by Oscar Venus | 31 May, 2024 | Contractual and Legal, Lens Blog
During the course of the last few weeks, Len has received significant communication from FIS members. Here he higglights various challenges and potential solutions. A key resource recommended is the CICV Best Practice Guide (BPG), which offers valuable insights for addressing payment and cash flow issues. Implementing the Guide’s recommendations, including incorporating Payment Schedules into contracts, can greatly mitigate potential disputes.
These schedules clearly outline submission and payment deadlines, ensuring adherence is crucial to avoid complications later on. Detailed applications for payment, supported by comprehensive documentation, are also stressed in the BPG to facilitate smooth processes.
Regular engagement with contractors and clients post-submission is advised to address any concerns promptly. By following these guidelines diligently, businesses can safeguard their commercial interests effectively.
by Oscar Venus | 24 May, 2024 | Contractual and Legal
A recent flurry of organisations have signed the Conflict Avoidance Pledge and FIS is proud that our members are front and centre in this. The new momentum coincides with a new Chair of the Conflict Avoidance Coalition who many members will recognise, Len Bunton, one of the FIS Contract Reviewers and a provider of contractual guidance via the FIS Helplines.
The Conflict Avoidance Process is a contractual mechanism which helps parties to avoid getting embroiled in pro-longed and damaging disputes. Where disagreements begin to develop, CAP enables parties to address and resolve matters early, collaboratively and inexpensively. CAP is included in contracts via a sample standard clause. If a dispute arises, the process involves the nomination of an impartial CAP professional (a highly experienced and knowledgeable subject matter expert). The role of the CAP professional is to inquire in the disputed issues and provide a report with recommendations on how they can be resolved. For example, an issue about interpretation of a contractual clause can be referred to a CAP Professional who is a lawyer with immense experience in building contract interpretation. If the problem that needs resolving is about the costs of variations, it can be referred to a highly experienced and impartial chartered quantity surveyor.
The CAP Professional would undertake an investigative role. They would, if appropriate, visit the relevant project site and talk to people who do the work and/or oversee delivery of the project. The CAP Professional would endeavour to get a clear understanding of the problem and apply their experience to provide a report with fully reasoned recommendations on how matters ought to be resolved.
Each party will normally bear its own costs and expenses and will bear in equal share the remuneration and expenses of the CAP Professional. Companies using CAP can promote their support by signing the Conflict Avoidance Pledge.
Conflict Avoidance Coalition chair Len Bunton thanked FIS for their support through the Coalition and added:
“I am greatly encouraged at the number of FIS members who are Signatories to the Pledge. The process is all about early intervention to ensure that issues on projects do not escalate into costly and time-consuming disputes. Wherever possible, I am working with FIS members to have this embedded into contracts, and I am 100% sure this will reduce the number of payment and cash flow issues currently surfacing”.
FIS Member and Pledge signatory John O’Connell, Managing Director of O’Connell’s Drywall stated:
“By signing the conflict avoidance pledge this demonstrates to our clients and supply chain that that we are committed to sending clear and consistent applications and expect the same in return with payments, this assists regular payments and cashflow and enables us to pay our suppliers on time. This also enables us to build strong ongoing business relationships with our supply chain and clients.By doing this providing consistency to all enables us all to have reduced stress and concentrate on our core businesses.”
by Clair Mooney | 26 Apr, 2024 | Contractual and Legal, Employment
For new workers the Government has announced a number of changes to the Points‐Based Immigration System (PBIS). These seem to be designed to reduce overall net migration and do make it harder for FIS Members to engage overseas workers. The key changes are outlined below.
Workers need to earn more than under the old system
The earning threshold for the Skilled Worker visa has risen from £26,200 to £38,700, as well as raise the Immigration Health Surcharge from £624 to £1,035. The Shortage Occupations List will also be replaced with a new ‘Immigration Salary List’, which retains a general salary discount but includes fewer occupations (plastering and drylining is not on the list, they culled most of the construction workers on the grounds they want to incentivise the industry to do more to recruit and train local people).
Under the PBIS, most workers from outside the UK in construction are required to be ‘skilled workers’ and require a Skilled Worker visa to work in an eligible occupation.
Build UK have produced a helpful flow chart here to show how it now works in terms of gaining sufficient points
Employers need to pay more than under the old system
The Home Office has increased the fees for most types of visas, including the ‘Skilled Worker’ visa used by most workers from outside the UK in construction.
- For those applying for a visa from outside the UK, the fee is £719 for up to three years and £1,420 for more than three years.
- For those already in the UK extending, switching or updating their visa, the fee is £827 for up to three years and £1,500 for more than three years.
- For occupations on the Immigration Salary List (which has replaced the Shortage Occupation List), the fee is £551 for up to three years and £1,084 for more than three years, regardless of whether applying from in or outside the UK.
