Piper Alderman’s Post

The numbers are in; the construction sector is worst hit by insolvencies once again 🏗️📈 “The sector has perennially topped the charts for over a decade, reflecting an incredibly tough last few years for construction and the trail of hurdles the industry has had to overcome", in the words of Womble Bond Dickinson (UK) LLP's Fintan Wolohan 💬 So how can the industry rebuild? Explore more in The Construction Index Ltd's report 🔗 https://ow.ly/rPtf50TjP4J #UKConstruction #ConstructionInsolvency #ConstructionLaw #ConstructionNews

  HOW DO SUBCONTRACTORS SURVIVE THE CURRENT STATE OF THE UK CONSTRUCTION INDUSTRY? The UK’s construction sector is a major and vital part of the UK economy, yet it continues to suffer an alarming rate of business failures. From headline National Main Contractors to smaller less well known Main Contractors they cease trading weekly. One thing we can be certain of yet goes unreported is that for every failed Main Contractor many subcontractors who are at the “bottom of the food chain financing the construction industry” will again be owed millions. For every failed Main Contractor the consequence for tens even hundreds of subcontractors results in serious cash flow problems, job losses, good profitable well run business forced to close, incalculable stress for the business owners, re-mortgaged and lost homes, livelihoods, dreams and ambitions destroyed. Much of the UK Construction industry is built on “credit” from sub-contractors operating under adverse payment terms and then receiving delayed or late payment and an undervaluation of their work. Subcontractors’ monies should be protected but it’s not. All of us in the industry know the system should and must change but realistically accept that’s not going to happen. As a Subcontractor with the onerous, unfavourable terms of “one-side” JCT and Construction Contracts what can you do to minimise your risks and exposure when the next Main Contractor fails – as they will. ·       First, read the contract and understand the risks (and rewards) of the contract. Much better get an expert Contract Professional or Construction Lawyer to read it advise and guide you (a few hundred pounds invested at this stage may say your business). ·       Negotiate the terms to reduce your risk and exposure BEFORE you start work and sign the contract. ·       Don’t assume you can’t negotiate and change the terms done professionally and with a logical well-presented argument you can and have every right to. ·       Don’t be afraid to negotiate payment terms that reflect your expenditure on the project – make sure your cash flow is positive. ·       Once you are in contact manage the contract and make it work for you. ·       If you have a dispute with a Main Contractor, it might be a sign, they are having cashflow issues. You need to manage it and resolve it as quickly as you can, whilst they are withholding your money and not paying you your risk and exposure increases. Even if you have signed a contract with onerous terms there are still things you can do to reduce your exposure. If you don’t have the skills, knowledge and understanding of JCT and Construction Contracts and why should you you’re an expert in the products and services you provide not a lawyer. FRESH JCT will help, guide and even negotiate for you. Contact FRESH JCT at [email protected] or ring 07563 246 975 to see how we can reduce your risk and exposure to the next Main Contractor’s failure.  www.freshjct.co.uk

The prospect of growth in our construction industry 🏗 is welcome, especially post-COVID and post-Brexit. Nonetheless, the industry remains exposed to risks which are analogous to an episode of 'The Weakest Link'. It is extremely disheartening to see Scottish projects never come to fruition due to various problems. There are dozens of vacant sites around Glasgow which have been derelict for years if not decades. A quick search on the Council website demonstrates that in many cases planning consents were granted years ago. Yet nothing has been built. Why? 🤨 🤔 This new article gives some theories. Supply chain failures due to political uncertainties and other ongoing world events (plus we longer benefit from the single market insofar as the free movement of goods, e.g. raw materials, is concerned); insolvencies of smaller companies within the supply chain (maybe more consideration should be given to this when evaluating tender submissions? If one tender response is comparatively much cheaper than the others, there is probably a good reason...); labour shortages in terms of skilled construction workers (no doubt exacerbated by the fact that we longer benefit from free movement of people) and so on. Numerous risks which create numerous opportunities for contentious and costly construction disputes to emerge. Commercially pragmatic legal advice from construction law experts in respect of contentious disputes will undoubtedly be welcome by many in the industry - please do get in touch if you, or someone you know in the industry, is having a hard time and is looking for a hand in getting things back on track 🤓

The latest Market Report from property and construction consultancy Gleeds has revealed more than half of UK contractors quizzed have been involved with projects impacted by insolvency over the last quarter. https://lnkd.in/eXYcmDxQ

The latest Market Report from international property and construction consultancy Gleeds has revealed that more than half of UK contractors have been involved with projects impacted by insolvency over the last quarter, as official figures show the number of construction firms going bust nationwide topped 4280 in the year to May.

The problems afflicting the South African construction sector mirror those from the UK 30 years ago - delayed / non-payment, pay when paid clauses, main contractor / sub-contractor insolvency ...... In 1994 the Latham Report recommended the then "Construction Contracts Bill" be implemented to provide stronger rights and remedies for Contractors. Two years later, the Housing Grants Construction and Regeneration Act came into force, providing a robust regime for interim payments, and a statutory right of adjudication. Many other countries, such as Singapore, Malaysia, Ireland, Australia and Canada have implemented similar regimes in more recent years. Cash flow is the "lifeblood" of the construction industry - is it not finally time for a statutory payment and adjudication regime in South Africa? #constructionlaw #adjudication #pinsentmasons https://lnkd.in/dcuVkxmT

There have been recent updates to the Australian Capital Territory’s Building and Construction Industry (Security of Payment) Act 2009. These changes, effective from 11 March 2024, may not have received much attention, but will impact on parties who are seeking to contract construction services or building works, including government bodies. Read more from Maddocks Partner Pria O'Sullivan and Lawyer Susan Guo https://loom.ly/rcdWvC4 #Maddocks #legalinsights #construction #australianconstruction

The entire construction industry value chain is at risk of collapsing as shrinking margins, unfair practices and payment issues continue to undermine the sector... Read here: https://lnkd.in/dewmtSRJ #Construction

Interesting article below from Construction Enquirer. Cash flow issues are a major concern in the UK construction sector, often leading to insolvency. Delayed payments and non-payment can severely impact your company's ability to meet financial obligations, causing a ripple effect down the supply chain. Many construction firms operate on tight margins, and any disruption to cash flow can quickly escalate to insolvency. Effective cash flow management and understanding legal rights are essential to maintaining financial stability and preventing insolvency in this high-risk, high-reward industry. Let MCL-Legal help you get paid. #MCLLegal is comprised of construction industry experts, with first hand experience in building and civil engineering, who have subsequently trained in the law. Feel free DM or get in touch [email protected] #contracts #cashflow #constructionlaw #gettingyoupaid

Canada 🇨🇦 "...it is likely the case that the terms of the Prompt Payment and Construction Lien Act (PPCLA) now apply to all construction agreements in Alberta, irrespective of the date entered into or the status of amendments. It is certainly the case that many parties will be operating on this assumption. On contracts pre-dating August 29, 2022, this means the new prompt payment obligations, potential construction adjudications and extended holdback periods are now in effect. Owners should be alert to these obligations, and the possibility that potential claimants will seek these remedies." #now #in #hongkong #construction #sop #securityofpayment #engineering #law #business #management #future