PROTECT YOUR CLIENTS AGAINST
THE IMPACT OF BUILDER INSOLVENCY

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 Helps Project Managers Find The ‘Honest’ Builders

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.

IPEX Provides Developers with Ongoing Protection

‘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:

  • 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 & the ability to make payments directly to subcontractors/ suppliers, minimising delays to practical completion

DEVELOPERS USING IPEX INCLUDE:

BUILDERS USING IPEX INCLUDE:

IPEX Project Applications

PREVENTION FROM DAY 1: 
PROTECT AGAINST FUTURE BUILDERS’ CASHFLOW ISSUES 

  • 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

MID-PROJECT IMPLEMENTATION:
GUIDE ‘TROUBLED’ PROJECTS TO COMPLETION SAFELY

  • ‘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

Developer Protections under IPEX

  • All progress payments are ring-fenced to the project 
  • All subcontractors & suppliers are subject to full KYC/AML checks & have account details independently verified before they are eligible for payment. BSB & Account Numbers are then cross-referenced with the payment file the builder submits – payment is blocked if details don’t match 
  • The lender & developer can view (and if need be, approve of) any subcontractors & suppliers that are linked to the project account before they are eligible for payment
  • The lender & developer can confirm which subcontractors & suppliers have been paid, when & how much* before approving additional claims, reducing risk of misappropriation & making ‘cost to complete’ reports far more reliable
  • Certain ‘key trades’ may be set to ‘open book’ to satisfy lender oversight requirements 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 lender or developer may require the builder to distribute funds to subcontractors & suppliers before approving any payment due to the builder

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

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