What builders do to subcontractors (from the guy who did it)
For four years I administered subcontracts from the builder's side. These are the five moves that took margin off subcontractors, how each one works, and the one sentence that beats it: the levelling call, the hero clause, the time bar, the certificate and month end.
Transcript
For 4 years, my job was to take money off subcontractors. Illegally. Not even dishonestly. That was the job. Contracts administrator, builderside. Hundreds of subcontracts, and every one of them had the same 5 moves in it. Going to show you all 5, it works, and the one sentence that beats it. Because every move in this playbook only works on a subbie who doesn't know it exists. Move one happens before you've signed anything.
Send your quote. It goes into a spreadsheet with four others. Yours is the cheapest, or close to it. So you get a phone call. You're in the mix, just need to confirm everything's included. And you say yes. You want the job, and it sounds like confirming, not negotiating. Every yes on that call is a line item you just gave away for free. Watched $20,000 of exclusions disappear in a four minute phone call.
The sentence that beats it: Anything not in the written quote is a variation, and I'll confirm that by email. That. Move two is liquidated damages. $1,500 a day. $3,000. $15,000 for a big job. Every day the works are late. The move. In our Index of real Australian subcontracts, 85% of liquidated damages clauses have no cap. None. Six weeks late, on someone else's delay, and your whole margin is gone and you're paying money on top.
Of that. Nobody asks for a cap. Nobody gets one. The sentence: LDs capped at 5% of the subcontract sum. I signed off on that cap for every subbie who asked. Which was almost none of them. Three is the one that does the real damage. Changes on site. Work, a delay, a redesign. Do it, because the super asks and you're a good operator. Sort out the paperwork later.
Contract says: notify within five business days or the claim is gone reduced. Of time bars in our Index work this way. Every single one of my side of the desk, a late notice was the easiest rejection I ever wrote. One Claim is out of time under clause 46.5. No argument about the work. No argument about the money. Just the date. Here's the sentence, for you to use, sent the same day:: Notice of variation.
Directed by John Smith, for example, on this date. Details to follow. Five minutes. The price can come later. The date can't. Four comes back in the You claim $84,000. The payment schedule, it comes back at $71,000. Explanation. One line: charges. 97% of subcontracts we've analysed let the builder set off based on reasonable belief. Notice. No proof. Job. And is the move inside the move. Subbies don't query it.
Assume there's a reason, and they don't want to fight, so they decide to make it up on the next claim. They never make it up. And I know, I'm the one who never put it same day: identify the clause, the notice and the records for deduction. The time, the deduction shrinks before anyone replies. Move five isn't in the contract. It's the builder's cash flow. The end of every month there's a list of claims there's an amount of money, the amount of money is smaller than the list.
So someone decides who gets paid. Ones above the line are the ones who will cause a problem if they're not paid. The ones who followed up in writing. Ones who know the Act. The ones who asked about retention last month. Ones below the line the nice ones. The sentence: for you to use. Isn't one. It's a habit. Claim on the reference date, up in riding on the due date, month, from claim one.
Builders learn who you are in the first 30 days. So teach them. So that's it, the five moves. The levelling call, the hero clause, the time bar, the certificate, oh, and the end of None of them illegal. All of them standard. Now you know. In my next video, I'm going to be covering why so many Australian builders go broke, and why the subbies pay for it. If you want to see which of these five moves are sitting in your contract right now, a free scanner in the link below.
Takes no account. It's free it takes 90 seconds
General information about Australian subcontracts, not legal advice. Get advice on your own contract and facts.