Sonia has acted for individuals, small businesses, publicly listed companies, property developers, builders, head contractors and sub-contractors, providing advice on all levels of complexity concerning project planning and contract development through to project completion, maintenance and management.

 Whether you’re a developer, principal builder on a large project or a sub-contractor on a building site, your business will face commercial risks during the works. These risks are typically present in 5 areas:

1. Payment of progress claims;

2. Timing of the works and extension of time claims;

3. Quality of the works;

4. Whether works performed can be claimed as variations (especially in the context of lump sum contracts); and

5. The application of liquidated damages.

 Managing these risks begins when you tender for the work.

 Tendering Stage/Precontractual Negotiations

 At the tendering stage or during any precontractual negotiations, you should have the proposed contract terms reviewed to understand what risks are being allocated to your business by that contract, and how those risks could be reduced and/or managed.

 Sonia can assist you, by:

• providing risk assessment and strategic advice regarding the proposed contract terms.

• negotiating (where possible) amendments to the proposed contract terms.

• drafting sub-contract agreements between your business and any subcontractors.

Performing the work

 Once the work begins, disputes will generally arise in relation to:

• claims for payment.

• timing of the works and extension of time claims.

• quality of the works.

• whether works performed can be claimed as variations (especially in the context of lump sum contracts).

• the application of liquidated damages.

 These disputes will invariably affect your business’ cashflow. No matter how big or how small your business is, payment is critical to maintain cash flow, liquidity and solvency.

 The inability to recover payment for work performed or delays and disruption to the works caused by others on site in a timely and cost-effective manner, can often mean the difference between your business surviving or having to close its doors.

Adjudication - Rapid recovery of disputed payments

 The Building and Construction Industry (Security of Payment) Act 2021 (formerly the WA Construction Contracts Act 2004) (the ‘Act’) creates a statutory resolution process (known as an adjudication) that allows a party who believes they are owed money under a construction contract (the applicant) to submit the payment dispute for rapid adjudication under the Act.

The broad purpose of the Act, insofar as it relates to payment disputes, is to ensure that, in construction contracts, progress claims are paid on time and that principals obliged to pay do not act as their own judge and jury and hold up payment on their own assertion that they have a defence warranting refusal to pay … It is a 'pay now, argue later' system, with the primary aim of keeping the money flowing by enforcing timely payment … If a payment dispute arises, then the Act provides for a system of rapid and summary adjudication which is conducted without any oral hearing. If the adjudicator, having received written submissions, makes a determination that the payment has to be made, then that determination gives rise to a debt 'presently due' and payable by the principal.

Click here for further information about the Act.

 Sonia can assist you to understand this process as well as act on your behalf in relation to the preparation or defence of adjudication applications.

Defects Liability Period/Release of Retentions

 Retentions are held as security in case a contractor or subcontractor’s business collapses during construction or they fail to fix defects during the Defects Liability Period (DLP).

 Retentions are typically held by the principal against the head contractor and by the head contractor against subcontractors, usually for 5 per cent of the contract value. The retention funds are usually deducted at the rate of 10 per cent of each progress claim until 5 per cent of the contract value has been reached. They are usually held in the form of cash but could also be a bank guarantee or insurance policy.

 At practical completion, half of the retention (usually 2.5 per cent of the contract value) is released. The balance should be paid out at the end of the DLP, providing any defects have been fixed. This can typically take between six months and a year.

 Many contracts have a limitation period in which the retention can be claimed. If you are not careful to stay on top of timelines you could lose a percentage of your contract value, which could affect your profitability on a contract.

 Retentions can add up to a significant amount of money and have an adverse effect on your cash flow, especially where you are running multiple projects.

 Sonia can provide you with advice and assistance to recover any retentions owing to you.