Getting to know your builder can make your cash flow stable. Doing contractor due diligence will prevent you from transacting with dodgy people.
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Often, late payments and underpayments are worrisome situations to be in for Sydney based-contractors. The situation can delay their employee’s wages or, even worse, they can go bankrupt.
What is even alarming is that in Australia, the majority of construction businesses (91%) that are going bankrupt are the small ones. The top reason is inadequate cash flow, with almost half (44%) of these companies stating this reason for bankruptcy.
If you do not want to become part of this statistic, then carry out due diligence.
Contractor Due diligence is a process that you undergo when looking for information about your builder. It means that you are checking if the builder is trustworthy enough to transact with. It also helps you ensure that you are only dealing with law-abiding builders, who would most likely pay you right and on time.
Doing construction due diligence can be a rigorous task for a contractor. But, it is a good thing to know more about your builder before accepting to work on a building project. Doing so will prevent problems that can happen after you sign the contract.
Doing Due Diligence will minimise the risk of payment issues because you will discover how the builder manages his projects. So, when you know that the builder is trustworthy, you can carry on and invest your time and money into the project.
If you find out that your builder is law-abiding, they will honour your right to Security of Payment. This act was created to prevent builders from ripping off their contractors, which is a common legal problem in Sydney. Whether the builder will not pay you or pay you late, the law will help you claim your hard-earned money.
In doing your investigation, you can get the information you need in lots of ways. Either by public documents or in private conversations with the people who dealt with the builder.
First, look for the following information about your builder:
You can look for the above information on government websites such as Fair Trading and ASIC. You can also do a Google Search for information like reviews and past projects.
But, offline means of investigation would also be good additions to your report.
You can make sense of your gathered data by making a Due Diligence report. While not required by law, it is a helpful document that can guide you in making better business decisions.
In making one, Fair Trading has a set of guide questions that can help you outline your report. The questions are mostly about the things that you should consider before signing a building contract.
Still unsure of your decision to go through a builder’s project even after creating the report? Consulting a construction lawyer can help you clear your head. They can help you analyse your due diligence data and your pending contract. So, you would know whether you will back out or sign the contract.
The due diligence process will only take a few hours of your time. For example, you can finish looking through your documents in an hour. But certain factors such as the availability of people you are trying to talk to can make your investigation longer.
If you need help in carrying out due diligence, Contracts Specialist can assist you.
We can help you discern a dodgy builder from a reliable one. We can also look together on your gathered data and your contract to look for any red flags. Since if you spot one, we could also give you the legal advice on what you can do next.
Call for your first legal consultation now. First consultation is FREE.
Contracts Specialist is a Sydney-based construction law firm that deals with Building Disputes, Construction Contracts, Debt Recovery, and Security of Payment. With Contracts Specialist, you are ensured that you are in good hands.