Jacob Austin 00:00:00 Hi there all Jacob Austin here and welcome to episode 164 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 proceeding regularly and diligently. It's an obligation that crops up in plenty of subcontracts, so we're going to cover what that actually means, what it requires of you, and what happens when the main contractors program falls apart and he expects you to resource up anyway, and why the money you spend catching up almost never comes back to you. So let's dig in. This is one of the most expensive things that happens to subcontractors that nobody ever claims for. Let's say you're due on site in March and the preceding trade is four weeks behind, so you start in April, but nobody moves the completion date because nobody's asked to and you haven't pushed it. Then in May, the contractor's program goes properly wrong and thus suddenly pressure from all directions. And somebody comes up with this fantastic idea that you've probably heard a thousand times or more.
Jacob Austin 00:01:33 Let's get more men on it. We need you to get more men on it. And so you do. You put second gang, you work three Saturdays, you pay a bit of overtime. It costs you circa £19,000 that you hadn't planned for. You finish roughly on time, which feels like the right outcome. Then you put in for that £19,000. But sadly, you get nothing. not because the contractor is being difficult, although he probably could be. But because under English law on the facts, you probably aren't entitled to it. And that is the facts of life that I want you to consider listening to this episode. Money that you spend speeding up when nobody's specifically instructed you to speed up is really hard to recover. It's harder than almost any other claim, which means this episode is mostly about prevention and the conversation that you need to have at the right moment. Because once that moment is past, you start committing your money to the problem. That money is gone. We'll cover exactly what your progress obligation actually is and whose program you're bound to, and we'll contrast that against acceleration and why constructive acceleration will often fail as a claim.
Jacob Austin 00:02:52 And finally, what to do on the Monday morning when you're sat around the table in the problem job site meeting, and somebody tells you to get more men on it. So let's start with the obligation. The exact formulation is going to vary between various subcontract forms, but subcontracts contain an obligation to carry out and complete subcontract works in accordance with the program or a set period stated, and to proceed regularly and diligently or words to that effect. But what does regularly and diligently actually mean? Unsurprisingly, the courts have looked at it, and mostly in the context of main contract termination and the sense of it is this the word regularly is about continuity. Are you attending site with sufficient resource on a continual basis? Diligently is about the application. Are you applying that resource industriously and efficiently and working towards practical completion? Put that together, and it's about a standard of how you go about the work. Not a guarantee that you'll finish by a particular date come what may. And that distinction is important to you. More important than it sounds, because here's what it means practically.
Jacob Austin 00:04:11 If you're on site with the resource that you've priced and you're working steadily and sensibly, then you're proceeding regularly and diligently. Even if that job is running late. Even if the contractor is unhappy, lateness caused by somebody else's delay is not a failure to proceed diligently. Now, the obligation cuts the other way, too. And I've got to be fair in describing the other side of the coin. If you're on a job, any price for six men, but you're regularly taking 2 or 4 of them off to work on a different project around the corner, because you're getting a better price, then you're in breach of that obligation. You're fluctuating your labor force going from one week having bang on program output to another week, a third or two thirds less than you should do. Proceeding regularly and diligently is a real obligation, and it has real consequences to including, in the worst case, termination of your employment under the subcontract. So there is no license to under-resourced the job. The second piece of the puzzle is your time obligation.
Jacob Austin 00:05:17 Most subcontracts give you a period, or at least a start and completion date. Add to that there's an extension of time mechanism for specified events, which include delays by the contractor or for others for whom he's responsible. And this is where we need to wave the flag, because this is the turning point. If the preceding trade put you four weeks late before you've even started, your remedy is an extension of time and where the mechanism allows for it loss and expense as well. That's the route speeding up to absorb somebody else's delay without an instruction and without agreement is not a route to anything. Now, here's a genuinely useful bit that most subcontractors have probably not heard of. It's a case between Ascon Contracting against Alfred McAlpine Construction Isle of Man. It's from 1999, so it's getting on a bit, but it's a subcontract case, which is why it's pertinent to you. One of the findings was that the subcontractor did not have an open ended obligation to comply with the main contractors programme, or with the programmes of other subcontractors on the job.
