[00:00]
Hi everyone, Jacob Austin here and welcome to episode 143 of the Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cash flow and grow their business. Today's episode is all about records, specifically why the absence of them is costing subcontractors money on changes, claims, contract charges every single day on live jobs right now. So, let's dig in.
[00:47]
Now, there are three regular problems that subcontractors constantly come up against. Variations that don't get paid or paid at a fraction of what was spent, claims and extensions of time that get knocked back or just ignored, and contract charges that land at final account for delays that the subcontractor has not a lot to do with. There's three different problems there, but there's one common solution to it and one common cause. The contractor has evidence and you don't.
[01:19]
Or, more precisely, you did the work, incurred the cost, lost the time and the disruption, but you can't prove it in a form that holds up when challenged because of lack of detail. This isn't about bad luck. It's a commercial gap that exists from the moment your boots are on site and it only closes when you build deliberate record keeping habits into your daily operations. It's not admin. It's commercial protection. Now, today's episode I'm not going to tell you, keep better records and leave it there.
[01:54]
That's not a policy. It's a platitude. What I'm going to do is take each of these three problem areas, changes, claims, EOT and contract charges of somehow made three and a four. But with those four, I'm going to show you exactly what records close the commercial gap because the record that you need to win a change argument isn't the same record you need to defeat a contract charge. They're different weapons for different fights. Now let's think about how the contracts actually deal with this because the framework matters.
[02:28]
Under a JCT subcontract, the subcontractor has an obligation to give notice when a variation is instructed and in some forms to provide a price before proceeding. The payment mechanism then flows from that instruction and the valuation process where there's no instruction where work happens in that grey zone because a foreman said, crack them with this. The contract mechanism don't just fire automatically. There's no instruction to value, so then there's no valuation. So then you're left trying to recover something that's essentially an uncontracted liability, either through day worksheets or correspondence or an argument about some kind of implied instruction.
[03:10]
The same dynamic applies to claims where they are working on JCT or NEC, there's a notification requirement attached to entitlement to additional time or money. Under NEC, for that's quite clearly the compensation event regime. You have eight weeks from the start of an event in most cases to submit that notification. And if you miss it, the contract expressly says you can't claim for it later. That's a real contractual bar.
[03:41]
Under JCT, the notice requirements are softer, but an extension of time claim is commonly given a time bar by contractors and often in their amendments. The submission of a notice is a condition precedent to getting your hands on that time or money. On top of that, an extension of time claim with no program evidence, no cause and effect analysis, and no contemporary records of impact is just a statement. And statements don't get paid for.
[04:13]
Then there are contract charges. Main contractors issue them confidently. They often have the project managers daily report, then they have the program, often a diary, and you've got what's in somebody's head and maybe a few conversations in a WhatsApp group. That's a big gap. And here's the thing. The legal entitlement might be on your side in all three of these cases. You might be completely right, but being right doesn't get you paid. Evidence gets you paid.
[04:45]
Now, where subcontractors often get caught out is the misunderstanding that records are something that get looked for when a dispute starts, but they're not. By the time you're in a dispute, the window for building that volume of evidence that you need to prove your case is already closed. A record that's made two weeks after the fact, especially if it's in response to a challenge creates a problem because it carries so much less weight than one that's made at the time. Dates matter and courts and adjudicators will look at the dates when documents are created, including sometimes looking at the metadata for those documents. So they're not
[05:23]
just interested in what they say, it's when it was said. The second issue is the belief that your sight team knows what to capture. They might know what they do every day, but they don't instinctively know what turns that activity into a contractual entitlement. There's a difference between a sight diary that says delayed due to other trades. To one that says, not complete between grid E4 to E8, preventing commencement of first fix, notified sight manager at 815, no alternative working area available, gang of four stood down until tomorrow.
[06:01]
One is a note, it tells you there's some loss of productivity, but the other one is evidence, it's got detail. The third area isn't really a failing, it's more of a naivety, and that is when contract charge is bite, the assumption is that if it isn't your fault, you won't be held responsible. And when a contract charge gets tabled at final account, it's often come from a place where the contractor hasn't made the amount of money that they wanted or they're making a loss. And so some directors come up with a plan, we've finished seven weeks late, we've got 10 sub contractors on site, they can all take a share of the pain, it's not our fault, we don't do any work, and just like that, the contractor's QS is instructed to take a deduction off of 10 different accounts off the back of little more than a conversation, so they go away, they look at the program, they identify who was on site, and they come up with quite a reasonable argument, and then they deduct to the contract charge.
