Construction has changed. Has the way you run your business changed with it?
I had a conversation recently with a business owner about how the industry has changed. He was very operations focused, and he told me one of the biggest adjustments he had made was accepting that commercial now leads.
His point was simple.
When the commercial team says stop, you stop.
For someone used to getting on with the job and making sure it gets delivered, that is a significant change. But delivering is only good for the business when you are going to get paid for it. Margins are too tight to keep delivering without understanding the commercial position.
That got me thinking. How many companies are still focused on delivery, carrying on with the work without understanding whether they have protected their right to payment?
Quite a few, in my experience.
The work gets done. Labour and suppliers need paying. Then the money does not arrive, and everyone starts asking why.
Sometimes there is a difficult client. Sometimes there is a difficult QS. There are people who delay payment because they are not being challenged enough, and businesses that seem to pay whoever shouts the loudest. That is wrong, and it needs challenging.
But that is not the explanation for every payment problem. We also need to be honest about what is happening within our own businesses.
When you grow, the expectations grow with you.
A larger project does not just mean more of the work you already know how to do. Your client may have a bigger commercial team, more detailed requirements and a contract that needs much more attention than you are used to giving it.
Take materials stored off site. You might expect to be paid because you have ordered them and committed the money. Then you are asked for vesting documentation. Depending on the contract, there may be requirements to meet before those materials can be included for payment.
If you have never dealt with that before, it can feel like someone has introduced another hoop at the last minute. But was it introduced at the last minute, or was it in the contract you signed and did not properly read?
That is one of the surprises growth brings. Your turnover has increased, but has your understanding of what you have agreed to increased with it?
Variations are another example.
“We did the work, so we should be paid for it.”
I hear this a lot. On its own, it is a childish attitude to a commercial issue, and it does nothing to resolve it.
If you are claiming a variation, you need to establish why you are entitled to the additional payment and substantiate the amount. What changed? Who instructed it? What records support it? Have you followed the requirements in your contract?
Your client may need that information to substantiate the same variation further up the chain. If you do not provide it, you can prevent them from recovering the money for the very work you are demanding payment for.
Their obligation to pay you depends on your contract, but the practical problem still matters. You may be asking them to fund your unsupported claim from a margin that is already tight.
Why should your client lose their profit because you do not want to substantiate what you are asking for?
That is not fair either.
People need to look at the wider picture. Understand what the person receiving your claim needs to assess it, and what they may need to pass it on. Give them something they can actually work with.
This is part of the work I do with my clients: helping them understand and follow their contracts, put proper evidence behind their payment claims, and use the contractual mechanisms available to challenge problems and get the employer’s attention.
Commercial needs to be involved while decisions are being made. By the time the work is finished and the payment has become a problem, some of the opportunities to protect the business may already have passed.
That does not mean stopping work whenever an invoice is late. Any decision to stop needs to be made with a proper understanding of the contract and the right process. It means that when commercial identifies a problem, operations cannot simply carry on and hope it will sort itself out.
Growth is a choice.
There is nothing wrong with running a business at a size you understand and can manage well.
But if you choose to grow, you need to grow your knowledge or bring in people who understand the additional requirements. You cannot expect everything around you to become bigger and more complex while you carry on working in exactly the same way.
These are things people can learn. With the right guidance, they become part of how you run the business.
The industry has changed. We can keep complaining about it, or we can understand it well enough to protect our businesses and challenge what is wrong.
Complaining gets us nowhere. Change does.