PROTECTING THE SUBCONTRACTOR’S
ENTITLEMENTS
Many subcontractors
start off every job on the proposition that this time it will all go
swimmingly, when in fact experience shows otherwise. The “streetwise”
subcontractor should set up at the
outset, and maintain certain basic strategies which will protect his
entitlements to time and money.
So what are these strategies? Well,
they do not involve rocket science but are based primarily upon good
“contractual housekeeping”. These basic routines include the following:
Confirm Start and Completion Dates (both
overall and for individual sections).
The actual
commencement date is fundamental to “starting the clock” (ie setting the
subcontract period running). As to the date of practical completion, this
determines the cessation of any liability to damages for delay and triggers off
the commencement of the defects period and release of half retention. The subcontractor should make sure that
these important dates are recorded in writing at the time.
Record and confirm all Programme
Agreements and Revisions.
Programmes
are often passed to and fro in an all too casual manner. The streetwise
subcontractor should make sure he has an agreed and identified programme at the
outset, and that every revision is
dated and covered by an appropriate instruction from the contractor. Is the
revised programme merely “for discussion”? Or does it constitute a definite
instruction from the contractor? These
questions should be resolved at the time of issue. Examine each revised programme and compare with the original
issue, particularly as regards the structure itself. If the roof and the
windows have slipped three months and the electrical works are still shown
finishing on the original date, then there is something very wrong. If spotted
at the time of issue, and dealt with at that time, subsequent disputes
regarding time are greatly reduced.
Notify all delays to
client/contractor immediately they
become apparent.
Many
subcontractors shrink from giving notice of delay for fear of “upsetting the
client”. In fact, it is in every party’s best interests if all potential delays
are flagged up at the time. In many cases, this enables agreed actions to be
taken to remove or minimise the delay.
In any event, if the subcontractor is going to be delayed, he may well
need to prove his entitlements to extension of time, and without such written
notices he will be unable to do so. After all, virtually all subcontract
conditions insist that the subcontractor does promptly serve such a notice.
Notify client/contractor of effect of
delays to overall completion date.
Again, all
subcontract conditions dictate that the subcontractor should serve written
notice as soon as he becomes aware of any possible delay to completion. If the
project is to be delayed in completion, then the sooner someone tells the
client the better. Nobody will love the subcontractor for this news, but they
will love him a lot less if it comes as a last minute surprise. If the subcontractor is to preserve his
entitlements to extension of time, then it is absolutely essential that he
notifies any such threat to the completion date, and states the reasons.
Apply for extension of time when necessary.
Many forms
of subcontract do not actually require the subcontractor to request an
extension of time, but only to notify the delays to his progress and/or
completion. However, the prudent subcontractor will, as soon as he sees his
works running beyond the original completion date, make sure he submits a
written request for extension, stating the detailed reasons. Remember, if the
subcontract works run over the end date, then only an extension of time award
will protect from damages.
Confirm all instructions in writing.
Most subcontract forms state that no
variation is to be carried out without a prior written instruction from the
client/contractor. The subcontractor
should try to follow this requirement at all times. At the very least, any
informal or oral instruction must be confirmed in writing forthwith, and
followed up later. Remember, all work
carried out without a formal instruction is potentially at risk in terms of
payment. Also, make sure the person
issuing the instruction has the contractual authority to do so.
Submit dayworks records for signature at the time
Dayworks should be submitted for
signature daily or at the latest, the
end of the working week. If the subcontractor delays in doing so, he can hardly
complain if the recipient is unwilling to sign.
Keep good site records, photographs etc
There is no substitute for first class records such as the site diary, labour
allocations, requests for information, progress reports, drawings registers
etc. As to site photographs, these can be invaluable, but only if dated and
referenced as to location and significance.
Recognise “variation” and “claims type” situations (eg additional costs due to changes, “extras”,
delays, return visits, “piecemeal working” etc) as they become apparent and
notify the client/contractor forthwith.
All too
many subcontractors wait until the end of the job before pricing and submitting
their variations, claims for prolongation and the like. Not only is this a
failure under the subcontract terms,
but it also comes as a nasty surprise to the recipient. If there is nothing in
the project budget, the glossiest submission will be of no use.
Promptly apply for payment, with
detailed evaluations.
Most
subcontract forms now insist that only a “valid” application will be
considered. The term “valid” is usually defined as meaning that all inclusions must
be fully detailed and supported by all necessary instructions, copy invoices,
signed dayworks etc. So a subcontractor
who submits vague “on account” applications with no proper validation will find
his application dismissed without payment.
In a nutshell, my advice to the
subcontractor is :
Put it in writing at the
time!
John Russell
Contracts and
Training Consultant
Cheshire CW4 7DP
Tel: 07770 986444
Email: swsubbie@globalnet.co.uk
Based
on my column in Electrical Times, April
2006 edition – Contract Law.
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