Jacob Austin 00:00:00 I'll Jacob Austin here and welcome to episode 163 of the Subcontractors Blueprint, the show where subcontractors learn how to ensure profitability, improve cash flow and grow their business. Today's episode is all about day worksheets. What that signature actually means and why for record purposes only, is not the insult you think it is, and how to build a record set that a quantity surveyor can't pick apart. So let's dig in. Now, I've seen at both sides of this script, the subcontractor comes into the final account meeting with a leverage file and inside it, 80 day worksheets, all signed by the site manager. He puts it on the table to back off what he's asked for, feeling like it's a winning hand. The total of the lot is over 100 grand to it and the QZ starts to open the file, looks at the sheets, starts pointing at sheets where there's six words printed at the bottom next to the signature for record purposes only. He says he's confirmed the men were there, but he hasn't agreed that the work has variation.
Jacob Austin 00:01:31 He also hasn't agreed that day work is the right way to value any of it. And so as he works through the lot, he's agreeing sheets here and there as you're knocking other ones out altogether. Some of them is paying a measured amount for. How do you start reacting to that? Well, the first wrong reaction would be that the sign sheets are now worthless and that the sheet is pulling a fast one. He isn't necessarily, though. Six words are an accurate description of what a site manager can actually verify, which is who was there and for how long. He genuinely can't commit the business to a valuation basis from the site coming. The second wrong reaction is to stop bothering with the sheets at all. That's worse. Without them, you've got nothing at all. The right reaction is to understand that a day worksheet was never the whole claim. It's an important component. It proves resource. It might also prove materials if you've recorded that on there, but it isn't going to prove entitlement or the valuation method.
Jacob Austin 00:02:35 It's just a record of who is there and the work that they completed. So today we're going to cover what day work actually is contractually what the signature from the site manager does and doesn't do, and the percentage additions that almost nobody checks that can affect your bottom line. Now let's start with a definition because some people in this industry have this wrong. Day work is not a way of working. It's a way of valuing the work. Under the JCT valuation rules. There's a hierarchy for valuing varied work. If the work is of similar character, executed under similar conditions in a similar quantity to what's in your original price document, you use contract rates. If the work is similar character but the conditions are different in similar quantity, you start adjusting those rates using a pro-rata calculation. The same happens if the quantities change significantly. You use the contract rates as a base and you adjust for it if it isn't of similar character at all, but it's something that you can do, then you use fair rates and prices, and then at the bottom there's no work, which applies where the additional or substituted work can't be properly valued by measurement.
Jacob Austin 00:03:55 So she's asking or arguing whether day work is the right basis for something to be paid against. Isn't being awkward. He's just applying the contract. Day work is the fallback. And he's entitled to say that the work that you could perfectly well have done under a measured condition and value against your rights is valued in that fashion. And actually, because you've tendered your rights and because you've built in margin the right amount of materials and so on into your rights, that will often be good for you or certainly not bad. Sometimes measurement will give you a better answer than day work does, particularly if the rates are strong or you've been able to complete it efficiently. So it's worth running both calculations to check which works for you the best before you dig in too far. But at the start, you've got to be realistic about the type of work day work is actually for. It's things like unforeseen obstructions, abortive work, haphazard bits of repair, investigation and opening up places where the scope genuinely wasn't known. When you started the job and the resource was driven by what you found.
Jacob Austin 00:05:08 That's the territory where de work should apply. Significant works or works of long duration, or works that repeat a lot ought to be generally capable of being measured, and a good shot will say so. Now the pricing under JCT forms. The prime cost of De work is calculated by reference to the Rics definition of prime cost of De work, and you add a percentage addition to that to cover your overheads and profit, your management time and your travel time, things like that. There are separate definitions for electrical work, for heating, ventilation and air conditioning and associated engineering. So if you're in those trades, There is a specific index of day work rates just for you. Everybody else comes to the general building rate and definition, so it's worth knowing which one your subcontract picks up. There's an alternative to that, and that's probably the one I'd push you towards, which is an all inclusive De work rate that's set out and agreed in your subcontract. With that, you'll want to list the trade, the operative, your various pieces of plant and so on, inclusive of everything no prime cost build up, no arguments about a definition, and no annual renewal of the rate.
