EP 136

Navigating Collateral Warranties: A lawyer’s insight into what they are and when you need them. (EP 136)



In the studio today, I am joined by Connor Mennell. Connor is a Construction solicitor specialising in transactional and contentious dispute work at Gordons LLP.

Connor has negotiated and advised on the terms of building contracts and knows the JCT and NEC standard forms. Connor also has experience resolving disputes through litigation, adjudication and mediation and providing commercial advice during ongoing projects to avoid formal disputes.

In today’s conversation, Connor talks about Collateral Warranties, what they are, why the industry has them and how to get them right. I was on an incredibly high-profile project once, where the client was a huge bank, and they asked for a Collateral Warranty, but they did so post-contract, and it was a drawn-out and expensive affair which Connor says is not unusual.

In this episode, we discuss how to avoid these pitfalls. You must listen to this episode if you’re a QS or a Main Contractor.

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Paul Heming: Hello and welcome to episode 136 of the Own the Build podcast. With me, Paul Heming. I want to start today’s show by saying a big thank you to everyone and anyone who has either a reached out to me on LinkedIn, had a flood recently of you, own the builder’s new and old contacting me, which is absolutely epic. We’re actually currently in the top 15 in the country on Apple’s UK chart for management. So we’re doing really, really well and it’s all because of you guys. I would love us to get a few more reviews and ratings. So if you do go and download the free template that we’re giving away today, which is a prequalification questionnaire template, please also just hit review and leave us a rating at C-link. I think you guys all know we pre-qualify contractors’ day in, day out. We have automated version of the PQQ, but if you’d like a simple word version, like I said, just hit the show notes and download it and leave us a review. In the studio, today I’m joined again by Connor Mennell, who is a construction solicitor specializing in transactional and contentious dispute work at Gordons. Connor has negotiated and advised on the terms of building contracts and knows that JCT and NEC. Connor also has experience resolving disputes through litigation, adjudication and is soon to be heading into a mediation. He told me. And is pretty amazing at providing contractual and commercial advice, which you will all remember from just a few episodes ago. And finally has the most delightful hull accent that I have ever heard. Connor, welcome back. How are you mate?

Connor Mennell: Hi, Paul. I’m good, thanks. And that sounds like you’ve heard too many hull accents then.

Paul Heming: Yeah, I mean that’s probably actually a pretty fair analysis to be fair, but irrespective I’m a big, big fan. How’s everything going? Like I said, you were telling me off air that you’ve got mediation coming up soon. How’s business?

Connor Mennell: Yeah, it’s been good. We’ve had quite a lot going on in the last month or two. I think most people I imagine are the same in a run up to summer, everyone wants to get things done as much as possible. So it’s been a busy, busy few months. You’ll be pleased to know off the back of our last conversation that I had a couple of smash and grab adjudications since we last spoke.

Paul Heming: Oh, I thought you were anti-smash and grab. You’ve changed, I changed you.

Connor Mennell: Oh, what can I say, Paul, you just got to play the game, don’t you?

Paul Heming: Yeah, I thought when you were saying it, you were saying I was like I bet you’d smash and grab whenever you could.

Connor Mennell: No, yeah, I mean it’s there, isn’t it? So use the tactics that are available. So we are, we are.

Paul Heming: Indeed. So it’s great to have you back on the show. Like I said before obviously you came in, I think it was episode 120. People will have listened to that, but there’ll be new listeners to the show. Just explain a little bit about yourself really, Connor, who you are, your journey in construction today.

Connor Mennell: Yeah, so as you said before, solicitor who predominantly I’d say deals with contentious work at the moment. So your typical payment disputes, your late completing the job, who’s responsible, can we submit, pay less notices, et cetera. And then also as we’re going to discuss a bit more today on the transactional side, putting in place consultant appointments, building contracts, even just reviewing all sorts of standard terms and conditions, updating main contractor, standard precedents, all that sort of thing. And as we’ll discuss negotiating warranties.

