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.

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Site Delays Could cost You Your Business!

This Week’s “Wise Up Wednesday” is about a dirty trick used regularly by unscrupulous Contractors when things are not going well and the works on site get delayed.

Contractors Can’t Programme/Manage Properly

Regrettably, in my experience the standard of management by the Contractor’s team has declined over the last 10 years. Many have shed their most experienced staff, so as workload picked up they have brought in inexperienced personnel, or as is often the case freelance staff. On a great many projects this leads to problems, including programming and managing the works, and in some cases that I have seen the programming was shambolic.

Of course, the Contractor won’t accept responsibility for any of this!

The Contractor Blames The Subbies

As an ex Specialist Contractor turned professionally qualified consultant I have been fixing Subcontractors problems, cost effectively for the last 27 years, and I have seen this trick used over and over, and over again!

The Contractor blames you for delay and cobbles together a claim against you for – and here are actual figures from a a claim we rebutted last month;

Excessive plasterboard patching: £10,000

Cleaning: £327.50

Fire stopping: £15,000.00

Delay to overall completion 20 weeks delay: £165,131.00

 Total: Minus  £133,441.75

Take Action

Remember, if you do run into this type of set off or any other kind of contractual or payment problem, it will not get better with time!

You need to know what you have to do to protect your company.

Come  and discover the Secret Keys To Minimise Risk and Maximise Profit, that we have been putting into practice on behalf of Specialist Subcontractors for the last 27 years.

And they’re 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;

15 March – Oulton HallLeeds close to M1 and M62

22 March – The Nottingham BelfryNottingham close to M1 J26

29 March – The Village HotelCoventry close to M6 and M40

WHAT DOES IT COVER? We will be unlocking the Secrets To Getting Paid on time every time 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;

“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 Getting 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.

#WiseUpWednesday: Identifying And Valuing Variations In Construction

This week’s Wise Up Wednesday is about the all important  subject of variations.

The identification and proper valuation of variations is arguably the greatest source of problems for Specialist Sub-Contractors and it is therefore important to have a clear understanding of the contractual framework governing the instruction, execution and valuation of variations.

A common feature of most construction projects is that at some stage the person who has commissioned the work is going to change his mind about some element of it and will require changes to be implemented during the construction phase.

All the standard forms of contract for Main Contractors and Specialist Sub-Contractors recognise this fact and specifically provide for variations.

WHAT IS A VARIATION?

Standard forms of contract and sub-contract tend to define the term ‘variation’ in a similar way.  However, you need to be aware that there are a considerable number of standard forms and many different ways of dealing with variations. So, please take care to ensure that you are familiar with and understand the provisions in each particular contract.

IS IT ACTUALLY A VARIATION?

Disputes frequently occur as to whether a particular instruction amounts to a variation. Unfortunately a common misunderstanding made by many Specialist Sub-Contractors is to assume that all Architects, Engineers and Main Contractors instructions are variations.

Let’s be clear on that; not all instructions give rise to a variation.

Instructions may merely confirm or clarify that which was originally required under the contract, whilst the Contractor or 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. 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 you are being instructed to do constitutes a variation to that originally contracted for.

ESSENTIALS

At their most fundamental level, the are two essentials which you should observe when dealing with variation instructions.

1. Check whether or not the person purporting to have authority to issue variation instructions actually has authority to do so, and

2. Comply with the particular requirements of the contract in respect to instructions.

It is not uncommon for various parties to assume that they have authority to issue instructions when in fact they have no such authority. Check the terms of the contract and if it is not clear clarify the matter from the outset.

MAXIMISING RECOVERY FROM VARIATIONS

Variations are an opportunity for the Specialist Sub-Contractor to maximise his financial return from the project.

Please remember the old adage “if you don’t ask you don’t get” and in practice variations should be valued by the Specialist Sub-Contractor.

You need to submit details as soon as possible after the variation arises. This will avoid situations where the person commissioning the work has not been properly advised as to the increased value that has arisen because of the changes he has instigated and may have insufficient funds to pay for them.

I hope you enjoyed my Wise Up Wednesday blo and that it gave you some food for thought, and I sincerely hope to speak with you soon.

In the meantime if you need any help with any of your business problems, including getting paid for variations, please don’t hesitate to pick up the phone and give us a call on 01773 712116.

It’s Wise Up Wednesday! 10 Ways To Make A Positive Impact On Your Specialist Contracting Business

Running any business is tough, but running a Specialist Contracting business is even tougher!

Here are 10 things you can do to make a real positive difference in your business;

  • Keep Score:It’s amazing how few Specialist Contractors have any idea of the daily, weekly, and monthly numbers. Make sure you know the financial trends in your business and keep that cash flow under control.
  • Set Goals: Like keeping score, setting goals and objectives is an essential part of business success.
  • Use High Impact Marketing: It’s easy to waste money on ineffective marketing. Learn how to use low cost marketing to improve your business.
  • Master Business Presentation Skills: Even talking one on one with a potential customer, good business presentation skills can help improve your Specialist Contracting business by leaps and bounds.
  • Monitor Trends: No business operates in a vacuum. The events and changes in the construction landscape have an effect on your business. Stay current by joining over 1,800 Specialist Contractors in this free group.
  • Sharpen Selling Skills: A high return area for business improvement is the sales function.
  • Find Best Practices: Every industry has its own best practices or ways of doing things that are tried and tested. Avoid wasting money and time reinventing the industry is generally a good approach!
  • Motivate Staff: Talented and motivated staff members can bring on big improvements in business.
  • Know Your Limits: Every successful business owner, even Bill Gates, has a clear idea of their limitations. Just accepting you can’t do it all , helps you to manage your resources andfind help when you need it.
  • Take a Break: Running a small business is hard work. Sometimes the best way to improve your business and re-ignite your passion is to take a holiday!
I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought, and I sincerely hope to speak with you soon.

In the meantime if you need any help with any of your business problems, please don’t hesitate to pick up the phone and give us a call.

It’s Wise Up Wednesday!

The past few years have been anything but plain sailing for Specialist Contractors in the construction industry, and we have already lost 5,500 companies to insolvency in the space of just 2 years.

The future isn’t certain either, with no-one truly knowing what is round the corner.

That’s why we have put together our Streetwise Wise Up Wednesday Guides to give you a quick burst of stuff that will help you in your business life.

Sometimes quirky, sometimes hard hitting, but always guaranteed to make you think and take no more than 2 minutes to read.

Be Flexible and Ready For Change

Certain aspects of the  construction industry haven’t changed for years, but others are moving on at pace, and what worked well last year, last month or last week may now be out of date!

It may become necessary to change the focus of the services you offer or the style of work you do to match what the market is looking for.

Start to look at other areas and niches in which your company could operate, and the opportunities may surprise you.

What About Technology?

Are you using the latest or most appropriate technology.  Better tech doesn’t have to be expensive, and communications, computers and data transfer have moved on in leaps and bounds.

Take a look around at your office and out on site, and if your tech looks like its from the 1980’s then maybe it’s time for a change!

Don’t Cut Marketing – Improve It

When money gets a little tight, many people reduce or stop their sales and marketing spend in order to save money in the short term. But this could seriously damage your long term wealth.

Think of your marketing spend as the engine in the light aircraft you are flying. Switch it off and you will carry on gliding for a while, but eventually you will come down to earth. Possibly quite abruptly!

Rather than just cutting things out without a plan, sit down and give it some real thought, and why not have a chat with one of our experts? Clever marketing isn’t expensive and nor is our advice!

I hope you enjoyed my Wise Up Wednesday blog and that it gave you some food for thought.