Many – and probably most – claims involve some kind of quote that forms the contact between the parties.
This means the contractor has created a quote document and sent it to the client who has accepted it. But it's amazing how little contractors are often putting in these quotes. After all, they are in the position to create all the terms and conditions for the deal, but in the end there are mostly only two things in the quote: a price and a scope of works.
So why not include the other great stuff that can improve your quote if there is a payment dispute? Things such as:
This is almost never in any quote, and yet it is the most important thing. How long are you giving the client to pay after they get your claim? I’d offer nothing more than 30 days and you ought to try on 14 days as often as possible. Remember, you need more than simply a period of time. You need to reference it from when it runs. So instead of stating payment terms as ’30 days’ why not say ’30 days from receipt of the invoice/claim.’ That is far better as it anchors the term with a starting point.
There will inevitably be additional work, so set out some decent terms to address them. You might say that they can be directed orally, or in writing including email. You should also state that in the absence of an agreed price, a ‘reasonable’ amount will be payable for variation work. Or you can say that you are not required to commence any variation work until it is authorised in writing. Be thorough and include all that you need here.
If you carry out daywork or variations, you may state that they will be valued using hourly rates for various activities, and you could probably guess what those activities are. Set them out now in the quote so there is no argument about what is owed for these works.
Ceasing and suspending work
You can also set out the conditions under which you might suspend work. These might be for non-payment of claims, lack of access, safety concerns and the like. This is a big move, so it pays to have clear terms under which you might stop or suspend your work. You could simply say that work may be suspended under the Security of Payment Act, which means you can suspend if your claim is not answered with a payment schedule, you are not paid a scheduled amount, or you are not paid an adjudicated amount.
It is likely you will be paid late, so include an interest rate you can use. It is important not to make these too high as a court can decide they are unconscionable and unclaimable. A good rate to use is simply the Supreme Court rate on judgment debt in your state. At the moment these are around 9.75 per cent per annum. If it’s good enough for the Supreme Court, it’s good enough for you!
There are always arguments about what plans you allowed for in your quote, so list them in the quote! This means that if you are quoting on Revision C, then any works that are additional that arise out of Revision F will be a variation. Too often, quotes include vague statements such as ‘As per Drawings.’ That is not good enough. What drawings? Nail it down in your quote.
These are just a few ideas, but if you spend some time listing all the scenarios under which you lost money last year you’ll be sure to come up with other terms you can include in your quote to better protect the value of your work and your ability to claim for it in full.