Streetwise Subbie's August 2018 'Wise up Wednesday' Every StreetwiseSubbie 'Wise up Wednesday' email from this month
Author: Barry Ashmore
Trade Body Failing on Payment This week your Wise up Wednesday focuses on the fact that the Build UK Contractor members are simply not paying on time, and seemingly Build UK and its Trade Association members are quite simply failing to protect Specialist Contractors. Build UK has hailed publication of their bad payers table as a “bold rst step” in reforming payment practices. But, I agree with Neil Walters, national chair of the NFB, who said:
“Seeing Build UK portray tier one contractors like industry pioneers is the ultimate insult. “Build UK members, who make up less than 1% of the construction industry, are failing the 99%. “Fair practice is essential to changing the industry culture around payment, not transparency. “Transparency is a legal requirement, not a bold step. Trade Associations Should Be Outraged! The Trade associations should be outraged at this news, because it’s the clearest evidence yet that they are making no progress whatsoever. But they won’t be! Build UK Chief Executive Suzannah Nichol MBE said: “… the leaders within the sector are serious about changing the way they do business.”
Trade Body Failing on Payment
Trade Body Failing on Payment Are they really? I don’t think so Suzannah. You have been banging on about payment and trotting out this “things are changing” BS for years, and nothing has changed! The Trade Associations should be absolutely incandescent with rage at the lack of progress because it is destroying Specialist Contractors by the day, and dismantling the industry one rm at a time. But they won’t be! So why not? If you are a Trade association member I suggest you ask them. I have asked them to engage with Streetwisesubbie.com and barring the odd one and it is literally one, they are not interested. The o er to talk remains open, but in the meantime we are getting on with the job of protecting specialist Contractors. Protect Your Interests Here are seven quick tips on protecting your business; 1. Check Who You Are Contracting With Check the nancial status of those that want you to work for them. If the Contractor/Client 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.
Trade Body Failing on Payment
Trade Body Failing on Payment 2. Scope of the Works/Variations It’s a chore but you 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 this. If you’re having trouble agreeing variations, escalate don’t procrastinate! 3. 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.” 4. Send Notices If you get delayed you must send notices – don’t be persuaded otherwise. Failing to protect your interests in respect to time can prove extremely costly! 5. Price and Discount If you have made important quali cations in your tender make sure they are not lost when the contract is formed.
Trade Body Failing on Payment
Trade Body Failing on Payment 6. Check The Fundamentals 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. 7. Payment Terms Make sure the payment terms are clear, unambiguous and that you understand them. Ensure you know what to do if you start to get paid late or less than you have claimed. 6. Design Liability If the contract does not expressly limit your design liability to “reasonable skill and care” you will get the more onerous liability of “ tness for purpose.” Fitness for purpose obligations will void your professional indemnity or product liability insurance cover! 7. Take Action Remember, if you do run into any kind of contractual or payment problem, it will not get better with time! You must take appropriate action as soon as possible. Do not leave things until it’s too late. Act immediately.
Trade Body Failing on Payment
Trade Body Failing on Payment StreetwiseSubbie has a nationwide network of Consultants to help you solve your problems by bringing you cost e ective resources to help make your life easier and your business more pro table. By working with our Service Delivery Partners across the country, we bring you professional support in all the essential areas of your business. And, because we only work with Specialist Contractors you can be sure that we know the kind of problems you face, and the solutions that work best. Which saves you a lot of time, and a lot of money.
Published: 1st August 2018
Trade Body Failing on Payment
Don't be Bullied! Arrogant Bullies! The arrogance and bully boy tactics of some Main Contractors and indeed some of the very largest Sub-Contractors is staggering. They think that they can treat you like dirt and that you have no alternative but to accept their bullying. The Contract Some Contractors will use every trick in the book to introduce onerous terms, or remove the important quali cations you have put forward, or deliberately increase the scope of your works without telling you. Others are just so incompetent that the documents are a complete shambles. If you do query this you are given short shrift and told; “take it or leave it there is another Subbie waiting to do the job”. The Delays Once on site, the usual story is that you will be constantly delayed and disrupted throughout the project. You don’t issue notices advising the Main Contractor what has been preventing you from carrying out your works. either because you fear upsetting the Contractor or you think it will spoil your relationship, or lead to other problems. The Contractor does little or nothing to change things or release areas holding you up.
Don't be Bullied!
