Jacob Austin (00:00:17) - Hi, all. Jacob Austin here. Owner of QS.Zone. And welcome to another episode of the Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cash flow, and grow their business. Today's episode is number 36, and today I want to discuss the long and growing list of things that subcontractors need to have in place to be able to work for their super friendly main contracting partners. If you're new to the show, please subscribe for more user friendly advice on all things subcontracting. I've had the pleasure recently of sitting down and reviewing some main contract conditions and seeing all of the things that the client wants to ship downstream to the contractor, and many of these things are the things that the contractor can't actually do themselves. So they rely upon the subcontract supply chain to be able to do it. A prime example of that is social value. Now, a lot of clients are promoting social value, and they're wanting to see the public benefits of a project and their investment going out into the local and the wider community.
Jacob Austin (00:01:27) - And some of these benefits need to be realized almost instantly. And then some of them are more long term commitments, and some of it might be nice to have things. Some of it is just done as a matter of course. So let's take apprentices. A contractor more than likely will have 1 or 2 apprentices themselves operating within their office. They might have a trainee design manager, site manager, quantity surveyor who are doing a degree apprenticeship, and they might well be able to use that to tick 1 or 2 boxes. But that then requires committing that person to the project. And how many times can they commit that same person? But when the requirements are such that you need to see four and five apprentices on a particular site, then that requirement gets kicked out to the supply chain. And what happens if the best subcontractor to deliver a particular piece of work just hasn't got apprentices at the moment? What if their workforce are suitably qualified and maybe some of them have recently passed their apprenticeship? Other measures that I've seen include accredited training.
Jacob Austin (00:02:33) - So the likes of your city backed NVQ being passed by a particular percentage of the workforce. So they're driving for subcontractors to have all of their employees through an NVQ. That's whether or not they've sat an apprenticeship themselves already and whether or not they're skilled. They might have a City and Guilds qualification already, but that doesn't help you meet the bar. So our subcontractors now to foot the cost of putting their staff through an NVQ to help a contractor tick a box on the framework project that they're working on. Other things include employability support. So creating new jobs and perhaps bringing in out of work people, people from the military and in some cases rehabilitated criminals, bringing them into the workforce and offering jobs. They want to see evidence of work placements offered out to students and high school children. They want to see school visits taking place to present about and promote the industry, as well as donations to community projects and community volunteering take place. And then there's measures like car miles saved either via the use of public transport, which is wildly impractical for subcontractors, getting material and tools to site, or the use of shared vehicles, vans, minibuses and so on, which there is perhaps the time and place for.
Jacob Austin (00:03:56) - But at the same time, are any of these things practical? Maybe two and three men sharing a van heading to and from work might be, but any more than that is a potential logistical nightmare, and the way that some of these things get written into subcontracts, the contractor can turn round and say to you that you're in breach of contract because you're not meeting certain social value measures, then you have the good old SME spend criteria. And of all the measures out there to measure social value, that one is a bit of a farce. Because if you look at the cross section of the construction industry, there aren't actually that many non semi subcontractors in existence. Then you have local supply chain spend. So they're wanting to see that the cash that they're spending on a project is reinvested into subcontractors that are within a particular distance of the site. Some require that all of the spend is kept within a 40 mile radius, which is probably reasonable. But then they're also wanting to see spend within ten and 20 miles.
Jacob Austin (00:04:55) - So you get this situation where you can no longer just appoint the best person to complete your particular piece of work. You've got to go out there and find somebody local, whether you've worked with them or not. And then to compound that, they also want to measure how far the actual site labour is travelling to get into site. So if you're a plastering contractor and you're based in Leicester, but. Most of your library is coming from, say, the Rotherham area. Then on a Leicester refurbishment project you're taking one box but then you're completely failing on another one. So then does that preclude you from being appointed and then not to mention, on top of committing to achieving all of these criteria, the contractors got to then appoint a specialist company to either measure it or they bring that resource in-house, setting somebody on as a social value, a coordinator and some clients that I've worked with, they want all of this stuff, but then they can't understand why the overhead needs to be so high, and the price just isn't as competitive as they might get in a competitive tender situation.
