In this Opinion piece, Lawrence Pearce, a Specialist Construction Law Associate at Holmes & Hills Solicitors, a partner of the Scaffolding Association, discusses the lessons of the last 12 months and looks forward to a successful future…
Like all of you, we are hoping that the words “pandemic” and “Covid” are put back in a box and locked away again sooner rather than later. 2020 was an extremely difficult year for everyone across the country and our hats should be taken off to the construction industry for showing considerable resilience.
Apart from the initial lockdown, the construction industry has pushed on, adapted, and helped to prop up the economy. Amongst all the negatives of the past 12 months, we are starting to see some real positives in the way sub-contractors have improved the day-to-day administrative management of the company. What has changed?
The pandemic has alerted many sub-contractors to review any contracts being sent over in a greater level of detail. More consideration is being given to ‘who takes the risk of delay’ and ‘how the contract can be terminated and for what reason’. Having a contract checklist in place has given many sub-contractors reassurance that if the contractual relationship does go wrong, at least they know their contractual rights!
It is understandable that when a project starts the last thing on a sub-contractor’s mind is keeping a note of the phone call they just received with new site instructions, however, these records may make or break any final accounts.
The old cliché of “failure to prepare is preparing to fail” does spring to mind but we are noticing some real progress in proactive project management since the start of the pandemic.
Ask yourself: If I were a third party looking through these documents, can I see a clear storyline of what happened and when?
CASH FLOW MANAGEMENT
It will come as no surprise that payment to sub-contractors have averaged in excess of 40 days and a third of the industry is still waiting for payment beyond 60 days. The pandemic, unsurprisingly, has just heightened the tension around payment but this has trigged a more robust approach from sub-contractors.
We are noticing that sub-contractors are now proactively requesting payment soon after the final date for payment has expired and not simply waiting.
With the moratorium on winding up petitions set to be lifted on 31 March 2021, we may see an influx of insolvent contractors. Now more than ever, keeping on top of cash flow management is the best way of protecting the business in 2021.
The pandemic has highlighted the importance of supporting those closest to you but also those alongside you in the industry. No doubt a difficult issue on site for one sub-contractor has been experienced and resolved by another. The scaffolding industry and the Scaffolding Association members have strength in numbers and can support one another to make sure 2021 and beyond is successful.
SPECIALIST CONSTRUCTION LAW ASSOCIATE, HOLMES & HILLS SOLICITORS
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