[07:02]
And unless you've got evidence that actively places responsibility with somebody else, a written notification of this trade was obstructing me, a record of who's responsible for this area, timestamp to complaints, notices, and evidence. You're going to struggle to get that contract charge reversed. Now let's have a look at how that might work out in a site scenario. And for the sake of this, let's say you're a fit -out contractor, and your program has you starting first fix ceilings in zone B from week six, you've completed zone A, you're ready to move on to zone B on that sixth week.
[07:41]
But, lo and behold, everything isn't ready for you, there are walls that haven't been boarded up, there's still a bit of service work to be finalised before the site manager was sign off closing up the walls, it's the right thing to do, but nonetheless, you're delayed, your gang can't go in there, you have to wait a whole week before you get access, it's amazing how many times things work out like that, things are running behind, but they can't be finalised in a day, it takes until the next Monday for you to be able to start your activities, why always a Monday? Anyway, you've lost
[08:14]
a week, you've lost a week's worth of prelim, but on top of that, your deadline hasn't shifted, the main contracture is now expecting you to condense that work into a shorter window, and you're going to need to work weekends to recover. What happens next depends entirely on what you did in that week. If your supervisor has made a note of the delay in his site diary, sent a one line email to the site manager saying this area wasn't ready, and then you've backed that up with a letter or a formal email to the designated person at the contractor, you have the start of a claim, you can show when the delay began, what caused it, who told you about the issue, you can demonstrate you've notified the main contractor, and you can close the loop by demonstrating when you get access, which is just as important as when the delay started. But on the
[09:06]
flip side, if nobody wrote anything down, because everyone expected one, it to sort itself out, or two, somebody else to deal with it, then you probably have nothing, and worse than that, the main contractor has lost that week as well, they're feeling the pain of their prelimbs, they've had to bring in a site manager and pay them a premium to cover off the supervision of that weekend working that you did, and because their site manager is telling their contracts manager that everything is good and rosy on the job, they're going to finish on time, they've got no knowledge of why you did that weekend working, they just know that there's a cost there, so now they're recovering it, they're countercharging it from you, claiming you've caused program delay, and unfortunately now you've got no contemporary evidence to point to, the money isn't moving because of who was right, it's moving because of who can prove their argument, so how do you protect yourself? You need
[10:05]
to set up a functional records regime, and there's three different risk areas here, but they probably fall into two different buckets, changes and variations, every instruction, be it verbal or written, needs to be confirmed back on the same day in writing, the language doesn't need to be overly formal, just to confirm today, Sammy the site manager instructed us to do x additional work, in addition to our subcontract scope, we'll proceed with it, and we'll forward our costs later, it takes a matter of seconds to write that, you could even have it set up as a template in your email account, so you double click on it, populate the blanks and click send, that one email starts your paper trail, it makes the instruction explicit, it formalises it, it also puts the main contractor on notice that you're treating this as extra, if they then disagree they have to say so, but at least you're having the conversation here before the cost
[11:05]
has been then you can have the conversation about well if you're not going to pay for it and it's not in my scope, I won't be doing it, that's difficult to have after the fact, the other thing that is really important on changes and variations is records of what was done, and so that might mean your site manager taking a few photographs of the area before and after the work, it might mean recording how many and how much material goes into a particular piece of work, it might mean invoices if there's no comparable item of work and you've got to buy in special materials, if you're doing the work on day works then you'll definitely need a signed record showing what you've done, when it comes to variations the more detail you can provide to back up your position the better and the more you are safeguarding your money, for claims and extensions of time, let's go hand in hand with time -based contract charges, the discipline for both of these is the notification, the moment you first
[12:05]
see an event that's potentially affecting your program, you need to record, well who caused it, what prevented it, what resources are standing, what alternatives you're exploring, why they weren't viable, it might be incomplete proceeding works, access being prevented by maybe the client in some instances, missing materials that the contractor was providing, another trade in the way, the possibilities are endless but your reaction to them should be the same, put something in writing to the main contractor, this shouldn't be aggressive, you're not starting an argument, you're just recording facts, we were unable to progress this item of work today in this area because of X, we're recording unproductive time against this event for this gang of people, that starts the paper trail, what you need to follow that with is a daily set of records, photographs with timestamps, emails that confirm the problem is still ongoing,
[13:06]
