EP 115

Paul Heming: Hello and welcome to episode 115 of the Own the Build Podcast with me, Paul Heming. In the past few weeks, we’ve been doing a bit of a giveaway. As you guys know of some of our resources, we did a guide to subcontract, tendering, a guide to the JCT, even an EOT template. So if you are keen on getting those free documents, just check out the last few episodes in the podcast description. I’m going to continue doing it as it seems to be something that’s resonating. So this week, I have attached or linked a template file, account statement, a template risk register. And as always, as you have been already, just reach out and let me know what you think. I’m on Paul@c-link.com. Anyway, onto today’s show. So, in the studio today, I am joined by a fellow podcaster. So I’m joined by Cian Brennan, who is managing director at Quantum Contract Solutions, a company giving contractual superpowers to construction companies. I have everyone’s attention instantly already, don’t I? And Cian is rooming from ear to ear with a smirk that says we’re going to talk all about contracts here, which I’m looking forward to. So today is a contract law focused episode. We’re going to focus on like real life examples, some tangible examples, Cian working with lots of different contractors, loads of different and interesting examples, but I’ll stop talking now. Welcome to the show, Ian. How you doing? Cian, Sorry.

Cian Brennan: Cian. I’m very good. It’s nice to be in the show. Just to clarify a little bit, it’s not legal, right? So the way I’d like to describe this, commercial is a good way to describe it. And for a lot of your listeners who are subcontractors or main contractors or GCs, wherever in the world you are, whatever you call yourself, a lot of your guys will get a drawing that is drawn by an architect or an engineer, and they will be able to interpret it perfectly, right? Depending if they’re a steel fabricator, if they’re a civil contractor, whatever it is, they can.

Paul Heming: You know your specialism.

Cian Brennan: You know your specialist, but you can get a drawing and you can go through that and understand it really well. And that’s not easy. Your average Joe can’t do that, right? They look at that. There’s a bit to it. I remember my first project years ago. It was a skyscraper in Dublin and it actually never got built, right. 

Paul Heming: Really? Couldn’t understand the drawings.

Cian Brennan: Probably, because I measured it wrong, right? But I remember even at the time getting like confused this elevation. Oh, what’s around? I remember going, oh, like trying to get my head around. It wasn’t easy. And so it’s not easy. But the people listening to this podcast can do it very well and so my thesis on this is that the contract is just another document, except this time it’s drawn up by a lawyer and just like everything else, it’s part of the game and the game of construction. And it’s just another document that you need to interpret. So you need to be able to understand it the same as the other ones because this particular document is the one that costs you the most amount of money if you get it wrong,

Paul Heming: That’s the one that matters in some respect. I was going to say to when you said that, I was going to say, yeah, but it’s even more difficult, isn’t it? Cause it changes on every project. But so do the drawings, so do the spec, everything changes on every project, right? The truth is that I guess at least with a lot of construction drawings, the standards, the material choices stay the same. Construction contracts seem to evolve a lot. We’re going to talk later about how much they get amended and so on, right? Which is part of the challenge. But I actually really like the way that will frame it in a lot of people’s minds. I know how to do technical drawings and it’s not something you just wake up and can do. Right? Same with contracts. And that’s kind of, let’s talk then about your construction journey and your business today. Cause is that kind of the thesis that you take into your business?

Cian Brennan: Yeah. So we help construction companies basically negotiate better contracts in their pre-award phase. And in the post-award phase, we help them comply with the contract. But really, what we’re trying to do is boost our cash flow and protect our margins. So that’s the kind of end-to-end. And so when we look at the contract, a lot of times it’s a combination between being contractual, being professional, how to approach things in a really professional way that retains a relationship, but also using relationships to your advantage. I mean, I couldn’t tell you how many times I’ve been on a call with a construction company and being Irish, we’ve talked about this before. I seem to have, I am allowed to curse a little bit, right? 

Paul Heming: I’ve got an Irish passport, so I’m going to swear as well.

Cian Brennan: My categorization of the issue is you are effed, right? I’m not going to curse on your podcast, but you’re effed contractually, but that doesn’t mean it’s over. It just means we can’t rely on the contract and we need to approach it a different way. So that’s how we like to approach the business. It’s about getting an outcome, getting paid, getting stuff approved and taking a different look at the contractual landscape and what it actually means and what actually matters and what actually doesn’t. What is just noise.

Paul Heming: And what’s your background though? Like, how did you arrive to the point where you thought, right, this is what I want to champion, quantum contract solution. I’m going to set it up and this is where I’m going to stick my flag in the ground. Why?

Cian Brennan: So my background is client side.

Paul Heming: Acute QS? 

Cian Brennan: Acute QS, originally, so construction –

Paul Heming: Gosh.

Cian Brennan: Yes. Did some further studies, but essentially QS, right? Brick enterer, I went client side for almost all of my career. Almost all of my career.

Paul Heming: You are mean, you know how bad these contracts can be, right? 

