, I’m pleased to say you are wrong.

StreetwiseSubbie is helping hundreds of sub-contractors just like you to get paid properly. We can help you cut through all the smoke and mirrors and get you paid on time, and what you are actually entitled to , rather than what the Contractor wants to pay you!

The thing about the Contractor’s Bully Boys is that they rarely understand what they are doing contractually. Very few actually understand the New Construction Act rules, they either don’t understand the Payment Notice requirements, or they fail to comply with them.

The timing and content of Payment and Pay Less Notices is critical, plus they often miss the fact that payment applications become the sum due if they don’t do what they are supposed to do when they are supposed to do it.

The threat of a smash and grab, quick and inexpensive “technical adjudication” is often enough to unlock payment. If the law and the facts are in your favour the adjudicator is almost ‘rubber stamping’ your payment application as the sum due!

So, don’t be intimidated, and don’t accept payment abuse, we are here to help.

Take Time Out To Brush Up On The Contractual Stuff

We’ve said before that learning the contractual stuff doesn’t have to be difficult, so please don’t be put off by thinking it’s legal mumbo jumbo that only lawyers can understand.

This all gives you a good start in the battle to get paid properly, and if you need us, our experienced professional Consultants are here to help you get paid what you are owed and on time.

Want To Know More?

If you would like to know more about the ways to Minimise Risk and Maximise Profit, that we have been putting into practice on behalf of Specialist Subcontractors for the last 28 years, I would like to invite you to our exclusive March Seminars.

You will have a thoroughly enjoyable delay where you can enjoy the company of other Specialist Contractors at this exclusively “Subbies” only event.

The atmosphere is relaxed and the presentations are down to earth and user friendly, packed with real life examples of what to watch out for, and all the information that you need to minimise risk and maximise the profitability of your business.

And as all the venues are specifically chosen for ease of access you’re sure to have a great day, where you can network, learn and share ideas in a vibrant and relaxed atmosphere.

The secrets are being revealed at our March events;

“Understand Your Contract to Minimise Risk and Maximise Profit”

“Introduction To Contractual Awareness and Using JCT Subcontracts”

WHEN/WHERE IS IT? The dates and fast access venues are as follows;

Too late for Leeds which was 15 March – Oulton Hall

Too late for Nottingham which was 22 March Nottingham Belfry

Hurry book now for tomorrow 29 March – The Village HotelCoventry close to M6 and M40

** If you have an alternative location that you would prefer for future events please email us on info@streetwisesubbie.com

WHAT DOES IT COVER?

We will be unlocking the Secrets To Minimising Risk and Maximising Profit in a straightforward down to earth easy to follow style using real life examples.

Here’s what your fellow Subcontractors said about our last event;

“Fantastic! A great day”

“Easily digestible information delivered in an interesting and easy to understand format”

“Very detailed and informative”

“Very informative and well delivered”

“We were struggling to get paid; not any longer!”

THE HEADLINES

  • Session 1 – Contract Formation
  • Session 2 – Introduction to JCT Contracts and Construction Act
  • Session 3 – Time, Notices and Delay and Disruption
  • Session 4 – Instructions, Variations and Maximising Return
  • Session 5 – Getting Paid On Time and the Right Amount
  • Session 6 – Resolving Conflicts and Disputes
  • Session 7 – Putting It All Together

WHO SHOULD ATTEND? This is exclusively for Specialist Contractors and is designed specifically to provide a broad appeal for Specialist Contractors staff who work with contracts which includes;

  • Estimators,
  • Contracts Managers;
  • Project Managers;
  • Commercial Managers,
  • Quantity Surveyors,
  • Credit Controllers and
  • Directors

WHAT WILL WE GET OUT OF IT? The Secrets To Minimising Risk and Maximising Profit, including the best information available to resolve the all important problem of How To Get Paid!

Specialist Contractors don’t get paid because they don’t understand the contract or don’t apply it when they should. We will reveal all you need to know to enable you to understand the fundamentals of those subcontracts, and how to get paid.

WHAT DOES IT COST? You can book now for preferential discounts and rates – but be quick to ensure you receive your Early Booking Discount!

Book within the next few days and instead of paying £350, you can pay just £315.00 saving you 10% off the standard price.

Book two or more places and you can pay just £280 each saving you 20% off the standard price.

Special rates apply for our Buddies (members) – please ask Tanya for details.

All rates are subject to VAT

Booking couldn’t be simpler, just contact Tanya directly on 01773 712116 or tanya@streetwisesubbie.com to confirm your places and she will take care of the rest. She is brilliant!

But hurry it’s tomorrow!

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.

Damages and Extension of Time  

This week’s Wise Up Wednesday is about damages and extension of time.

One of the biggest financial risks to you as a Specialist Subcontractor is the possibility of damages from the Contractor if you over-run your original completion date.

These over-run costs can be massive. Consider a contract with liquidated damages from the client of £10,000 per week, plus the weekly costs of the Contractor’s site staff and establishment, also those of other sub-contractors. You could be looking at £30,000 per week of over-run being deducted from your account and/or pursued from you through adjudication or litigation. Enough to sink many a smaller Subbie for good.

If you wait until disaster strikes before considering what you should do, then you are in big trouble. It’s probably too late by then in most amended subcontracts, and definitely those incorporating NEC/4 or NEC/3 as it was!