Jacob Austin 00:06:28 It's simpler and it's harder to erode. Now let's go back to the signature. When a site manager signs a day worksheet for record purposes only, what he's actually confirming is that the resources shown or on site and doing that work for that period. That's a statement of fact within his knowledge, and it's something that he can honestly sign. But what he isn't doing is confirming that that work was a variation, or that day work is the correct valuation method for it. He probably also doesn't know that your rates are agreed or that the hours were reasonably incurred. Now, you need to bear in mind that signature is still valuable to you, and sometimes subcontractors undervalue that signature because they're disappointed that it doesn't entitle them automatically to payment of absolutely everything they've asked for. But think about what a contested valuation actually looks like. The three questions to think. Firstly, was it a change, then was they work the right way to value it? And finally what resource was actually expended? What a signed sheet actually does is close down that third argument completely.
Jacob Austin 00:07:40 And that argument about what resource was actually expended is the hardest one to prove after the event. And it's the easiest place for the SHS to start picking on a couple of Mondays here. A day of plant there. Applied across 80 sheets. That's where you could easily lose 30%. But with signatures, that argument is over before it starts. So the signature isn't the claim, but it's a demonstration that there's an approved record and it removes the argument that would be there otherwise. Going back to the other two questions, you can't try and get the site manager to sign something that he's got no authority to sign, one he'll refuse. Or worse, he'll stop signing anything and you'll lose that foundation of at least having a record of the resources. So get the signature for what it's worth, and deal with the entitlement and valuation basis through a separate route. And I would do that with the written confirmation of a verbal instruction that we covered in last week's episode. Together. That is a strong pairing because you've got confirmation of the resources, and you're setting your marker in the sand that you want to value.
Jacob Austin 00:08:53 This on a day works basis. If the contractor doesn't respond to that confirmation, then that becomes the instruction. One more thing to think about on the signature. If you get your sheet back unsigned or it doesn't come back at all. Don't just file it. Send it again with a copy of the email where you originally sent it, saying that the attached sheet was submitted on that date and that it's not been returned. But in the absence of comment, you'll take that the resources have been recorded as agreed. Now, that is where silence isn't going to constitute acceptance, but it creates a proper record of an unanswered submission. And that unanswered submission is harder for the shark to start attacking than a sheet that you just forgot about and never got signed. Now, here's a bit that's worth considering at older stage. If your day works are dealt with on a prime cost basis, then the percentage additions you tender are applied to the prime cost of labor, materials and plant. Those percentages are what carry your overhead and your profit, and a whole list of incidental costs that the definition doesn't include in prime cost.
Jacob Austin 00:10:04 What can happen in practice is that the main contractors inquiry has a day work section at the back, and you fill that in quite quickly at the end of your tender period because somebody asked for it. But it's a pretty unimportant looking part of the document. You probably put in their percentages that you've always put in, which you inherited from, however, used to do the estimating before you did it. And nobody's probably looked at since 2015. But 18 months later, that percentage is applied to 4050 grand worth of prime cost, and it might not be man enough. This is where you can lose money, and what you need to do is go and work out what your percentage additions actually need to be, not what's traditional, what covers your real overhead, your supervision, your tools, consumables, insurances, things that the definition of day work excludes and then you put your margin on top. If the honest number is higher than what you've been tendering, then that's a whole in your business. And in effect, pennies and pounds have been squeaking out through that hole for years, and it only shows up visibly because you've got a job with a lot of day work on it.
Jacob Austin 00:11:18 Here's a tactical point. Contractors rarely negotiate day work percentages, and certainly not hard at tender stage, because it's a small section of a big document and nobody compares their tenders on it. They'll argue every rate in your bill. Meanwhile, the the day work percentage is through with barely a look at them. That asymmetry works in your favor here and most subcontractors never use it. The same goes, of course, for all in rights. If that's the route. State them in the order per trade per hour and state what they include and don't include. Now where do subcontractors get caught out? There are six common places. One is not following the proper process. Some contractors don't have a process. Some have quite a rigid process. I've seen one like this before. On a day where the subcontractor carries out day works, they are to let the site manager know at the start of their shift what they're doing, what elements of day works are involved, and allow the site manager the opportunity to come and see that works being completed.
Jacob Austin 00:12:24 They are to submit a day worksheet at the end of the shift, and the site manager will sign it within that working week. That can fall down quite easily if you forget to let the site manager know you haven't afforded him the opportunity to come and see you doing the work, so he can't get a grasp for how complicated it is, how long it's going to take, and then when it comes to signing a sheet, he probably won't. That also comes with a tight timing window. You need to submit a sheet at the end of your shift, not the end of the week, not within seven days at the end of your shift. Now, bear in mind that not everybody will have that procedure in their subcontract, but some contractors do. Some contractors have that as a standard. You need to know what that standard is in your case. And only you can answer that by reading of course your subcontract. Miss any of that detail and you're relying on the site manager's good will to sign off.
