It is anticipated that as lockdown restrictions ease, and particularly with children and young adults returning to education, cases of meningitis will start to rise.
The risk of labour and materials cost inflation running significantly ahead of “general” inflation in either a “no-deal” or a “bad-deal” Brexit scenario raises the spectre of further contractor insolvencies.
Despite the collapse of Carillion receding into the memory, some contractors are still going under. Contractors are also pushing back on the terms of parent company guarantees, insurance provisions and indemnities and are increasingly looking for caps on liability.
Providers need to be alive to the risk of contractors becoming insolvent and how to limit the resulting inevitable disruption. This article looks at the situation where you have let (and hopefully signed) your contract. There’s plenty you should be doing at the procurement stage, as well, but that’s for another day.
When managing a contract, you should:
- Ensure that your contract has actually been signed and dated by both parties and if not, prioritise getting this done. Find out why it has not been signed; is the contractor disputing its terms?
- Keep contract management information up to date, including a list of the people working on the contract, a regularly updated assets database with details of all component replacements, current health and safety information and annual insurance policy details;
- Manage and monitor the contract actively, keeping on top of “payment routines” extension of time/compensation event claims and Instructions issued under it;
- Check you know what work your contractor is undertaking and that it is being done and invoiced promptly. Keep track of what you will owe your contractor for each completed task or stage and how much of this has been paid in interim payments;
- Make sure you can access financial and other contract records if your contractor’s IT system goes down on their becoming insolvent;
- When considering contract variations, make it clear to your contractor that the current terms still apply until a formal deed of variation is signed, and ensure that any variation is legally permissible;
- Have your contract independently audited periodically to check that the terms of the contract reflect what is happening "on the ground" and vice versa. Keep the contract documents up to date with any changes you have agreed;
- Maintain contingency plans for contractor insolvency, “stress test” them and keep them up to date;
- Watch out for the "warning signs" of contractor insolvencies such as subcontractors and suppliers complaining about not being paid, frequent changes of staff, recruitment and resourcing difficulties and requests for "payments on account" (or, conversely, late or incomplete payment requests); and
- Take advice promptly as soon as any problems are identified – don't leave it too late to put contingency arrangements in place.
The above points are not exhaustive, and in many cases are just the starting point for your preparations and investigations. Each contract needs to be considered on a case-by-case basis depending on its value, length, subject matter and terms.
The overall message is clear, though. You need to consider the risks and implications of contractor insolvency at the scoping and procurement stages, manage your contracts actively, maintain up-to-date contingency plans and be ready to react quickly if your contractor does get into financial difficulties.
For more information
If you would like advice on any of the issues raised in this article or believe your contractor is heading for insolvency, please contact Andrew Millross.
As we continue to emerge from lockdown measures and deal with local measures and the short and long term economic impact of Covid-19, local authorities will need to re-assess how services will be delivered for years to come.
The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
Two final pieces of the possession jigsaw have been published on 15 September 2020. Mr Justice Knowles’ working group on possession proceedings has issued its guidance on the “overall arrangements” for possession proceedings.
One change proposed by the Building Safety Bill is the introduction of a duty holder regime, which will see statutory responsibility for the safety of higher risk buildings placed on key individuals
Throughout this pandemic, the Competition and Markets Authority (CMA) has been publishing various “Statements on Coronavirus” (Statements) which provide guidance on consumer rights during this time.
A recent increase in COVID-19 cases in the UK means new measures are being put in place in an effort to reduce the risk of a second wave. Whilst the impact of COVID-19 continues to be felt, it is important to remain focused on the sector’s road to recovery.
Sometimes half an hour at a conference gives you the reality that has been staring you in the face all along. That was my experience watching “Change is on the Horizon”
Following our recent e-briefing on Possession Notices, Helen Tucker and Emilie Pownall from our housing litigation team discuss the impact of the changes on social landlords.
Not only has the possession stay been extended until 20 September, the notice periods to be given to tenants has been extended in certain circumstances with some important exceptions.
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