Don’t Expect Payment, if You Don’t Expect Payment 2

By
Wednesday, October 22nd, 2014
liked this article
Embed
Allegion – 300 x 250 (expire Feb 28)
advertisement
contract
FavoriteLoadingsave article

Before you try to work out what I mean by that title, I shall explain.

There is a lot to be said about your mental approach to payment issues. The call I got last week was a perfect example. A contractor was telling me how he had been underpaid by about $80,000, and then finished the sentence with “Oh well…. In guess you do your doe most of the time…that’s the way it is.”

That kind of statement says a lot about what is going on in the contractor’s mind, what his expectations are, and how that translates into how the business is doing, and those expectations have been supported by years of losing money.

As we know, a person will start to believe that some outcomes are inevitable if they see those outcomes often enough. In this way, many contractors are “conditioned’ to expect to lose money, and that this is the natural order of things. Worst of all, they feel there is nothing they can do about it. Under this lies the assumption that the client always has all the power and the best thing to do about debt it to walk away from it… quietly.

The bottom line is that this guy simply expected not to be paid, and therefore, he often wasn’t.

Here are a few thoughts to help break that mode of thinking:

  1. If you enter a contract for an agreed price, you are fully entitled the entire amount agreed, after accounting for variations, credits, and rectifications.
  2. The value of variation work is either agreed at the start, or agreed afterward, or else valued in accordance with reasonable rates and values. It is not worth whatever your client thinks it is worth.
  3. You don’t have to be held to ransom on the final payment, or ever.
  4. You are entitled to your retention payments in full and on time.
  5. If your client does not follow the contract process for approving variations, then don’t do them!
  6. Your client cannot be in constant breach of the contract while at the same time insisting you stick to every paragraph and subclause. This is especially true in scenarios where you have not been paid for two months but the client insists you must keep working so as not to be in breach of your contract. They are in breach of the contract for not paying you!
  7. If you don’t get satisfaction or are being treated unfairly, then have the matter adjudicated under Security of Payment or else heard in an appropriate Tribunal or court.
  8. If your contract has a dispute resolution clause, use it!

It is often the case that your clients are as conditioned as you are. They are so used to contractors simply copping a loss and walking away, that the minute you actually do something about it they don’t know how to deal with it. Their resistance collapses in a heap.

On many occasions when we have recovered money for contractors, they simply cannot believe it because it runs counter to their entire belief system. They cannot believe they actually did something about not getting paid. They cannot believe they can wield some power in the dispute. They cannot believe they got a hearing by an independent party, and they cannot believe it when they win. And last of all they cannot believe it when that payment actually winds up in their account. These contractors are forever changed. When I look in on them later on they are totally different people and have taken some control of their payment issues.

Take some time to absorb the list above, then start to change your expectations about payments, and think about whether you are prepared to do something about them next time.

There are many quotes by successful people that are along the lines of “You Get What You Expect to Get.” This is so true in relation to payment.

Embed
FavoriteLoadingsave article

Comments

 characters available
*Please refer to our comment policy before submitting
Discussions
2
  1. Fiona

    Awesome article!

  2. David Chandler

    Anthony in the current bargaining environment in Australian construction what you say is not that easy. Australian's construction clients and contractors pay for the dysfunctional procurement and transaction terms that would not be acceptable in any other industry. Construction procurement practice in Australia needs a logic and cultural revolution. The first step should be to make "bid shopping" illegal on all contracts over $1.0m. I have seen this implemented with great effect. Sub-contractors only give bids to a few worthy constructors who respect their input in both bid and delivery phases. Getting paid is fundamental. The client gets more innovative and cohesive bids. Construction cost and time goes down. T