Cian Brennan: Yeah, a hundred percent. But I remember sitting so often, right? And as in around Australia, in the Middle East, Ireland, US and the problem was over and over and over again, subcontractors, contractors were going out of business or not getting paid what they should get paid. And more often, it wasn’t that they didn’t do the work, is that contractually they were awful. They would submit absolute rubbish EOTs. I mean, at your intro there, you were giving some good templates, right? So guys download those templates for sure. Right? Because what a lot of people don’t understand is like, in my situation, I don’t not want to approve something. I don’t care. I want to approve, I want to give the money to the subcontractor. 

Paul Heming: Do you?

Cian Brennan: Yeah, absolutely. A hundred percent. But in all of these companies now, and even in small main contractors, technology is trickled down and all of these guys have decent corporate governance. And there will be a box that needs to be ticked that says, did they comply with a contractor or not? Did they submit their notice?

Paul Heming: Where’s the as-built program? Where’s this, where’s that? Where’s the other? Didn’t happen. Can’t do.

Cian Brennan: It. didn’t happen. Can’t do it. Because people need to realize, I have to take your document that you submitted, right? And let’s be honest, if it’s bad, I have to take your shitty document, turn around, either jazz it up and then either present it to a contracts committee internally or present it to a director of the project  And he’s going to go, are you kidding me? Like where’s this, where’s this, where’s this? And so that’s the mindset shift that you have to take that you’ve got to do the paperwork whether you like it or not. 

Paul Heming: I mean that’s the mentality that you are trying to bring to your business. And it is to upskill the way subcontractors or all contractors, it’s navigate contracts.

Cian Brennan: Yeah. It would mainly be subcontractors. So it is showing those guys, okay, I know how to work the insides of these companies and so here’s how you need to do it.

Paul Heming: Fantastic. I’m looking forward to this cause I’m an ex sub, so you can tell me all the reasons why I went wrong. Can I go back though to one thing that you said there?

Cian Brennan: Sure. 

Paul Heming: Because I want to hone in on it now, your client size, but you said I want to pay you the money for this EOT. An example is that, I mean, don’t take this the wrong way because I’m no longer in projects. I’ve got Software Company where we see clients, main contractors, subcontractors interact. And my perception of how I interacted is now, you know, it’s all theory, isn’t it? It’s none of the challenges of the day to day, the challenges of the budget where we all taught the talk. Did you wholeheartedly believe what you’re saying there of I want to pay you, but if you can’t give me the documentation, I can’t do it. Or is it more, because my feeling as a subcontractor was the absolute minimum I have to do is be perfect with documentation to even be in the consideration of getting my money. That’s how I always felt, do you see what I mean about the subtle difference? How does that make you feel? 

Cian Brennan: That’s interesting. And there’s a few different things, right? So, okay, we are talking about QS on QS sort of arrangement, right?  So in that scenario, when I’m a QS and like there’s a QS, I do genuinely believe, I don’t not want to pay you. There’s nothing there. Right? If it is a PM to PM sort of arrangement, that’s different. Okay? And that is more often than not, right? Because both QS’s are going to be able to talk numbers. And if the numbers are agreed, well then let’s get it going. Okay? So it’s a number problem, right? I do we agree over numbers and then so if we agree on numbers, we’re pretty good to go, right? Are you contractually compliant? Yes. Okay. So we’re pretty good. However, with a PM, a lot of times the PM is covering up stuff. He’s messed up.

Paul Heming: You reckon, you know what, I reckon there’s going to be a lot of PMs who are thinking it’s the other way around. I was curious. QS’s mess it up.

Cian Brennan: No, but the client’s PM hasn’t done what he’s supposed to do and he’s got you to do extra work. Right? And so now you’re starting to submit these variations in EOTs that are his fault. And then now he has to turn around and present these things internally and he doesn’t want to do that because they’re his fault. And so by doing that, you’re making him look bad. And so that’s where he doesn’t want to do that. And that’s why sometimes you get this weird little lack of communication between the PM is not passing anything up the line whatsoever. And it’s because he’s trying to protect himself.

Paul Heming: Yeah. No, okay. That makes sense. It’s either way, whichever way you look at it, whoever you consider as a stakeholder, the transaction of money more and more is bound by the contracts and less by handshakes and all the projects that I was involved in, you’ve got to get things right. The paperwork’s got to be there and you hear people say, oh, it’s not like it used to be. You know, like the slightly older generation and perhaps it isn’t, but this is the world that we’re now operating in. So I completely understand the thesis of your business and completely support that thesis as well. Because too often, subcontractors get the short end of the stick. And that’s largely because their resource is not the resource of whoever they’re going after. It’s kind of like a tier system down, isn’t it? At the bottom, you have less resource, you have less understanding. You have to take the medicine that you’re given to some extent. So all for change in that. Anyway. Oh, go on. Sorry.

Cian Brennan: Well, conversely on that, what you have the least resources, but in the contractual hierarchy, assuming that we’re not just talking standard contracts, you actually have the most aggressive contract because the contract between the principal and the main contractor or GC is going to be, you know, they’ll have lawyers on both sides and they’ll have agreed to contract. But the contract between the main contractor and the subbies, they’re going to push risk down the way. So you got the worst contract in the chain and you probably got the least resources to be able to understand what you’re doing. The time bars will be the shortest. So you actually need the most help. And more often than not, most subcontractors, the way they operate their paperwork is they’re going to have their project manager doing it as a side hustle to their regular job.

