Fair payments are not always made to schedule, or at all, in the construction sector. Often, those involved in a construction project may have their money tied up in different areas or be operating on a debt business model that makes them prone to being unable to pay.

Whatever the reason for non-payment, whether debt or simple dishonesty, the responsibility exists for every party entering into an agreement to do so only if they are certain they will be able to meet the terms and mutual expectations.

Because this has been a recurring and defining challenge within the industry, governments introduced the Building and Construction Industry Security of Payment Act. This act was created to assist contractors, consultants and suppliers in the recovery of owed money. It enables a faster resolution of non-payment and makes it easier to hold debtors to account.

Protecting yourself from non-payment in your original contract

Despite the above, it cannot be assumed that just because of legislation, you will have a safety net to fall back on if a party you are working with does not pay. Every sound business model requires a solid suite of contracts that have in-built protection, to prevent your business from being exposed to undue risk.

There is no such thing as a one size fits all contract. An effective contract must be tailored to your circumstances and to its specific purpose. There are, of course, many different types of transaction and partnership within the construction space, and all of them call for different contracts. These contract types may include:

Many businesses within the construction sector rely on a professional construction consultant to provide them with a template or contract suite. These contracts, provided by experienced consultants within the construction industry, are based upon years of experience, a knowledge of what works and what doesn’t, and an intimate familiarity with the Building and Construction Industry Security of Payment Act.

This act is not static, but continues to be amended, across jurisdictions, and it is therefore essential that you partner with a construction consultant that has a working and current knowledge of the act.

Some construction businesses may already have a contract that has been developed, either using in-house resources or a general legal expert. In such circumstances, it is still advisable to allow an experienced construction consultant, such as Guardian PC, to undertake a contract risk assessment.

To the untrained eye, a contract may appear to be fool proof, with nothing that will make you vulnerable. However, those with more experience will be able to detect a number of issues with a contract, that should be resolved before putting pen to paper. This may or may not involve terms that place you at a disadvantage.

Breaches of contract and adjudication

A quality contract reduces the risk of a breach. However, this risk cannot be eliminated. Fortunately, if you have entered a partnership with other parties based on a sound contract, you will be better protected when the time comes to seek compensation and fair payment.

A building and construction industry expert, such as Guardian PC, can offer adjudication application advice when fair payments are not made to schedule. We have many adjudication forms to provide guidance on matters such as payment claims, payment schedules, adjudication applications, adjudication response, payment withholding, notices and notice of suspension. We can offer this advice whether you are making the claim, or whether a claim is being made against you.

Thus, with the support of an adjudication consultant, it is easy to commence the dispute resolution process with greater confidence, without having to take the matter to court – which can be a costly and time-consuming exercise.

Once the application is with the adjudicator, the matter is in their hands, and they will use their expertise to determine the solution; to determine who is in the right and wrong by the Act. They will make announcements about the amount owed, payment due dates, and applicable interest rates.

With an appropriate application that addresses the important points, clearly outlines information, and does so as it pertains to the Building and Construction Industry Security of Payment Act, your chances of an adjudication in your favour are increased, provided that your claim is fair and reasonable.

Finding a solution for your business

If you are establishing partnerships, ensure you are using a suite of contracts that is sound and falls in line with the Building and Construction Industry Security of Payment Act. If those you transact with are not paying on time or at all, consider an adjudication application expert who can assist you to input an effective application. For more information about our services in this area, contact Guardian PC.