Don’t Wait Until Your Money Is Gone
The Check That Helps Developers ‘Step In’ Before Their Builder Enters Administration ‘Step In’ Rights…
IPEX has now released a third option for the payment of builder entitlements, removing the last commercially valid point of contention (without compromising the security of subcontractor & supplier entitlements).
Until now, builders either received an agreed percentage of any subcontractor/supplier payments made (cost plus) or more commonly, requested the release of their entitlements via a developer approval process. Typically, the developer would deposit the progress payment and ask that the builder pay all subcontractors and suppliers linked to the claim. Once these payments were validated (payment recipients are immediately visible in the IPEX system), the builder would request the release of their entitlements. Provided that the amount requested was in line with the QS assessment, the developer would approve.
This process is designed to achieve 2 primary outcomes:
Whilst this process continues to work very well in certain situations, it was perhaps a step too ‘secure’ in others; some builders were a little put off by having to ‘ask’ for their money given that it had already been approved by the QS. And fair enough.
IPEX now offers developers the option to provide builders with immediate access to their entitlements whilst still ‘ring-fencing’ the remainder of the claim.
A developer (or their QS) can now enter a value into IPEX that has been assessed as the amount payable to the builder, isolating this value from the remainder of any progress payment. In other words, the developer can give the builder access to $200K out of a total progress payment of $1M – the $800K remaining is subject to standard IPEX limitations & can only be used to pay subcontractors and suppliers linked to the project.
If the builder believes they’re due an amount greater than that which has been allocated, the ‘approval’ process remains – they simply submit a request and make their case; if the developer is comfortable, it gets approved.
Well, legitimate ones anyway – what justification could a builder have for needing access to subcontractor entitlements that would be commercially acceptable to any developer?
IPEX can now be implemented in a way that conceals subcontract/payment values, builder margins AND gives builders immediate access to their entitlements. There’s really nothing left to object to.
All IPEX payment options/processes remain commercial decisions to be agreed between the developer & their builder on a project-by-project basis.
To find out if IPEX can be implemented on your next project, get in touch.
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