Jacob Austin 00:00:00 Hi all. Jacob Austin here from QS.Zone. And welcome to episode 128 of the Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cash flow and grow their business. For today's episode, we're continuing our deep dive into JCT subcontracts, and today we'll be covering program clauses and extensions of time. And why? Extension of time protects the program and your margin, and prevents main contractors from pushing delay risk down to you quietly when you don't expect it. So let's dig in. Let's start with a common trap. You're delayed for reasons outside of your control. Receive drawings late. Maybe your access is blocked. Maybe it was an innocent looking sequence. Change on the program. You bust a gut trying to finish the job on time, but you still end up paying for delay. Not because you're at fault. Because you didn't convert that delay into an extension of time at the right time. Triggering the contract's all important mechanisms to work in your favor on a live job. That gap in your admin can be where your margin disappears.
Jacob Austin 00:01:30 The contractor doesn't look at delay emotionally. They look at the bottom line. And over a long project, weeks lost here and there can turn into months of overrun that the contractor can't afford to lose. So they go looking for culprits. Then what might well have been project delay, caused by their own lack of coordination or poor management, turns into a witch hunt for subcontractors who might not have performed on the job without protecting yourself. You're in for a rough ride. Copying for program. Blame contra charges and a final account where all your leverage is gone. If you've been around long enough in the industry, you will have no doubt lived this. The program slips. It starts stacking vertically with minimal float. Maybe something innocent, like a few bits of information arrived late and you're bouncing around doing bits because parts of the site aren't ready for you and you think, fine, we'll just crack on. Everyone can see that it's not us at fault, but contracts don't run on what people can see. They run on black and white.
Jacob Austin 00:02:32 What's been notified, evidenced and complied with. And when the job gets tight for the main contractor with either time or money, the program starts becoming a weapon. If you don't secure your time entitlements properly, the risk isn't just being late, it's being pushed into acceleration. Without proper agreement. It's burning your own labor and plant to keep dates that you can't achieve. It's losing productivity through re Sequencing. And to add insult to injury. Getting hit with set off dressed up as delay costs for a delay that wasn't even yours. That's why program and extensions of time matter. Because you can be busy on site, work till you're blue in the face and still lose the job commercially. Now what do you do about it? Well, across the JCT 24. Family time and money are two separate tracks. Time is dealt with through the mechanism that adjusts the subcontract completion period, and that is EOT machinery money for disruption. Losses that you've incurred by being delayed sits in a separate section. That's your route to recover the cost.
Jacob Austin 00:03:41 So the commercial point is that an extension of time moves the date, but it doesn't automatically pay you a single penny. So you have to treat extension of time and loss and expense as linked. But they're not the same. And you won't just be given time because the job is delayed. You get time by demonstrating what happened when it happened, what activity it hit. What period of delay has been caused? Cause and effect. The decision timetables have been tightened by JCT. In the latest three two contracts, which matters because it means the pressure for information comes fast. If you're late or you're vague, then the contractor can literally turn around and legitimately say that you've not proven a delay. Now, when we get on to money, we're talking about loss and expense, which isn't compensation for inconvenience. It's direct cost caused by specific matters that you're entitled to recover. Crucially, if you follow the notice procedure and provide the information required by the contract so sometimes you'll have time but no money or a potential money claim that gets neutralised because the notice wasn't compliant.
Jacob Austin 00:04:54 It's all about how you follow the process and of course, whether anyone was actually at fault because the JCT philosophy will give you time, but no entitlement to money in certain instances where it's nobody's real fault that time has been lost, such as for whether or force majeure events. One crucial thing that matters at subcontract level is flow down. Your subcontract will usually require you to comply with obligations that sit upstream in the main contract, and to cooperate with the contractors, program management and commercially. That effect will feel familiar. The contractor has to defend its own completion date upstream, and your performance and delays become part of how they do that. So if you are delayed and you stay quiet, the contractor will often protect itself by pushing the story downstream, whether or not it started with them. And you might see that in meeting minutes. Subcontractor behind and in program updates with your activity shown as the critical issue. And if you do, you'll more than likely then see it in cost recovery, country charges loss and expense from the contractor and set off arguments.