Don't be Bullied! The Completion Date Draws Near! Suddenly, the Contractor realises that the Completion Date is nearly here and someone somewhere gets a grip of the job and starts to get things done. Usually, this takes the form of ooding the job with labour so that all of a sudden lots of areas become available to you all at once. Of course the Contractor wants men in every single area, and seeks to bully you into accelerating the works for free. “YOU HAVE TO, YOU MUST, YOUR FAILING, WE WILL DEDUCT DAMAGES” screams the Contractor who has suddenly changed from a friendly guy into some sort or crazed monster! No doubt because his boss has threatened him with the loss of his job if he doesn’t get this one over the line! You Don’t Need That Much Time Suddenly the Contractor expects activities that were allocated a perfectly reasonable amount of time in the original programme, to be be rushed through and done in a fraction of the time. Except that they can’t… You know they can’t, and if the Contractor was being reasonable he would agree that they can’t. Why else would they have been allocated the time they were in the original programme?
Don't be Bullied!
Don't be Bullied! And if you agree to this madness and things don’t work out whose fault will it be? Absolutely spot on – it will be your fault! Don’t Allow Them To Bully You… As a Specialist Contractor you shouldn’t allow yourself to be rushed or bullied into accepting onerous terms. There won’t be another Subbie prepared to do the job otherwise they wouldn’t be talking to you! And don’t accelerate your works without ensuring that your contractual rights are protected. This may mean that you upset the Contractor or Client, but better that than nding yourself on the wrong end of a very onerous and expensive problem. Getting Free Advice Not all free advice is good advice. But when you talk to us at StreetwiseSubbie you get initial free advice from genuine experts, who are already helping over a hundred Specialist Subcontractors, who get that advice as just one of their many StreetwiseSubbie Membership bene ts. And, as a Buddy (as we call our members), if you need to go beyond the free advice, discounted rates apply. Please check out the Membership Options, or give us a call on 01773 712116, or email info@streetwisesubbie.com and we will be happy to explain the bene ts. Published: 8th August 2018
Don't be Bullied!
No Pay Don't Stay - Suspend! We are all familiar with the thousand and one excuses provided as to why the payment which was due hasn’t arrived. Securing payment is more di cult than at any time in living memory, and yet another insolvency is announced today as Scottish steel fabricator Rippin Limited has gone into administration with the loss of 25 jobs. The general feeling among Specialist Contractors experiencing di culties with payment is that they should down tools and walk o the site until payment has been made. In other words; “No Pay Don’t Stay” Whilst this is a natural reaction, it is important to understand that whilst under the Construction Act there is an overriding entitlement to stop work if payment hasn’t been made on time, it comes with a set of rules which must be followed. Suspending Performance If the Contractor delays payment or refuses to pay you altogether, you may be entitled to suspend the performance of your obligations. If your contract is subject to the Construction Act then section 112, allows you to suspend performance when you have not been paid. Section 112 is implied into every ‘construction contract’ (as de ned in the Construction Act) It provides the right to suspend performance where a sum due to you under the contract is not paid in full by the Final Date for payment and no e ective Payless Notice has been given.
No Pay Don't Stay - Suspend!
No Pay Don't Stay - Suspend! It is important to check that the Construction Act applies to your contract. The Act covers agreements in writing for the carrying out of “construction operations” (as de ned in the Act) which include the construction, alteration, repair, maintenance, extension, demolition or dismantling of buildings. The Act sets out some exceptions such as mining, petrochemical, power generation, water treatment and contracts with residential occupiers (where one party intends to occupy the dwelling as his residence). The notice of suspension must always be given in writing and include the ground(s) on which you are suspending work i.e. non-payment. The right to suspend performance is incredibly powerful, but you must ensure that you have ful lled your obligations under the contract as regards notice etc. Suspension At A Glance I t is a powerful tool for applying pressure on the Contractor to pay in full Partial payment is insu cient – only full payment will eliminate your right to suspend The completion date is, in e ect, extended by the period of suspension It may bring the matter to the attention of the Employer / Client which may help to resolve the situation Advance notice of 7 days (or more if your contract requires it) must be given after the nal date for payment has passed You cannot suspend if a valid Payless Notice has been served on you
No Pay Don't Stay - Suspend!