The fine for employing illegal workers has increase from £15,000 to £45,000 per illegal worker for a first offence and from £20,000 to £60,000 for repeated offences. More on the fees here.
Right to work checks are still important
Depending on the individual, employers have the following options for ensuring they have right to work in the UK: a digital check via a certified Identity Service Provider, an online check via the Home Office online service, or an in‐person manual document‐based check.
FIS is working with Migrate UK to help members navigate the changes. Migrate has produced specialist guidance for FIS Members (including a great webinar hosted for FIS Members: “How to hire skilled workers from the Global Talent Pool”) and the free consultation and discounted services available exclusively to FIS Members through this relationship here.
by Iain McIlwee | 2 Apr, 2024 | Contractual and Legal, Transformation
A new stricter procurement regime is being introduced to support the Government’s 2019 Manifesto commitment to ‘..support start-ups and small businesses via government procurement, and commit to paying them on time…. <and> clamp down on late payment more broadly…’.
The Public Procurement Notice PPN 10/23 comes into force on the 1st April and demands historic payment performance is taken into account when awarding new Central Government contracts with a value in excess of £5 million per annum.
Contracting authorities must verify that the successful bidder meets the selection criterion prior to award of the contract or appointment to a framework agreement or dynamic purchasing system. The criterion is based on:
- Whether the bidder has paid its suppliers in accordance with the contractual terms that it applies to its supply chain; and
- Whether, overall, the bidder has paid its suppliers promptly by:
- paying at least 95% (at least 90% if an action plan is provided) of invoices within 60 days, which is considered an appropriate measure of overall payment promptness, and;
- meeting the average payment days threshold of at least 55 days for all invoices.
Reporting on this requirement will take into account a twelve month period and the bidder must demonstrate that they meet the required standard in at least one of the two previous six month periods – intercompany payments should not be included.
Where the bidder has reported payment data every six months in accordance with the Reporting on Payment Practices and Performance Regulations 2017, the two most recent reports can be submitted. If the bidder has recent data for the previous three or more months which has not yet been reported under the regulations, then this can also be submitted as a reporting period.
Where bidders are not required to publish their data in accordance with the regulations, they should still submit the previous twelve months’ worth of available data in two (six month) periods in line with the Department for Business and Trade Guidance to Reporting Payment Practices and Performance.
The criteria for applying the rules is summarised as:
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Bidder pays ≥95% of all supply chain invoices in 60 days and the bidders average payment days are also ≤55.
Both metrics are hit concurrently in at least one of the previous two six month reporting periods.
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Bidder meets the required standard. |
Pass |
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Bidder pays ≥90% < 95% of all supply chain invoices in 60 days and the bidder’s average payment days are also ≤55.
Both metrics are hit concurrently in at least one of the previous two six month reporting periods.
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Bidder demonstrates action plan that includes (as a minimum) the following:
1. Identification of the primary causes of failure to pay:
(a.) 95% of all supply chain invoices within 60 days; and
(b) (if relevant) all supply chain invoices within agreed terms.
2. Actions to address each of these causes.
3. Regular reporting on progress to the bidder’s audit committee (or equivalent).
4. Plan signed off by a director.
5. Plan published on its website. (This can be a shorter, summary plan) |
Pass |
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Bidder pays ≥90% < 95% of all supply chain invoices in 60 days and the bidder’s average payment days are also ≤55.
Both metrics are hit concurrently in at least one of the previous two six month reporting periods.
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No action plan or action plan does not include all of the above features. |
Fail |
| Bidder pays <90% of all supply chain invoices in 60 days in both of the previous six month reporting periods after removing intercompany payments (if relevant). |
Bidder’s payment performance falls substantially below the required standard. |
Fail |
| Bidder’s average payment days are >55 in both of the previous six month reporting periods after removing intercompany payments (if relevant). |
|
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Exemptions should only be considered:
- where the market for a contract of this type is distorted/narrowed/struggling to such a significant extent that delivery of public services is likely put at risk, or value for money is likely to be severely compromised;
- where there is a civil emergency.
FIS CEO Iain McIlwee commented:
“Whilst this another positive step, we are still talking about lengthy payment periods in an industry where up-front costs have increased substantially in recent years. It is also narrow in application, the requirement to comply with this notice only binds Central Government Departments, their Executive Agencies and Non Departmental Public Bodies where the contract value exceeds £5 million. It does not apply to NHS trusts, local or devolved authorities and there is also a fair bit of wiggle room provided in the exemptions. All this means in real terms the impact will limited for the vast majority of those working in the finishes and interiors sector. That said it is further recognition of the importance of an issue which remains a cancer at the core of construction and our hope is that as procuring authorities look to the new Regulatory Requirements and concerns about the resilience of the supply chain that they look to exceed the expectation set down in this PPN.