Jacob Austin 00:06:27 Now that they are finding probably describes half the pressures you experience on a given construction site, the main contractor reissues his programme at revision P, his move your dates, your durations have been squeezed and nobody's asked you a thing about it. And the implicit message, and sometimes the explicit message is that now this is the program that you need to work to, and if you fall behind against it, then the contractor is going to measure your failings against that program. But unless that their program is incorporated into your subcontract or you've agreed to it, it isn't your obligation. Your obligation is what's in your original subcontract. A main contractor cannot unilaterally shorten your program by redrawing the bar chart. Now, be careful with that because it's a shield and not a sword, and you can lose the defense it's providing you. Your subcontract might expressly incorporate the main contractor's program with a phrase as updated from time to time. That inclusion is not uncommon, but if that wording is in there, then revision P could actually become your obligation.
Jacob Austin 00:07:41 And the second thing is, if you work to revision P by conduct, if you do that specifically without commenting month after month, you're going to have a hard time arguing later that you are never bound by that program. Silence on its own would not necessarily be acceptance, but conduct on a long job. Every time a program is issued, you are starting to work to the revised dates and the revised durations. That starts to look like you've agreed to it. And so hidden between those two lines is what you need to do. It's a small action to take when a revised program lands that moves your dates or compresses your durations. Right back doesn't have to be aggressive. Something like. We note that revision P shows our works commencing on such a date with the duration of this many weeks, which differs against our subcontract period of whatever that was. We're willing to work with you to achieve this revised sequence where possible, but we do that without prejudice to our subcontract period or our entitlement to an extension of time, and on the basis that any additional resource required to achieve the accelerated durations would be subject to a separate agreement.
Jacob Austin 00:08:55 That's one paragraph. It keeps you sounding cooperative, which is what you want commercially, but preserves your entitlement to actual money if you start committing it. Now let's move on and talk about constructive acceleration. This is the idea that when you are entitled to an extension of time and the extension is wrongly refused or simply never granted, and so you have to speed up to avoid delay damages, that you should be able to recover. The cost of speeding up. The Society of Construction Law protocol defines it along those lines, and they note that it's rarely recognized under English law in the United States. It's an established doctrine, and you ought to have entitlements to it. And when people do try and argue it, the starting point is the same as Ascon case that we mentioned earlier the court's approach that didn't support a free standing. Acceleration recovery because there's a problem of double recovery. Before you go anywhere near this. You need to be clear that you can't claim loss and expense for a delay, and also claim the cost of accelerating to avoid that delay, because essentially you'd be recovering twice for the same event.
Jacob Austin 00:10:08 The court also observed that you'd need to show that an attempt that you've made to mitigate the effects of a delay was ineffective, so that's not very helpful. There's another case called Motherwell Bridge Construction against Micafil Vakuumtechnik, this one's from 2002. And the Technology and Construction Court allowed acceleration costs in this case. But how it was framed is important. It wasn't recovered as a constructive acceleration. It was recovered as damages for a breach of contract, and that the breach was failing to grant an extension of time that was due, and in addition, a matter that helped was that the contractor had notified the actual and projected additional costs that they were going to incur either before or at the time it took measures to accelerate. So the picture is that there has to be an entitlement to an extension of time that actually existed. It has to have been claimed properly and then refused or ignored, which is why the breach comes from you have to have notified the other side either in advance or at the time that you are accelerating and what that was going to cost, and then you have to be able to prove that the works would have finished late without those measures that you took.
Jacob Austin 00:11:26 And finally, you have to keep that clear of any delay costs that you're claiming elsewhere. Every one of those is something that you need its own individual evidence for. And often people don't even do the first step notifying. And if they do? What are the chances that you're telling the contractor what the acceleration is costing before you invoice it? In my experience, you find out about it as a contractor when it appears on an application and often several months after the event. And that brings us on to six failings that subcontractors regularly make when dealing with regular progress and acceleration. The very first thing is not claiming an extension of time, just absorbing the four week delay because it wasn't your fault and everybody knows it wasn't your fault and it feels unnecessary to make a formal claim about it. But months later, when you need an entitlement to square up the books, there isn't one because you never gave notice. You'll notice obligations exist, whether or not anybody's being reasonable, whether or not you've got a decent idea of whether a delay is going to last a long time or not.
