Are you happy to rely on a ‘stat dec’? or do you want to be sure Sub-Contractors are getting paid?

March 23, 2023 by admin

We’re all familiar with the process; given that Developers have practically zero visibility or control over how project funds are distributed once released to their Builder, they will ask that a statutory declaration or ‘stat dec’ be submitted with any request for payment.

Can you really trust a ‘stat dec’?

Whilst the logic behind the request for a ‘stat dec’ is sound, the process itself is less so, relying entirely on the assumption that declarations are always being made truthfully. The Developer has no real way of checking & short of direct contact from an unhappy Sub-Contractor, would typically have no information to the contrary so, must simply accept the Builders’ word & release payment.

If even a small minority are willing to sign off without genuine confirmation of rightful payment distribution or worse, deliberately submit a false or misleading declaration, the utility of the entire process is diminished. Do you trust that every ‘stat dec’ you receive has been made in good faith?

Developer exposure is rarely limited to a single progress payment

Work continues onsite for some time despite non or partial payment of Sub-Contractors, which of course, brings with it subsequent progress claims. Without any other available mechanism to confirm that previously released funds have been allocated correctly, significant sums of money may be claimed across multiple progress payments before a Developer becomes aware there’s an issue, often with very little having reached the intended recipients.

Never release another progress payment without being sure

There is a way to know Sub-Contractors have been paid before approving progress claims (without resorting to paying them directly!); it’s called IPEX.

IPEX is an online payment platform that secures funds intended for a specific project, preventing your Builder from being able to use project funds for any reason other than the payment of approved/verified Sub-Contractors & Suppliers linked to that project. Under IPEX, a Builder can’t move money into another project to cover a shortfall, a key motive behind falsified declarations.

Visibility over which Sub-Contractors/Suppliers have been paid & when

More than just security of funds, IPEX allows Developers to confirm who has been paid & when (standard), whilst open book configuration provides access to the complete account transaction history: who, when, how much and percentage paid against the Builder-entered contract value. IPEX lets you verify Sub-Contractor & Supplier payments before approving additional progress claims, while helping your QS to pick up any unusual payment behaviour; think a finishing trade being paid early in the project or a one-off payment to a company that has long since finished onsite. You’ll see it immediately.

Good Builders can finally ‘prove’ they pay their subbies

Just as Developers benefit from transparency, so too do ‘good’ Builders. IPEX removes any doubt around frequency/timing of Builder payments to their Sub-Contractors. And, by physically stopping payment to any party not verified as linked to the project, IPEX greatly reduces Sub-Contractor risk, helping to instil trust & encouraging more favourable pricing/terms for any Builder who willingly adopts IPEX.

Transparency AND control over how your project funds are spent

Whilst IPEX can’t prevent your Builder from running into cash flow issues during your build, it does offer Developers & Lenders a range of protections in case they do. So, keep requesting those ‘stat decs’, but now you can confirm what they say before releasing that next progress payment!

To find out if IPEX can be implemented on your next project, get in touch via this link