Paul Heming: Yeah. You’re not wrong. You’re not wrong. Final question, but we’re going to dive into an example. Why do you want to help subcontractors considering you were client QS originally? What was the shift in the mentality?

Cian Brennan: Two things. One is my granddad was a contractor back in the day. 

Paul Heming: Okay. 

Cian Brennan: And when he died, the newspaper said ‘The man who built Galway’. 

Paul Heming: Really? 

Cian Brennan: Yeah.

Paul Heming: Is that where you’re from, Galway?

Cian Brennan: Yes, yes. I’m from Galway.

Paul Heming: I’m going there in two weeks for the first time and I cannot wait.

Cian Brennan: Oh, you’re going to love it. It is a great end.

Paul Heming: I’m told. 

Cian Brennan: Yeah. Particularly if you like a couple of drinks, I swear.

Paul Heming: I do.

Cian Brennan: So, it got to the stage where I’m like, these guys are going out of business or losing money. And I was starting to feel, like my job now is saying no and rejecting invoices for these guys and I don’t feel right about it. And I now know how to help them, because that was the first thing. And the second thing, and even more so now, subbies, and you were a subbie, right? Subbies are only guys that actually do construction.

Paul Heming: And know how it’s done.

Cian Brennan: Not even know how it’s done. Only they’re in the chain. No one else builds anything.

Paul Heming: Yeah.

Cian Brennan: Right. The principal is paying for the thing, the main contractor’s a finance company. He wins the project, he gets a loan and he gets paid by the principal and he subcontracts it and he makes money on the delta. 

Paul Heming: Cyber management. Yeah.

Cian Brennan: Yeah. Very, very minimally will they ever do any construction work themselves. That’s so bad. So, subcontractors are actually the only guys that do the actual work. So they’re like the bees of the world. They’re the guys all of a sudden the bees get knocked off, right, then we’re all in trouble cause there’s nothing’s going to be built. Right?

Paul Heming: Yeah. You’re 100% talking my language here, mate. 100%. Go on.

Cian Brennan: So yeah, they’re really the two reasons I have a passion as well. And also because the type of person that is a subcontractor is my type of person as well, in that they’re typically someone who is really good at something and has grown a big business out of it and commercially savvy, grand up entrepreneurial and, you know, CEOs of these companies, managing directors of these companies are probably the only guys in most industries when you look at CEOs and managing directors, only guys who have actually gotten their hands dirty, like literally dirty. CEOs of other companies in like tech or whatever, they’ll do a management degree, they’ll do a master’s degree and they’ll be brought in at a high level and maybe –

Paul Heming: At C-suite.

Cian Brennan: Yeah, at C-suite. Maybe never have worked below.

Paul Heming: You’re literally repeating many of the things that I talk about a lot of the time in very different circumstances to this conversation. But construction technology, and we’re completely going off topic here, but there are a lot of construction technology companies who are founded or directed by people who don’t understand the problems that you face on the ground on a construction project. And too often that means that we kind of feel detached from a lot of the software that we use as construction technology is slow on its uptake in comparison to other sectors. And I think that’s one of the main problems. And interesting is that you said a lot of things that I’m agreeing with here, Cian, and we haven’t even got into the topic of the show. So today what I wanted to do with you is, and I will share Cian’s podcast in the description. Everyone should go and check it out. I’ve been listening to it and getting great value from it. Very contract focused as you can imagine, or commercially focused as you probably prefer me to refer to it as. I want to talk about for the next part of the show, “a specific case study” that you talked about on one of your shows. And that was, so you recently talked about a client of yours who is a contractor and they had a dispute about an element of scope that was in their contracts or as they perceived it was not in their contract. Their client instructed them to do the work and the contractor, and it resonates with my life as a subcontractor. How often would it be that you would say that element of scope is not in our contract? And your client would say, yeah it is. And you would say, no, it isn’t for all of these reasons. They’d say, nah, I think it is for all these reasons. And then the contract itself says, well, I can instruct you to do whatever I want you to do anyway. So I’m going to instruct you to do that and then we’ll talk about whether or not we’re going to pay you for it. Even though in the context of what has gone before is I’m never going to pay for you for it because I believe I already have paid you for it. So it reminds me of my life as a subbie and you were talking about it and it resonated with me hugely. Could you just explain in better terms exactly what happened?

Cian Brennan: I mean, it happens all the time.

Paul Heming: It happens to me all the time.

Cian Brennan: So, it’s about tackling the problem, right? So let’s just go into it and in the first instance, there will be a clause in the contract that says you need to go ahead with the work. Time is of the essence and we’ll work out the costs after. That’s the problem. That’s the fundamental problem. So the first thing in catching that fundamental problem is going into the contract and negotiating that out and saying, no, we’re not doing that. We’ll negotiate, we’ll give you a price within X amount of days. Like, we’ll be really quick with our price and you got to approve it really quickly and then we’ll go and do it. That’s what you want in the contract. Because then if they’re not playing ball, you don’t have to do anything cause you’ve got no approved variation. So that’s the first way to solve the problem. But let’s say you haven’t been able to handle it or it’s in your contract for whatever reason.