Jacob Austin 00:12:37 And they often are a condition precedent, which means Missing them kills your entitlement outright to extensions of time and potentially extra money as well. Secondly, hearing the request to get more men on it as an instruction. Usually it isn't. It's usually exactly what I said a request. And if you start complying with that request without any qualification, without any argument, then it's a decision that you've made and paid for yourself. If you want it to be an instruction, you have to ask for it to be one in writing at the time. Thirdly, silently accelerating. Even if you can narrowly stitch together the Motherwell Bridge route that we mentioned in the case earlier, it needs contemporary notification. It needs evidence of what you're doing, what it costs, and that you've actually been able to accelerate. Showing in an invoice at the end doesn't count as any of those things. Fourthly, Mixing acceleration and prolongation in the same claim without separating them. If you've claimed prelim thickening and prolongation for a period of delay, you're also claiming overtime to avoid that delay.
Jacob Austin 00:13:52 You need to be able to show precisely which costs are which, and if you can't, then you'll likely expect the whole thing to be discounted rather than just the potential overlapping costs. The contract is not going to sit there sifting through alphabet spaghetti, trying to make sense of a claim that's just letters all over the place. They'll throw the whole thing out and accuse you of trying to rip them off. Probably. The fifth thing would be working to revision F, then revision G, then revision H, and so on, without ever writing a word about what it means to you as a subcontracting business and what you're having to do to achieve the changes. 12 months of you complying with revised programs is hard to unpick. The sick thing is under resourcing the site in protest. If the money is not coming and you're feeling frustrated, the temptation is to whittle your site presence down to a minimal three men or whatever, just to keep things ticking over so nobody can accuse you of not being there. But that doesn't put pressure on anybody in a way that helps you.
Jacob Austin 00:14:59 It puts you in breach of your progress obligations to proceed regularly and diligently. That gives them a claim against you. And in a bad case, it might even give them grounds to terminate. If you need to stop, then there is a proper way to do that. And we covered that a few weeks ago in the working off site episode. Now let's knock up a scenario to illustrate some of the points. Let's say you're carrying out a 12 week fit out package, and it's worth circa 240 grand. You're due to start in March, but the M.A first fix is overrun and you start later on the 14th of April. Four weeks and a couple of days late. None of that is anything to do with you. You weren't even on site. Here's what a lot of subcontractors. Or do you get on with it? There's no point in making a fuss about something everyone else can see. But in May, the pressure arrives. You end up putting on a second gang for five weeks and you work for additional Saturdays.
Jacob Austin 00:16:03 It costs you a nice round, 20 grand in acceleration, and you finish more or less on time. You claim all of that 20 grand at the time, but you get offered four grand as a gesture for helping out or nothing at all. That's a regular way that that hand plays out. But here's what you could have done. The difference is probably an hour and a half worth of work spread over the 2 to 3 months of site time, just prior to your original start date, you visit the site, you realize things are running behind, and it doesn't look like you're going to be able to start. So you write a little note to the contractor. X and Y areas don't look ready for me to start on my due date of the whatever it is of March. Please can you confirm that either access will be made available or a revised start date? The site manager writes back to you. Thanks for dropping in. The M&A is running a few weeks late. We'll give you a two weeks notice period in line with your contract of when we expect to be ready for you.
Jacob Austin 00:17:08 Access was then not available until the 14th of April due to the progress of the preceding M-A work. Now you give a short notice of delay. Our subcontract cites a date of X of March when our subcontract works were due to commence. Access was not available until the 14th of April. Due to the progress of preceding works. We give notice of delay and we apply for an extension of time of four weeks and two days, and we will reserve our position on the associated loss and expense. That's it. That notice is costing you nothing socially. You're not blaming anybody. You're not getting into a war. You're just simply recording a fact that everybody knows you weren't able to start on your original start date, and you've started four weeks and two days later. Then in May, that conversation happens. Can you get more men on it? And your answer is yes. If we put a couple more men on it, it's probably not going to cost me anything. But the site manager then says, actually, we think we need you to work a couple of Saturdays to help catch up the program.
