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…

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What Can We Do When We Don’t Get Paid?

What can we do if we don't get paid? We get asked this question a lot. In some regions, legislation is quite strict on payment terms, but in other parts of the world it is very common for the paying party to hang onto their money for as long as possible. Most forms of construction contract will include some sort of remedy for non-, or late payment, so you will need to check what these are on your projects. As an example though, let’s have a look at what the FIDIC 1999 Editions have to say about late payment. Sub-Clause 14.8 (Delayed Payment) states that: ‘If the Contractor does not receive payment in accordance with Sub-Clause 14.7 [Payment], the Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. This period shall be deemed to commence on the date for payment specified in Sub-Clause 14.7 [Payment], irrespective (in the case of its sub-paragraph (b)) of the date on which any Interim Payment Certificate is…

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BCIPA: High Court Confirms That a Valid Payment Claim Requires a Reference Date

At the end of last year, the High Court delivered its first judgment on security of payment legislation: Southern Han Breakfast Point Pty Ltd (In Liquidation) v Lewence Construction Pty Ltd [2016] HCA 52. The decision confirms that the existence of a reference date under a construction contract is a precondition to the making of a valid payment claim (and, in turn, a precondition to the making of a valid adjudication application and determination) The Facts Southern Han Breakfast Point Pty Ltd  and Lewence Construction Pty Ltd  were parties to a contract for the construction by Lewence of an apartment block in New South Wales. The Contract provided for Lewence to claim payment progressively from Southern Han by making a progress claim on the eighth day of each month for work completed up to the seventh day of that month. On 27 October 2014, Southern Han gave Lewence a notice purporting to exercise its right under the Contract to take out of Lewence’s hands all of the work remaining to…

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