Paul Heming: Yeah.

Cian Brennan: So that now we’re in trouble. Okay?

Paul Heming: Yeah. We’re in the Maya.

Cian Brennan: We’re in it. So, the way to broach this subject is again, it’s about, is Pavlov’s dog. Okay? So when I’m talking about contract, I always say it’s not just contractual, it’s about strategy, right? So Pavlov’s dog, okay? So you might be tempted to roll up a load of variations into one variation and not submit many variations. That’s what a lot of people are asked to do a lot of times, but it’s not the best thing to do. You’re better off every time, you get asked to do additional work, submitting a variation very quickly or change order, whatever it’s called. Right? Change order variation quickly. And then what you can do then is you can start seeing how long it’s taking them to approve the variations or not. And so –

Paul Heming: It’s going to be taking long in my experience, it’s going to be months.

Cian Brennan: Okay. So, but so this is the thing, right? So the first time it happens, you need to be on the case. Doesn’t get approved. Why isn’t our variation approved? We need to get it approved. Oh, sorry. There’s another thing in the contract assessment periods. If you can negotiate in assessment period for a variation, that will also help, okay? Okay, so let’s just say, okay, it’s going on. They’re not approving it or they have approved it and you’ve now kicked up a bit of a fuss to say, Hey, we need you to approve the variations, but if they’re no longer approving variations, and so the big problem we have is that you’re going to be asked to do something and you know this is going to cost me a lot of money.

Paul Heming: And I’m never getting paid,

Cian Brennan: And I’m never getting paid, right? Or I may not be getting paid.

Paul Heming: I’m never getting paid. Let’s stick with that.

Cian Brennan: Let’s just stick with you’re never getting paid. So, what do you do? Right? Because you have to go ahead with it. Like, so you have to go ahead. Okay? But then there’s also a bit of another issue as well as you have original scope that you need to complete. And so this is definitely going to go in on top of it. And this actually might delay you delivering on the original scope, which is another issue that always happens. You get all this additional work that maybe you don’t get a variation for, an extension of time for, and then it now looks like your original scope is late as well. Okay? So now you’re going to be risk getting hit with liquidated damages on the original scope, which is not fair because you’ve been asked to do all this additional stuff, right? So in that scenario, okay, so one is ideally, you want to be doing the Pavlov’s dog, making sure that every time they ask you to do something, you get a variation in very quickly. And hopefully, you’re training them to approve the variations quickly. That’s what you want to be doing or kicking up stink every single time. Because then you’ll know if they ask you to do something big like this, so let’s just say they’ve been slow the whole time. They haven’t paid you and it’s been really bad. And then you know you’ve got this big one, right? And you’re okay, this is a big one, they’re not going to pay me. Right? So what do you do? It’s a tricky one, right? And you just do a nurse’s strike, okay? All right. So what I mean by nurse’s strike, you do a go slow and you just say, so this is it. You go, yeah, I’m doing it. Absolutely I’m doing it. And every time they ask you, yeah, I’m doing it. It’s just right down the bottom of your packing order. They can’t tell you –

Paul Heming: But then they’re like, this is part of your scope and you are late. So what you doing?

Cian Brennan: Hold on. But then they’re saying, this is part of your scope. So now we have a scope argument. Now you know, you’re not getting approved for the variation. So that’s if the variation’s gone, right?  But if they’re saying, no, we need it, and you go, yeah, you just get that variation approved. I’ve submitted my variation, get it approved. We have, it’s like we’re working on it in the background. We still have other dis original scope to do. And so now you’re putting, they know very well that you haven’t, they need to approve the variation for you to do the work. Okay?

Paul Heming: Yeah.

Cian Brennan: Go on. Shoot, shoot.

Paul Heming: No, it’s difficult. I reflect on moments in time on projects where the issue comes up. This is in your scope. No, it’s not my scope. This is in your scope. No, it’s not my scope, blah-blah. It ends up a week later and they say there’s the instruction, now it is “in your scope”, right? You then say, no, this is a variation price. They say, just carry on, but talk about it. And you say, no, I want you to pay me now, because that’s not in my scope. Eventually, it comes back out. That is in your scope, we’re not going to pay you. But you’re now, I don’t know, two weeks, three weeks into the instructed period, and then it’s a nightmare situation. I feel it happened to be so many times.

Cian Brennan: But so there’s the contractual thing and there’s spending money. And so just to keep a very simple, you want to spend as little amount of money as you can, right? It’s the same sort of scenario when you are in a situation where it looks like the main contractor might be going out of business, you’re hearing some stuff about insolvencies, they’re not paying other contractors. What do you do? You just stop spending money. You have to look after yourself. It’s more important, in this scenario where let’s just say the variation they’re asking you is 50, a hundred, half a million dollars or Euros or pounds.

Paul Heming: Come on, forget the euros and the dollar.

Cian Brennan: Whatever. Right? So this is a discussion you’re going to have to have internally about it. If you spend that 500 grand, you know you’re not going to get paid. Well, then you can do the nurses strike, say, okay, look, yeah, we’re going ahead with this, and we don’t say it, you just do a go slow.

