Today’s video is about how a subcontractor lost millions and the Lessons Learned from a Subcontractor’s Nightmare, watch it by clicking here or continue with this quick read.
A few years ago there was a civil construction company that came to us for help.
- During the project, they were doing a great job.
- They had an opposing project manager who they formed a great relationship with.
- As the project progressed they were asked to do additional and varied work.
- This meant delays and changes to scope.
Their opposing project manager said that he was aware of the delays and additional work but asked them not to submit the necessary contractual paperwork such as change orders, extensions of time, etc. for each individual thing. Instead, he asked the civil construction company to bundle them all up together.
The company agreed.
They put everything together in one big claim.
Ordinarily, something like this doesn’t get approved. However, in this case, the project manager kept his word and approved the document.
The company then claimed for everything and got paid the whole amount which was over a million $.
As the project was wrapping up the project manager left.
They brought out a close-out team.
The close-out team sent a letter to the company reminding them that the contract had a clause stating “payment on account”.
They followed this by saying because of this clause they were in the process of reviewing their variations.
They found that the variations didn’t comply with the contract and we approved in error.
So basically they’re rejecting the claim and basically were asking for the claim money back.
What can we learn from this?
- Even if you do a great job on-site, if you don’t comply 100% with the project you will land up in trouble.
- Even if the project manager advises you that it’s OK not to comply, YOU SHOULD ALWAYS COMPLY with the contract.
- Corporate governance trumps relationships.
- Systems within corporate governance are all about hard yeses and hard nos around compliance.
- NEVER EVER FORGET ABOUT THE CONTRACT. YOU HAVE TO DELIVER CONTRACTUALLY.
We want you to be the MOST SUCCESSFUL you can possibly be. That’s why we put together content with tips and advice that is tried and tested.
For more contractual advice, Quantum Contract Solutions is here to guide and assist you through everything contract related. Let’s reduce risk in your contracts and save time and money, just click this link to get our FREE case study to show you how clients just like you are doing it.
