Profitability and Cash Flow: How Contra Charges Impact Subcontractors

Episode #6

     

Today Jacob dives into the world of Contra Charges. Discover their real purpose, gain insights into profit protection amidst slim margins, and harness the power of evidence. Jacob's expert guidance unveils the strategy to handle issues pre-escalation and negotiate contract terms for limited liability. Tune in to equip yourself with the tools to navigate Contra Charges, safeguard profitability, and elevate your subcontracting game.

KEY TAKEAWAYS

  1. Contra Charges are a contentious issue in the construction industry, but they are often necessary when a subcontractor causes damage or fails to perform.

  2. The burden of proof lies with the contractor to demonstrate that a breach of contract or damage has occurred, and that there has been a cost incurred as a result.

  3. It is important for subcontractors to challenge contra charges and request evidence of the breach and the cost incurred.

  4. In some cases, subcontractors can negotiate agreements with the party affected by the damage to avoid a formal contra charge situation.

  5. Subcontractors should consider including limitations of liability in their contracts and be willing to decline work if the risk of high contra charges or liquidated damages is too great.

BEST MOMENTS

  1. "For there to be a situation where a Contra Charge is being levied or any kind of set off or abatement, it's got to a situation that nobody really wants to be in."

  2. "And a lot of the time it tends to be the way these things are communicated that cause the biggest issues."

  3. "So if there hasn't been any kind of breach, then there isn't grounds for a contra charge. And similarly, if there hasn't been any cost or any loss incurred, then there also isn't any grounds for a contra charge."

  4. "So they have to prove to you that they have the right to deduct that money."

  5. "If you know you've got a situation where a contra charge is going to happen, then it's sort of like why not take matters into your own hands and try and resolve it before it becomes this controversial issue."

HOST BIO

Meet Jacob Austin, a Chartered Quantity Surveyor with a rich background at industry giants Balfour Beatty, Kier, and Vistry Group. With extensive involvement in education, health, and residential projects spanning various scales, from £1000s to £100M, Jacob brings a unique perspective. Having collaborated with numerous small businesses, he's now committed to sharing his expertise to drive their success. Join Jacob on his podcast, where he blends his profound insights and personable approach to offer guidance, industry secrets, and inspirational stories.

LinkedIn - www.linkedin.com/in/jacob-austin/

Instagram - www.instagram.com/qs.zone/

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