With increased Government support it is more important than ever that we call-out poor practice. If you have payment concerns FIS is able to take these foward anonymously both directly and working with the Small Business Commission (who has sanctions via the Prompt Payment Code). Through FIS you also have access to QS, Legal and specialist credit checking services that can help to expedite payment – nothing changes if we do or say nothing and we will always look to act in your best interests”.
A full copy of the PPN is available here
by Oscar Venus | 15 Mar, 2024 | Contractual and Legal
Director of Building Safety for HSE, Philip White, has today written to the Building Control industry outlining new transitional arrangements for the registration of building control inspectors in England.
The Building Safety Regulator has listened to the concerns raised by the profession, including the potential impact on the construction industry if there are not enough inspectors registered to practice by the legal deadline.
It is crucial these concerns are balanced with the requirement for BSR to implement the Building Safety Act, 2022 and the need to raise standards in the profession; it is also important to remember that these changes were introduced in the wake of the Grenfell Tower tragedy.
A competence assessment extension period of 13 weeks will be introduced from 6 April to 6 July 2024 to enable those who meet specific criteria to continue to operate. This is not an opportunity to delay completing registration as an RBI and there will be no extension to these arrangements.
BSR has seen a positive response to the changes among the profession and it is encouraging to see a large number of people already engaging with the process. As of today (14 March) 3,261 professionals have started their applications to register.
In line with BSR’s enforcement policy statement and the principles of proportionate regulation, BSR will target its regulatory activity at those who present the greatest risk, particularly those who are not engaging with the new regulatory regime.
Open letter to Building Control professionals – March 24
Letter from the Director of Building Safety to industry:
Dear colleague,
As you will be aware, a number of concerns have been expressed by the building control profession about whether enough building control professionals will be registered as RBIs by 6 April.
I understand those concerns and have been working with colleagues in BSR and across government to consider what we can do to support the profession. To that end, the decision has been taken to implement a competence assessment extension period for those meeting set criteria.
Professionals who are not registered by 6 April will not benefit from the extension period and will not be able to continue to work on regulated building control activities.
Experienced building control professionals who are not trainees but have not yet completed a competence assessment will have the scope of their registration temporarily extended provided they meet the following criteria:
Temporary Class 1 Registration Extension Criteria:
- They are an existing building control professional;
- They are registered as a Class 1 RBI by 6 April 2024;
- They are enrolled in, and in the process of having their competency assessed through, one of the BSR approved competency assessment schemes by 6 April 2024. These are: cbuilde.com, www.thebscf.org, www.ttd-education.org; and
- A scheme provider has not told them that they have not passed their competency assessment for a second time
Those who meet the above criteria will be allowed a period of 13 weeks from 6 April 2024 to 6 July 2024 to complete their competency assessment and upgrade their registration to Class 2 or 3 (and 4, if applicable).
During this period, the scope of their registration will be temporarily extended, and they can continue to undertake building control work for the class of RBI for which they are undertaking a competency assessment.
Those who meet the criteria but do not successfully complete a competency assessment and upgrade their registration class by 6 July will not be able to continue to undertake regulated building control activities.
More detail on the transitional arrangements can be found here: https://www.hse.gov.uk/building-safety/building-control/codes-standards.htm
This must not be seen as an opportunity to delay – there will be no extension to these arrangements. From 6 July 2024 any professionals who have not completed a competency assessment and upgraded their registration class will only be able to undertake work under supervision.
We expect employers to support staff going through the assessment process by ensuring they have time to complete the assessment process and providing assistance and support to help them to succeed.
I encourage everyone who has not yet done so to register with BSR and enrol with one of the competency assessment schemes as soon as possible.
Philip White
Director of Building Safety, HSE
by Clair Mooney | 21 Feb, 2024 | Contractual and Legal, Lens Blog, Main News Feed
FIS Consultant Len Bunton shares his thoughts on why businesses should learn to say, No.
Len’s message is that businesses should not accept onerous contract clauses that increase risk, extended payment periods, or contra charges to name a few.
In this blog, Len has set down a list of things that businesses in thge sector should be saying no to.
Adopting some of the statements should help you to manage the commercial aspects of projects much more efficiently and profitably. In my experience there are plenty of good employers and contractors out there who will look after you and who have long-term building programmes, and who will value your input, and who will want you to help them build successful projects on cost, on time and to a high quality.
Be selective of who you work for, and find out which organisations have long-term building programmmes, with whom you can build a successful relationship.
Len Bunton, Bunton Consulting
These monthly Blogs are designed to help FIS Members avoid common traps and build on our focus on collective experience. They share ideas about improving the commercial management of your contracts. In other words, instilling best practice into the way FIS members run and manage their business. What I have endeavored to suggest is ways to ensure you get paid on time, and what you are due.
