Business Advice

10 Top Tips To Avoiding Construction Payment Disputes

23/07/10

By Richard Hildrick

The Construction Industry has suffered more than most through the recession and despite the imminent introduction of new legislation, payment problems in the industry continue to be commonplace. Here are some ways of avoiding those problems before they become a reality.

1)Know your contract
Always check the terms and conditions of your contract - when do you need to submit payment applications and in what format, when is the payment notice due and are the payment terms acceptable?

Ensure that the Adjudication Clause does not say that you will have to pay the other party's and the Adjudicator's costs, whoever wins....

...Look at who will be or will choose the Adjudicator, if one is needed.

Make sure that you understand the variations & extension of time (or compensation events) clauses, and note any time limits for issuing notices.

If in doubt, have the contract reviewed by an expert before you sign it or start work.

2)Correspondence
Ensure that you give notice, at the time, of any event which is going to hold up your progress or incur additional costs. Take care to be clear and specific in your wording.
Manage your client's expectations by giving regular updates of where your final account is heading. This needs to start from day one as no-one likes a surprise bill at the end of the job.

3)Instructions
Always get a written instruction from your client before carrying out any additional work. This can be in many forms, including revised or new drawings, meeting minutes or letters, but beware of e-mails as your contract may not recognise electronic communications.
If instructions are given to you verbally by your client, confirm it in writing.

4)Obtain agreement to additional costs
Whenever possible, get agreement to the costs of additional works before you carry them out. Otherwise, sit down regularly with your client to agree and sign-off... continued on page two >

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