If you have been through it, you can understand the feeling of despair and misery when a builder who has made you empty promises, liquidates owing you a substantial amount of money.
Fighting for subbies rights
The idea is to minimise the damage any one builder can cause to your business.
Rather than just head down, arse up working your guts out for them, you also have to be pro active in making sure you get paid for you hard work.
The biggest thing that can STOP the damage is Project Bank Accounts for security of payment but that is a while away.
Here is a link to the Department of Finances Project Bank Account videos.
There are a number of safeguard you can put in place including Debtor Insurance, register them on the PPSR scheme and if things turn sour, a Subcontractors Charge but the things I find most effective are:
- Keep your ears and eyes wide open when on site
- Talk to other subbies in regard to timeliness of their payments
- Always trust your gut feel.
Before a builder liquidates there are always telltale signs. If you are a member of this site, read some of the stories in the members forum about CMS Building and Design, Bluestone and others, the signs are there and it's always the same excuses given for non payment.
Some of those excuses or signs are:
- First and foremost, if a builder is building his own unit development, run a mile, keep running as fast as you can and do not look back! The last 3 builder liquidations, Cullen Group, CMS Building & Design and Bluestone Constructions all have something in common. The builder was building their own unit complexes or in the case of Bluestone, a complex for related entities (daddy's business, the permanently excluded person.
- A new project manager appears on site. This is often a sign that the previous manager had a good working relationship with his subbies and cannot stand by and see them ripped off. Always contact the previous manager and ask him why he left because they will see the signs across the board before you do. You will only see them from your perspective.
- A new subcontractor (let's say a plumber) takes over from the previous company. This is an obvious one, the previous plumber may not have been paid so it's quite simple to replace him and not pay the last company the 300k he is owed.
- The project is falling behind it's program. Another clear sign that subbies are not being paid and have stopped work.
- And of course the big one, slow or no payments for your claims. When our first payment was due from Cullen, we called them and they couldn't give us a date.
- Builder tells you he is expecting a large claim from another job and will pay you out of that. If they are robbing Peter to pay Paul, it's time to get out. This is exactly what Cullen told me.
- They will use extremely large numbers to impress you who they think is just a dumb subbie.
- If the client is not happy, then there is a problem so if you know the client, talk to him.
Builders approaching liquidation are extremely slippery. Many of them will have already set up their illegal Phoenix operations. We have evidence of that in many builder liquidations we have worked on for unpaid subbies.
In the case of Cullen Group, the QBCC put out a public warning about Onpoint Construction Pty Ltd.
We had debtor insurance for Cullen that we have not claimed because the first time they were late, we issued them with a breach of contract notice. We then stalled the work to minimise any financial damage they could cause our company.
Vigilance is the key and when you hear something, it is probably true so act then before it's too late and always trust your gut instinct.