Security of Payment Act | Keeping Deviations Down | Contractors Debt Recovery
Channel: SecurityofPaymentAct
Date: 26/12/2011

http://www.securityofpayment.com.au/
https://www.contractorsdebtrecovery.com.au/

This video is brought to you by Contractors Debt Recovery, and will help you prepare for security of
payment claims, adjudications, and milestone payment disputes. Success in Security of Payments
matters relies on good evidence and solid preparation. 
 
Hi there. Anthony from Contractors Debt Recovery back again for another Bafta award winning episode for your enjoyment and pleasure. OK. I've written beforehand this time, this little talk is about controlling deviations from the contract. Now, what happens is contractors lose control of the contract. And that is because your client is like a mangy bloody horse and just leading you off the road of what the contract says everyone needs to be doing and you're accepting it. And before you know it, you wake up one day and who knows what the agreement is, it's just an absolute pea soup.

So I want to talk to you about types of deviations and the consequences for you. So, every contract has a due date for payment. Every month or fortnight or whatever it is, here's the agreed time I'm meant to be paid. Now your client all of a sudden doesn't do it. So contractors just come to me going 'We've been working for four months haven't been paid...' for four months while you're working: a deviation. 

The agreement says you'll do this scope and be paid value of the work completed every month. Your client insisting you do your bit, keep working; not doing my bit, not paying every month. So, this starts to go wonky, all right; that part of the contract is not being observed, there's a deviation and you're letting it happen. The next is the agreed scope of work. The scope says, you're going to do X, Y, Z, all right. And then on site someone yells at you and said, I need you to do A and you're doing B, and I'm taking 'Z' off you. 

Zed's coming out; no proper documentation, no proper meeting, no real agreement at it, no agreed value of what the additional work is, no agreed value as to what 'Z' is that's coming out, are they even entitled to reduce the scope. No one looks at it, no one discusses it, you lose control of that. So your scope starts to become clouded in mystery, compound that with the fact is you haven't been paid for nine weeks. Now, you're starting to lose control here but you just keep working. Why? Because you haven't spoken to me! Well, you will be now. 

Extension of time notices. Most contracts will say, if you need an extension of time, you put in a notice. Now, many contracts just don't put that notice in. Those that put the notice in, don't wait to get a reply: "Is the EOT approved or not?" And there should be a limit on to when it's approved or when it's responded to, accepted or rejected. And you need to pursue those.  Often contractors will also say, "Here my all my EOT requests, 25 of them. None of them have been replied to." Now, good, you've let your customer just wander off again. Bring him back. Here are my notices. We're not going further here until we get an answer on them because the contract says that that's what I can do and it says you need to respond to them; keep control. But no, you've — other notices and everything, you're sending that out, you're not getting a response but you're not holding your client to their part of the deal, you're performing your work, you're losing control of that. 

And finally, the most contentious is the variation process. Every contract will have a laborious process for getting variations approved. You need to know what those are before you enter into the contract. And then you need to stick to them. Now, often your client will waive that and say, well,  no time, just go into it, we'll sort that  out later, etcetera, etcetera. 

So now your client's wandering off again away from the contract and you need to be going, "Hey, this is your contract I signed and you signed. It says you need to do X, Y, Z. So please perform that. You need a quote from me, here's my quote, it needs to be signed off or approved in writing. I'm waiting for your written approval." Clients will say, "Don't waste time. You're holding it up. I haven't got time, etcetera, etcetera, etcetera." To which the answer is, 'I'm not wasting time, here's my quote. You're wasting time because you're refusing to sign it. As soon as you sign it, we can do the work. OK?' 

So again, you let your client go for a bit of a wander, just doing whatever they want to do. And you're just going along for the ride. Now, these all compound each other. So you've got a variance here, variance there, variance here, deviations here and here, and what that results in is this.   Bloody nightmare all over the joint, uncontrolled disaster. And the longer you go into it, the worse it is. Not one part of your contract resembles anything that it was when you agreed to the deal. And that is your fault, your client's fault, but it's your fault because you let it happen.