Jacob Austin 00:06:03 And this is why I say the EOT protects the program and it protects your margin. Because even if the contractor secures time upstream, that doesn't mean they automatically grant you it downstream. And even if they give you time, that doesn't mean you'll recover the cost of keeping your operation alive through the amount of disruption you're being caused. So practically, you need those two outcomes running in parallel time protection so you can't be treated as the scapegoat for being late, and you don't miss the subcontract completion date and potentially section or completion dates. But you also need cost protection so your disrupted production isn't seeing costs come straight out of your margin. The link between those two outcomes is your administration, trial notices, particulars, records, and consistent narrative. The way to think about the two is that the iate submission answers what happened. How did it move my date and the loss and expense submission answers? What did it make me do differently and what did it cost? If your paperwork doesn't answer those two questions and do it clearly, then the contractor can keep arguing about entitlement forever and delay the only thing that you really want, which is commercial closure, and subcontractors regularly miss out on their full entitlement.
Jacob Austin 00:07:30 And I don't know whether it's a lack of knowledge or a habit they've got into or what. So let's have a look at a handful of regular issues that quietly cost money. First off is stopping at the EOT. You've submitted that EOT you've pushed for the time that you're entitled to. You feel relieved that it's been awarded and you move on, but you've only protected the date. You haven't got your hands on the cost entitlement, so you're still carrying the cost effects of effective disruption unless you run the loss and expense track properly. Number two, and this is a big one and it could have been number one as well. Vague notices delayed due to access. That's not a claim as passionate as you can get about that. It's lacking specifics. Which area, which dates, which trade constrained you? Which activities are impacted? If you can't tie a particular delay to an activity in a period, then you're going to struggle to prove the impact. Number three leaving it to the end. Mopping these things up at final accounts stage is just too late.
Jacob Austin 00:08:35 When you final accounting often your site teams moved on records. Apache everybody's minds are a little bit fuzzy about what actually happened. Plus, the contractors shit is probably under pressure to close out accounts with a target number in mind. We'll sort it out later. Usually means you walk away with less than you really were entitled to number four, letting the contractor define the measuring stick. Let's say you got issued with a recovery program, but it's flawed. It assumes perfect access. It assumes everybody comes in at the right point and disappears in time for you to do your part of the work. There's no float in it. So it's not really practical. But you want to seem proactive. You want to seem helpful, so you start working to it and then you start being measured against it. Not against reality. Not against how you price the job. And what the contract is effectively done is get you to accelerate the work without paying for it. And to boot, if you start failing against that program, they start blaming you for it.
Jacob Austin 00:09:41 In that instance, silence can be really expensive. Issue number five is being bullied with concurrency. Sometimes concurrency is real and sometimes it's manufactured. Either way, the contractors move is pretty much the same. They're bundling issues together to dilute your entitlement. True concurrency in a programming sense is really rare. Having two competing events that are delaying the job by the same magnitude at the same time. Exactly. Yet that concurrency argument still raises its head. The defense to concurrency is simple. Records separate records of each event with the separate impact to the separate period. Treat them and analyze them as if they are two completely different events, and you can work out what the answer is. If there is an element of true concurrency, it will likely be a small overlap in issues. That doesn't negate your entire claim. Now, I said a handful, but I've thought of a sixth and that is treating disruption as it fits just part of the job. Good subcontractors pride themselves on getting the job finished, so you start absorbing disruption as if it's normal.