Paul Heming: See, I’m with you. I’m with you 100%. However, I start going slow and they start saying, you are going slow, you are delaying. I was, oh, curtain warning, cladding. I was always on the critical path, they said, oh, you’re going slow now, which means that the M&E isn’t starting now in Zone X nor the dry line. Even now a couple of weeks late on that. And this is all in your scope under that item.

Cian Brennan: Oh, now we’re back again. Is it in my scope or is it variation? You’ve just asked. You’ve issued me.

Paul Heming: Well, it’s on the east elevation. It says this in the scope loosely. I was going to say that as a mega, but it says that in the scope and yeah, we believe it’s in your scope. And now that east elevation bar on your program, you are late on it, which means that, look, this M&E contractor, this trial line contractor and all the follow on trays are now late as well. 

Cian Brennan: Why have they giving you this instruction then? Should you have been going ahead?

Paul Heming: Cause you refused to go ahead with your own work. 

Cian Brennan: You refuse to go ahead. In the strategy, you have a lot more. You’re right. This would be an argument that you would have. But you have a lot more. You’ve had and heard, but when you sitting down at the table, you can be sitting down at a table having spent 500 grand or you can be sitting down –

Paul Heming: I agree with that. 

Cian Brennan: Having not spent 500 grand and being told, okay, you need to go ahead.

Paul Heming: That makes perfect sense. Right? Okay. So you don’t want to be the person who sat at that table six months later, half a million pounds, poorer. You want to be the person who is sat at that table having spent a tenor and you’re three weeks late, right? In that working example. So now let’s imagine we are sat at that table and this is where it gets really, it is tough already, but this gets really tough, right? So now, I’m the main contractor. You are the subcontractor, right? I then say, alright, yeah, we’ve called each other’s bluff, it’s not a variation and I’m going to start causing all kinds of other problems if you don’t get on with your works, you’re causing delays to everyone else. You’ll sat there having spent a tenor. Now what? Cause now it’s getting really tough.

Cian Brennan: Okay. So now, well this is it going to absolute shit, right? More often than not, more often it would have reached the point, they’re like, you need to go ahead and do it. And you’re like, well, give us the variation and we’ll do it. Right? And then at that stage, you would escalate it to pass the PMs to a senior manager. Okay, we’ll do it. And they’ll strike an agreement.

Paul Heming: I’m going full on apocalypse here though. There is no way. I was on Batty Power station as Carillion were going out of business. So I’ve been on a bad job. No offense to Batty power station.

Cian Brennan: No. So if you have, like, I would hope, and if you had good people in-house or company like ours, you would have a pa all your paperwork in place. And contractually, you would be covered and you would have a very reasonable argument to say, that is not in our scope. One, it was not like you could say it wasn’t price. We told you clearly it wasn’t in your scope. You’ve now given him the instruction, which leads us to believe that you also now believed that it wasn’t in our scope as well. They’ll have another argument. Right? But anyway, at the end of the day, you’ve not spent the 500 grand and that’s the problem that –

Paul Heming: That’s perfect sense. 

Cian Brennan: It’s the leverage that matters, right? 

Paul Heming: Yeah. 

Cian Brennan: And that’s the kind of the strategy at the end of the day. Okay? But –

Paul Heming: No, go on.

Cian Brennan: But you’re still saying to me, yeah, look, we’re working on it. We’re moving it. You know, we’ve got that variation into you guys. You had a cost estimate. If you just approve it, we get back and then they’ll understand what’s going on. And more often than not, it gets worked out.

Paul Heming: Yeah. And I guess so then go and sit in, let’s sit now in your shoes, right, where you were the client side, right? And you’ve got this issue, you’ve got someone saying that that’s a check. You look at the job and you think, oh no, we’ve got a bit of a scope gap there. We didn’t put zone X into anyone’s package. What we going to do? Discussion. I’m guessing I’ve never been in these discussions cause I was always a mere little subcontractor myself. But I’m guessing that is like, right, okay, where do we put this? Let’s put it into subcontractor A’s package. Should we see if we can get away with not paying it? 

Cian Brennan: Yeah. Let’s try.

Paul Heming: I’m guessing this is on some jobs, what’s happening. You are smirking from ear to ear. But this is my feeling as a subcontractor. You think, how’s this ended up? And they say, yeah, we’re going to instruct you. But I guess like, in that situation, I actually say, oh, we’ve got 10 grand for it, but let’s see if we can get away with it. And then, so eventually, if you are set, if you are going slow, kind of twiddling your thumbs and say, there’s my quote for 15 grand, eventually they’re going to be like, ah, God, we do need to do it cause we’ve got the M&E and the dry liners, let’s just pay it. And you win that battle. And that makes perfect sense to me. I’ve been in some jobs which have been toxic at times for many different reasons, where even it would go all the way, honestly, Cian, where you’d end up just almost in a situation where you think this is impossible. I’ve done everything. I’ve documented everything perfectly, I’ve done all of these things, but still the contract says they can instruct me to do whatever they want to do. And it was infuriating for me because it didn’t matter how perfect you were, it didn’t matter if you go slow, you did all the things right. You would still feel like you had that gun to your head. If you don’t, then you’re screwed either way.

