Builder insolvency

Protection for developers

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IPEX

Prevent your funds from being used to cashflow other developers projects

Insolvency risk has led to ever-increasing scrutiny on builder finances but no matter how thorough your due diligence process, it can’t predict the terms or financial impact of any new contracts your builder may sign during your build.

No developer appoints a builder believing they’re at risk of going under but their financial position can change quickly – many have been impacted despite long standing relationships, great track records and extensive due diligence.

IPEX helps developers to ‘test’ financial due diligence indications to reduce the risk of appointing a builder that is already in financial distress and, provides ‘ongoing’ protection should their builder run into trouble after they’ve signed the contract.

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Project protection

You can't insure against builder insolvency but you can still protect your project

IPEX is an online payment platform that integrates with a project trust account to ‘ring-fence’ project funds and limit what a builder can do with progress payments.

Given the recent wave of insolvencies, IPEX is working with developers and lenders to augment existing due diligence processes and protect funds against any potential cash flow issues their builder may encounter during their build.

Transparency

Developers/lenders can verify who has been paid, when and how much* (including the percentage of contract value paid) before releasing further funds.

Security

IPEX ensures that developer/lender funds can be used only to pay approved subcontractors and suppliers linked to that specific project.

Using IPEX

Additional benefits for developers

‘Test’ builder due diligence outcomes to find ‘honest’ builders

Stop payments from being used to cashflow other projects

Validate ‘stat decs’ to confirm subcontractor payments

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

Attract subcontractors by reducing risk of non-payment
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How does IPEX help developers & lenders

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Due diligence in its current form requires the developer/lender to satisfy themselves of a builders’ ability to meet existing contractual obligations. If the information they are basing this decision on is out of date, incomplete or fraudulent, they bear the consequences.

IPEX shifts the onus for any due diligence ‘gaps’ onto the builder; those willing to accept the condition of ‘ring-fenced’ funds are essentially ‘proving’ their financial status; those that have misrepresented their true position will fight IPEX inclusion and likely withdraw.

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IPEX adds practical controls that prevent a builder from using progress payments to cash flow another project, even if they’re in extreme financial distress. Builders can access payment for their preliminaries, margin and any direct costs, but funds equal to the value of works performed by subcontractors are set aside and off limits.

IPEX also allows developers to confirm every subcontractor and supplier payment. If your builder submits a ‘stat dec’ claiming to have paid someone they haven’t, you can identify it immediately and take action before approving the next claim. In the case of more serious/repeated breaches, you’ll have the information you need to act before your builder enters administration.

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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 project applications

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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
More applications
Testimonials

What our customers have to say

"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
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