Jacob Austin 00:10:58 And that's a commercial decision in itself to not chase a potential entitlement. But commercially, disruption is either a risk that you've priced and you knowingly take or something that you should be notifying and then charging for. If it's just something that you absorb silently, then you're effectively giving the contractor a free option. They're getting the benefit of your flexibility and you're covering the cost for it. Now, depending on your expectations, you might be willing to accept some bits of disruption. You might have some risk or contingency money in your pocket, and that's fine. But there will become a point where that money runs out and you need to start charging for it, or it eats your margin. Now let's work through what that looks like on a live job. So for this example, picture that you're a finishing trade that's priced on a flow of work to keep your lads busy. You're either plastering, painting, second fix ceilings, flooring, something like that. You make a start on site and you've been released X amount of rooms.
Jacob Austin 00:12:04 It seems like it's enough to get going, so you crack on, but you start to notice rooms aren't being released as quickly as you're finishing them. You aren't able to keep your lads gainfully employed. You're sequencing every day. You're still working, but you're not getting the productivity out of your gang that you priced against. So you start tapering your labor down a bit, leaving just a couple of blokes on site to deal with the workflow as it trickles through. Then the contractor realises that there's some delay being caused. They issue a new programme, it's a bit optimistic and it's compressing your remaining work into tight sections or dates. On the one hand, you're happy to crack on because for a week or two, the rooms start flowing to you to complete as per the programme. Then the emails start. Confirm your finish. X amount of rooms by date x confirm you're going to do weekend work. Confirm additional labor. Then the language starts to shift. You're behind. You're impacting others. You need to accelerate.
Jacob Austin 00:13:08 Now this becomes a proper commercial issue. If you haven't been issuing timely delay notices with the records to back it up. And if you haven't got a sensible way to work out your disruption cost as it builds, then you've got no clean route to push back on it. Now you're either accelerating for free, or you're being blamed for being late, or you're fighting late with really weak records, either one of these is going to be a real problem for you. So presume you asked for additional time, and then you realized later that it was costing you more money. So within the final account, you include an amount that contributes towards your disruption costs. Now you're probably hearing arguments like we gave you the time, so you've been compensated or you didn't notify properly. Or even worse, actually, no. And were applying contra charges for supervision for delays that you've caused to other contractors and prolongation of various bits of prelim work. And eventually this story starts turning into a money problem. And that's the reality. The program becomes the story, and the story then becomes the money or lack of it.
Jacob Austin 00:14:22 And just bear this in mind. Contractors contract the clues in the name so they will rely on your subcontract. So how do you defend yourself in this situation? Here's a simple, repeatable way that will keep you commercially safe without drowning you. Two simple tables. They can be in Excel. They can be in word. They can be on your phone, a time log covering event dates, impacted activities, and how long it lasts, a cost log covering, what it made you do differently and the cost of that. It's then up to you what you do with that information. You might choose to overlook small issues, as I probably would for the sake of maintaining relationships, but big items that are costing you get them notified. That means read your subcontract to identify who a notice goes to and write a simple letter. JCT. 24 allows for email submissions of notices. Now, personally, I always like to use a written letter. I feel like it's got more impact. It feels like it's carrying importance.
Jacob Austin 00:15:35 It looks like you've taken the time to consider what's in it, and you're signing it at the bottom to put your name to it. The initial notice doesn't have to be overly complex, it can just be. We are being delayed by this issue. It started on this date. It hasn't finished yet. This entitles us to additional time and cost. We'll gladly work with you. We'll gladly work with you to try and mitigate the effects as far as we can. One page. Calm tone. No drama. No argument. State the facts. This is the notice. What comes next is you need to start demonstrating the effects. You can't submit a claim that simply says cite is delayed X amount of weeks. It's activity A could not start on date. B because of event. C anchor it to your price logic. Your agreed sequence your method statement or your subcontract program. When you compare what you are actually doing to your priced logic. The difference is what you're going to be asking the contractor for.
