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

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.

It’s Wise Up Wednesday – Resolve That Dispute…

This week’s ‘Wise Up Wednesday’ is all about resolving disputes – before they start!

Many disputes can be avoided by getting the paperwork right in the first place, and making sure that everyone has a common understanding of what is expected of them, and what will happen if things go wrong.

So the first way of resolving that dispute is to stop it from happening in the first place.

Adopting the following approach can help:

  1. Record all pre-contract negotiations and confirm everything in writing and/or email;
  2. Make sure all the important details are properly incorporated in the contract and that it exactly what has been agreed;
  3. Agree on any standard terms and conditions to be used and negotiate out any onerous clauses;
  4. Don’t agree to anything you don’t understand and if you need to, don’t be shy about getting advice on your contract documentation.
  5. Make sure you follow the procedures set out in the contract – don’t ignore them…

What If Things Still Go Wrong?

Construction is a contentious business, so it’s no surprise that disputes can arise, even if you haven’t done anything wrong.

Commencing any form of dispute resolution can be stressful and impact on your business, because no matter how strong your case, you can never be certain of the outcome.

That’s why it is absolutely essential that you get things right from beginning to end.

WANT TO KNOW MORE?

You need to know how to put all this together to make sure you keep disputes to a minimum, get paid, and protect your company’s financial well being.

So, please 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.

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.

Should You Be Issuing Payment Notices?

If you employ Sub-Contractors this week’s blog is for you; it’s about the all important topic of Payment Notices.

Is Your Payment Mechanism “Adequate”?

Every construction contract (as defined in the Construction Act) must have an “adequate” payment mechanism.In very simple terms it must have a:

  • Payment Due Date – when the work must be valued
  • Payment Period – time between Payment Due Date and Final Date for Payment
  • Final Date for Payment – latest date when payment can be made In any event,
  • Mechanism that clearly determines the Payment Due Date and the Final Date for Payment.

If the contract payment terms do not meet these requirements, the provisions from the  Scheme for Construction Contracts will apply.

Payment Notices

There are strict requirements for both payer and payee to issue and manage payment notices which operate the payment mechanism.

All Notices must state the amount and the “basis” of calculation. So, you must be certain of what the Payment Due Date is as there is an absolute requirement to serve a Payment Notice up to 5 days after the Payment Due Date. If this time period is missed it is a breach of contract with consequences.

Bad News For You

This is could all be bad news for you, because when you are the payer you must get it right or you could find yourself in breach of contract by failing to serve a Payment Notice within in 5 days of the Payment Due Date.

Most contracts require your Sub-Contractors to submit an application for payment, and in that case their application for payment automatically becomes the Default Payment Notice.

If a Default Notice is served there is no defence to the amount claimed if a Payless Notice is not served in the time specified.

Valid Payless Notice?

A Payless Notice is a final chance for you as the payer to value the works and withhold monies trumping the Payment Notices or Default Payment Notice. However, the Payless Notice must be valid and must state the amount and basis for calculation.

The key thing about Payment Notices is that timing and content is critical to their validity, and if these Notices are not managed properly by you your Sub-Contractors will be entitled to challenge them.

And that means you could end up paying monies which the Sub-Contractor is not actually entitled to. don’t risk it, check your processes now.

Got a payment problem? Get in touch and let us help! Call 01773 712116 or email info@streetwisesubbie.com to find out more.

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.