Cian Brennan: So, here’s a kind of a belief shift and a mindset shift in first subcontractors in general. I think it’s really important. Think of the biggest subcontractors in the first place. The biggest subcontractors are very contractual. They are. And in the landscape that we’re in, where it used to be all about relationships, it’s not as much about relationships, of course it still is relationship based. If you want to be seen as professional and you want to be respected and have a good reputation, you don’t get that from rolling over and doing what you’re told nonstop.

Paul Heming: I agree wholeheartedly with that.

Cian Brennan: And so it actually is being able to push back. But like, there’s a lot of assumptions. Like, you need to be delivering on everything else, right?

Paul Heming: Just be contractual. Yeah.

Cian Brennan: Yeah. If you are not delivering and you are crap, and we’re talking about this little thing here, and you legitimately haven’t done the work, and then you’re trying to employ this strategy, well then it’s not going to work. But if you’re delivering elsewhere, you got contractually, all your ducks are in a row el elsewhere, and you’re coming to the table and you’re being strong, they’re going to respect you for it.

Paul Heming: I completely agree.

Cian Brennan: They’re actually going to have confidence that you know what you’re doing. I guarantee you that.

Paul Heming: The trouble is, almost every subcontractor that I know, no matter how big or small wants to crack on and get stuff done. They don’t want to skimp and hardly do anything. Almost all of them are specialists, take pride in the work that they do and want to add to the project, not subtract, but too often you find yourself in the mire of these issues that makes you feel like I’ve got to get really in the dirt of these contractual things, which I’m not even that bothered about. I just want to get done. I want to do my work that you asked me to do, get paid for it and move on and help you in your project. But I’ll tell you what, this show is already very long. The first half. I want to talk to you about a second point in the second half of the show and actually just touch on being “contractual”. But we’ll do that right after this break.

So Cian, you’re taking me all the way back to some painful times in my life here, thinking about getting given instruction. I wasn’t going to get paid, but it’s all good stuff. I’m pretty sure people listen to the first half of that show will be thinking, yeah, I’ve been in that position and I’ve now have lots of different strategies really, or mindsets to change it next time it does happen, which is great. 

Cian Brennan: Sorry, did you say you used to be a noise wall contractor? Is that what it is?

Paul Heming: Curtain wall.

Cian Brennan: Curtain wall. Okay. 

Paul Heming: Not the same, but not unsimilar. Build envelope. 

Cian Brennan: Yeah. Can I tell you a little story about a noise wall contractor? 

Paul Heming: Go, sir. 

Cian Brennan: So I first had a client, he’s still a client now. About three years ago, he was the CEO of a noise wall contractor. So noise walls are like the walls on the side of a highway, freeway, motorway. 

Paul Heming: Right. Yeah.

Cian Brennan: So those big walls, they’re still the same thing, right? It’s just soundproofing. 

Paul Heming: Come on. Don’t demean curtain wall quite that much, but all right, I’ll roll with you. 

Cian Brennan: And he was saying to me, I don’t want to look contractual. And I was like, trust me, it’s just a game, right? They’re going to give you their worst contractor. They’re expecting you to negotiate. And he was like, no. And I was like, okay. He goes, well, I have a new client and I have existing clients. Okay, what is your existing clients? How about I take a new client and I’ll try and negotiate a contract for you? And so what I explained to him is, if five people are bidding for work and four people try to negotiate the terms, and one doesn’t, they don’t look at you and think that you’re easy to do it. They look at you, they look, oh, this guy isn’t a clue he’s talking about. Right?

Paul Heming: It’s a bit like five prices and one is 20% less. You think?

Cian Brennan: Exactly.

Paul Heming: Something is up there.

Cian Brennan: That’s exactly right. And so we did it for him, and the response from it, we negotiated, went over and back and like, we got a good deal in the end. But their comment was, thank you for doing that. It gave us confidence that you knew what you were doing. 

Paul Heming: “Being contractual” 

Cian Brennan: Being contractual. And so even though you look more professional and you’ve actually signed a contract that had like, about 82% less risk.

Paul Heming: Yeah, about 82%. So just touching on that point though, right?  So you are someone who has gone from client side to subcontract side with many different subcontractors who you now represent. That phrase, you are being too contractual. Or maybe it’s like, just thinking about what your client was saying there, Ooh, I don’t want to appear contractual, that phrase, that’s definitely a phrase that came from main contractors and clients like, ooh, you are being contractual. That subcontractors then like, Ooh, I don’t want to be that. Cause there’s some perception that being contractual is a bad thing. Can you recall at any moment on any project that you were working on that you said to someone, you’re being a bit contractual?

Cian Brennan: No. Not a single time. Everything was, you’ve not complied to contract. 

Paul Heming: Yeah. Okay. And so what does the phrase you are being too contractual mean to you?

Cian Brennan: It’s the only, in my view, and what I’ve only heard, is it the subbie saying, oh, I’m worried about being too contractual or appearing too contractual. 

