Michelle Cirson (00:00.728)
Hello, welcome to the Subbies Toolbox Podcast. I'm your host, Michelle Cirson, construction adjudicator, lawyer, and the founder of the Subbies Toolbox. Today on my podcast, I want to tell you why I got trolled last month on social media for telling the truth about something I did when I was a builder CA. This one really is a bit of a strange thing. I'm really feeling torn about whether or not I should talk about this publicly because normally I just post and ghost on social media.
I do that for my own sanity because if I spent all my time worrying about what people said to me in the comments, I probably wouldn't have the guts to be honest about things that took place when I was a builder CA or even my observations about the construction industry. So for those of you who have been following me for a while, you'll know that on my LinkedIn, even on my Facebook page, and previously with our Tricks of Your Trade podcast, I've been brutally honest with things that have gone on. I've interviewed people who used to be subcontractors of ours who went broke.
and have talked to many industry professionals around the industry who have different views on some of the political things that happen and the cultural things that happen in the construction industry. But I do write those posts myself, so we don't use AI to write my posts, and you'll recognise the posts because they are usually a construction site photograph with a bit of a blurb about whatever whatever it is that I'm talking about that day.
Now, these so rarely go viral, and they if they do go viral, it's usually because of something positive. But last month I put a post up that went a little bit viral for the wrong reasons. And I think I'm guilty of assuming that a lot of you know who I am and what my background is, so I don't need to contextualise the comments that I'm making. And the reason I started talking about this topic, which was things that I did.
When I was a builder CA that led to Subbies going broke, was to build an awareness about the decision tree that a staffer has inside a building company and how much authority they may or may not have to get you paid, how much authority they may or may not have to sign you up for ridiculously low prices, even if they know that you're underpricing, and why they would go down that path of doing something.
Michelle Cirson (02:20.063)
So I'm gonna share the post with you just so that you can understand exactly what I'm talking about. this is it on Facebook, but I did have it on other socials as well. But this Facebook was where it really people started getting really nasty in the comments and talking about this post. So basically I told the story of when I was a builder CA, there were three subbies that went broke. Two of them had been underpricing and can significantly underpriced the lump sum for the scope of work. We knew about it.
In the building company when they signed up, and when they went broke, the builder took their attentions. Now that was pretty inflammatory, but it was true. That's what happened. I had spoken to other trades who had said to me there's no margin in that if that's what their price is. And those other subcontractors were friendlies who I could trust to give me an honest explanation of the quote and help me understand the pricing so that I could know whether there was an apples for apples problem.
Or whether that subcontractor was just buying that job. The other subcontractor was a little bit more convoluted, and it was actually a mistake that I made as a staffer that led to that subby going broke. Now, the first thing I want to talk about here is the two times that we signed up subbies who were underpricing and they went broke and we took their attention. It actually is worse than what I wrote on here because the commercial manager in one of those scenarios.
said to me, sign him up and make sure you get a director's guarantee from him so that if he goes broke we can come after him personally. That is no word of a lie. That is something that happened when I was a builder CA. I need to preface this with I worked for multiple builders when I was a builder's CA. So I I got a grandstand view of how things were playing out in more than one builder's camp. So if you're thinking about that and going, well that was that particular builder, no.
It wasn't. It was not just isolated to one particular builder. And I can tell you from experience from working with other consultants in the industry now who are ex-builders camp that they have had similar situations take place as well that they have seen play out. So I'm gonna circle back to that because I want you to remember that these people in the comments were trolling me because I signed up
Michelle Cirson (04:39.861)
A subcontractor, and it should have been on me, the staffer in the building company, to make sure that nobody walked the plank with their price. So just park that thought for a moment if you're listening to this, and I'll come back and answer that in a second. But the second part of this post was actually really this this genuinely happened. And everyone in the comments was saying, I call BS on this. There's no way this happened. I'm like, yeah, it did happen. And
This is a grandstand view of why you should not trust the staffer in the building company. So when I was a builder CA, I was really green. I had been client-side project managing. I didn't understand what each trade did and how to break up trade packages. And so I was quite closely supervised in my role when I was a builder CA, at least in the first five years that I was a builder CA.
Now later on when I was builder CA for some other builders I had a little bit more autonomy, but I wasn't really genuinely working in a CA role where I was letting trades. We were still engaging trades, but a lot of it was crisis contract admin that I was involved in. So in this particular instance, this is a little bit of a utopia story where I was working in a regional town. Everybody was very close and knew everyone.
And everybody had good bloke relationships. So the whole construction industry worked on good bloke relationships. Now I'm going back 12 to 15 years. So this is a little bit of time has passed since this took place. We were had a regional job and I had not been out to site for some time. I knew vaguely where the job was up to because of the site manager and things like that, but I was still letting trades at this back end of this project, and it was a stage townhouse development, so there's more than one stage.