No Pay Don't Stay - Suspend! Wrongful Suspension Wrongful suspension will almost certainly amount to a breach of contract on your part, so you must take care to ensure the right to suspend has actually arisen. If you are in dispute with a Contractor about the value of variations that does not entitle you to suspend. It is exactly that a dispute about valuation” not “payment”. It is necessary for you to serve a written warning notice on the Contractor and if seven days (or the period in the contract) have elapsed and payment still hasn’t arrived, you are then entitled to suspend work. Without the warning notice, you will nd that it is you that is in the wrong and on the receiving end of all sorts of claims, despite the Contractor’s failure to pay on time. The best advice we can give is take advice from Streetwisesubbie before taking action! The Threat Of Suspension If your work is on the critical path, the threat to suspend work often results in the arrival of the money. But you must do it correctly to get maximum e ect. Where you correctly suspend work, there is an entitlement to an extension of time for completion. You are also entitled to receive payment for the loss and expense incurred as a result of the suspension and time to re-mobilise.
No Pay Don't Stay - Suspend!
No Pay Don't Stay - Suspend! As we have said before, learning the “Payment Law” in the form of the Construction Act is not di cult, so please don’t be put o 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. I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought, and if you haven’t yet taken action now might be a good time to pick up the phone and give us a call. Published: 15th August 2018
No Pay Don't Stay - Suspend!
Construction Dies While The Worthies Bicker! Thousands of businesses have su ered, the banks have taken a massive hit, and even the general public sat up and took notice when Carillion went to the wall. Carillions demise not only drew criticism for their director’s; “recklessness hubris and greed”, it has also cost you, me and every other taxpayer our share of the £70 million paid to liquidators and lawyers! Not to mention the increased cost of a whole raft of taxpayer funded projects. The Worthies Trot Out The Same Mantra What does all this say about our fragile economy, or a government that continues to let work to the big players despite their precarious nancial position? Yet month-after-month, year-after-year, the worthies trot out the same mantra, that everything is ne; “construction is a world class business; the pride of Britain”. But now some of the worthies are bickering; “the leaders are serious about changing the way they do business” cries one, “not so, that’s the ultimate insult cries another”.Whilst the most learned of worthies repeats his stale old calls to “ban retention.” And no point expecting the elected worthies to step in and actually do something useful. They are far too busy bickering over wreaths and burkas and making an almighty mess of things.
Construction Dies While The Worthies Bicker!
Construction Dies While The Worthies Bicker! The Facts Paint A Very Bleak Picture Last year a major survey by StreeetwiseSubbie found that 73.65% of Specialist Contractor’s contracts were subject to disputes ‘frequently or occasionally’. Which means that almost the entire industry is a ected by disputes! It’s a fact that Contractors (who are the main conduit for the money in the supply chain) work on wafer thin margins. It’s also a fact that construction is a risky business and it doesn’t take much to go wrong before those wafer thin margins become huge nancial chasms instead. But it’s not the Contractors that take the hit! Because, some unscrupulous Contractors claw that money back by taking it from their Specialist Contractors. And I do mean “taking it”. Rest assured that you the Specialist Contractors foot the bill, through no fault of your own, because you are vulnerable to such ruthless treatment. Construction Is Dying One Firm At A Time The Contractor’s aggressive QS’s have no moral compass. It’s just a game, they are paid to do a job, and that job is to screw the Subbies! It may suit the Contractors if they don’t pay, but it causes major impact on the Specialist Contractor’s business, leaving them with little capital to run their business, let alone invest in training or the future of the industry. And so, Specialist Contractors are forced out of business one by one and quietly but surely the industry dies. Thousands have already died, and more will follow if this vile cancer is allowed to continue unabated.
Construction Dies While The Worthies Bicker!
Construction Dies While The Worthies Bicker! Only yesterday it was announced that £25 million turnover civils specialist GPL Group (Manchester) Limited has gone into administration. putting 60 jobs at risk. It’s A Proven Fact It’s a fact that construction is gradually destroying the very companies that are actually capable of getting the job done! The total number of construction insolvencies in England and Wales rose 12.4% year on year in the second quarter of 2018, according to o cial gures. The total of construction insolvencies for the rst half of 2018 now stands at 1,476, up from 1,352 in the same period a year before – an increase of 9.1%. Construction is gradually being destroyed because certain Contractors don’t care about another Subbie going to the wall. They relish it, because they get to keep their cash! And because no one dares to make the link between this ruthless treatment and people’s lives, and the overall state of the industry, then the vicious circle of destruction continues unabated. Stop Before It’s Too Late Payment abuse is destroying the UK construction industry, and over 95% of respondents think that neither the Trade Associations nor the government are doing enough to solve the problem. So, the time has come for Specialist Contractors to take a stand and to:
Construction Dies While The Worthies Bicker!
