The importance of QS expertise for subcontractors in a turbulent economy
Posted on 5th April 2022 at 09:52
Rising energy prices and supply chain challenges are set to cause havoc for subcontractors and contractors, with many already feeling under unprecedented pressure.
The hike in energy prices has led to a decreased production in major building materials such as steel, aluminium and cement. Unlike the domestic energy sector, there are currently no limits on the increase of commercial energy costs. The production issues alongside increasing costs of such materials are causing many sleepless nights for the construction sector.
To exacerbate the situation further, the legislation regarding rebated fuel, also known as red diesel, is changing on 1st April 2022. Red diesel is gas oil with a lower fuel duty than the white diesel used in road vehicles. Previously used in construction, from 1st April red diesel is only permitted for use within the agricultural sector. Subcontractors will be forced to pay the higher duty of white, fully taxed diesel.
Subcontractors need experienced QS advice
SubPort is an award winning Quantity Surveying consultancy. We provide essential cost control, contract and tendering advice to subcontractors. With so many cost and production concerns to overcome, the advice of an experienced Quantity Surveyor (QS) has never been more essential for subcontractors.
With many tenders already accepted and contracts signed, subcontractors are now having to deliver on price and lead times agreed before the cost increases and supply chain issues hit. According to Director of SubPort, Dan Henderson, increasing costs on an unprecedented level and fixed-price lump-sum contracts don’t combine well for contractors or subcontractors.
Dan also foresees an impact on clients:
“While many clients will see the benefit from this in the short term and remain insulated, far more contractors and subcontractors will suffer. Longer term some will disappear leaving less choice and higher prices for clients, or worse still contractors or subcontractors will disappear during the works, leading to delays and increased costs regardless. It’s becoming increasingly difficult for contractors and subcontractors alike to estimate and price work, particularly work that is more than a couple of months away or has a programme of a few months or more."
How can SubPort help subcontractors to remain profitable?
With subcontractors focused on delivering existing projects, there is little time for contract administration and addressing the detail behind the impact of rising costs and supply delays. Establishing a cost-effective strategy for moving forward is even more time-consuming.
As experienced quantity surveyors, SubPort evaluate a subcontractor’s financial position and contractual commitments, alongside increased commercial energy costs and other anomalies, to create a robust commercial plan.
SubPort review existing contracts as well as newly awarded contracts to understand any risks that might impact cashflow, productivity and profits. The terms and conditions will also be fully reviewed to establish a subcontractor’s contractual commitments and where there is a potential for renegotiation.
Measuring the feasibility of a contract and forecasting contract risks requires QS experience and industry expertise to achieve full transparency.
Commercial contract management
SubPort prepare and submit payment applications and variations, and deal with any compensation claims. By handling such administration quickly and efficiently, the subcontractor avoids the risk of unnecessary financial penalties.
Managing change control
Particularly in light of changes in costs and material supplies, effectively managed change control can be the difference between a subcontractor powering through a turbulent economy and going out of business. SubPort calculate and manage any changes to a scope of works and apply them correctly in a way that protects the subcontractor.
SubPort handle contractual disputes on behalf of the subcontractor. Commercial representation is provided when required, both remotely and in meetings, and all risks are mitigated. SubPort can also act on behalf of subcontractors to recover cash wrapped up in retentions.
Can we help?
If you’re a subcontractor or contractor who needs help in managing increasing costs and slow material supply, get in touch with SubPort to see how we can help.
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