Jacob Austin 00:13:23 And of course, the site manager's memory of what you've been doing. And the practical problem here is worse than the contractual one, because a site manager might well sign a sheet for something he saw you do yesterday, but he won't. In two weeks time, when he can't remember what the hell was going on. So get into the habit. Same day. Every time, like clockwork. The second thing that goes wrong is getting the wrong signature. The person signing needs to be somebody with authority, and who can actually be in a position to observe the work. A signature from the gateman. Again, useless. A signature from somebody who wasn't there. That can be worth less than the signature, because it can then pull all manner of your other day worksheets into scrutiny as well. How many of these have you just shoved under Simon's nose because he signs everything, and how many of them are actually genuine? Issue number three is rounding. Eight hours, eight hours. Eight hours. All the way down a sheet for a job that patently doesn't take eight hours.
Jacob Austin 00:14:30 That's a single fastest way to lose confidence in your entire file of records. Record, actually, what happened to the nearest half an hour, a record with awkward numbers in it. Reads far truer than a record of round numbers and, of course, round numbers. Point of rounding up and asking for more money than it's worth. Issue number for this one can cost you a lot in credibility and in recovery against your expectations. Double recovery. If you're claiming prelims or loss an expense that include the same supervision, the same plant accommodation, you can't also recover those resources through day works. A competent SHS will go looking for this specifically, and if he finds it anywhere, he'll apply that same suspicion to everything. So keep your account above board, don't invite undue scrutiny and honestly strip out things that appear twice. It adds so much credibility to your arguments. The fifth issue Is a lack of narrative, a sheet with hours, no description of what's actually been done. No means to tell whether this was in your scope or not.
Jacob Austin 00:15:45 This is just a time sheet, especially if the chaos has got no way to connect it to it, either an instruction or a change. Every sheet needs a description, at least a sentence. And finally, claiming day work for work that's clearly measurable. Two weeks of a gang doing a repetitive operation on a known detail that's going to be measured no matter how many sign sheets you've got. Pick your day work fights for the work that genuinely can't be measured throughout all of this. What you're looking for is credibility. Submitting day worksheets where work genuinely can't be pre estimated. If it can, it can likely be measured. You're likely to get challenged on whether work can be measured or not. And if it can, well, there likely is half an argument to say yes, we'll measure everything. But there's this element that should be day work that might be an unknown that wasn't there before you started the work. That might be something that's driving extra resource that's beyond your measure, a change of conditions, perhaps a lack of continuity of work, the condition that you're finding the site handed over to you in that isn't quite the same as it should have been, and you're having to go and tidy up before you can start your work.
Jacob Austin 00:17:02 The hours need to be genuine as well. Now, I've been on sites where I've seen five painters, all huddled together, having some competition over whether they could throw something into an empty paint pot. I've heard the noise when one of them scored from the room next door, bobbed my head in and gone, oh, what's going on in here? And one of them foolishly said, day works. I've also seen a couple of guys bragging to each other about how much they'd earned by lunchtime, because their site supervisor had promised them 15 minutes worth of day work for every snag that they scrubbed off, so they were furiously going between apartment to apartment to apartment, cleaning off items off the snag list, and then bragging that other than two and a half days today and it's only half 11, I've done three. And what you're going to do is erode your credibility, because by adding all of those up, you'll be claiming for more hours in a week than your operatives could have worked. It stands out like a sore thumb as a genuine error, and the SHS is entitled to correct genuine errors.
Jacob Austin 00:18:10 Another thing that regularly happens is duplication between day works and your measured account. Doing something that you're being paid for on measure under day works because you're revisiting an area, or you're doing it out of sequence and then claiming not just the time it takes you to get back there and set up again, but the cost of that whole piece of work as if you'd never been paid for it or it wasn't part of your account already. These are the areas where day works. Get a real bad rap. The process isn't for that, and you will likely get tarred with the same brush if you take that approach regularly. One off and it's just a mistake. If you're regularly seeming like you're trying to duplicate your work on a day worksheet against your measured account, you're heading towards a fallout and it's one you don't need to have. Now let's put together a bit of a worked example. Let's say you're doing a groundworks package and you've hit an unrecorded concrete obstruction whilst you're doing a drainage run. Nobody's known it's there.
