Michelle Cirson (00:01)
Welcome back to the Subbies' toolbox podcast. ⁓ Continuing on from last week's podcast about our business risk checklist. So we do have a download available for you to download the business risk checklist. I wish I'd called it something easier to say, but let's go with that ⁓ and have a look at the checklist and triage and rank by importance. The things that you think you could bite size implement in your business.
to be able to reduce the likelihood that you end up in strife. Now, just to double back on why this is such a big deal. Subcontractors, when things go bad, don't get paid. That is our lot in life. It is the one thing that builders know how to do well, is that when things go pear shaped, they know how to short pay us, backcharge us, delay payment, take retention. Basically, they're one trick ponies in that regard. And there are a lot of...
Builders lawyers who say all the time, better to have a gun and not need one than to need one and not have one. And to that, I'm always saying to them, if all you've got is a gun, then every problem is a blood bath. I don't mean to be mic drop about that or completely over the top, but it genuinely is the way that it works. never, there never seems to be any kind of middle ground in terms of.
finding a solution on site rather than just enforcing the solution on paper. And at start of these projects, builders' lawyers are engaged to make sure the contractor faults in the favour of the builder. So it's our job as subcontractors to really manage up. We have to manage up in building contracts because the way that builders and principals and banks manage down is just to pass the liability down to subcontractors and hope that
They have the money to sue them for if things go pear shaped. So ⁓ part of the purpose of this podcast is giving you the tools to be able to manage up and have actual practical solutions to be able to deliver on the crazy promises you have to make under building contracts. Or if you can't deliver on them ways to mitigate the risk if things go wrong. So ⁓ your ability to articulate to your builder,
The reason that the nasty clause in their contract is not going to get them the outcome that they need. If that situation occurred is one of your greatest assets. If you can intimately understand what the builder needs to achieve and why the way the contract defaults won't actually give them a bird in the hand. There's a good chance that you will not only be able to talk the builder out of having those nasty contract terms in the first place, but also you're going to earn their respect because they're going to think
This person's actually thought about this and has already either put in place or has a plan for how this would be resolved if this went wrong. So to circle back to what today's episode is about, I want to talk about quality and ITPs. So on our business risk checklist, this is one of the things that you might look at and just go, look, this is just paperwork. This is ITPs, ⁓ so much work, so much paperwork.
You know, it's all a lip service. Does anyone ever really check it? Well, I want to tell you a couple of stories about how ITPs would have saved our Subbies' Toolbox members hundreds of thousands of dollars. And that is of no exaggeration whatsoever. So the first way that ITPs and guys, I want to be ⁓ really clear about what an ITP is to I know many of you probably already know, ⁓ but an ITP is called an inspection test plan.
⁓ and it is a form that is used to audit your quality on site once a particular task is complete or where something's been delivered and installed. So you would use ITPs to prove to the builder that you've built something in accordance with Australian standard. There could be times when you are doing some kind of structural work where there needs to be a hold point for the builder's engineer to come and do an inspection.
and your ITP will effectively be the form that records whether or not that inspection was done. The sign off from the engineer who was on site that day who came to check to say, that footing was poured correctly. Here's the signature. ⁓ But your ITPs, I genuinely believe, are one of your biggest assets. Now, this goes back to some of my very first projects in construction where I worked with a female engineer who's
husband was also an engineer. ⁓ Her entire life was the construction industry. She worked in construction her entire career. And she was one of the best photo takers and record keepers that I've ever come across in my entire career. In fact, she would be the holy grail of the best person to be able to roll out as a witness in court to prove any number of things. And it's not the case that she just walked around taking photos for the sake of photos.
She was very specific in particular about what photos she took where and how she positioned those photos so that it was easy to see based on the photo itself, precisely what the evidence was capturing. So for example, you might have a whole lot of reinforcing steel and she would use a little card or a date or a newspaper or something to be able to record when that photo was taken. And then she would always that same day,
come back from site with her camera, sit at the computer and plug it in. And so all of her photos were uploaded in real time, which was the best possible type of evidence we like to get as lawyers, which is what we call contemporaneous evidence. The reason it's so powerful is because you don't know at that time anything is going to go pear shaped. So if you can prove to the court, well, here's a photo I took that afternoon.
and uploaded to my computer. Here's the metadata showing that I uploaded it to my computer that afternoon. It's very convincing evidence. It doesn't look like, I just got this day docket and I knew that I wasn't going be paid. So I filled them all out at the end of the job and then scan them to the builder in one big go. So I digress, but ITPs are your powerful tool in terms of being able to
evidence of the work you do, the quality of the work you do, that the work that you did was complete and nobody had yet damaged your work, the quantity of materials that you might have delivered to site, any tests that were performed on the work that you did. And ITPs really do get a bad rap. People, a lot of our clients roll their eyes when we talk about ITPs, but they're one of my favourite tools.
for the ways in which you can ⁓ capture and prove to the builder, no, I was complete that unit on the day that I gave my progress claim. See, here's my ITP. It's proven that the site manager came through that unit with me and signed off on those walls or that mechanical vent was installed because here's the photo of it that we took on that day. And those are the tools and the bits of evidence that we need to get you paid if your builder does not pay. ⁓
Couple of war stories to convince you into using ITPs, which I would dearly love if you would start doing that. But the first one relates to a fencing subcontractor that we helped a few years ago. They had delivered hundreds of thousands of dollars worth of fence posts to a site. shortly thereafter, there was a bit of a dispute. And two sides to every story, there was a bit of a dispute.
