Managing projects

Dealing with a distressed project

Make sure you’re not paying another developers’ bills

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IPEX

Is your builder asking for more money to finish?

Best case scenario, the builder is up to date with payments and genuinely requires help to complete the project. Far worse is when your builder has been cash flowing other projects with your money.

While you may never know the true cause of the shortfall, the least disruptive (and least expensive) course of action is often to ‘help’ the builder.

But there is another problem: your builder will be working on multiple projects at various stages of completion (and likely, distress); how do you know that any extra payment you make isn’t immediately being shifted into the builders’ other projects?

Manage Distressed Projects to completion without paying subcontractors and suppliers directly

IPEX is an online payment platform that places practical limits on how a builder can use project funds. Builders can access payment for their preliminaries, margin and direct costs, but the balance of each progress payment is set aside and off limits – these funds can only be used to pay subcontractors and suppliers linked to the project.

Rather than relying solely on a ‘stat dec’, IPEX allows project managers to verify that those linked to previous claims have been paid as expected before certifying the most recent claim.

Whilst ideally used as a preventative tool, IPEX can also be engaged mid-project to help developers/lenders to ensure that any further payments made into a distressed project are paid under controlled conditions.

Using IPEX

Additional benefits

Ring-fence all further payments to your project

Stop payments being used to cashflow other projects

Validate ‘stat decs’ to confirm subcontractor payments

Target specific subcontractors and suppliers for payment

Act on ‘step in’ rights before your builder goes under

Protect funds already paid to builder in the event of insolvency

No change to builder processes and no impact on builder payment
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IPEX adds to practical controls existing legal protections

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IPEX prevents your payments from being used to cashflow other project/s linked to your builder – only subcontractors and suppliers working on your project can be paid out of the project account.

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 and certainty over how funds are spent for the remainder of the project.

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In addition to ‘ring-fencing’ funds to your project, IPEX can also further limit how funds can be distributed by the builder down to isolating a specific subcontractor or supplier that those funds are owed to; funds deposited into the IPEX account can only be paid to that entity.

This is ideal for payment of supplier deposits or specific overdue invoices – the developer/lender can ensure funds reach the intended recipient without the risk/admin involved with having to step in and pay them directly.

Once all payments associated with the ‘variation’ request have been made, these controls can be removed.

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Should a ‘payment default’ event occur before completion of an IPEX protected project, the impact to developers and lenders is minimised as:

  • Any payment made to the builder via IPEX has either been distributed to approved parties or remains in the account
  • The developer can replace the builder as trustee of the project funds, gaining full visibility of all previous transactions and the ability to make payments directly to subcontractors/ suppliers, minimising delays to practical completion

$1B+ in funds protected and counting

IPEX adds to practical controls existing legal protections

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  • Guard against the potential impact of other, less-feasible developments linked to your builder
  • Additional protection when working with a builder for the first time or builder is ‘stepping up’ a level
  • Provide lender comfort should builder due diligence has raised minor red flags
  • Provide lender comfort on developer-builder projects
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  • 'Controlled’ payments to assist your builder with funding supplier deposits
  • ‘Ring-fence’ additional payments outside of the contract to ensure they’re spent on your project
  • Move forward with the builder despite substantiated instances of non/delayed payment of subcontractors or suppliers
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Developer protections under IPEX

  • All progress payments are ring-fenced to the project and can only be used to pay approved subcontractors and suppliers on your project
  • All subcontractors and suppliers are subject to full KYC/AML checks and have account details independently verified before they are eligible for payment. BSB and account numbers are then cross-referenced with the payment file the builder submits – payment is blocked if details don’t match
  • The developer can view (and if need be, approve of) any subcontractors and suppliers that are linked to the project account before they are eligible for payment
  • The developer can confirm which subcontractors & suppliers have been paid, when & how much* before approving additional claims, reducing risk of misappropriation and making ‘cost to complete’ reports far more reliable
  • In cases where risk is higher or greater control is deemed necessary, the developer can ‘isolate’ a specific subcontractor or supplier for targeted payment
  • Certain ‘key trades’ may be set to ‘open book’ to satisfy oversight requirements including the payment of supplier deposits or similar, whilst other contract/payment values can remain confidential (payments made under standard view are expressed as a percentage of contract value which is sufficient to ensure amounts paid are in line with work performed onsite)
  • If required, the developer may elect to link the payment of builders’ entitlements to subcontractor/supplier payments – an active incentive for the builder to distribute funds quickly and in full

* Standard developer portal view shows payment as % of contract value. Open book developer portal view shows subcontract/payment values.