Jacob Austin 00:19:14 It's completely unexpected, not on any drawing. And because of the sheer size of the thing, it takes a gang 11 days over the course of three weeks whilst they're working around other proper work to break out and work around it. That's proper day work. territory. It's unforeseen is variable. It's a direct result of something that you found, and it's genuinely difficult to measure. So you've collared the site manager and you've shown him what you've found. Day one. Before anything else, you confirm back in writing that you've shown the site manager and you've been directed to breakout around a large obstruction. You're currently not sure of the extent of it, and it's not shown on any drawings that you consider that a variation, and given the unknown extent of it, you'll be recording resources on a day work basis for it. Now, that sentence there is doing quite a bit of work because it's establishing your entitlement and it's flagging the valuation basis at the start rather than presenting it at a surprise at the end. A show who's been told on day one that this has been recorded on day works has a much harder time objecting to it then than they do if you hadn't done it, then every single day you submit one sheet, date operatives by name and trade actual hours, plant on site and hours, material used, and so on with a narrative saying what they did.
Jacob Austin 00:20:47 Now, in this instance, you're just recording the breaking out time, because the time spent installing the drainage is another measured item that you'll claim for elsewhere. The same with the bed and around the backfill and so on. At the end of each day, you're submitting your record sheet to the site manager or the very latest the following morning. Alongside that, you're taking regular photographs. You're showing how long you kept discovering it for as you dug through to install a trench that continues to progress through the three weeks, you've also recorded a couple of days where you stood the gang down and made them work on something else, whilst a couple of decisions were made and that last bit adds credibility. Recording the days you didn't work on the day work basis, you didn't break out. That obstruction is what makes the days that you did all the more believable. By the end of it, you've got 11 signed sheets, a written confirmation from day one, a photographic record, and a narrative that reads like an account of three rural weeks rather than a claim document.
Jacob Austin 00:21:53 Now the valuation conversation happens and look what's left in it. Resources agreed because of the signatures. Entitlement is established because of your emailed confirmation. There's only a couple of questions now. One, where the day work was the right basis or whether it could have been measured. And you did flag on day one and nobody objected to that. And two, whether there should be an adjustment against the day work for the trench that you would have dug normally anyway. Those are both quite valid points. You would expect there to be an extra overrate for breaking out and to be able to measure that under player rate. But then again, at the same time, this is unforeseen and perhaps doing it on a day work basis and adjusting for what work that displaced, as in the original trench dig is the fairest way to value it. But that is now a negotiation of a couple of minor points. And because of the paperwork you put in place, you're in a fairly strong position. So how do you protect yourself? First, fix your day work percentages or all in rates at tender stage and make sure they're reflected in the order next from your specific subcontract.
Jacob Austin 00:23:07 Find the submission procedure and any time periods, and put that into your job fact sheet so that everybody's aware that that's what they need to work to. If you can't find anything specific, then submit your sheets the same day. That's going to be any period that anybody's written in a contract. Thirdly, redesign your sheet if it needs to because you need some common information on there date project operative names and trades. Actual hours. Plant with hours. Materials and narrative A space to refer to an instruction or a confirmation and signature. Blocks on behalf of yourself and the contractor. The instruction record is often missing from day worksheets, and having that in place helps you, paperwork wise, to connect the record to the entitlement document. Force photograph your work as you go as a habit, not as a response to a dispute you always find. You don't have a photograph of the thing that you need unless you regularly do take photographs. You don't know what you're going to need in the future, and photographs taken late often don't show quite the full picture, and they won't carry the same weight.
Jacob Austin 00:24:25 Fifth Chase. Unsigned sheets in writing. Do it weekly as a routine. Don't do it angrily, just a simple one line or two line email listing out the sheets that are outstanding. Putting pressure on the contractor to return them, and creating an argument that you've been prevented from claiming. It becomes very hard from a legal point of view, if the contractor is failing to sign sheets for them, not to pay you for them because they remain unsigned. Sixth, and finally, cross-check before you submit anything. Check your day. Works against prolongation, against measured work, against measured variations, and against your prelims. Find and eliminate duplications before the QS does. It gives you instant credibility up front and it prevents an argument later. And that is about all there is to day works. I genuinely hope that helps My mission with this podcast is to help the million SME contractors working out there in our industry. 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.
Jacob Austin 00:25:37 I'd be incredibly grateful, as that will help me help as many people as possible. And thanks for tuning in. If you like what you've heard and you want to learn more, then please do find us at www.SubcontractorsBlueprint.UK and we're also on all your favourite socials again at @SubcontractorsBlueprint. And remember, miss the contract detail and the commercial risk falls on you. Thanks all. I've been Jacob Austin and you've been awesome.
