Is your Builder asking for more money to finish your project?
Whether the result of material/labour costs rising significantly on a fixed price contract or deliberate underquoting to win a tender, many Builders are now finding themselves in a position where they are no longer able to complete projects for the amount agreed.
YOU CAN SAY NO, BUT WHERE DOES THAT LEAVE YOU?
It’s a tricky situation with no real winners – Builders really don’t want to be asking either. Calling their bluff means risking they go under, whilst terminating the contract & engaging a new Builder is expensive, likely costing far more than what they’re asking for. All options considered, helping your Builder out is often the most practical way forward.
AM I BANKROLLING OTHER DEVELOPERS’ SHORTFALL?
Whilst the rational response may well be to agree, you want to be sure that if you do make an additional payment, the entire sum is required for your project. Unfortunately, this can be difficult to establish given the information you’re relying on is coming from your Builder. But even if you are able to satisfy yourself that the request is genuine, how do you ensure the additional funds reach the intended Sub-Contractors & Suppliers without paying them directly?
TRANSPARENCY & CONTROL ARE CRITICAL TO SUCCESSFUL RENEGOTIATION
When you’re asked to contribute large sums of money outside of the original agreement, it’s only natural to question how your funds have been managed to date & want greater visibility over how all future payments will be spent.
Conversely, such requests are not necessarily a sign of Builder mismanagement; costs can escalate quickly in the current market with cash shortfalls impossible to avoid for even the most financially responsible Builder. A request to renegotiate that includes enhanced transparency & control over how any additional funds are used can significantly increase the probability that a new agreement can be reached.
YOU’VE DECIDED TO PAY: MAKE SURE YOUR FUNDS REACH THE RIGHT PEOPLE
IPEX is an online payment platform that secures funds intended for a specific project, ensuring that progress payments can be used only to pay approved Sub-Contractors & Suppliers linked to that project. IPEX allows Developers to verify who has been paid & when before approving the release of any further funds. With IPEX:
- Funds are ring-fenced from any other project & can only be used to pay approved Sub-Contractors & Suppliers on your project
- Each Builder-nominated payee must be onboarded through IPEX which includes identity & bank account verification, with those approved for payment visible to the Developer
- Developers can verify that payment has been made to any given Sub-Contractor or Supplier before releasing further funds
- Developers may elect to hold final approval rights over payments until all nominated Sub-Contractors and/or Suppliers linked to the ‘variation’ request are paid as intended
Making any agreement to contribute additional funds conditional on the use of IPEX is the safest way forward. By agreeing, Builders are confirming that their request is genuine (a payment through IPEX doesn’t help their position on any other project), whilst Developers gain transparency over how funds are spent for the remainder of the project.
A PRACTICAL, FAIR-MINDED APPROACH TO RENEGOTIATION FOR BOTH DEVELOPERS & BUILDERS
Whilst re-negotiating previously agreed terms is never pleasant, it is sometimes necessary. IPEX makes additional contributions far more palatable to Developers, providing control over who can be paid & assurance that funds can only be spent on their project. Similarly, IPEX can assist Builders that find themselves in a difficult position to prove that their request is genuine, increasing their chances of securing the funds they need.