May 8, 2020
Are Contractors Playing with Fire? Construction Projects and “Uncertified Revenue”
Uncertified revenue is the value of work as assessed by a contractor which has been completed but not yet certified and paid by an employer. It typically could include the value of measured works, changes to the works and / or other claimed entitlements. Practices in the industry vary hugely. However, some contractors account for uncertified revenue on a basis which is – at best – optimistic and – at worst – wildly unrealistic. They may assume that the vast majority or even 100% of uncertified revenue will be realised when reporting internally and externally. This approach can pose serious risks. Following the collapse of Carillion in the UK in 2017 it was found that £294 million of the £729 million revenue reported in its accounts but which it would not actually receive concerned unapproved variations and other claims submitted to clients (i.e. uncertified revenue). Although there were many other failings, this unrealistic accounting of uncertified revenue was a major factor in…
March 10, 2020
The Coronavirus – are we Entitled to Make a Claim?
The global hot topic this month seems to be the coronavirus and my consultancy practice has received lots of questions from clients so today, we thought we’d take a look at some of those questions and share our thoughts with you. The usual question we are asked is: “We are obtaining labour/materials/plant/equipment from China and the supply is being delayed. Are we entitled to claim for an extension of time and additional costs?”. Our answers, as usual, have been along the lines of “it depends on your particular contract, but possibly”. I know that this is a bit of a lawyer’s answer, but it really does depend on several things. Let’s however, have a look at what the FIDIC Red and Yellow Books, 1999 Editions, have to say on the subject. Firstly, Sub-Clause 8.4 (Extension of Time for Completion) provides that an extension of time is warranted in the case of ‘Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions…’. This seems to…