Thursday, October 21, 2010

What do statistics tell us?

The BCIPA (Qld) has just released its 2009 - 2010 adjudication statistics.  They make interesting reading, but what do they mean?

68% of claimants are subcontractors and a whopping 85% of respondents are contractors or head contractors.

Contractors, even the biggest, are just are not getting it.  The Payments Act is designed to improve payment processes and reduce disputes.  It is high time the industry took its focus off disputes and made a real attempt to "get it right".

16% of Claimants are contractors, but only 5% of respondents are clients.  It indicates that most disputes are inside the industry - contractor to contractor.

The average claim was $253,000 and the average decision was $232,000, indicating that, on average, claims were over 90% successful.  This is an amazing statistic and indicates very clearly that contractors are failing badly with contract and payment management processes.  The industry must engage properly with the Act as a business-as-usual practice if these statistics are to improve.

Consultants (11%) and suppliers (5%) are starting to use the Act to collect disputed payments.  Suppliers are still largely unaware of their rights under the Act and are mostly tied to accounting systems that are not conducive to making the Act part of their business practice.

999 applications were lodged in the year, a rise of around 100 over the previous year, indicating more awareness and a willingness to use the Act to recover debt.  The total value of claims was $224 million, consistent with last year.

The largest claim was double the previous year, at $32.7 million.

Small claims did well, with 82.4% of claims up to $5,000 awarded in full.  From experience, we would say this is largely due to very poor contract / payment management on the part of contractors.

Claims over $500,000 were less successful
with 9.4% paid in full, indicating that respondents are much more prepared to fight off a large claim.

You can significantly improve your chance of succeeding by using proper , complying processes for contract and payment management.  Thepowertool empowers everyone in your organisation to contribute to securing your entitlement to payment.

Wednesday, October 20, 2010

Your production (site) workers are your eyes and ears

Did anyone see Domino Pizza ceo, Don Meij, on Undercover Boss, Australia? If not, it's worth re-capping. Meij demonstrated a highly effective, but not always used, management strategy. He understands that the role of management is to support people at the workface, the ONLY people in the company actually generating revenue and interacting with customers all the time. By empowering and supporting the people on the ground, he knows that the company will thrive through their commitment and skill.

Many of us think of management as a pyramid, with the ceo at the top, being supported by the workers. It's an easy trap to fall into from the top floor of head office. Good management is better seen as an inverted pyramid, with the ceo at the bottom, supporting production teams with systems and resources to do their job efficiently and effectively.
Construction workers (trades and labour) can be cast in a very one-dimensional role,  performing electrical, plumbing, tiling, carpentry etc. It is a risky view for a business. Your workers at site are your eyes and ears. They know exactly what is happening and where your money is going. Management can ignore the richest source of job intelligence and attempt to stay informed by other means that are costly and ineffective. Trickle-up information flows are too slow in modern contracting environments. You can lose a payment entitlement in a week.  The alternative is to support and empower site workers to gather and report site intelligence as it happens.
Production workers can be empowered by instructing them on, and giving them responsibility for, reporting on contract management issues as they arise. This includes delays, variations, defects, coordination, WH&S, deliveries and a host of other issues.
With onerous time frames imposed by modern subcontracts, subcontractors can not afford to lose half a day waiting for business information from site. Providing for production workers to deliver "task-ready" advice from site is simple, efficient and cost-effective using tools like thepowertool mobile Site Diary.

Thursday, October 7, 2010

What's happening?

Been away from the desk for a bit, but good and interesting things keep happening.

Last week we were delighted that thepowertool was granted an Australian Innovation Patent over its software systems and processes.  We knew we were special, but it's nice to have it confirmed.  Also comforting to have our software process protected, especially our new mobile Site Diary app, which is now more valuable than ever after the "Chase v Hamo"case in NSW reinforced the need to be right on top of your payment process.

iPhone and iPad applications are exploding in the construction industry as people start to leverage the benefits of working at site.  Check out the very interesting discussion on iPad applications at the Linkedin Group Linking Construction.  (You may have to register to see the discussion, but its worth it).  Here's my 2 cents worth - "We need to consider what data must be gathered at, and disseminated to, the field and how to effectively interface the gathered intelligence with management and technical systems.  There is a temptation to adopt technology just because it can.....  After 30 years in practice, we know that one of the primary inhibitors to preserving contractual entitlement, and subsequent payment, is the failure to gather information and intelligence (directions, variations, delay and disruption, acceptance of sub-bases, deliveries etc.,) as it occurs and pass the data in a timely manner to management for appropriate action.  It is especially important with tight contractual notice provisions. iPhone app (patented) allows site personnel to record site data by note, voice, photo, mark up or sketch and pass it to management for action, with due dates.  It feeds the data into a payment claim system that complies with Australian, New Zealand and some Asian security of payment legislation, thus preserving contractual entitlement".  Thepowertool is driving new thinking about the way site intelligence is gathered and used to leverage your contract management effectiveness and protect your contractual entitlements.

One last thing - a recent NSW Supreme Court case has reinforced the importance of making sure that your payment process is spot-on with timings and complying with the Act.  Essentially, from now on, if you want the protection of the Payments Act you must get the process right.  An adjudicator can't help you if you get it wrong.  Read more about this case here >>;

To help out in our local area we have started the Gold Coast Sub-contractors Meetup Group. This is a NEW informal meeting and discussion group for the construction industry on the Gold Coast to discuss business trends in the industry.

The objective of this group is to discuss and discover the best practices being used to run a construction business. Whats out there, whats good and whats not.  if you would like to join the group, please feel free to register on Facebook to get an invitation.  The first meetup is at the Parkwood Tavern on Tuesday 19th October 2010 at 4:30 pm.

You MUST get the process right in order to protect your entitlement

A recent Supreme Court case in NSW (Chase Oyster Bar (Chase) v Hamo Industries (Hamo) [2010] NSWCA 1) has made it clear that parties to an adjudication must get the payment process right if they are to take advantage of the protection that Security of Payments Acts in Australia offer contractors and subcontractors.  The Courts can now overturn an adjudication decision if the timings for payment claims, payment schedules, notices, applications and responses are not correct. 

Re-starting the process is costly, time-consuming and uncertain.  It always happens at the worst possible time, when you need it most.  Thepowertool can help you to manage your payment process and make sure you do not miss your timings.

If you would like a more detailed examination of this case you can read it here >>;