Involved in the project. Now what happened was I was a justice of the piece and my commercial manager was very big on making sure the subbies knew how much they were getting paid so that nobody was worried whether or not they were getting paid. So we were really upfront with that and we had this routine of bringing in the subies on claim day, and I would witness their statutory declaration and then we would fax it off to the big head office in the sky and make sure that they made the pay running time.
Michelle Cirson (06:48.44)
So we worked really hard to make sure our subbies were getting paid. And this particular subby was on two claims per month, 14-day payments. So bi-monthly claims we call it back then. And we got all the way to 95% of this guy's contract sum before I worked out that they had not even started the driveways yet of this townhouse development. And I said to his wife, hey, we're not going to be able to pay you any more claims now until you guys are finished because we've already paid you 95% of your contract sum and you still have all the driveways to do.
She panicked, got her husband and came back into the office the next day, and he was like, How have you been working out these claims? And she says, Well, I've just been working out what our cost of wages was for our workers, and then putting some money on top for us every fortnight, and then just putting that in. So he had not actually been tracking the progress of the job over a period of time. Now, in my post, what I explained was that.
That concretor was pretty real with us. He just said, look, I'm not going to be able to finish. And we're going to go broke over this. Like, this will send us broke. We, as the builder, we couldn't fix that problem for them. We couldn't just keep paying them until they finished. That was not within our authority or our control. We did have some retention on them that we needed to pay somebody else to finish that job, and that concretor did go broke, and he ended up getting a divorce. So it was really devastating from a
relationships perspective and I want to emphasize here that I think those relationships were real. I don't think they were fabricated or you know, nobody was being fake for the sake of getting discounts or anything like that. That genuinely took place. Now I put at the bottom of my post and this was really what I was emphasizing is like the point of this story is that no matter how good your relationships or your payment terms are, if you're not tracking your job costings across the life of your project.
There is no way that you are going to actually come through at the end of the job because you will work for longer than you will receive revenue. You would just you'll basically go broke because you're not you're not in control of your own financial destiny there. the second thing that I had said in that post was that my commercial manager was asleep at the wheel because here I was a snotty nosed green CA who was just signing.
Michelle Cirson (09:15.124)
signing off on progress claims in this beautiful relationships utopia going, Yes, I'll get you paid, I'll be your hero and then it didn't appear on job cost reports at the end of the month that we had already paid that guy almost ninety five percent of the contract sum and they were nowhere near complete that. So they weren't actually looking at the progress of each trade's contract sum completion on a monthly basis. So again, not not actually
Tracking those financials. And the third lesson that I had put in that post was that nobody thanked me for that. So here I was putting myself out on a limb, certifying people's stat decks to try and help them get paid, making sure everybody was friends and the relationship was strong, and I had genuine good intentions to make sure that the subcontractors were being paid. And when that guy went broke, no one thanked me for that. And I didn't expect to be thanked. I was mortified, I'd made a huge mistake.
But you need to put yourself in the shoes of the staffer in those situations. So some of the comments on that post were that it there was no way that it was the commercial manager's fault for not supervising me closely enough. I should have done my job. That was one of the comments. Quite a few of the other comments were saying, I call BS on this. There's no way this story is true. Builders just would not pay that well throughout the course of a project. There's no way that they would do it without asking for a breakup. Well, guess what? It's true.
Is 100% true and I have no way of proving that to you, but genuinely I just think it's amusing and concerning that the industry thinks that I'm fibbing about this story rather than looking at it and going, Yeah, you probably shouldn't trust a staffer inside a building company with your financial future. If you're trusting the staffer, that is the person in the mix. If you look at I've got a subcontractor.
Got a builder and then I've got a staffer. Who has the radical accountability for the actual commercial outcome for the transaction that you're entering into? And just circling back as well to the comments that people are saying how it was my fault that we signed up those subbies who were underpricing, that I had the moral responsibility to call out the underpricing of the subcontractor who knew that they were buying jobs.
Michelle Cirson (11:41.824)
and tell them that they should not be pricing that low, that they should be increasing their quotes. Said no builder's CA ever. On what planet is a builder's CA going to go back and say, hey, you've underpriced? First of all, the apples for apples comparison that is required for somebody who knows 5% of your trade to work out whether or not you've underpriced something is not realistic at all.
Not realistic. But even further complicating things is where you're packaging and hiding your margin in your quotes with your trade breakup. So even if you had the most comprehensive quote, to go and compare that to some to your competitor's quote and work out where you're underpricing would be very difficult. And we don't live in a world in Australia at least where a quantity surveyor is reviewing your quotes and then doing a comparison.