Construction Dies While The Worthies Bicker! rop their ‘victim’ mentality d refuse to work for poor or negative margins believe in themselves as the backbone of the industry say “No” to the Contractor’s onerous terms stand together as never before at grass roots level demand a better fairer and sustainable future read “The Streetwise Subbie” Let’s stop bickering and work together to nd a way to solve the contractual, payment and a myriad of other problems that are destroying the industry one rm at a time. I want to hear to hear from everyone (worthy or otherwise) who wants to get behind a campaign for e ective action to x the problem once and for all. After all, to quote from Rod Sweet’s 2018 Canary in the coal mine article about construction post Carillion[1] ; “the industry and its biggest client [UK government] could be compared to a group of canoeists, in the water, clinging to their capsized craft. Carillion may have gone under but the rest seem safe, for now, as the river carries them toward the waterfall.” For more information or to add your voice call StreetwiseSubbie.com on 01773 712116 or email info@streetwisesubbie.com. [1] Rod Sweet (2018) Canary in the coal mine: What Carillion’s collapse reveals about construction’s productivity conundrum, Construction Research and Innovation, 9:1, 3-8, DOI: 10.1080/20450249.2018.1447062 Published: 22nd August 2018
Construction Dies While The Worthies Bicker!
Time for Change? Wise Up Wednesday is here to help you the Specialist Subcontractor. And this week it’s about change. You see, I know from personal and professional experience that even small changes can achieve amazing results. Whereas, doing nothing, or waiting to see what happens, can have disastrous consequences. Want To Grow Your Business And Your Pro ts? How serious are you about growing your business, your pro ts and your services? Most Specialist Subcontractors say they are trying to do just that, but somehow it just isn’t happening for them. Most Subcontractors are great at delivering products/service but as they grow and develop the business they neglect the need for new skills, and processes creating unseen ine ciencies and ‘grow themselves pro t and cash poor’. Why? According to something I read recently, we all have four devils within us: EGO, APATHY, IGNORANCE and FEAR. One of these four prevents us from changing, and therefore owners, directors and managers can become bottlenecks within their own company. Example… Just the other week I spoke to a Subcontractor who is being delayed and disrupted on yet another job. This has happened before and cost them dearly!
Time for Change?
Time for Change? Unfortunately he hasn’t made any changes or put in any systems or processes to stop this happening, so that he doesn’t make the same mistake for the 10th time. Why? Because he would have had to do something di erently and one of his devils stopped him CHANGING. Another example; yesterday, the owner of a business told me he never checked the contract and merely agreed to whatever was put in front of him. Absolute madness, the contract he had agreed to was stu ed full of onerous terms, and the Contractor was using these to avoid paying what was owed! Yet another one of the devils at work preventing him saying; “I don’t understand this contract and I’m going to get help”. So what’s happening? Both these Subcontractors have a desire for success but have not committed to CHANGE. As a business owner, director or manager it is your responsibility to develop yourself and your people. Owners, directors and managers who don’t commit to continuous development burn pro ts and don’t even realise until it’s too late. So what is commitment? Commitment is taking responsibility for where you are right now, reviewing the good, the bad and the ugly and doing something about it. Commitment is asking yourself “what don’t I know, what do I need to learn?” Recognise the devils within you and ask others for help.
Time for Change?
Time for Change? The bene ts of committing There are enormous bene ts to be had by committing to take “e ective action”. They are too numerous to list here, but if you want proof then give us a call or email us on info@streetwisesubbie.com and we will provide all the proof you need. Personally I have been helping Specialist Contractors to take e ective action for 28 years, and before that I had 20 years as an electrical contractor. And, StreetwiseSubbie has been helping Specialist Subcontractors just like you for the last 10 years. In that time we have not only recovered £thousands for our members, we have helped them with around 21 key areas of their business, so we know we can help you. It’s that simple. So what are you waiting for? Shake o let’s take some e ective action together.
those devils and
I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought. I sincerely hope to speak with you soon. P.S. Please remember that we are here to provide solutions for Subcontractors. Whatever you need we can action it for you. If you want to change or have a problem, not sure what to do or just want a second opinion, please give us a call on 01773 712116, or email info@streetwisesubbie.com (please do not click reply to this email). Published: 29th August 2018
Time for Change?
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