If you've ever wondered how the contract sum impacts your risk profile in the Australian construction industry, you're in the right place. As a construction adjudicator with real-world site experience and a background in building and law, I'm here to spill the beans on everything you need to know.
In this blog, we'll explore the fascinating world of subcontracting and how understanding your contract sum can help you navigate the choppy waters of the construction industry.
So grab a cup of coffee, sit back, and let's dive in!
$5k to $30k: Fast in, fast out! When you're working on projects in this range, you need to be on your toes. The margin for error is minimal, and jobs often start later than expected. However, there's good news – you should be able to avoid retentions, which means you can get your hard-earned cash without unnecessary delays. Remember, in this game, speed and precision are your best friends.
$30k to $75k: Now we're moving up a notch, my fellow...
Builder's contracts often contain clauses that can have significant financial implications for contractors and subcontractors. One such clause, known as the "cross contract set off" or "set offs" clause, can be easily overlooked but poses a grave danger. In this blog post, we will shed light on the hidden risks associated with these clauses, explain their impact on payments and retention funds, explore the limitations of adjudication, and provide practical tips to safeguard your financial interests.
Unraveling Cross Contract Deductions Clauses
The term "cross contract set off" or "set offs" clause refers to a provision in builder's contracts, also known as "Other Monies Due" clauses in the Australian Standards. These seemingly innocuous clauses grant builders the power to halt payments across all your projects, not just the current one, if there are claims made under the existing contract. This means that not only can builders stop paying for the work you've carried out, but they...
If your builder has gone broke and you are part the way through the job, in a lot of instances, the legal options available to you once a liquidator is appointed are very limited because most of the measures needed to be in place before the liquidator was appointed.
To be able to do protect yourself retrospectively is an expensive band aid exercise with lawyers with no guaranteed outcome. It potentially may not even worth doing because there are laws that say that you can't sue a company in liquidation. Of course you should always seek legal advice about your particular circumstances - especially if you have a PPS Registration, an Adjudication Decision in your
favour, a Subcontractor's Charge or a Judgement Debt.
What I want to talk about here is about the commercially savvy things you can do, because although you might not have great legal grounds to get paid, but you might have some leverage to negotiate a payment and terms to complete the job directly with the Principal.
Let's talk about supplier warranty deeds.
If you're in the construction industry and you supply anything under a subcontract, you may have encountered this issue. It's becoming more common for lawyers and principals to require builders to have subcontractors get their suppliers to sign a supplier warranty deed. This deed is in favour of the principal and/or the builder, and it often goes beyond the normal warranty terms and conditions.
So why is this causing disputes?
Well, suppliers may be reluctant to sign this deed, especially if it goes beyond their usual warranty terms. This can lead to a stalemate between the subbie, the supplier, and the builder, with the builder insisting that the subbie get the deed signed and the supplier refusing to do so. It can also result in full-blown disputes that cost a lot of money in legal fees and often leave no one satisfied.
The issue is further complicated by the fact that there can be a disconnect in expectations between...
In the construction industry, subcontractors play a vital role in bringing together a successful project. However, there is often a debate between using union or non-union subcontractors. In the "Tricks of Your Trade Podcast" episode 40 hosted by Michelle Cirson, Tim Dive provides his insights and tips on how subcontractors can protect their trade, whether they are union or non-union.
Tim Dive is the founder of Workplace Advisory Specialists, a consulting agency based on the Gold Coast in Queensland. With over 15 years of experience in the industry, and having worked on the tools as a plasterer, Tim has witnessed firsthand the pros and cons of both union and non-union subcontractors. According to Tim, the main difference between the two is the structure of their workforce.
"Union subcontractors are organised labour with a collective bargaining agreement, and they follow that agreement to the letter. The non-union side is not as structured. There is no collective bargaining...
If you’ve never had trouble getting undisputed retention out of a builder, you’re either really bloody lucky or you’ve only worked in the industry for a microsecond.
One of the most common reasons people contact me is to recover retentions that should have been ‘automatically’ released at the expiry of the defects liability period.
There are a handful of reasons why this happens. Some of them include:
In a number of states in Australia...
If you’re an Aussie Subbie, chances are you think of paperwork as a succubus on your precious time that could be better spent on charge out work.
Here’s the thing.
Business coaches talk about taking meaningful action that will move the lever towards more profit and lower overheads. If you hang around those folk long enough you’ll start saying things like “that which gets measured gets improved.”
The thing is, they’re absolutely right.
But it’s a hard sell to talk a subcontractor into spending money on administration when they’ve been ‘getting away’ without it for years. So true to form, we usually meet you guys for the first time when there has been an oopsie daisy and you need help to get out of a hole.
Once we dig you...
This legislation was brought in by way of a staged implementation by Queensland Government, and it is now trickling into the final stages of roll out. Before Project Bank Accounts and Project Trust Accounts, builders could continue to hold any retentions in their everyday business bank accounts.
That means that the builder was able to use your retention to prop up its cash flow. In other words, there was nothing stopping a builder from spending your retention on something else. And if he did spend it on something else, he now needs to come up with new cash to release your old retentions.
Moving forward, builders now must put your...
Has your builder ever bribed you with the preference on the next project if you walk away from outstanding payments on his current job?
Maybe the money isn’t outstanding, but a bunch of variations are still “for discussion”.
If you knew what your builder was really thinking when he suggests this arrangement to you, you would focus your quoting efforts elsewhere and force your competitors into his trap.
Now before I get into the juicy stuff, I need to give you a disclaimer. This blog is about you being asked to walk away from proper, honest to goodness costs that are legitimately owed to you. I trust that you will know in your gut whether this is truly the case, or whether there’s a genuine dispute afoot.
To be clear, there is a difference between a builder who is trying to settle a barney with you on a good bloke basis, and a builder who is trying to hoodwink you out of your final claim.
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...