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Late Payment: What Can We Do When We Don’t Get Paid?

What can we do if we don’t get paid?
We get this question a lot.
In some regions, this is less of a problem because legislation is quite strict on payment terms, but in other parts of the world it is very common for the paying party to hang onto their money for as long as possible.

Most forms of construction contract will include some sort of remedy for non-or late payment, so you will need to check what these are on your projects, but as an example, let’s have a look at what the FIDIC Red Book, 1999 Edition has to say about late payment.

Sub-Clause 14.8 (Delayed Payment) states that:

‘If the Contractor does not receive payment in accordance with Sub-Clause 14.7 [Payment], the Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. This period shall be deemed to commence on the date for payment specified in Sub-Clause 14.7 [Payment], irrespective (in the case of its sub-paragraph (b)) of the date on which any Interim Payment Certificate is issued. (more…)

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Trying Your Luck – Where do you draw the line with your claim submissions?

I was recently asked a question by one of our distance learning students which, at some time or another, you may have asked yourself. The question was:

Where do you draw the line when it comes to ‘trying your luck’? Is it better to be realistic in your claim submissions, taking your own delays into consideration, or do you submit all, knowing that they’re incorrect, and wait for the Engineer to ‘catch you out’?’

Obviously, a scenario where the claim is solid and difficult to refute is preferred, but there will often be ‘grey’ areas when it comes to entitlement or quantum. When preparing claim submissions for clients, we give our client the benefit of the doubt within the claim and if the Engineer notices these or disagrees with them, then this will be a basis for negotiation. It’s always good to give the other side something where they can score a few points to show that they are doing their job. To answer the question though, I think that there should be two parts to my answer. (more…)

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Practical Use of the FIDIC Contracts Intermediate E-Course | Accepting Trial Students!

You may have seen last year that Claims Class has stepped into the world of online learning and to kick things off, we launched our Construction Claims Basic and Construction Claims Intermediate E-Courses in 2017.

We’re starting 2018 on a high and our second course, the Practical Use of the FIDIC Contracts Intermediate E-Course is ready to go and we’re running a trial launch.

Before we get into the details, if you’re thinking that you would rather not be a trial student then let me reassure you. Whilst this is a trial launch, all video content, resources, assignments and tutor support will be delivered EXACTLY as they would be if you were to sign up during the official launch. During the trial period, we simply want to ensure that we have created: (more…)

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A Simple and Effective Way to Improve Claims: Visuals in Narratives

One of our distance learning students recently raised a point that graphics and other visuals can be effectively used to enhance a claim document and I agree with him, provided that some basic rules are followed. In this blog we look at visuals in narratives and how they could improve your claim.

Some people see and understand things better through ‘pictures’ and others prefer the written word and I have to admit that I am one of the latter in this respect. On many occasions, I have been presented with a claim which consists almost entirely of charts, tables and other graphical representations and I have simply not been able to understand it, because there have not been any written explanations of the graphics. This is something to do with the left and right sides of the brain and how we process information and usually, one will be stronger than the other in most people.

The problem that we have when preparing claims is that we seldom know what type of brain the people who will eventually read the claim will have, so it is definitely a good idea to appeal to both types. One thing that is absolutely vital for the success of a claim though, is that the respondent is able to understand the contents fully and that the claim leads them ‘by the hand’ to the conclusion that you wish them to reach.

So, how can we include graphics and visuals effectively?

(more…)

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Top 10 Secrets of Successful Subcontract Commercial & Claims Management

It is no secret at all that subcontracting is one of the highest risk sectors within our industry. Subcontractors suffer more than most from the mistakes and misdemeanours of others. If the project is poorly funded then the Main Contractor’s first course of action is to reduce outgoings. The easiest way to do this is to delay or limit payments to Subcontractors.

If the Main Contractor feels the pain of liquidated damages or the rejection of interim payment applications then the first to feel the impact will again be the Subcontractors (and often for reasons completely out with the Subcontractors’ own performance!). This is not the result of malice, rather an unpleasant commercial inevitability in jurisdictions without statutory protection for Subcontractors.  The reality is that the further you are away from the source of the project funding, the less likely it is that the cash will find its way to you.

However, there is much that the weary and / or wary Subcontractor can do to minimise their risk and maximise their recoveries. Here are our top 10:

“Back to Back” or “Pay when Paid”- Is it really? The authors of this piece very much doubt that this is indeed the case. What people declare as being “back to back” is rarely so. A Main Contractor may not have been paid for a variety of reasons. Unless those reasons expressly relate to your performance then you may legitimately ask why this has anything to do with you at all. Ask yourself “If the Employer never pays the Main Contractor does that mean I will never be paid?” Is that what you actually signed? We find this rarely to be the case and is often a cause of great confusion between Contractors and Subcontractors who blur the difference between the commercial reality of their financial position and the conditions of the Subcontract they have entered into. (more…)

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