Although typically a developer-led decision, project managers are increasingly driving the implementation of IPEX to reduce the risk & impact of builder insolvency for their clients.
Whilst the primary motivation for these PM’s is to reduce client exposure, there is also a desire to avoid the significant reputational hit that comes with recommending the wrong builder.
IPEX helps to ‘test’ financial due diligence outcomes to reduce the risk of appointing a builder that is already in financial distress and, provides ‘ongoing’ protection should the builder run into trouble after they’ve signed the contract.
DE-RISK BUILDER RECOMMENDATIONS
IPEX allows project managers to ‘test’ the builders’ financial position before making a recommendation.
If your builder truly has the financial capacity to complete existing contractual commitments, they should not need to divert funds from this project!
IDENTIFY NON-PAYMENT OF SUBCONTRACTORS IMMEDIATELY
IPEX lets project managers verify every single payment.
This transparency allows immediate identification of fraudulent or misleading statutory declarations so that action can be taken before certifying the next claim.
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 & direct costs, but the balance of each progress payment is set aside & off limits – these funds can only be used to pay subcontractors & suppliers linked to the project.
IPEX provides project managers with visibility over who has been paid & when, without requiring a builder to share commercially sensitive information including their margin or subcontract values.
Importantly, IPEX does not change the agreement between a developer & their builder, it just provides a range of practical controls to ensure they are always operating within it.
There is NO cost to project managers; IPEX is paid for by the developer.
PROTECT AGAINST FUTURE BUILDER CASHFLOW ISSUES
Should a payment default event occur, IPEX minimises the impact to your client. Funds are ring fenced so can’t be siphoned off to other projects/accounts prior to the appointment of administrators.
The PM/developer also receives the full account transaction history, removing much of the work associated with substantiating creditor claims & establishing your exact position on the project.
‘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 & no impact on builder payment.
Attract subcontractors by reducing risk of non-payment.
‘TEST’ BUILDER FINANCIAL DUE DILIGENCE RESULTS TO FIND THE ‘HONEST’ BUILDERS
DD 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 DD ‘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 & likely withdraw.
PREVENT PAYMENTS BEING USED TO CASHFLOW OTHER PROJECTS & ACT ON ‘STEP IN’ RIGHTS EARLY
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 & any direct costs, but funds equal to the value of works performed by subcontractors are set aside & off limits.
IPEX also allows developers to confirm every subcontractor & supplier payment. If your builder submits a ‘stat dec’ claiming to have paid someone they haven’t, you can identify it immediately & 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.
PROTECT FUNDS ALREADY PAID TO THE BUILDER IN AN INSOLVENCY EVENT
Should a ‘payment default’ event occur before completion of an IPEX protected project, the impact to developers & lenders is minimised as:
PREVENTION FROM DAY 1:
PROTECT AGAINST FUTURE BUILDERS’ CASHFLOW ISSUES
MID-PROJECT IMPLEMENTATION:
GUIDE ‘TROUBLED’ PROJECTS TO COMPLETION SAFELY
* Standard developer portal view shows payment as % of contract value. Open book developer portal view shows subcontract/payment values.