Paul Heming: Indeed, indeed. So just for simplicity, just talk about the difference for you, between contentious and transactional work. Is it that you typically do just, wait, it sounds like you do a blend of both, but is it typical for a construction solicitor to maybe do contentious and then another skillset is transactional or how does it usually work?

Connor Mennell: So it varies actually. I know there are other firms, some very well renowned firms that are of the view that you either specialize in one or the other. Some people just prefer one or the other. And then some people, for example, the partner who leads my team at Gordons and really experienced guy called Richard Piper. He has always done both sides of transactional and contentious work. And I think for anyone starting out, it’s incredibly good experience and standard to be a much better step to be doing both because if you just work on a dispute, but then it comes to negotiate the contract, whether it’s a building contract or a consultant appointment and there’s a particular burn of contention in a dispute that you’ve been like on, you sort of see the angles that you can twist things because it can come down to grammar and commas and where things are set up or just different approaches to how a contract was structured and things that were or were not included that had a big impact on a dispute. You might then take that forward into negotiating the contract. Vice versa, if you know contracts inside and out, you know exactly where you need to go and what bits you can pick on the dispute side of it. So I think there’s a big advantage to doing both.

Paul Heming: Yeah, that makes perfect sense, right? You go through, you see the pitfalls and where you could go wrong with certain bits and pieces and you think next time round when I’m drafting a collateral warranty or a contract or whatever, that’s fresh in the memory, right? We can’t slip up on that element again. So that makes perfect sense. No, no, that’s really great and it, go on…

Connor Mennell: I was just saying, I think as well from our client’s point of view, they come to us with their issues and pick up the phone to me that want to speak about construction issues. They don’t necessarily think, oh, this is a dispute or this might turn into a dispute or negotiate a contract. I’ve got an issued this, so they’ll speak to me and want me to help them. They don’t necessarily care what type of issue it is.

Paul Heming: I think that is totally…

Connor Mennell: True help.

Paul Heming: I think you want that full 360, right? Is that they want to come, that’s kind of why I was, I guess I asked that question initially, right? From my perspective when I’m thinking construction’s this, yes, it makes sense, transactional versus contentious, but throughout my career I’ve employed you guys not you specifically, but construction, solicitors, lawyers a lot, and I didn’t particularly care, I just wanted that shoulder to cry on, to be honest with you can’t. So it makes sense that you’ve got that across both skill sets, right?

Connor Mennell: Yeah, I mean, the collateral warranties that we’ll come onto, perfect example. You have someone that puts them in place, but then if something goes wrong with, then you sort of the natural thing to do is speak to the person that helps put you in place with the warranty. So yeah, I think it is from my point of view, it’s sort of the natural way to deal with things. But like I said, different people, different approaches.

Paul Heming: Yeah, no, I agree. And it makes sense to me the way you guys run things. So we are going to talk about, we did contentious last time we were together, so let’s balance things out and do a little bit of transactional, let’s say we might even flirt with a little bit of contentious later in the episode. But what I wanted to do really is on the topic of collateral warranties. Now I reckon everyone listening has heard of them. I don’t reckon everyone listening knows exactly what they are or the reasons why they exist. Because I’ve been involved in lots of different projects and there was times where collateral warranties were on the project or in our scope or weren’t. And I remember when I was first told, I’ve got to get this collateral warranty executed, I remember thinking, what on earth is a collateral warranty? So on that basis, on that very simple premise, Connor, could you talk us through what they are and why they exist?

Connor Mennell: Yeah. So I mean at their most simple, they are a contract. They’re a contract that puts something in place between two people where there is no contractual relationship otherwise. So if you think about a new shop unit, so you’ve got a retailer that’s going to take a new build unit on a retail park, and they are the end user, but they have no contract with the developer or the professional team. So what you do is you put collateral warranty in place that effectively says, I promise I’ll comply with all of the obligations and the standards required of me, any of the building contracts or professional appointments because obviously the employer can rely on the terms of the building contract, but it’s not necessarily the employer that’s going to use the building, it’s the retailer, the end user. So they then have the comfort of knowing they’ve got warranty, there is a contract in place that they can rely on and they can enforce those terms if anything does go wrong. So that’s effectively an insurance policy for whoever the end user or a funder for example, of the building that is built comes to be.