Testimonials

What our partners say

“Based on our experience IPEX should be mandatory. It is now an integrated and essential part of our governance. It’s delivering a new standard of providing trust downstream to our subcontractors and suppliers that they’ll be paid and upstream to our clients and the financial institutions funding these projects.”
Ken O'ConnorDirector
Ken O'Connor
“IPEX delivers the security of funds subcontractors need on projects. Everyone prices risk into jobs; however, with the IPEX concept, there is a reduction of payment risk, which should translate into a more competitively priced trade insurance outcome. It’s really in everyone’s best interests in the long run to use IPEX.”
Sam LeslieGeneral Manager
Sam Leslie
“Once we were aware of IPEX and decided to implement this new standard for project payments, it was a seamless onboarding and end-user experience. It reduces risk and addresses trust and relationship building in one platform. This will put us in a powerful position as the demand for construction labour increases.”
Rob MoolmanManaging Director
Rob Moolman
"At Frasers, we take our commitment to every project, and every investor, builder, subcontractor, supplier, and customer we work with seriously. That means putting in place financial frameworks and processes to ensure that every dollar is used for its intended purpose, and there is full accountability and transparency over the budget for a project.” “We’re so excited about the Encompass development, which has a real ‘wow’ factor, and through IPEX we’re better positioned to deliver the project securely and successfully.”
Sarah BloomGeneral Manager Development Victoria
Sarah Bloom
"From the moment I understood what IPEX provided I had no hesitation in introducing it to BlueScope. With such a major capital works project it was clearly a very prudent risk management tool. With hundreds of millions of dollars being paid to suppliers and subcontractors through major contractors, securing certainty that monies were being delivered into the accounts of the substantial number of subcontractors and suppliers was critical.“
Steve ChandlerCEO
Steve Chandler
"After a year of utilising the IPEX platform on one of our key commercial construction projects, the experience has been overwhelmingly positive. The platform’s user interface and our customer service experience have exceeded our expectations, significantly bolstering the security and efficiency of our collaboration with the builder. The adoption of IPEX has been embraced by the builder and & it provides additional comfort to trades particularly with the current construction industry challenges."
John VickersDirector
John Vickers
“Based on our experience IPEX should be mandatory. It is now an integrated and essential part of our governance. It’s delivering a new standard of providing trust downstream to our subcontractors and suppliers that they’ll be paid and upstream to our clients and the financial institutions funding these projects.”
Ken O'ConnorDirector
Ken O'Connor
“IPEX delivers the security of funds subcontractors need on projects. Everyone prices risk into jobs; however, with the IPEX concept, there is a reduction of payment risk, which should translate into a more competitively priced trade insurance outcome. It’s really in everyone’s best interests in the long run to use IPEX.”
Sam LeslieGeneral Manager
Sam Leslie
“Once we were aware of IPEX and decided to implement this new standard for project payments, it was a seamless onboarding and end-user experience. It reduces risk and addresses trust and relationship building in one platform. This will put us in a powerful position as the demand for construction labour increases.”
Rob MoolmanManaging Director
Rob Moolman
"At Frasers, we take our commitment to every project, and every investor, builder, subcontractor, supplier, and customer we work with seriously. That means putting in place financial frameworks and processes to ensure that every dollar is used for its intended purpose, and there is full accountability and transparency over the budget for a project.” “We’re so excited about the Encompass development, which has a real ‘wow’ factor, and through IPEX we’re better positioned to deliver the project securely and successfully.”
Sarah BloomGeneral Manager Development Victoria
Sarah Bloom
"From the moment I understood what IPEX provided I had no hesitation in introducing it to BlueScope. With such a major capital works project it was clearly a very prudent risk management tool. With hundreds of millions of dollars being paid to suppliers and subcontractors through major contractors, securing certainty that monies were being delivered into the accounts of the substantial number of subcontractors and suppliers was critical.“
Steve ChandlerCEO
Steve Chandler
"After a year of utilising the IPEX platform on one of our key commercial construction projects, the experience has been overwhelmingly positive. The platform’s user interface and our customer service experience have exceeded our expectations, significantly bolstering the security and efficiency of our collaboration with the builder. The adoption of IPEX has been embraced by the builder and & it provides additional comfort to trades particularly with the current construction industry challenges."
John VickersDirector
John Vickers
Use cases

Who benefits

Developers

Reduce the risk/impact of builder insolvency. Deter distressed builders from tendering and protect your project against future builder cashflow issues.

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Builders

Leverage your strong financial position into more contracts and better commercial terms without sharing commercially sensitive information.

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Lenders

Prevent loaned funds from being diverted to other projects linked to your builder (or developer). Reduce risk and automate oversight for developer-builder lending.

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Project managers

De-risk builder recommendations and identify non-payment of subcontractors/ suppliers immediately. Reduce reputational risk while maximising the chances of successful project delivery.

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Subcontractors and suppliers

Work for builders who won’t risk your entitlements to cashflow other projects. Reduce your risk of non-payment in the event of builder insolvency.

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Construction lawyers

Add practical controls to existing legal protections. Best practice risk mitigation for your property developer clients.

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Contact Us

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