Make sure you follow the Len commandments
Our expert explains why learning to say no is essential – and suggests some rules that should be written in stone before you agree to any new projects
For my regular sermon on payments and contracts, I’d like to share my thoughts on how we can stem the tide of unscrupulous business practices.
As you’ll know, I advise clients across a wide variety of sectors in the construction industry, a few of whom have told me that they’ve had enough of turning the other cheek to unfair conditions.
We’ve all seen how the failure of construction firms can cause a domino effect of debt that hits the supply chain hard, leaving businesses out of pocket and struggling to survive.
To avoid similar disasters of Biblical proportions, I’m working on ways to help organisations say NO to onerous clauses and conditions and push back on nefarious employers and contractors.
As part of this guidance, I’ve drafted the following list of commandments that should be adopted by every business approaching a new project.
This should be the message that we are ALL sending out to potential employers and contractors before signing on the dotted line:
DON’T send us a tender with onerous contract amendments which increase our risk and reduce yours – the documents will just be sent back to you.
DON’T get us to work with you for months, using our ‘know-how’ to help you secure a contract, and then come back to us seeking a further discount off our tender. It won’t happen.
DON’T include extended payment periods.
DON’T include liquidate damages provisions that are completely disproportionate to the value of our work package. We won’t accept them.
DON’T include provisions that retention releases will be dependent upon the completion date of the main contract because we won’t accept that either.
DON’T issue an instruction to us for additional works before weagree a price with you, because we won’t do these works without an agreement on price.
DON’T tell us that you can’t pay us because the client hasn’t paid you – that’s your problem, not ours, and pay-when-paid provisions are outlawed.
DON’T keep hitting us with spurious contra charges because we won’t accept them. If you don’t drop them, we’ll simply refer the matter to adjudication.
DON’T put a clause in the contract that says if we initiate an adjudication we will be entirely responsible for your costs and for those of the adjudicator. Again, we simply won’t accept it.
DON’T keep telling us that there’s more work in the pipeline that we’ll get if we play ball with you on other contracts.
DON’T include cross-contract set-off provisions. Guess what? We won’t accept that either.
DON’T forget that you need us to get your projects built – if you don’t treat your supply chain properly, you’ll have no supply chain.
DON’T extend the date of the final account agreement because we DO want to accept that.
DON’T start a contract without there being clear responsibilities in relation to Contractor Designed Portions.
DON’T keep telling us that certain things are ‘design development’ when you don’t even know what that means and it’s not been defined in the contract documents.
Now, I’m well aware that many readers will nod their heads toall of the above points and then say: “That’s all well and good Mr Bunton, but I’m afraid we need the work.”
“there are plenty of good employers and contractors out there who have long-term building programmes and will look after you”
Of course I understand that, but being brave and adopting some of these commandments really WILL help you manage the commercial aspects of projects more efficiently and profitably.
In my experience, there are plenty of good employers and contractors out there who have long-term building programmes and who’ll look after you. Such people will value your input and want you to help them build successful projects on cost, on time and to a high quality.
So you need to have the courage to be selective in who you work for and find out which organisations have long-term programmes and with whom you can build a successful relationship.
A number of clients I work with ARE beginning to say no and it’s working; their voices are being heard and better and fairer contracts are being entered into.
So it CAN work and we CAN change things if we all have faith in our convictions and work together.
Here endeth the lesson!
Pilot plan will help businesses to prosper
As part of my ongoing drive to improve industry conditions,I’m currently working with several members of the Finishes and Interiors (FIS) sector, who, like SELECT, are active members of the Construction Industry Collective Voice (CICV).
I’m now looking to run some pilots across the UK to help businesses operate the commercial side of contracts more effectively and efficiently and keep them out of trouble.
These pilots will include the implementation of the Best Practice Guide (BPG) produced by the CICV, along with a national webinar.
In addition, I’ll be working with several organisations to present the BPG to their site, contract and commercial managers so that they can improve the way they manage projects. We’ll also be providing these organisations with an overview of the Joint Contracts Tribunal (JCT) and Scottish Building Contracts Committee (SBCC) conditions of contract to help them look out for onerous contract amendments.
I’m always happy to share this expertise with SELECT Members too, so contact your Member Representative if you want to discuss anything in particular about contracts or payments.
Expert advice is close at hand
The CICV’s Best Practice Guide is available to download by going to bit.ly/CICV-BPG