Paul Heming: Okay. So my understanding in your example is that I’m going to make it even simpler, is that client is building a McDonald’s, for instance you’re talking about a retail unit or a commercial unit is building a McDonald’s and that McDonald’s doesn’t have a contract directly with the professional services. So the architect structural engineer in your example, right? So the collateral warranty actually creates a binding contract between two entities that aren’t in contract, i.e. the end user McDonald’s, and I’m hungry, which is why I mentioned McDonald’s. McDonald’s and the architect or where I saw it a lot was residential units. I worked a lot in residential construction where you’re doing like blocks of flats and it would be between the tenant or the person buying the unit and potentially through to the professional services or whoever else, right? So why do they exist? Why do they even need to exist?

Connor Mennell: So the issue comes from, if you are in the shoes of the tenant or McDonald’s, something goes wrong for the roof for example, it’s a very easy one, there’s a leak coming through the roof. There’s clearly an issue there. If you are that end user without a warranty, you have no right to claim against the party that has carried out the defective work, whether that’s designing the architect or the contract hasn’t installed it properly or you have the contract with the employer so that you can claim against the, whether it’s the architect or the contractor or any subcontractor, you put the warranty in place, you then have a direct right to claim against the architect in exactly the same way that the employer would under their contract or the contractor would if it’s inverted.

Paul Heming: Can I ask at that point, why wouldn’t I just go to the employer?

Connor Mennell: Because what’s the employer then going to do, they’re going to going to claim against the contractor anyway, so it creates an extra layer of complication.

Paul Heming: Okay, so it’s just creating that direct link.

Connor Mennell: And also they might not still be around, they could be joint venture, they could have transferred, there might not be that interested or progressing it with as much seriousness as the end user would like. So it just gives them control. It’s an extra layer of protection and it’s in exactly the same sense that warrants are valuable to the employer even under a design and build type procurement because obviously the employer has the main contract and a direct link there. Obviously the contractor has full design responsibility in a lot of design and build situations, but it will still usually want warrant is from subcontractors. And the reason for that is that it then adds an extra layer of protection to the employer. They know that even if anything goes wrong with the main contractor, there’s still someone on the hook.

Paul Heming: It makes a lot of sense because actually it’s creating the direct connection as opposed to the indirect via a company. And it makes even more sense when you like, many employers are actually kind of temporary entities almost. You have JVs et cetera, et cetera. So it actually helps me understand it better there as well. Could I ask then, so you’ve talked about professional services, architects, engineers, you talked about roofers, D and B contractors. I worked for a subcontractor who did a huge amount of design. And so collateral warranties were always part of our world. They’re always in our psyche, if that makes sense. Who is it? If you’re advising employer now, who is it that you need to get collateral warranties from?

Connor Mennell: So it would generally be anyone with significant design input. So typically anyone appointed to the professional team. So the very major ones would always be the architect and M and E consultant because M and E is a big one. Why if anything goes wrong with M and E in a modern development, that’s pretty fundamental usually, obviously any civil structural engineers and again, anyone else with design inputs, obviously depending on the scheme there might be a transport engineer that designs all the links and how everything fits together. If it’s in a significantly built up area. Environmental consultants, you might not get a warranty from them, but you might want a letter of reliance which does something similar. Subcontractors, you would generally only really care about the ones we’re designing, but obviously some of those will be responsible for large packages. Others might be quite small. So obviously there’s a project specific element, but generally if they have design input, you would like a warranty from them, especially if you’re the employer.

