Len Bunton, Owner of Bunton Consulting Partnership and President of the Conflict Avoidance Coalition, provides a round-up of a number of different contractual and payment issues which he has encountered over the past four to six weeks. He says, hopefully, those reading this can take the right message from these experiences and avoid encountering similar problems themselves.
First though I want to mention the success of the Conflict Avoidance Coalition Conference in London on the 16 September which was very well attended and we heard from an excellent range of public and private sector clients and many others involved in the construction process. The trade associations were also represented at the conference and are giving great support to this initiative. The feedback has been extremely interesting and positive, and there is no doubt that there is clear traction to bring conflict avoidance strategies into construction contracts to avoid costly and time-consuming disputes. So, I would urge you to sign the Conflict Avoidance Pledge by logging into conflictavoidance.org
One of the issues that come up was the ongoing problem with amendments to standard contracts and FIS has been incredibly supportive again of the initiative to encourage public and private sector clients not to amend standard contracts. FIS offers members a Contract Review Service and having been involved in a number of these, it has not been too difficult to persuade clients and contractors to water down some of the onerous risk transfer clauses.
On the subject of contracts, it is worth a reminder that FIS has prepared a very helpful form of contract for members to use with clients and subcontractors and they have also published a short form of contract for labour only contractors, and these documents can be found on the FIS website, and I would recommend their use.
I have come across a couple of situations recently that I want to make the readers aware of. The first of these concerns a failure by a contractor or a client to issue written instructions in respect for example of additional works and variations. The contract usually specifies that no variations will be paid for unless there is a written instruction So what can you do if you are given a verbal instruction to carry out work and you request a written instruction and nothing happens. Well, the simple answer in my view is simply not to do the work, and to explain why you have taken that viewpoint and if the contractor and client are worth their salt if they do not respond and put these instructions into writing. I have experienced a situation recently where the contractor in good faith carried out a lot of additional work and we got to final account stage and all of their claims for variations were red penned and deducted despite the fact they had been paid previously. Now that type of conduct is manifestly unfair and unacceptable but it does happen, so make sure your site, contract and commercial managers are aware of this situation and they take a tough stance if this arises on one of your projects.
I also encountered a situation recently where a contractor had carried out work on a daywork basis I had submitted the sheets for signature but they weren’t signed by the contractors management and the contractor applied for payment and was paid on account, and then again when we got to the end of the job the dayworks were wiped out. Now in my opinion that does not mean that the contractor would not be entitled to payment, and if you ended up in an adjudication on your final account, then there was no reason why they adjudicator can’t put his own assessment on the work that has been carried out, but again this is a problem area that you need to be fully alert to.
In previous articles I have spoken about the issue of retention and have mentioned that legislation is underway to abolish retention completely which is great news for the industry but this is going to take a few years to come into play,, and already some commentators are talking about an” alternative to retention” which is just complete nonsense.
What you need to do is to ensure that you follow the contractual provisions in relation to information that might be required in order to release the retention, and that quite often includes the provision of commissioning certificates or O & M manuals etc, so you need to make sure that at practical completion you have got all of that information ready.
to go to the contractor or their client so they cannot come back at a later date and say no paperwork no retention.
Regrettably we are still experiencing behavioural issues in the industry and a recent example related to a client who submitted a payment application on time, then had little or no communication from the quantity surveyor, and a payment notice popped through the letterbox and the contractor found that about 40% of his application had been red penned. So, my advice is to submit your application, then arrange to meet the client and/or the contractor and find out if they have all the information that they require to progress your payment, and if they are going to dock anything off you need to ask the question why are you doing that and what further information you do you need.
It strikes me that what we were experiencing at the moment is a range of people in the industry who are pretty clueless about the importance of cash flow to the contracting supply chain, and a lot of education is needing to be done in the UK, with contractors, clients and commercial managers, and in particular younger people coming through the early stages of their career in the industry.
Treat people with fairness, courtesy and respect and do not work for organisations who do not do so.