your daily diary that records the finer detail, the ilka what we mentioned earlier, not just held up by others but held up in this location for this reason and this is the impact, it's about creating the cause and effect, you'll notice registers the cause, your records speak to the effect, now on the practical side this may not be a job for just one person, commercial awareness has to be built into your site teams habits, that might mean supervisors understanding that the site diary is more than just a note to self, it's a reliable record that might need to stand up in court, photographs should be systematic, dated and described with the file name, your commercial team need to be reviewing the site diaries regularly, not just at final account, the format of everything matters less than the discipline, if what works for you is a WhatsApp group that somebody exports and files away then that's better than a system that nobody uses, use what your team
[14:08]
will actually do consistently, but the structure and the detail about what gets recorded is the part that's important, ipin on problem jobs as a main contractor and looked at the site manager's diary, trying to see if we can find clues as to whose cause what delay, and what I've found is a nice neat table that the site manager's drawn in there every day, noting how many of which trade they've got, what the weather was like, what inspections were done, and a bit of a vague paragraph describing what work was going on, but at no point did it identify, what work couldn't happen because of X, what discrepancies there were between the program and what was happening, what bits of information might have been missing, all of these are common causes for delay and none of them were present in what the site manager was doing, and so it's as important to think about what the record is actually of than just generating a record itself, the weather and who's there on site are interesting, and they're certainly interesting if there's
[15:08]
a particular issue like a crane being winded off, or the temperature being too low to lay concrete, so they're worth recording, but you've got to get your site manager or whoever fills out your diary into thinking what are the issues that are stopping me today, who's causing them how long are they going on for, those are the things that are really going to make a difference to you, records made at the time are really good evidence, a record made in response to a dispute is just an explanation, and an explanation is never going to carry the same weight as an accurate diary entry from the day a problem occurred, all of these things need to be there to build your cause and effect, from the moment a problem starts hurting you to the moment it finishes, photographs, those diary entries, notifications, dated, or specific about what was prevented and why, if you're working on any scene projects that eight week notification window for compensation
[16:08]
events is a contractual bar, and if you miss that the entitlement is gone regardless of how legitimate your claim might have been, a lot of main contractors are putting a similar time bar into JCT style contracts, and are treating as a condition precedent for you getting an extension of time or extra money for a delay, only you can know if those amendments are there in your JCT subcontract, only you can know if the eight week window has been shortened in your NEC subcontract, these are important details that you have to know because it affects the speed in which you got to notify your contractor, but as a rule of thumb if you're discovering an issue and you're notifying it the same day you're never going to fall foul of a time bar. Remember
[16:54]
also the same things that act as your evidence of your notification of a delay are the same things that are going to defend you from contract charges if the main contractor is running late, having an extension of time in place that demonstrates you are delayed that your finished date is moved back by ex -emotor time, prevents and gets off the table altogether, contract charges from the main contractor for you losing that same amount of time, and when it comes to variations the biggest pain point for subcontractors is verbal variations that never get firmed up, and effectively you're doing work for free. Some site
[17:33]
managers that I've worked with prided themselves on keeping the job to budget but they were doing it by approaching lads that were amenable to doing a bit of work and saying I wonder if you could help me, I've got this little problem, can you just, and all of those can you just, were little variations, they were little items that probably should have been a day work, and I'm not saying that you have to charge for everyone of these, but inevitably some are bigger than others, and if you don't start charging for them you miss the small fish and you miss the big fish as well.
[18:06]
Notifying a verbal variation doesn't have to be formal, it just needs to exist, and what you're also doing by recording it is putting the owners back on the contractor to either confirm it's a variation or tell you why they don't think it is. Crucially, you're starting the debate about whether you're going to get paid before you've incurred the cost, and being right doesn't get you paid, having evidence does. Now that brings us to a close on today's episode, I hope you've got something useful out of it, my mission with the show here is to help the million SME contractors working out there in our industry, so if you've taken some value away from today's show then I really need your help, to share the show and pass that value on to somebody else who'd benefit from hearing it, and together we can help as many people as possible, and thanks for tuning in. If you
[18:58]
like what you've heard and you want to learn more, then please do find us at www.subcontractorsblueprint.uk for more information, and you can also find us on all your favourite socials again at SubcontractorsBlueprint. Thanks again all, and remember, miss the contract detail and the commercial risk falls on you. I've been Jacob Austin, and you've been awesome.