Industry Standard or Rawlinson's quote assessment to make sure that you haven't underpriced. If you are in business and you are a subcontractor and you are underpricing quotes, it is your responsibility to make sure that you're buying a job for a good reason. If you're going to go and buy a job, and that is the commercial reality of the way the industry works, builders do it all the time. Builders are constantly bidding at negative margins to
Buy jobs to keep their overheads busy, to keep their staff employed. That being their minimum viable price is solving a problem. It doesn't mean they're insolvent overall if they're buying a job. They might have six very profitable jobs, but buy one to secure the revenue for overheads for the six-month period leading in. It's a commercial reality for what subcontractors are doing as well.
So who am I as a builder's CA to work out whether this is the job you need to buy or whether you're genuinely underpricing or if you've made an anonymous mistake and missed something? Now I need to put a big fat line in the sand to this next comment. Because underpricing and staffers of building companies predicting that you're underpricing, working it out, and then being good blokes and telling you to put your price up is one little utopia fantasy land.
Michelle Cirson (14:05.461)
It is not lost on me that there are a bunch of builder CAs out there who are talking subcontractors into specing out different inclusions or downsing particular materials that are going to be supplied. And then when they write it into the contract, carving out big chunks of the building where those alternatives are not able to be used, or well, they'll delete a portion of work at tender and then write it back into the scope of work.
And try and sneak it back in. That stuff is still happening. Drawing revisions on the last iteration of back and forth of contract negotiations is still happening. Those are the dodgy things that staffers are doing. And if you think about it from an issues and incentives perspective, just take away the fact that we're in the construction industry for a moment and think about me as a staffer, as an employee of a building company.
What are the things that I care about? I care about making budget, getting promoted, not having egg on face if things go pear-shaped. I also don't want too much work on my plate. So if you're making things painful for me to be able to complete work or having really long protracted departure schedules, or if sometimes what I could care about as a builder's CA would be that I don't really understand your quote.
I just need to get this signed up and I'm too embarrassed to ask you what something means about what's included. So you need to think in terms of you actually have a human being with human interests that you're putting all the responsibility on for saving you from underpricing or misquoting something. So it does sound like I'm getting pretty defensive about this, but those were the shoes that I was walking in when I was a builder's CA. I was trying to look out for myself.
I had a mortgage of my own. If I got in trouble with my boss or lost my job, there were not many other builders that I could work for at the time. And it took me a long time to climb the ladder enough to get even just basic pay rises in that industry. Very different climate than it is at the moment where you get paid quite a lot to be a builder's CA, particularly one studying law. my goodness, talk about being born to ten years too early and to a calling, but
Michelle Cirson (16:28.93)
The staffer of the building company is only really worried about the staffer's decision tree. Your decision tree as a business owner going into quoting a job like that needs to be completely different and way more radically robust than what that staffer is doing. And if you're trusting a staffer to get you paid because you think that relationship is going to uphold, there is a point at which that staffer is going to be found out or
The favour is going to be exhausted. They're going to come back and say, You're not, you know, the relationship's not worth it to me to burn myself. So a staffer can't get you an EFT. They probably don't have access to the bank account to actually get you paid. And most of the time, well, I could say almost all the time, it means that there is at least one person between them and the bank account that they need to convince to get you paid as well.
When you get into territory of trusting a builder's CA or cadet, even project manager level, and there is a construction manager, a CFO, and a director that's sitting above them in the decision tree, and then the person in accounts as well, who's going to nitpick and red line everything and make sure that you've got your I's dotted and your T's crossed or your payment claims going to go on hold. you are having to rely on that staff to go and advocate for you with those other people, and those people
Inside that building company are ultimately the ones who will decide whether that staffer gets promoted. So when I used to advocate for subcontractors, my bosses used to say to me, Hey, you're forgetting who you're working for. You work for us. Why are you advocating for them? And they had a point. They had a point. You have to pick a side, right? So I just wanted to bring this up and I'm
I suppose I'm a little bit precious about getting trolled because over the years my social media has been so positively received. I am a little bit offended that no one believes me that that happened, but whatever, that's fine. the main point that I want to make to you if you're listening to this and you're a subcontractor is that you cannot rely on the staff or in the building company to save you if you're doing something crazy to win a job. And
Michelle Cirson (18:46.601)
it there is a very good chance that the director of that building company probably has no idea this stuff has gone down. So in the past, builders that I've worked for, the directors were unaware of the comments and the guidance that the commercial manag managers were giving, particularly in terms of signing up prices, subcontractors who were underpricing. So those directors, I can't say whether they would have said something other than what they
What the commercial manager said to do, but it was not the case that the owner of the building company was in a predatory context saying, go out and get that guy who's underpriced, we'll send him broken steel his retention, and then we can pursue him with a director's guarantee. That was not what happened. It was staffers further down the food chain who had personal interests in the outcome of that deal. Now
One of the things that I do remember directors of building companies say to me, and bear in mind too that I'm not just talking about builders that I've worked for, I've heard this been spoken by a lot of directors of building companies in the past when I've acted for builders or been involved with their cases as well. But builders also have a vantage point and a lens on which they view the industry. Just like subcontractors do, where we look at builders and go, Well, what are they even building?