Jacob Austin 00:16:41 With this kind of calculation, I would expect to negotiate a sensible outcome and use that to your advantage. Tell the contractor you don't want to go and employ a claims consultant and do all kinds of measured mile analysis to work out to the penny how much money you're losing. Come up with a simple, sensible calculation and negotiate from there. When you receive things like revised programs, particularly if they're based on unrealistic outcomes, they're squashing your periods of work. If it ignores constraints, then respond to the contractor. Tell them your concerns about it. Put a helpful spin on it. By all means. You're not trying to necessarily have an argument over this, but you need records. A simple response like we will use reasonable endeavours, but access information and preceding trades will likely prevent achieving these dates. So we reserve our position on time and cost. Something like that puts a marker in the sand. You're saying you're going to work to it to try and help out, and what you're effectively doing is serving a notice, but saying at this point it's too early to tell whether I'll be delayed or not.
Jacob Austin 00:17:52 Also, don't accelerate without a clear instruction and a cost basis that you can value against. Acceleration costs money. Not all acceleration. Sometimes you can bring in an extra gang. If there's enough work faces to go at, they can productively earn new money and they can go away. Everybody's happy at the end. As soon as that changes to we need to work longer days, we need to work weekends, the picture changes. This is where we start talking. Over time. We start needing two supervisors so that one can have a couple of days break per week, and there are premiums with that. The difference between your overtime pay and your regular hours pay on a per hour per operative basis is what you need to be charging for. You need the contractor to confirm they'll accept that cost and do that before you start doing any overtime. Then all you need to do is keep simple records of who turns up on what weekend, what extra shift, and charge your overtime difference per man. If the contractor isn't willing to do that, then that tells you they want the benefit of the acceleration without putting their hand in their pocket.
Jacob Austin 00:19:03 You know where they can stick that one that's right back in their pocket to get the wallet out. Another great defense is building boring evidence every week. A daily diary from your site supervisor, a weekly summary email with this is what we've achieved. These are really easy to do at the time when it's fresh in everybody's mind, and it's almost impossible to do at the end of a job. Looking back through sketchy records. Knitting the fog together. The Daily Diary doesn't have to be anything extravagant. How many lads are working on what task and how it's progressing? Plus simple things like weather records and noting down if there's any particular issues that are holding you up. Simply summing that up at the end of each week and sending that in as a short impact. Summary. What's happened? What's affected? What could you do? What couldn't you do? It starts giving you the bullets to fire if you need to. If a delay happens, that habit, if you can build it, keeps you in the loop.
Jacob Austin 00:20:07 It gives you a good balance of information that you can use. And crucially, it acts as evidence if you need to rely on it, and it will make later agreements far, far easier. And finally, loss and expense needs substantiation via your daily diary and your weekly summary. You know what events are happening. You know who is involved in what delayed activity. The cost log that we mentioned earlier now can turn into your substantiation. Link it to what your diary is telling you. You can help your contractor assess it further by splitting it into sensible chunks, so that you can identify which parts of prelims costs, which parts are overtime, which parts of the costs are because your labor is taking longer than it should to finish your project work. You're not trying to win a tribunal with this. You're trying to give them enough information to be able to assess what you're saying is true. If the assessment can be done easily, you get agreement faster. If you make it hard, you get delay and expect to give more up around the negotiating table.
Jacob Austin 00:21:13 And that brings us back to what is probably the biggest takeaway. These kind of documents. They're not just paperwork. These are records. These are leverage. You're leveraging your records to get you the money that you're owed. And that concludes a high level sum up of program and loss and expense under JCT subcontracts. There's always more to say on these details. And there's always more technicalities that can be unraveled and explained. But what I've covered today are the principles that underpin delays and loss and expense. And if you follow them, you should be able to negotiate a sensible outcome. My mission with this podcast is to help the million small subcontractors working out there in our industry. If you've taken some value away from today's episode, then I really need your help to share the show and pass that value on to somebody else who'd benefit from hearing it. I'd be incredibly grateful so that I can help as many people as possible. And thanks for tuning in. If you like what you've heard and you want to learn more, then please do find us at.
Jacob Austin 00:22:22 Head to www.QS.Zone for more information. We're also on all your favourite socials again at @QS.zone. And remember, miss the contract detail and the commercial risk falls on you. Thanks all. I've been Jacob Austin and you've been awesome.