Jacob Austin (00:05:57) - So then you go back around to the client organisation, going back to competitive tendering to try and lessen the cost that they're paying out. And what that basically tells you is they don't want to pay the price for all of the things that they're trying to burden you with. So why do it in the first place? A recent trend that I've seen is the introduction of the client wanting to audit the contractor on their compliance with anti-slavery legislation, and then wanting the contractor to indemnify them against any losses incurred because of their connection with the contractor who's not supporting anti-slavery. And then a similar thing for anti-bribery and corruption. So I've yet to actually see one of these audits take place. But how long is it before the stipulation comes in that the contractor has now got to audit their supply chain on these two policies as well? And this is one step further than just having the policy in place and perhaps just having a piece of paper in place to say that you don't employ slaves. It's just too much of a box tick.
Jacob Austin (00:06:55) - The current perception is that that's just not taking it seriously enough. So will that start becoming a requirement? And is any sane person done an actual assessment of how much it will cost to go out there and audit via some third party, all of the supply chain of each contractor, so that they can all say that they're complying with the law and critically, that their supply chain is complying with the law. And it seems kind of decisions that are why there are so many accreditations out there, because now each contractor has got to satisfy themselves to be able to tick the box when they peak or enter into a contract for large schemes, to say that they've cascaded all of these requirements downstream to their supply chain. So then it's the subcontractor picking up the tab for a decision that I think a client doesn't really understand the impact of any start with some quite sensible things. Are you qualified to do the work? Are all of your staff and your workforce qualified? Have they done asbestos awareness training? And these are things that I would expect to want to know if I was a client.
Jacob Austin (00:07:58) - There are the people that are going to build my building for me, competent and capable to do it. One because I want a good building at the end of the contract, and two, because I don't want anybody to get killed or hurt whilst that building goes together. That for me is about as much as I would want to know before I built a building. Can you do it and can he do it so you don't kill anybody? And it would probably be best if there was some insurance in place, so maybe I'd ask for that as well. So why can't it stop there? Why do we have to go through all of the operatives having a CSCS card with a particular trade? Because if you read a JCT contract, the standard clauses in there actually obligate the contractor to provide a workforce who's either got a CSCS card or any appropriate other qualification. So this notion of you can't have somebody with the City and Guilds cert carrying out your joinery because they haven't completed the no value qualification alongside it. It isn't really the case.
Jacob Austin (00:08:57) - There is still the wiggle room under the main contract to consider alternative qualifications. So is it that the contractor has got lazy and they no longer want to look at certificates? They just want to look at a plastic card. I can see the time saving involved in that. And I suppose practically speaking, it is easier just to carry a plastic card around than to start carrying your folder of certificates to prove that you can do your job. So those requirements coming down the stream from the clients as well. ISO requirements. Now, as long as the contractor carries an ISO 9001, 14,001, 45,001, blah blah, why does it then have to fall down the stream for the subcontractor to do the same? Because surely one vetted an appropriate quality management system, an environmental management system can cover the whole project and the people working on it. Surely that's what the contractor is earning, and surely that's what the site manager is there for, to ensure that the quality is up to scratch, to ensure that nobody's poisoning the local watercourses, and so on.
Jacob Austin (00:10:00) - Now those aren't just nice to have things I can see and surely anyone else can. Why? These things are fully necessary, but surely they're only needed once, not by every member of the supply chain. Can nobody else see why this is overkill. And when the client says, scratching their head at. Why the costs are coming in so high. Do they ever think how much of that has started with them and their pre-qualification questionnaire? And for sure, where there's laws in place, the contractor has got a good reason to start asking you where your policies are to comply with the laws. So your health and safety policy, your environmental policy, your drug and alcohol abuse policy, modern slavery and bribery policies. I can understand these being in place or being required because the contractor could be in a very dark place if they aren't. But why does that stem into each and every contractor in the universe having their own accreditation requirements? You've got construction line, you've got a claim. Achilles, Altius, APS, CHAS CQMS, Construction Safety Solutions, DW Health and Safety, Green Light Pro, Short Sellers, Smart Safe Contractor, Safe Cert, MSL, PQS, Aveta and each contractor seems to specify that they want their own version of that completing because it's not enough to just rely on the standard questionnaire.
