It’s Wise Up Wednesday! Orders Are A Process, Not An Event!
We are already into the third month of the year and we need to stay focused on doing the right things in our business, because the future isn’t certain, and no-one truly knows what is around the corner.
That’s why we have put together our Streetwise Wise Up Wednesday Guides to give you a quick burst of stuff that will help you in your business life.
Sometimes quirky, sometimes hard hitting, but always guaranteed to make you think and take no more than 2 minutes to read.
Orders Are A Process Not An Event!
Receiving an order is not just an event, it’s a process and it’s one of the most difficult processes to manage!
So don’t be surprised if you incur a few problems along the way.
Most of your work will result from some sort of enquiry, but nowadays they all say that you are ‘deemed’ to have read dozens of documents that you have never seen and have allowed for their contents in your price and programme.
The Contractor is trying to transfer as much responsibility as he can onto you. Don’t make it easy for him to stitch you up!
You simply don’t have time to check every document and his one sided onerous sub-contract terms and conditions, so in order to protect your interests you must qualify your tender to record precisely what you have included and, equally importantly, what you have excluded.
Obviously there are a number of items that should be stated clearly in your tender:
• The price, in both words and numbers, confirming that it excludes VAT.
• Any discounts and exactly what conditions must apply for those discounts to apply.
• The period for which the tender is open for acceptance.
• The period over which the price is fixed. You should clearly state that the price is only fixed for the period up to anticipated completion of the sub-contract works, not practical completion of the main contract
• The extent and scope of work that you have included for, particularly if what you have allowed for is not in accordance with the specification or drawings.
• You should clearly state which documents you have taken into account when preparing your tender. If you have allowed for only part of what is stated then make that clear and unambiguous.
• If your tender is based on a bill of quantities provided by the Contractor, state that it is based on his quantities and is subject to re-measurement on completion.
Most importantly, you should not simply accept the Contractor’s terms and conditions!
Either state that your tender is based on a standard sub-contract (such as DOM/1 or the JCT standard building sub-contract [SBCSub/C]) or your own standard terms and conditions.
As a very minimum, if you don’t refer to any terms you should state that terms are to be agreed.
In regard to the time for completion you should state that no agreement to programme is implied and that you anticipate a meeting to discuss the Contractor’s own programme and the manner sequence and timing in which the works will be under taken.
Most standard form sub-contracts do not limit your liability for Liquidated and Ascertained Damages (LADs) or the delay and disruption costs of the Contractor and his other sub-contractors if you cause delay.
You may wish to try and agree an overall limit of liability for all delay and consequential costs – to say 5% of the value of your works, but you must get that into the contract!
If you are designing, it is imperative that the contract expressly limits your obligations to reasonable skill and care. If your contract does not contain such a limitation your liability will be the much more onerous fitness for purpose and your PI insurance will be void!
State whether you have included for the provision of a performance bond or warranties etc. and that they will only be provided subject to the wording being acceptable/mutually agreed.
If you are uncomfortable about submitting qualified bids, or just don’t have the time to respond to every enquiry in detail, you should as an absolute minimum include a general qualification along the following lines:
“Our offer is based generally on your enquiry but there are a number of commercial and contractual issues to discuss and agree before it is capable of acceptance or your order issued”
This should allow you to negotiate with the Contractor if your offer is otherwise of interest to him.
Whatever else you do please remember that getting an order is a process not an event.
I hope you enjoyed my Wise Up Wednesday blog post and that it gave you some food for thought, and as usual, if you need any help, please don’t hesitate to pick up the phone and give us a call.
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