Paul Heming: We’ve heard it. But yeah, there appearing difficult. Yeah. That’s what it means. Doesn’t it? Is like, do you want to seem like you’re being too contractual, being difficult, but I’ve heard it from main contractors saying it to subcontractors many times and yeah, but it is a subbie mindset, isn’t it? Oh, I don’t want to appear to be. But do you perceive it to be, it’s going back to that example of five prices, one of them is 20% less looks ridiculous. Do you perceive it as client man contractor as a weakness or a strength in a contractor?

Cian Brennan: In a subbie? 

Paul Heming: In a subbie, sorry.

Cian Brennan: Yeah. If they’re contractual, yeah, it’s a strength of their contractual.

Paul Heming: You really think that? 

Cian Brennan: A hundred percent. Because ultimately at the end of the day, that all things considered, okay, there’s all things considered, if you’re contractual, you will be more profitable. Okay. Without a doubt. The biggest subbies out there in are contractual, a hundred percent. So they’re making more money per project. I’m absolutely sure that you make more money per project, you’re able to buy better equipment, you’re better to hire better people, you deliver a better service, your reputation goes up because you’re delivering a better service. You get into this virtuous cycle and they’re like, oh, well, yeah, they are contractual, but they are good. They know what they’re doing.

Paul Heming: If I’m a main contractor, I actually kind of need a quite contractual subcontractor who’s going to help me to make all of my variation and claims stronger and better up the line. Right? 

Cian Brennan: That’s very good point too. Yeah.

Paul Heming: It all feeds into that. How often are contracts like, can you give me this information cause I need to put it in my claim, or I need to put it in my variation and weak in contractually subcontractor or commercially weak subcontractor isn’t going to be able to give you that. So I think that being contractual is not a bad thing. It’s got a bad rep, perhaps more for subcontractors in their minds. But it’s not a bad thing, is it?

Cian Brennan: It’s how you do it. It’s how you do it. Okay. So let me give you some bad examples. Right? So not Warren Buffett, who’s Warren Buffett’s number two, I can’t remember his name. He’s got the big glasses on. Anyway, he had this terminology called inversion thinking. If you want to figure something complicated, I figure out how to ruin something and then flip it, right? So, if we wanted to do it really badly, this is how I do it really badly. I wouldn’t at bidding time when they’ve asked you to submit your departures or your clarifications, I wouldn’t do it then. Right? We want to wait until they’re just about to award the contract before we try and negotiate the contract. Cause that really him off cause they’re going to delay it two or three weeks. He’s just about to award a contract and then you try and negotiate it. Get a lawyer to do it and send in loads of clarifications, most of which don’t even matter to your company. Right? Just changing words for the sayings. Like we’re talking 30, 40 of them, really just do that right. Then on the project, don’t be contractual at all. Don’t be contractual. And then when things start to go wrong, all of a sudden get really contractual, ramp it up, and then that is the classic way. And so many companies do that. That’s how to do it completely wrong.

Paul Heming: How should you do it?

Cian Brennan: How should you do it? You should do it at bidding stage. Or if you’ve just been offered a contract, okay, that’s a little bit different, right? But at bidding stage, and you just want to do the least amount of the clarifications that give you the biggest bang for book, the biggest risk reduction that are specific to your company. And the way you want to phrase them is kind of semi submissive. And you got to explain them. Right? This doesn’t, apply to me or this isn’t work. This is against our commercial principles of –

Paul Heming: What did you mean submissive? Semi submissive.

Cian Brennan: Yeah. I know. It’s like I’m just a lowly subbie, I’m suggesting to do this. You don’t want to demand, this needs to be taken out. This is blah-blah.

Paul Heming: I recommend for the sake of the project do this. 

Cian Brennan: Exactly.

Paul Heming: Put this risk elsewhere. It’s not for me to manage.

Cian Brennan: Exactly. Yeah. And then say, look I need longer payment turns for a cash flow because you want us to buy this equipment upfront. 

Paul Heming: Shorter payment term. Sure. I don’t want longer.

Cian Brennan: Of course. Sorry, shorter. 

Paul Heming: He’s got his client’s hat on, guys, we busted him.

Cian Brennan: No. So anyways, you want to explain it.

Paul Heming: It’s over.

Cian Brennan: Yeah. You want to explain it. So their contracts, administrator, contracts person who’s doing it can easily understand and go, yeah, okay, that’s fair. That’s fair. That’s what you want to do. And so, then you want to start contractual, starts admitting the notices from their very start. Then you’ll look professional. They’re like, oh, these guys are on top of it. And then you build, and then as you go through the project, and you’re building up a body of evidence for what we call squeaky bum time, which is Alex Ferguson quote where that final 15 minutes of a football game where people are shifting around in the plastic seats, that’s when it matters And so that’s when all of the disputes come in. And so all you’re doing the whole way through the project, when you’re submitting in your notices, when you’re submitting your variations, your EOTs, even if they’re small ones and you’re getting them in, you’re getting them in, you’re just protecting yourself for that final quarter. So that when the thing goes wrong, when the main contractor goes, oh shit, I’m losing money. I need to save money. How can I go around saving money? Maybe we’ll bring in a closeout team. Relationships go missing. That you’re like, you’re covered. They look at you and go, ah, it’s too much, too much hassle with those guys.