Jacob Austin 00:18:15 And your answer is no problem. Here's what it costs. In writing later the same day, further to our conversation, you've asked us to increase resource by working weekend time to recover time lost through no fault of our own. We're willing to do that. requires a second gang that will be recovered through measured work and approximately four weeks of weekend working, at an additional cost of £20,000. Please confirm that you instructors to proceed on that basis in the absence of confirmation. We will continue to progress the works in line with our planned resource and our revised completion date. Now look at what you've done. You've said yes. You're not being a difficult subcontractor. You've put the decision back where it belongs with a person who wants the outcome, and they've got a decision to make. Commit to spending the money to catch the time up or don't. And because you've done that before, you've spent anything. Three things can now happen. One, you've got a variation and you get paid for it. That's just as likely to happen as anything else, because at that point, your £20,000 is probably cheap.
Jacob Austin 00:19:25 Against his own delay damages coupled with his own site time is premium cost. The other thing that likely happens is he doesn't reply. And so you don't accelerate, you just keep on working. Normally you get a live extension of time flame and you've got an offer to accelerate that wasn't accepted. If you finish late, you've got an entitlement that you maintained to some loss, an expense that you couldn't quantify at the time. Finally, he says no and asks you to do it anyway, but you're in no obligation to. If they won't commit to your extra cost, then you don't have to accelerate. If they don't respond to your extension of time, then you're starting to enter that narrow window that we spoke about with the Motherwell Bridge claim, because you've got a demonstrably clear extension of time. You notified it in advance. The start dates speak for themselves. You've got refusal to grant it, you've got contemporary notification of cost. If they absolutely forced you to do that, you have got a claim. It's still a hard claim, but it is now a claim rather than just some conversation about the contractor doing the right thing and paying you a fair price.
Jacob Austin 00:20:37 And all that took is 90 minutes or so, an hour and a half of your time administering your contract properly. That against £20,000 I so well paid hour and a half, isn't it? I could type that correspondence hanging from the ceiling with a one finger in an hour and a half, especially for £20,000. So how do you protect yourself here? How do you protect your entitlement as well? First, notify delays when they happen. Every time. Delays aren't always obvious. You never really going to know how long something is going to delay you for. Not even with mystic regs. Crystal ball even notify if nobody's blaming you. If you're sure that everybody knows it's not your issue. A short letter costs you next to nothing. It's not accusing anybody. It's just a record that either something didn't start on time or something has caused a delay. If your subcontract has conditioned precedent wording that there is the difference between you getting your hands on some time and some money and nothing. Secondly, check whether your subcontract incorporates the main contractor's program and whether it entitles them to update that from time to time.
Jacob Austin 00:21:53 Do that at order stage and if that wordings there, try to get it limited to say, the program attached at the date of the order, or that the contractor exercising their right to update the program does not limit your ability to claim extensions of time or loss and expense. Thirdly, respond to revised programs that change your dates. One paragraph saying that you're willing to cooperate but without prejudice to your subcontract period and your entitlements. That's all it takes. Put it in the file and move on. Fourth, don't accelerate without asking for an instruction first. Do that in writing. Put a number on it. That single habit could save you a fortune. Fifth, keep the records that will prove a delay. Claim is a matter of routine, not just if you start thinking there's a dispute afoot. That means weekly resource returns a marked up program. Day two photographs of areas that you can get into. You couldn't get into when you can get into them, and a note of who's told you what. If you ever need to show what would have happened without the acceleration.
Jacob Austin 00:23:05 This is the only material that will start to piece that picture together. Sixth, decide within your business practically who can say yes and who can say no to a resource request. These things, when they're asked on site, is usually under pressure. It's usually to somebody who the site manager has started building a good rapport with and they want to be helpful. Being helpful without covering your back is going to cost you money. So you need to build a rule around that. If that means that your resource increase needs a cost and an instruction, then you remove the point for that to fail. Now remember, all of this starts with you writing a notice at the right time to get your hands on your entitlement. That's one of the biggest failings across the marketplace. Whether a notice goes down like a lead balloon or whether it's received like a helpful piece of advice is all in the wording. You don't have to be aggressive when you put together a notice. You just have to write something. Express that you want to be collaborative, but you need the contractor's guidance on how best to collaborate with them, and that you'll try and help them get round the delay.
Jacob Austin 00:24:14 But unfortunately, it may still cost the money. These are things that you can do for free that protect you and your business. Now, I hope today's episode helps you. My mission with this podcast is to help the million SM contractors working out there in our industry. If you've taken some value away from today's episode, then I really need your help to share the show and pass that value on somebody else who would benefit from hearing it, so that I can 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.
