If you are an Aussie Subcontractor and your builder needs you to start work on site without a written contract squared away, there are a handful of (arguably) innocent reasons this is happening.
When I say innocent, what I mean is that the builder probably isn’t being predatory when he asked you this favour. More commonly, there are procedural or organisational hurdles internally for the builder that should be cause for you to proceed with caution.
Here’s what they are:
1. The design is likely to change, he knows it, and he doesn’t want to lock you into a scope of work before he ‘all in’ commits to giving you the job.
After all, if he signs the contract with you then you’re not going to price the changes keenly are you? He’s worried you’ll think its open slather, and he’s trying to delay giving you the leverage.
But all is fair in love and war, and if we are really honest with ourselves, he should delay the commencement of the project if he’s that worried about price fluctuations. You and he in that moment are tandem sky diving together and he’s still putting on the parachute. If he wants to take that risk, that’s on him. But don’t be silly enough to go along for the ride.
If the risk isn’t enough of a deterrent for you, think of it like this. The builder (and/or his client) is mitigating delay costs that would otherwise be affecting the timeframe of the project, and he’s doing it by gambling your purse. That is squarely his problem and if you subsidise his risk by getting a boogie on before you sign a contract, you’re forgetting who you work for.
This one applies if you’re dealing with a snotty nosed green contracts administrator, and it is one of the most common ones we see. There is a delay getting you the written document because either:
2. He/she doesn’t know what to write in the scope; or
3. You’re over the budget, and he/she is having trouble getting approval from management to sign you up.
If this is happening to you, here’s what you need to realise. There is very likely to be a bum covering white lie told by someone at some point about what your ‘agreed’ price was. We have even seen builders argue in adjudications that written quotes were verbally over-riden by the parties and that a subbie agreed to do the job for more than $100k less.
Nobody wins in this situation, and the only way you don’t lose significant wads of cash is by making sure you do not set foot on site without first thoroughly reviewing and executing a subcontract document that you are sure reflects the agreement you have with the kid.
Chances are, this job will be managed like a school yard sandcastle competition. You’ll get mucked around with resequencing of works and waste time explaining why things can’t be built with fairy floss and chewing gum on a shoestring budget.
If we are reviewing a contract for you and you’re already getting a sniff that this job will be like this, we are likely to strongly encourage you to focus your quoting efforts elsewhere.
4. The person you are dealing with isn’t the person preparing the Contract
This one typically happens because of your Achilles heel for relying on relationships, and it can be a ship sinker. What you need to realise in this instance is that the person giving you promises has zero authority to deliver on them.
I include this in the innocent category because your mate in the builder’s camp probably has no idea how useless they are when it comes to getting paid for the work you do for them.
In fact, they’re under pressure from upper management to contract with subbies to a letting schedule and they will be coming at you from a perspective of urgency around getting their work done. Whoever it is that is still tweaking jargon in the contract document is probably their boss, and if the contracts administrator has taken too long to get you in line for a written contract then he’s in damage control, and even less of a position to advocate for you.
5. Another way this unfolds is when the decision makers in the builder’s camp are still cutting a deal with the principal.
I am working on a current matter where the builder and the principal had not yet decided if the builder would act as a construction manager or a builder. The subbie started work on site at the instruction of the builder and now the builder denies that he engaged the subbie at all. The builder swears black and blue the subbie did the work for the principal directly.
Thankfully this subbie sought early advice and is in good stead to recover his money, but would you know what to do if this situation unfolded on your next job?
Take Away this message from this article:
When your contracts administrator or your builder asks you to start work on site before he’s squared away the contract, you will not know which one of these reasons (or some other equally worrying reason) is holding up the paperwork.
What I can promise you with my hand on my heart that the builder can’t, is that it is never ever ever, ever ever worth the risk.
In that moment there is no urgency in your camp to get the job rolling. The urgency belongs to the builder and that my friend, is the very best leverage you can have when it comes to negotiating better contract terms.
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