But the contractor in that instance terminated this subcontractor for convenience. Now they had just delivered hundreds of thousands of dollars worth of material, but they didn't have evidence of what they delivered to site. And the contractor just denied that it had been delivered. Now this material was able to be seen from satellite footage, but obviously it wasn't good enough quality.
that you could prove the number of posts or the value of the material. So it wasn't persuasive enough to be able to conclusively say those were our posts, we delivered them, we're entitled to pay for them. Now in Australia where we have security of payment laws, there are special rules around getting paid for unfixed goods and title does need to pass to the person who's paying the bill if you don't have the right to claim for unfixed goods under your construction contract. So there was some legal arguments that went through the mix.
of that adjudication, but ultimately the adjudicator said that because they could not be convinced of the quantity of materials that had been delivered, the subcontractor was not entitled to be paid. So there's a very good example of where everything could be fine at the start of a project. You go and load out 27 floors worth of plasterboard and everybody's happy. And then next week the builder gets terminated for convenience.
So this is moving now into my second war story where there was a case last year where a plasterer had in fact done that very thing. They loaded out a apartment building with plasterboard and the builder got in a fight with the principal and the principal terminated the builder under the head contract. As a result of that, the builder terminated the subcontractor out of the subcontract and the subcontractor then had to try to get paid for payment for unfixed goods.
Now, the builder in that instance was using Procore and if you're familiar with Procore you might be aware of the function where they can use the camera on the hard hat and they can go and they can take very good evidence and effectively do a survey of the site with coordinates of where everything ⁓ is to be able to prove what is in place at a particular point in time. Most subcontractors can't afford or
don't have the software sophistication to be able to do things like that. So you would be relying on your ITPs. And unfortunately, if the subcontractor is relying on delivery dockets or some kind of evidence from a supplier that materials were delivered to site, it's very difficult to be able to prove that those materials were in fact delivered to site. So the standard of evidence that you need to get yourself paid can be easily captured.
in ITPs. Now another good example we have a subcontractor at the moment that's doing a window refurbishment project on a historical building and his scope involves actually having to replace sections of timber on vintage windows and he says to me well how am I going to capture these things on ITPs they all look the same and I'm like yeah really good question let's create some little custom cards that you can just get your
get your worker to put in the inside of the frame of the window so that you have these things sequentially numbered. And if you do that and you do it in a systematic approach, your metadata on your camera will show that 45 minutes prior there was the photo of the number before and then here we are at the next window and then here we are at the next window. So it doesn't have to be a work of art. It can actually be, keep it simple.
and short is effectively the best KISS principle I can think of. Keep it simple and short when it comes to ITPs, but make sure that you do have a document that supports the way that you do your work on site. Now, if you are needing an ITP template, you can email questions at subbeastillbox.com.au and I will be happy to give you one.
⁓ I would just dearly love that subcontractors everywhere started religiously using ITPs to capture evidence of the work that they did. Now I do want to double down on this and point out how ITPs can backfire if you do not do them accurately. Now a couple of years ago we had a subcontractor who had done some ground works and they had been testing anchors as they went through the project.
and their operator had been putting weight load on the anchors to stress test them. Now guys, I'm not an engineer, so please excuse me if I've got the terminology a bit skew if here, but those anchors had to be under load for something like 16 minutes and their worker on site had done every single test for every single anchor that was shown on the drawings and the subcontractor was happy, he thought
this is great, we've done a good job. And then it came to light that there were three anchors in the corner of the building pad that had not been installed because of access issues. So was something in the way and those three anchors could not be installed. Now there was an issue with deflection of part of the foundation and the builder came back and pointed the finger at the subcontractor.
Now there was geotechnical issues. There's always multiple aspects that come into play with these types of disputes. But our subcontractor was adamant that no, we've got test results for all the anchors. And the builder's lawyer said, well, that's great, but you didn't install those three in the corner. So how, how is it possible that you've got a test result for every single anchor when you don't have, not all the anchors have actually been installed. Perfect example of where if you have a systematic approach,
and your staff are treating it like a lip service or not taking it seriously, that's where your own evidence could bring you undone. Because what happened then was it cast a question over, well, are any of these records true? Have they all been fabricated? And then we have to look back to what real evidence, first class evidence do we have that those tests were done in real time? And that's where I'm talking about, like with the window subcontractor, having the time.
those photos taken and where those workers were working but when it comes to something like stressing anchors taking a little video of the starting time the middle time and then the finish time alongside those anchors can keep your ground staff accountable so that they're not just fabricating evidence for you so that they can pass go and collect their $200 so it's not lost on me that it is very difficult to
actually trust and allow others to go to site to do building work on your behalf. ⁓ Scary enough for me as a lawyer having a paralegal and letting them do something like post a letter, let alone go and install foundations for a building. ⁓ Which is why supervision is so important in the construction industry and a requirement of licenses to adequately and personally supervise the work. So circling back to the ITP.
It's one thing to have them is another thing entirely to actually use them. And then you also have the added element of making sure my staff are not just fabricating evidence so they can go home early. ⁓ food for thought in terms of quality for this week for the podcast. But hopefully you can see that not these solutions that we talk about in the business risk checklist, not all of them are legal solutions. This is no legal solution.
What it is is an admin solution with a systematic approach that avoids legal drama. And if you do end up in hot water legally, that is the type of A-grade evidence that will help you win your case. So I don't want to oversell the ⁓ construction industry. You can do everything right in the construction industry and things will still go bad. The idea is that if you have a systematic approach and you've
had the forethought and the education to go through business life, collecting evidence, doing the right thing, putting those guardrails in place, then when it does go wrong, instead of it being a catastrophic building company ending event or a fatality, you can live with yourself because you've had the forethought to put these measures in place and do your best, short of being the human being to go and do the work yourself.
you have done everything you could possibly have done to keep that situation under control and avoid the problem in the first place. So hopefully this is of an assistance and I will see you next week.