They're not they can't actually build that block wall. They need us. We're the ones that actually do the building work. 100% right. 100% right. And then you watch them go and get those awards, the master builder's awards, and the builders are all lining up and no mention of the subcontractors, right? So I always think calling them a builder is quite an interesting thing because really they are just a project management house. That said, from their lens, from their vantage point, they think they're winning jobs.
At a head contract level to keep the subcontractors in business. So builders have a mindset that when they go out and they have these astronomical costs of tendering, genuinely they do have big costs of tendering jobs, even though the subbies are pricing each trade package and giving quotes to the builder at tender. The builder is taking on the risk that if the subbye missed something, the subbye's not on the hook for that contract yet, the subby can still walk away. But the builder is committed to their price. Now
Michelle Cirson (21:04.94)
It's a whole nother podcast about builders who price with negative margins in tenders to win them in the hope that they can screw the subbies down or get project pricing after that tender has been won and the contract has been signed. But I have heard directors of building companies say those those subcontractors are so ungrateful. We're the ones who win the jobs so that they have work. That is by and large a sentiment.
That builders often have going around in their little carousel in their heads, going, We're taking all this risk to secure this work for you for this project, and you guys are blaming us for X, Y, and Z. So there is a whole lot of tit for tat that goes on in the construction industry, and the the who's got it harder argument will never, never, ever be gone. I do wonder whether if we went back to that contracting model or reverse the contracting model.
And effectively builders had labor on the payroll, whether that would be different because walking a little bit of a mile in your shoes as the sub-e would probably do the builder a really good good job. And I have seen recently, particularly post-COVID, where builders have purchased subcontracting businesses and have had a dose of that medicine themselves, where suddenly the builder has a subcontracting arm that is tendering for work with other builders, and then they're doing contract reviews and going.
How can we sign up to this? They want a parent company guarantee or they want a director's guarantee, and so it comes full circle in the industry. So there's a whole lot of politics that goes around it, but the main purpose of me talking about this on this podcast is to say, firstly, I'll put these little anecdotes up in a raw, unvarnished way because I want you guys to see that if that could be me with my values and the way that people call me sub a subby hugger.
and my advocacy for subcontractors in the industry. If my values could be so heavily impacted by being in that context, working for builders and doing things that I didn't feel were right, so much so that I go and start my own law firm called Subcontract Illegal and I only act for subcontractors, stop it for a second and think about how heavily influenced somebody who isn't worried about doing those things would be.
Michelle Cirson (23:25.4)
For me, it didn't feel right in those moments, and that's why I still think about them today, and I post them on social media so you can know that they happened. But how do you think a staffer who's just neutral, or even worse, a staffer who has been working for a big shiny builder for 20 years, who wears that builder's logo on their chest as if it's tied to their own personal identity, and that's where they get their confidence from and their career.
satisfaction is that they are X, Y, and Z person for ABC Builder. Big shiny builder syndrome is a major issue and it it comes out in staffers where they get these egos or this power trip and it's all monopoly money. It is all monopoly money. So if you're relying on the person who's playing with monopoly money to save you from the bad business transaction, I would call BS on that.
And say maybe we need some radical accountability there. Because yes, when I was a builder CA, I made mistakes. I made a lot of mistakes. In fact, I have clients now who still remind me about the things that I put in their scope of work that I genuinely mucked up that cost them money. And it pains me, pains me to have those memories. But nobody in any industry is perfect. And that's why when you are entering into commercial transactions,
You intimately understanding your process, your minimum viable price, where you're at in the market with your competitors, and the reason that your price is that price for that project, that's all on you. And then whether or not the builder accepted accepts that price, all I would say is, why would you expect somebody else in business who's trying to make profit for themselves to save you from that bad decision? Particularly if you're doing it on purpose. So,
I don't intend for this to be a kick up the bum for the subies podcast, but I just wanted to call you out and say if you're trolling me on social media because I'm telling the truth about things I did as a builder's CA, stop and think for a second: who are you relying on in the contract chain to save your bum? Or are you taking radical accountability for the way that you're going about your own procedures and systems in your own subcontracting business? And on that note, I'm going to take off.