In JCT contracts what you must do is to give the Contractor written notice of individual delays immediately they become apparent, detailing the cause and the effect upon your programme.

In particular, you must notify the anticipated effect upon your completion date and request an extension of time. Then you must update these notices as the works proceed.

You must also keep and regularly submit good site records (i.e. site diary, progress reports etc.) in order to prove your entitlements when challenged. There is no need for all these notices and records to read like some legalistic document. Just tell it like it is, making reference to the facts, and the anticipated effects.

But you must submit these details in writing and as soon as you encounter the problem. You must also ensure that you comply with the specific requirements of the contract. And these can be onerous. If it says you must send such notices on blue paper in a green envelope tied up with pink ribbon, then that is what you must do to ensure the notice is valid!

If you have the notices records and evidence in place, then even if the Contractor comes at you, it should be possible to win in the end. So, to quote a well-worn phrase, ‘Don’t be shy – get noticed’.

In NEC/3 and NEC/4 contracts the situation is altogether different, so please get in touch if you don’t know what you should do.

Want To Know More?

If you would like to know more about the ways to Minimise Risk and Maximise Profit, that we have been putting into practice on behalf of Specialist Subcontractors for the last 27 years, I would like to invite you to our exclusive March Seminars.

You will have a thoroughly enjoyable delay where you can enjoy the company of other Specialist Contractors at this exclusively “Subbies” only event.

The atmosphere is relaxed and the presentations are down to earth and user friendly, packed with real life examples of what to watch out for, and all the information that you need to minimise risk and maximise the profitability of your business.

And as all the venues are specifically chosen for ease of access you’re sure to have a great day, where you can network, learn and share ideas in a vibrant and relaxed atmosphere.

The secrets are being revealed at our March events;

“Understand Your Contract to Minimise Risk and Maximise Profit”

“Introduction To Contractual Awareness and Using JCT Subcontracts”

WHEN/WHERE IS IT? The dates and fast access venues are as follows;

Too late for Leeds which was 15 March – Oulton Hall

Quick still time to book 22 March Nottingham Belfry close to M1 J26

Closing soon 29 March – The Village HotelCoventry close to M6 and M40

WHAT DOES IT COVER?

We will be unlocking the Secrets To Minimising Risk and Maximising Profit in a straightforward down to earth easy to follow style using real life examples.

Here’s what your fellow Subcontractors said about our last event;

“Fantastic! A great day”

“Easily digestible information delivered in an interesting and easy to understand format”

“Very detailed and informative”“Very informative and well delivered”

“We were struggling to get paid; not any longer!”

THE HEADLINES

  • Session 1 – Contract Formation
  • Session 2 – Introduction to JCT Contracts and Construction Act
  • Session 3 – Time, Notices and Delay and Disruption
  • Session 4 – Instructions, Variations and Maximising Return
  • Session 5 – Getting Paid On Time and the Right Amount
  • Session 6 – Resolving Conflicts and Disputes
  • Session 7 – Putting It All Together

WHO SHOULD ATTEND? This is exclusively for Specialist Contractors and is designed specifically to provide a broad appeal for Specialist Contractors staff who work with contracts which includes;

  • Estimators,
  • Contracts Managers;
  • Project Managers;
  • Commercial Managers,
  • Quantity Surveyors,
  • Credit Controllers and
  • Directors

WHAT WILL WE GET OUT OF IT? The Secrets To Minimising Risk and Maximising Profit, including the best information available to resolve the all important problem of How To Get Paid!

Specialist Contractors don’t get paid because they don’t understand the contract or don’t apply it when they should. We will reveal all you need to know to enable you to understand the fundamentals of those subcontracts, and how to get paid.

WHAT DOES IT COST? You can book now for preferential discounts and rates – but be quick to ensure you receive your Early Booking Discount!

Book within the next few days and instead of paying £350, you can pay just £315.00 saving you 10% off the standard price.

Book two or more places and you can pay just £280 each saving you 20% off the standard price.

Special rates apply for our Buddies (members) – please ask Tanya for details.

All rates are subject to VAT

Booking couldn’t be simpler, just contact Tanya directly on 01773 712116 or tanya@streetwisesubbie.com to confirm your places and she will take care of the rest. She is brilliant!

But hurry our last round of seminars sold out very quickly.

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.

 And Please Support #Buildgate (Google it)

Missed any Wise up Wednesday emails? You can read them here and sign up now.

Wise up Wednesday Feb 2018

If you’ve missed any Wise up Wednesday e-mails from StreetwiseSubbie, then from February 2018 they will be collated into a series of unique monthly publications. The February issue is here now.

In February, I wrote about how keeping good records will help you to avoid payment problems, the ‘hit’ that the Carillion liquidation had on businesses, particularly Subbies, and how you can protect your business from potential disasters like this in the future.

There is also a personal story from a Carillion employee and who should take responsibility for the failure of the company he worked for.

You can find out more about our special Contractual Training events being held in  Nottingham and Coventry and there’s still time to catch these if you book soon. Get your copy now.

Get copy now

‘Wise Up Wednesday’ is a series of short, weekly emails to help Specialist Contractors like you stay on top.  Each week you get practical, down-to-earth advice that’s designed to help you to protect your business from unscrupulous contractors, win, work, get paid and make money!

StreetwiseSubbie has help countless Specialist Contractors to understand contracts,  recover retentions and solve payment disputes.

If you don’t already receive your 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.

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