Paul Heming: Yeah. Okay. And so if there’s design, significant design, we want to cut later warranty. The reason why we want them, particularly if you’re the employer, is that you are creating that connection between your end user and your key stakeholders within in the project team, design team, et cetera. All of this makes a lot of sense. I have got a story from my personal experience of collateral warranties going quite badly wrong and I want to talk to you in the second half of the show about how you can avoid that and the things that you’ve seen in your career so far. But we will do that right after this break.
So Connor, you’d think that collateral warranties, there isn’t always, you’d think there almost isn’t that much to say, but I have got personal experience working on a job where, and this project is with a highly serious client, now one of the biggest banks in the world, it was Canary Wharf, I’m not going to name any names, but it was a massive high profile project and the collateral warranty on that project dogged the entire conversation throughout the project. And the reason why is, and it was before I had arrived at this company, I arrived into the project, I think it had started on site for a couple of months, but the contract had been running effectively for say half a year. The reason why the collateral warranty was such a problem was we were being asked to provide one, but it was the collateral warranty wording was included or requested post-contract. And what that meant was that the negotiation of it was protracted, messy. It wasn’t perceived like the project team were doing it as opposed to the pre-contract team, which was problematic. And it also caused us a huge amount of problems because we had to sub-subcontracts the terms of that collateral warranty and the sub-subcontractor was like, we’ve never done this before, we don’t want to do this. And all of it was managed by the project team, not the precon or the legal team, if that makes sense. And that I think due to our own skillset was problematic, but also our own motivations if you like. That’s not something that we felt that we should be doing. And it long and short of it, it became a nightmare and it was not resolved until final account. It kind of was the collateral warranty wording was kept as a bargaining chip, both sides, all the way through the projects which went on for years and until final account. And it was a nightmare as you can imagine. How does that story land with you? Is it something that you can, does it resonate?

Connor Mennell: I can well imagine that situation and it’s one of the reasons why we will always, whenever we’re involved in anything, if there’s a warranty or to be fair, even when it’s not always apparent there’s going to be warranties, we’ll include wording for any potential warranties in the terms of the appointment or for any subcontract warranty in the terms of the building contract. Because nobody caress when work starts, no one is interested in negotiating contract documents once people start on site, put bluntly, but you’ll know yourself from, and it sounds like from that experience, that’s how it played out because as soon as the work starts, the priority is getting the job done and maintaining program, isn’t it? No, no one is going to want to be diverting attention to the terms of a warranty that’s doesn’t need to be given for another 18 months when you’ve got a milestone that needs to be hit in six weeks to get paid. That’s the reality of it, isn’t it? So our advice is always include the terms of any warranty and have the obligation in the appointment or the building contract to back that up, that the warranty will be given by whatever the trigger point is, usually practical completion or shortly thereafter in the terms as appended subject to any minor reasonable amendments or whatever the precise wording is. But I can completely imagine why, if anything is still outstanding post the work’s starting, it becoming an absolute nightmare. And we’ve had clients come to us before where things have been put in place, they’ve then come to us afterwards for some advice on getting the warranty properly put into place and turns out they’ve already paid the subcontractor, everything they’ve left site, there’s nothing else for them to do. So at that point you’re sort of struggling for an incentive to get them back to actually sign the warranty. So yeah, there are various situations like that that we’ve seen come across our desk here. Others as well, where they’ve only mentioned afterwards after a subcontractor has being put in place that they’re expecting a warranty and you then sort of trying to renegotiate the subcontracts after again after they’ve started works and some cases done a lot of it. So in reality you just make it very difficult for yourself, don’t you?

Paul Heming: Yeah, exactly. And to be honest with you, that’s what happened on that contract is like, oh, actually we need a warranty from you and sub-subcontractor is, am I being stupid? I’m trying to reflect, that was about 10 years ago now. But if you are doing design, if you are doing significant design, so tying it back to what you said, when should there be a collateral warranty? So we were doing significant design on that project. Should we always be providing a collateral warranty or is it only when the employer says you have to provide a collateral warranty?

Connor Mennell: Well, there is no obligation to give a warranty unless there is an obligation to give a warranty. So if there is nothing in the contract that says you are required to give a warranty, then you don’t need to give a one.

Paul Heming: If you are the employer and you are not getting a warranty from let’s say the architect or a sub subcontractor who’s doing a big portion of the design, are you effectively potentially devaluing what you are then selling to tenant, whether it’s McDonald’s or apartment owner? In my idea, in my earlier example because if you’re doing that, they don’t have the warranty, they will want it and you’re creating a problem, right. So you do need it.

