6th September, 2023
Well organised and drawn up construction records give evidence of both liability and quantum, which makes it easier when it comes to resolving disputes. In some cases in all areas of construction, businesses can be owed thousands of pounds, leading to a struggle for survival due to one bad contractual decision. Typically, if the business is not facing fabricated contra charges, you will be asked to substantiate your account even if you think you have already done this. It is important to have updated records that ready to be submitted to the other party at the time that they happen.
It is good practice to complete these submissions at site meetings where you can record what has been submitted and get confirmation of receipt. When an issue arises, it is not then possible to fabricate records and submit them as they will be accounted as worthless. This outlines one of the many key points of appointing a Quantity Surveyor to ensure the project, content, timing and proof of receipt is all well managed.
Daywork sheets are obvious minutes to record at site meetings including instructions and programme changes, making sure liability is recorded, which must be in clear and concise language. Quantum must then be recorded and a good way of doing this is recording extra works, disruption, acceleration or simply all operations on daywork sheets so that all resources and work done can be linked and identified.
The daywork sheet primarily does 2 things:
Some clients may state that they do not entertain dayworks, however this should not be something to put you off, simply state that it is given for record purposes. Depending on what items are available for valuation where fair rates and prices are required or there are no terms, the daywork sheet is a persuasive tool in this instance. If they are not dealt with or left unsigned by your client that is even better, as if in an instance the client refuses to pay and does not sign dayworks, this will hold up in a legal dispute and the responsible party will be obliged to pay in full.
Withholding of payment for construction defects
A final account and final payment must be considered when a construction project reaches completion, it is common for the paying party to withhold payment against what they consider to be defective works. Most standard forms of construction contracts contain provisions for dealing with defects in construction. Normally, in the form of a procedure which includes a notice that practical completion has been reached, a defects liability period and a notice of making goods or defects. It is imperative that the contractual procedure is understood so that any rights to claim are not lost.
The types of issues under the heading of construction defects relate to the withholding of payment on the grounds of defective work, the pursuit of due retention or pursuit or damages for defects, including latent defects. It is not unusual for one party to consider an item a defect and the other a variation, the latter of which does not have to be carried out after practical completion.
This often leads to disputes if other contractors are employed to carry out this work. In terms of financial repayment pursued, there will be arguments of what constitutes practical completion, valid service of notices and failures to carry out timely defects inspections.
If not defined in the contract, there is no hard and fast rule as to what constitutes practical completion unless expressly agreed. This can lead to issues regarding Liquidated and Ascertained Damages (LAD’s) and defects. Often the paying parties will accuse the Contractor or Subcontractor of non-completion for minor outstanding works, whilst also taking possession of the building, which in the absence of a definition, is likely to constitute practical completion.
An example of this would be when the Contractor failed to obtain a building control due to a defective sound test, which is essential on flats and dwellings that adjoin one another. The Client had to deal with incompetence from the builder, and the Contract Administrator was negligent on numerous points, including certification of non-compliant work. When adjudication becomes necessary in this case the contractor would be held liable for defective works and the matter would be settled.
It is also common that an Employer or Contractor as the paying party, will create contra charge claims that are very significant and often overinflated by hundreds of thousands and are designed to make the payee give up so that they can keep the money. Contra charge claims are often worth nothing and designed to make non experts panic, which is another reason why sound legal advice and Quantity Surveying support is always advised in these situations.