Builder Transparency: What Payment Info Developers Can View Under IPEX?

February 14, 2024 by admin

In the construction industry, builder transparency is crucial for establishing trust and ensuring project success. IPEX for builders provides tools and strategies to achieve this transparency.

As developers’ use of IPEX becomes more widespread & ultimately, a requirement from lenders, it’s only a matter of time before are asked to work under IPEX? And while most have approached negotiations logically to date, a small handful have responded with a degree of fear and/or anger – a reaction that has immediately ruled some out of contention for the contract.

Don’t lose a contract based on false assumptions: initial builder response is critical

A key reason developers & lenders are engaging IPEX is as a real-world ‘test’ of due diligence – a way of weeding out those who have misrepresented their true financial position & intend to use early progress payments from the new contract to finish off other developers’ projects. We expect builders in trouble to fight the use of IPEX – that’s the point – their response helps to identify them.  

But between logic & fear is another group; builders who are initially opposed but ultimately, agree to work under IPEX. So why the early hesitation if they aren’t in financial difficulty? We asked – their reaction was based on what they thought working under IPEX meant:

  • “I’m not sharing how much I pay my subbies.” 
  • “I don’t want clients seeing my margins.”
  • “We can’t have other parties dictating when we pay our subbies”

All understandable concerns but none are requirements for working under IPEX. 

So, what can a developer see under IPEX?

Typically, not much. In fact, IPEX standard view is designed to conceal a builders’ commercially sensitive information i.e. subcontract & payment values & therefore, builders margins/trade letting wins. 

IPEX only provides developers with enough data to verify that a) the subcontractors & suppliers linked to the previous months claim have been paid & b) that the percentage of contract paid is roughly proportional to work completed – it’s a logic check, an extension of the ‘stat dec’ process to make sure the previous progress payment has reached the right people before approving further claims.

A screenshot of a computerDescription automatically generated

*IPEX standard developer portal view: no account balance data, subcontract or payment values are visible to the developer.

Understand what’s being asked of you AND know what you can get in return

Most developers aren’t asking you to give up subcontract values, payment amounts or your margins: they just want to know that subbies are getting paid & be able to protect their investment (and investors) if something goes wrong. 

Practically, the level of transparency provided by IPEX standard portal view should not be of concern to any builder and any increase in visibility levels above standard view requires written consent from the builder (unless an insolvency or payment default event as defined by the contract has occurred.

For builders who are already doing the right thing, nothing really changes under IPEX

There is no change to the subcontractor or builder progress claim process, no change to the QS approval process and no need to change accounting software; your process is essentially the same; IPEX just ensures that everyone (including the builder) gets what they’re entitled to. 

In our experience, very few builders have an issue working under IPEX once they understand what’s required & importantly, what they can get in return.

  • For tips on negotiating the best deal possible when you’re next asked to work under IPEX, click here
  • To learn how builders are proactively offering IPEX to clients to win contracts, talk to IPEX