Connor Mennell: Yeah, absolutely. Because if you are in a scheme like that that you mentioned you are funders and any funder will want warranties from subcontractors and if it’s a significant sub subcontractor with design from them as well, which I can imagine in a scheme like that it was, so yeah, and any funder, so if you come to refinance, which you know, when schemes are as expensive as they can be, you often will, anyone that’s funding that will want the benefit of warranties from all design parties, anyone that comes to purchase the freehold would want the benefit of warranties. Whether that’s a fresh warranty or a warranty to be assigned. Because remember warranty’s just a contract, it can be assigned. If it allows it, they’re going to want that. So if you don’t, you might come into a problem and that’s where you have some alternatives to warranties that might then become relevant. So latent defects insurance is one option. And that if, the example where someone should get a warranty but can’t latent defects insurance might be one option. In that situation it’s effectively an insurance policy where if any list and defects does arise, it’s covered by that.

Paul Heming: But if you are, that’s an added cost as opposed to collateral warranty is something that you should have embedded and it it’s in the standard suite of contracts, right? With JCT, with NEC. Is there a standard wording and you just say that’s what I want? If your advice for an employer would be, you’ve got the standard wording as a minimum, use that before you start getting all these clever lawyers involved, you start tweaking it and adding commas and removing and saying shall instead of will do all these funny things. Is there the standard wording in the JCT slash NEC or any of these standard forms, is that like your baseline advice use that because it’s there drafted for everyone?

Connor Mennell: Yeah, I mean that’s why standard form of contracts have been developed, isn’t, it covers what people generally expect from the industry and especially on the design and build warranties will be expected. And the typical appointments that you tend to see will all tend to cover appointments, warranties from all consultants as well because people do expect them. So yeah, if you pick up your standard design and bill contracts from the JCT suite, that will include options for the warranties at least. And I think you’re put in the details of who you want the warranties from, but yeah, I mean as large we do tend to amend that slightly just to…

Paul Heming: Yeah, you do. Yeah, that’s…

Connor Mennell: Give a little bit more.

Paul Heming: It’s when you start, it’s smirking the most actually is that the thought of these amendments but stop amending stuff. It’s naughty, very naughty, Connor. All jokes.

Connor Mennell: I mean you summed up my job better than I can. I did in a few commas and wills.

Paul Heming: Well, naughty, naughty. Yeah, I think that’s it, right? Joking aside, I think that’s a really interesting point you made about latent defects insurance. It is potentially a plan B but if you’re doing that, you’re effectively eating away your margin. One thing that you said earlier was about the timing of signing the contracts, right? So say you’ve got the JCT standard, when you’re creating the contract say who needs to provide one blah, blah, blah… When do they need to provide them? Because often, because you said earlier that they need to provide it before PC or whatever, which kind of makes sense to me. I always remember quite often with like performance bonds, if performance bonds were drafted into the contract, the amendments would often say, and unless the performance bond is signed until it is signed, there will be no payment now. That makes sense. Because obviously the performance bond is kind of front of the job protection in some respects, right? And collateral warranty is end of the job protection. But could you just talk about what like the typical terms are? Is it that you are signing a collateral warranty only at the very end or can you be forced to sign at the start? What’s best practice?

Connor Mennell: Well, I think the best practice is if you think about the purpose of them, they are generally for someone with an interest at the end. So the end user. So when do they need it? They need it when they’re going to be using the building. So in that case, if that’s the primary party with an interest that’s receiving the warranty, it would make sense for the contract to say or nor before practical completion you shall provide a warranty for the benefit of ex party.

Paul Heming: Because I guess also at that point it’s likely that you know that it’s McDonald’s or Mr. Mennell or Mr. Heming who’s actually going to be the recipient of all the end user kind of thing, right? That makes sense?

Connor Mennell: Exactly. I mean there are some examples where you know that the outset for agreement for leases put in place with the relevant parties on, I don’t know a new shopping center.

