The purpose of this article is to deep dive into what you as a subcontractor/specialist should be looking out for when thinking about due diligence.

These will be split into the 3 core areas which is in keeping with our package.

Pre-Contract:

A potential client has requested a price from you for a scope of works. In most instances the pricing is the easy part, but what you have actually priced/excluded/assumed is the hardest part. This is easily dealt with by way of a set of qualification to go with the quotation. This will cover:

  • standard & contractual terms
  • what info you have used to price
  • then any inclusions/exclusions.

TOP TIP: keep your prelims separate from the contract works

The next stage is when your potential client is keen to place an order with you. It is never so crucial to make sure that your terms are part of this order. If they are then you need to discuss this further.

When the sub-order is issued, it is best to pass the subcontract onto a known specialist that has experience to make sure you are getting the best terms possible prior to signing any documentation.

Most clients would bring you to a pre-start meeting. Go through this meeting with asset of your terms to hand. NEVER NEVER sign this document without seeing the full sub-order.

TOP TIP: use the excuse that the MD needs to sign the document

Once review you and terms are amicable it is good to sign and move to the next stage

Contract:

One key area, which should have been resolved at pre-start stage, but if not, don’t panic. This is the theme of change management (i.e. additional works/variations) and how is it dealt with during the project. It is a must to find out:

  • Who from the client side has the authority to issue instruction’s?
  • Can CVI’s be used?
  • What format do variation’s need to be submitted?
  • What is the format of instructions issued by the client?

As well as change management cash flow is key. If you have got the valuation dates, this is a must. Once these are retrieved diarise these so you will never miss a key date. Equally this list of AFP dates should also show when payment/payless notices are due.

TOP TIP: Keep note when the dates run out. A month before they do and you are still on site, make sure you get a revised set of dates.

Even though you are a subcontractor you may need to appoint other companies as well in a form of a sub-contract order. Make sure you have a suitable format for this to pass all terms down the line

TOP TIP: Think about it in a way; “if my subcontractor has a variation will it be a variation to me”

Next is to have an AFP payment compiled for the contract. The key document in this is the variation tab, make sure you have various columns to populate where the source of the variation is

TOP TIP: This may sound old fashioned, but I like to keep a hard copy of all variations/variation back-up and it is at hand as and when required.

TOP TIP: Make sure that you submit all variation back-up with your AFP and give the client no excuse not to pay in full.

TOP TIP: Always call your AFP an interim, never a final account

Keep on top as top when certain documents are to be issued by the client in terms of payments. Do not be troubled to remind them they are late!

If you have employed subcontractors as well, make sure that you issue your notices in line with your T&C’s.

Post Contract:

This should be the easy stage, if you have followed all the dos for the previous 2 stages.

It is a matter of getting the account agreed and this should be easier with all the back-up you have.

Get the final account signed off.

TOP TIP: If a deal has to be done, always see if you can get a decent settlement in terms of either paid early or release of all retention

The last thing to do is diarise when final retention is due

The above is not an exhaustive list, but I hope that it will give food for thought in terms of items to either improve processes or totally to introduce such processes into your company.

Many thanks for viewing my post and would you please share it with anyone you feel would benefit from the advice provided. 

If you have any private questions on the subject matter you can connect with me on LinkedIn and send me a message, or else you’ll find my contact details on my LinkedIn profile  https://www.linkedin.com/in/granttod/

#construction #change #duediligence

Written by Grant Tod
Co-Founder of BStructured (www.bstructured.co.uk) part of QS Advisor Limited