Lens Blog: Support for FIS members

A day in the life of an FIS consultant

In this article, we discussed with one of our consultants Len Bunton the services he provides to FIS members and experience of the issues our members need advice on.

The process usually commences with a phone call from one of the FIS Team who has taken a call from a member needing assistance, and the first thing they have done is to put me in contact with the individuals in the organisation who are dealing with the issue.

It’s particularly important to have a fast response time, and unless for example I am tied up for a day or half a day on client business, I usually make contact immediately. The member would then send me details of the problem and I ask for all relevant correspondence which is reviewed, before arranging a meeting to discuss the issues.

In my experience, the member organisation is usually fairly well down the road in terms of having communication with the other part and the consultants are  normally required when negotiations  are not going anywhere. So, the first responsibility is to find out what the issues are, and what solutions the member organisation is looking for.

The other thing I like to establish, is if they want to continue the business relationship with the other party, and in many cases they have decided they really don’t want to be doing any more business with that organisation, and that often influences how we approach the situation

The majority of the issues we   deal with have financial implications because the issues that are in contention are inevitably leading to nonpayment. So, the priority is to establish the options available, and discuss the implications of each of these with the member.

My view is that every effort should be made to have face to face engagement with the other party and not   hide behind a load of e-mail traffic which gets us nowhere.  Often the member will advise the other party that they have engaged an FIS consultant rather than me writing to the other party out of the blue.

There are various methods of engagement and the first of these is to request a face to face meeting, or an online meeting, and to find out why the other party is experiencing non payment. If we do not make progress there, then the matter has to be escalated to senior management within the company and in my experience, they’re often unaware of the issues or have not got into any of the detail. All they know is they’re being told   the contractor is not entitled to payment.

One of the areas that readers of this article will be aware of is FIS’s support of the Conflict Avoidance Process and we are encouraging every member organisation in FIS to sign the Conflict Avoidance Pledge. That process can be relied on in these circumstances to give the parties a window to try to find a resolution, or a compromise, and if they are unable to do so then there is a prospect of bringing in an experienced industry consultant to review the issues and make non-binding recommendations to both sides. Further information can be found at www.conflictavoidance.org

If it appears to me that the member organisation has a strong case, which is well supported with evidence and records, then with great reluctance I would suggest that we prepare the documentation and issue a notice of adjudication. In about 80% of the cases where this happens,  it usually does bring the other side to the table to have a discussion and hopefully find a resolution.

Not every contractor is aware of the nuances of the adjudication process and the costs that might be involved and the risks attached. We have seen a number of cases recently where we have been successful in an adjudication, with a decision in our client’s favour, and the other side simply refuses to pay and the member has to commence enforcement proceedings which leads to further costs, most of which will be non-recoverable.

I have seen this many times and then during the proceedings the other party will come along with a compromise offer It is up to the member to decide if they want to continue the battle.

I am not a great supporter of the attitude often taken when I am told “it’s not the money it’s a matter of principle” and I just do not believe that. I think in these situations there is no space for stubbornness and the member needs to carefully consider the advice they are being given by an experienced consultant.

Despite the difficulties and concerns in the industry at the moment, I am seeing an increasing approach by parties to try to find a resolution and to move on.

So, having dealt with that issue, what other services can your FIS consultant  provide? Before I go on to that, I want to say that in many instances when somebody tells me they are not getting paid and I stick my nose in the trough,  I quite often come to a conclusion that the member organisation has not demonstrated an entitlement to payment. Either for example they have not provided enough evidence, they have not provided relevant records to support their application for payment, or in some instances the payment application is overstated.  In some cases a member organisation is claiming payment for work that they have not carried out which is simply down to human error or a lack of attention to detail. Sometimes the member has failed to comply with the payment provisions in the contract, and that is why we are emphasising the importance of having a payment schedule in each contract which must be rigorously adhered to.

So, to answer the question I have posed – one of the areas we are working on, is helping members   improve the commercial management of their contracts, so they avoid getting into payment and cash flow problems. A starting point is often carrying out a review of contracts that are coming into tender and analysing the terms and conditions to establish if there are any high risk clauses, and if there are, to try to negotiate these out directly with the client and/or the main contractor.

Member organisations need to understand the risk exposure that they have in the contract and it’s up to them either to agree to have these resolved, and even better to have them omitted completely, and if all else fails, then the member has got to take the decision – do I take this contract on with the inherent risks that have been identified or do I simply walk away?

Again, we are finding that a number of FIS memberss are doing the latter  and are declining to tender for the project because the risk exposure is far too high, and in many cases where design responsibility is involved, many member organisations are declining to tender and one of the reasons for that is they cannot obtain the appropriate professional indemnity insurance for design.

So, what else can be done? Member organisations are  now seeking some training on the JCT forms of contract and also NEC 4 and it is important that everyone in the construction business from estimating to site and contract management, and commercial management are aware of how these contracts operate, and how they should be managed and that is particularly important as far as NEC 4 is concerned.

We have also recommended to FIS that they encourage their members to follow the recommendations from the CICV Best Practise Guide, and if you are reading this article then I strongly recommend that you download this and go through those recommendations.  I am absolutely convinced that these will help you improve the commercial management of your contracts and in fact there are a couple of members who we’ve been working with recently to adopt  the recommendations from the BPG into their business and I am advised that it’s showing very positive results.

One of the most crucial aspects of this is the importance of keeping records relating to the project as it progresses. The single issue where I see that contractors applications for payments fail, or claims being rejected, is where they have not maintained contemporaneous records.

Finally, I want to touch on the very important issue of giving support to a member who is often going through a period of severe stress. Consultants need to be readily available, have a fast response time, and give honest and pragmatic advice.

Len Bunton

len@buntonconsulting.co.uk