Paul Heming: We definitely knew it Connor on this big bank project. I think everyone would know and they still didn’t do it. So you never know.

Connor Mennell: And on that example of funding is one where it might be slightly different. So one I’m working on at the moment, the funding is initially going to be given prior to all of the subcontracts being put in place. So the obligation to give the warranties there is on each application for payment of any of the subcontract packages. So all the design team are going to get the warranties prior to the funding being given. So all the architects M and E engineer, but then obviously because the subcontractors aren’t in place yet, we obviously can’t get warranties from them just yet. So the way we set that up is each month when they make an application, if any of their application involves, for example the glazing subcontractor, we’ll expect the warranty to come in from the glazing subcontractor at that point. And that’s because ultimately my client’s given funding, they want at any point to be able to step into the warranty and direct proceedings if the client goes insolvent. So that’s protecting the funder’s interest at that point because they need to ensure that this building is complete, otherwise they have no security for that funding. So you can see it depends on which party is receiving the warranty as to when it really matters that the warranty’s put in place.

Paul Heming: Yeah, that makes perfect sense actually. And just talking about the difference between the different stakeholders or parties to a warranty. We’ve talked about employer, tenant, end user, main contractor, subcontractor professionals. If you are and again, I’m just going to lean back into my experience, our sub subcontractor did not want to sign a collateral warranty and they didn’t want to sign a collateral warranty because it was too late. The client had missed the boat, they hadn’t included an inverted commas for a collateral warranty. They were taking on more risk by giving it collateral warranty and they didn’t see, they saw it as being detrimental commercially to them as a business in the long term. I guess because there’s insurance, there’s all these other things, it remains a liability for much longer with a collateral warranty. And so in effect, the project paid more to get that collateral warranty. What are the risks for someone? There’ll be surveys, there’ll be architects, there’ll be people listening who are being asked to sign the collateral warranty. What should you really be taking into account in terms of the risk profile that you’re taking on board by signing one?

Connor Mennell: Well ultimately it’s less about what you’re required to do because you are, whether the warranty is in place or not through the terms of your appointment, you’re required to do the same thing. So the real risk factor is how many people can claim against you for that. So the key thing to think about is how many people are you going to be required to give a warranty to? Because if it’s one warranty to a funder versus 25 warranties to 25 different tenants, that’s a massively different risk, isn’t it? So that’s the key thing. And there are some projects where it’s going to be baked in a little bit that there are going to be a lot of people you need to give warranties to others. What you’ll often see is, yeah, we’ll give warranties to X class of beneficiary up to a limit of free, anymore you’ll have to pay for. And obviously that payment is aware.

Paul Heming: So we went to three tenants, not to 103 tenants if they’re all moving into these apartments.

Connor Mennell: Exactly, yeah. There’ll be negotiations with classes of beneficiaries that you’re entitled to give a warranty to. You’ll often see that the fast purchaser or the fast tenant or the fast funder will get a warranty. And the reason for that again, is just limiting the number of people that can claim against you. So if you give a warranty to the fast purchaser for example, that’s obviously only one party that warranty can then be assigned so that anyone else that purchases the site afterwards still can get a warranty and still has that direct contractual link that it puts in place, but it’s still just one person that can use that warranty. Whereas if it was just, you’ll give a warranty to a purchaser that could be two or three, couldn’t it?

Paul Heming: But I think this is why there’s often confusion around collateral warranties, right? Because it’s almost like it’s not black and white as to the necessity for them. It’s sometimes you are given them. If I’m talking about this from a subcontracts perspective, I realize if you’re an architect, it’s a totally different kettle of fish. But it’s almost a judgment call as to whether or not we need to get a collateral warranty from anyone. And irrespective there is still the contractual obligation during the defects period or the six or 12 years, whatever, right? For the subcontractor to the employer in that case for the quality of your design, for your workmanship, et cetera, et cetera. So it’s almost irrespective of having one, there’s still the obligation, it isn’t there and then sometimes you have them because it’s more belt and brace. Is that a really simplified way of looking at it? But does that make sense?