Jacob Austin (00:11:24) - They want to bolt on their own set of standard criteria that are bespoke to them. So regardless of, say, you having a cert, you have to reapply to a different body, pay yet another fee, waste your time filling out another form, have your health and safety assessor answer a particular set of questions, just to be in a chance with getting on site and securing an order. Can somebody not just make a reasonable decision? Can somebody not say enough is enough? I spoke about accreditations in episode 15, when I covered tendering and quoting, and at the time there had been a recent launch of a joined up approach to accreditations for contractors. But where 20 weeks later now and nothing seems to have changed whatsoever. Now, maybe it was a bit much for that to be implemented overnight, but I haven't even heard of it being spoken about since then. Then you've got different requirements from contractors saying, I want to have so many supervisors on site per number of employees. If you're only having small numbers on site, you might get away with a triple certificate.
Jacob Austin (00:12:26) - But then if you exceed ten, we want to see an SMSTS certified supervisor and for every ten in addition, another SMSTS supervisor and what subcontractor I know in order to make sure that they complied with that requirement, basically put all of their staff through a SSSTS qualification. I don't ask him how much he spent on it just in putting people through the course. Never mind the days work that they will have lost. Then they've got a similar requirement for first aid. So we need to have so many first status per head. And yes, the driver for this might well be to comply with the law, but it's yet another cost. And that's before you get to silly little things like PPE and some contractors wanting each Sube to have their own badged PPE and some wanting them to have the contractor's badged PPE. But you definitely can't wear somebody else's PPE on your site. Some contractors stipulate what colour hats different people can wear, and then some will allow the use of rigger boots, whereas others have to have a laced up boot.
Jacob Austin (00:13:27) - Some contractors insist on all hard hats being worn with a chin strap, and this is all before you get down to the nuts and bolts of is your price competitive and have you offered the right value engineering options? Have you seen the holes in the specification where the architect has drawn something that you can't really construct? Or have you priced a bill of quantities that some pqrs has measured that doesn't necessarily reflect the full scope of works, and then the contractor is looking at you to complete a completely different scope of works for that same price. You've had the drawings, you know what the requirements are. You're a competent specialist. Surely you would have priced something that works then it's the good old main contractor's discount. And now, because you didn't want to offer an extra 2.5% on this particular job, you're going to be on 90 days payment terms. And oh yes, that's 90 days from the valuation date, not the date that you actually did something on the site. And PES, whether you've read all of my policies on health and safety and environmental requirements or whether you haven't, I'm going to expect you to comply with them all and the retention for the job will be 5%.
Jacob Austin (00:14:34) - Oh no, I don't have a program, but the LEDs for this job are 20 grand a week. And that's before we start talking about my site set up and my site supervision costs. I'm going to pass on to you anyway if you fail to meet the dates that I want. Now, all of these things I'm saying to you, they sound like a rant. Perhaps, but I'm saying it because I want you to be aware. I want you to know what you're getting into. And that's got to start with reading the documents you get sent. Digest and understand that inquiry document to pick up at the outset whether you need to pay for that 15th accreditation in order to work for this contractor, to understand how many supervisors you need to price for so that you can include it in your bid to see how many. Requirements are being passed down from the main contract into your subcontract, and to see whether it's reasonable for you to be able to comply with them. Because if it isn't, you need to call it out because contractors contract.
Jacob Austin (00:15:28) - And once you're on the hook for doing something, whether you've priced it or not, the contractor is going to expect you to do it. And the moral of the story is you need to get it right before you get to site. You need to understand what you're getting into before you're in the bath and the water is too hot. You need to protect yourself because nobody else is going to. I hope that's helped open your eyes to some of the things that are out there in the marketplace. My mission is to help the million SME contractors working out there within our industry. If you've taken some value away from today's episode, I'd love it if you'd share the show and pass on that value to someone else who'd benefit from hearing it. And of course, subscribe yourself if you haven't already. Thanks so much for tuning in today's show. If you like what you've heard and you want to learn more, please do find us at www.QS.Zone where you can subscribe to our training and support system for like minded subcontractors.
Jacob Austin (00:16:21) - In there you'll find templates, how to videos, interviews, and more. It's less than the price of a cup of coffee per day, and you can cancel any time or also on all your favourite socials at @QS.Zone. Thanks again! I've been Jacob Austin and you've been awesome.
