Wise Up Wednesday: What’s The Construction Act? And What’s It Got To Do With My Business?
It’s Wise Up Wednesday!
What’s The Construction Act?
And What’s It Got To Do With My Business?
The Construction Act, or to give it its full name the “Housing Grants Construction and Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009, has been law since 1 May 1998.
But, you are not on your own if you don’t really understand how it affects your business, and more particularly the contracts you enter into.
I have been representing Specialist Contractors for 28 years (yes that’s even before the Construction Act), but since the Act became law, the same questions and problems have cropped up time and time again.
Here are a few FAQ’s and the suggested answers.
1. The Client’s or Contractor’s terms take no account of the minimum requirements of the Act (i.e. requirements relating to payment and adjudication)?
The fact that the Act applies to them at all, still comes as a complete surprise to many Contractors! If any one or more of the minimum requirements are not met, the relevant part or parts of the Scheme for Construction Contracts comes into operation as a ‘default’ mechanism.
2. What if the Contract states ‘pay when paid’.
‘Pay when paid’ is made ‘ineffective’ by the Act, unless there is an express clause relating to insolvency of a third party upon whom payment depends. Watch out for that, as you may not know the credit worthiness of that third party.
3. The Contractor just sends me a cheque with no details of how the figure is built up.
The Act requires that you be given prior written notice of sums due and the basis of their calculation.
If there is a significant difference between your application and the Contractor’s payment, understanding his valuation is the first step towards resolving the matter.
4. The Contractor sends me a notice showing me his valuation, but when he paid he has deducted ‘contra-charges.
The Contractor is ignoring the Act. Once he has notified you of the sum due, he must make payment in that sum, unless he then gives you a Pay Less Notice setting out the basis of his calculation.
5. The Act gives me the right of suspension by not less than 7 days’ notice in the event of late payment. If the Contractor’s notified valuation is less than my application, can I suspend my works?
No. The right of suspension is related to late payment of the sum which has been notified as due. There is no right of suspension merely because of a difference of opinion regarding your valuation. What you have is a dispute about ‘valuation’ not ‘payment’.
1. I have a dispute with a Contractor regarding the value of my variations. I have issued a notice of adjudication. Now I wonder if I might have been hasty?
If you ‘flew off the handle’ without and issued a notice without preparing your referral, then you could be creating a problem.
The adjudicator will be on board in a matter of days and will be asking to see your referral notice. If you cannot comply, then your adjudication will collapse at the first hurdle!
2. I have a very complicated dispute with the Contractor regarding my account and a loss and expense claim. Is this a suitable case to refer to adjudication?
Perhaps not. It is very difficult for an adjudicator to reach a sound decision on large, complex disputes in the limited time available.
Potentially, identifying certain fundamental issues and referring those issues to the adjudicator. could be helpful to the parties may well aid the parties in reaching a settlement.
3. What kind of disputes are most suited to adjudication?
Adjudication is ideal for settling cases of blatant disregard of the Act by the paying party. In general terms, the simpler the issues, the more suitable the case is for adjudication.
Want To Know More?
These are merely examples, and as each situation turns on its own special circumstances and wording please seek professional advice (ours, or other suitably qualified and experienced professionals) in all such matters.
If you want to know more, our courses provide a practical no-nonsense approach to learning all the basic principles that can easily be understood and used for the benefit of your business on a day to day basis.
I have been successfully presenting courses for Specialist Sub-Contractors for 22 years and our Consultants have practised what we preach, because in that time our experts have recovered literally millions of pounds on behalf of Specialist Subcontractors using simple techniques that you can easily learn.
“Understand Your Contract to Minimise Risk and Maximise Profit”
“Introduction To Contractual Awareness and Using JCT Subcontracts”
WHEN/WHERE IS IT? The dates and fast access venues are as follows;
17 October – Village Hotel Leeds South Close to M62 and M1
30 October – Village Hotel Liverpool Close to M62 and M57
31 October – Village Hotel Manchester Bury Close to M56 and M62
13 November – Village Hotel Newcastle Close to A! and A19
14 November – Village Hotel Leeds North Close to A1 and M62
Don’t see a date/location that suits? Contact us for future dates.
Here’s what your fellow Subcontractors said about our last event;
“Easily digestible information delivered in an interesting and easy to understand format”
“Very detailed and informative”
“Very informative and well delivered”
“We were struggling to get paid; not any longer!”
Session 1 – Contract Formation
Session 2 – Introduction to JCT Contracts and Construction Act
Session 3 – Time, Notices and Delay and Disruption
Session 4 – Instructions, Variations and Maximising Return
Session 5 – Getting Paid On Time and the Right Amount
Session 6 – Resolving Conflicts and Disputes
Session 7 – Putting It All Together
WHO SHOULD ATTEND?
Our events are exclusively for Specialist Contractors so you are in the friendly company of other Specialist Contractors, and everything is designed to provide a broad appeal for all Specialist Contractors staff including;
Estimators, Contracts Managers; Project Managers; Commercial Managers, Quantity Surveyors, Credit Controllers and Directors
WHAT WILL WE GET OUT OF IT?
The Secrets To Getting Paid and Minimising Risk and Maximising Profit!
Specialist Contractors don’t get paid because they don’t understand the contract or don’t apply it when they should. We will reveal all you need to know to enable you to understand the fundamentals of those subcontracts, and how to get paid.
WHAT DOES IT COST?
The value of this whole days training is £350 + VAT, however, you can get your Early Bird booking discount and enjoy the reduced rates as follows;
- 10% discount when you book one place
- 20 % discount when you book 2 or more places
- And if you are a member and StreetwiseSubbie Buddy (or join us now), you are eligible for even more heavily discounted preferential rates.
All rates are subject to VAT
Booking couldn’t be simpler, just contact Jo or Tanya directly on 01773 712116 or email email@example.com to confirm your places.
But hurry our last round of seminars sold out very quickly.
I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought, and I sincerely hope to speak with you soon.
P.S. If you have a problem, or you’re not sure what to do, or just want a second opinion, please give us a call on 01773 712116, or email firstname.lastname@example.org