Connor Mennell: Yeah, I mean, well remember the employer wouldn’t have a direct right to claim against a subcontractor for any work that goes wrong. They need to have the warranty because there is a, the employer has the main contract, the main contractor then has a subcontract. So the employer can claim against the main contractor. And this sort of ties into what you were just saying, it’s the employer getting a warranty from the subcontractor that gives the employer a little bit more protection. So the employer may feel that actually given the value of work that’s being carried out by a subcontractor or given the level of security that the main contractor is given, whether it’s they might given a performance bond under warranty and a parent company guarantee, maybe they might have absolutely…

Paul Heming: That is built embrace…

Connor Mennell: Security. Yeah. And so they might think, wow, what’s a subcontractor good add to us here. And for that reason they might think, yeah, we can figure those subcontractor warranties here or it might be that anyone coming into a unit occupying unit, well we’ve got main contractor warranty, we’ve got an architect warranty, subcontract value isn’t that particularly great here. So we can live without that in this case. So you’re right, it is a judgment call and it’s all based on allocation of risk because that’s all the warranty is as effectively it’s an insurance policy covering off the risk of anyone who has an interest in it.

Paul Heming: Okay, no, that makes sense. And so I’m going to try my best now Connor and you’re going to be really nice to me in reflecting on my takeaways from this. You’re going to just be kind to me, right? But my takeaways are that collateral warranties are that added protection as you’ve just said. And you generally want them where there is an element of design, whether that be as an employer with your professional service team, your design team, your architecture engineers or whoever else with your main contractor, if it is D and B or there’s design portion. And then with your subcontractors, where they are taking on a chunk of design work, where you could fall down is by not having the collateral warranty terms embedded in your initial contracts. So they should be there, particularly if you’ve got the standard T’s and C’s that you can have in the standard suites of contract like the JCT and NEC, you may want to get them tweaked by a charming lawyer like yourself to tweet them. But you should do it all upfront because you might deciding that you want it, don’t do that guys. So do that. But you might want to do it because either way you want to kind of do this upfront, it’s got to be included. If not, your plan B is that latent defects insurance. But again, that’s coming off the bottom line. Have I missed anything? Is there anything that you would add to that? And again, be nice.

Connor Mennell: No, I think that’s right. It’s everyone wants certainty in what risk they are taking on in a project and ultimately it’s in all parties interests to know what risk they’re letting themselves in for at the outset, so that it protects, it gives the employer protection, which they’re not looking for at the start. If there’s an obligation to have the warranty, the subcontractor knows exactly what risk they need to price in at the outset if they know the warranty is going to be there. And ultimately as well, one of the key terms of the warranty is what professional indemnity insurance is needed. And so that’s a big thing to consider as well for subcontractors. How much the need to update their insurers at the risk. Is the PI insurance limit adequate? Is it people have different levels of insurance in place up and which insurer doesn’t need to update. And then all that at the outset is just a certainty that you need to start a project and know it’s going to run smoothly. Because as you’ve found to your detriment, it can be a bit of a waking nightmare if you’re having to negotiate all of that throughout.

Paul Heming: Absolutely. Yeah, no, that completely resonates. And I think that’s been a really interesting conversation. I have taken away quite a bit from it and there was a lot that I was reflecting on from my own personal experience. So thank you for joining us for the second time and grazing us with that delightful hull accent. I’ve personally been enjoying it throughout this conversation as well as the content. It’s double whammy with you Connor. Quality content, quality accent. And I for one, enjoyable. No, all jokes aside mate, thank you so much for coming in. I’m certain I’ll be inviting you back and thanks for your time.

Connor Mennell: Thank you very much, Paul. I know, I was telling a client who’s highly anticipating our next podcast that was going to be coming on soon. So at least we’ve got one listener for this show coming up.

Paul Heming: Indeed, indeed. So that one listener, or for all the listeners listening, remember that PQQ template, go and download it and if you like what we do, leave us a little review. That was a blooming bit of a poem, at the end they’re completely off the cuff. So anyway, I will be back with you next week. Have a good one and thanks for listening.

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