Paul Heming: I think you’ve hit the nail on the head, right? I like the squeaky bum time analogy. A bit of football in there. Why not? But the job starts going badly wrong. You’re 90% through, the main contractor is busy looking at their budget and starting to themselves for want of a better phrase. And they think, right, where can we make cost savings? How are we going to make this stack up? And they look around at the five subcontractors that they’ve procured, and they look at you and they go, cranky. They’ve got some good documents, haven’t they? Let’s not look at them, let’s just give them what they want because they’ve done what they need to do. So again, “being contractual” for the listener is not something that you shouldn’t do. It’s something that you should do, because it completely and utterly protects you. And it’s that perception of who you are as a business. And as you say, if you’re being contractual and doing a terrible job on site, operationally, you’re going to have a problem. But if you’re being contractual alongside being who you are on site and delivering on site, you aren’t going to have a problem. No main contractor is going to come to you and start attacking you for being contractual if you’re delivering on your promises. Right. So, by all accounts, be contractual. Right?

Cian Brennan: Well, I’d just be professional. When you are asked to update drawings and document registers and whatever it is, right? I’m sure you’re on top of that. I hope you’re on top of that, right? This is it. It’s just, you’re interpreting a different document that says, as it’s got a set of rules, if you’ve been delayed, if you think you’ve been asked to do additional work, you have to notify us. 

Paul Heming: Also, by the way, I’m not being contractual. I’m following the document that you wrote and made me sign, which said I had to do that on this date. So here’s my document. So all I’m doing to be contractual is following what you’ve told me. Right?

Cian Brennan: And then a little, I wouldn’t say it’s a sneaky tip, it’s a good tip is that if I send you, Paul, a notice. To Paul, right? In a letter, right. Handwritten notice.

Paul Heming: I’m already nervous.

Cian Brennan: To Paul, right. In a letter we’ve been delayed, blah-blah. It’s going to cost us blah-blah. And I send it from me to you. That’s like, that’s poking the bear unnecessarily. Why don’t you just submit a memo style from a doc control into their doc control, referencing Paul Heming? It goes in, it’s submitted, it’s done. You’ve done what you’ve been asked to do. It’s submitted in a way that’s not going to, it’s a memo style.

Paul Heming: Taunting me.

Cian Brennan: No, it’s not a letter. I’m not trying to poke you. And that’s a better way to do it.

Paul Heming: Yeah, yeah. No, completely. And I mean, I feel like we could talk for hours, to be honest with you. And there’s so much to cover, which is great. I wanted to talk to you briefly about delay and extension of time. We’ve already kind of talked about it throughout, we’ve done a few episodes on the topic where it’s about that professionalism throughout the process is what allows you to submit extensions of time successfully, get your EOT paid, get your extension to the time. Could you just talk about how you advise your clients on the topic of delay and eventually extensions of time?

Cian Brennan: So with delay there, I don’t mind, I just give you our strategy is, again, it’s Pavlov dog. We’re trying to train the client. And so I would suggest submitting delay notices that say, hi Paul. We went to site today and there we didn’t have access to where we’re supposed to go. So what I did instead was I put my guys over here and we worked on this particular thing. There was no cost or time impact to you. Just letting you know, because I’m supposed to under the contract, right? Best endeavors. Best endeavors, no cost or time. So we submitted that, reads that, no problem. Submit that, reads that, no problem. Submit it. This time we actually couldn’t redeploy them and therefore there has been in delay. So that’s how you want to submit the notices, and really it’s submitting them for everything. Even if you don’t think it’s a valid claim, submit it anyway. And also with EOT, you’re building that paperwork for defined quarter, right? 

Paul Heming: So, for squeaky bum time.

Cian Brennan: For squeaky bums. So you can turn around and go, all right guys, you’re trying to tell me you’re going to hit me with liquidated damages and I’ve submitted 40 notices of delay. Really? You have some leverage. Okay? 

Paul Heming: Yeah. Look at this file effects of information I’ve got, when we’re coming down for that squeaky bum time conversation. You are not, you’ve done what you needed to do. I’m not going to speak about it.

Cian Brennan: So you’re actually, you’re doing two things. One is your’re building a nice bit of reputation for like, oh, these guys keep mitigating stuff. Like they’re just taking so much on the chin because so many subcontractors do that quietly, which is nice. That’s a nice way to do, like if you met a person, a human that quietly got on with stuff, even though is an impact to themselves, you’d be like, that’s a really good human. But in this game, you get taken advantage of.

Paul Heming: You just tell everyone, I’m a good guy.

Cian Brennan: Exactly. You got to say hi. 

Paul Heming: You still wouldn’t believe me, Cian.

Cian Brennan: I know. So you got to submit it all at a time. And then you got to, one of the main things is with EOTs, it’s better to get, and this is contrary to most o other things. It’s better to get a bad document in than a per than waiting to get a perfect document in. Cause you can always revise a bad document. But if you’re late, then you’re late and you haven’t complied with a contract. 

Paul Heming: I was always advised that when it comes to EOT, there’s a couple of things I was always advised like, you’re never going to make profit from it. It’s not a money making endeavor, it’s a cost recovery in demo, like it’s almost like slapping in a stupid claim, expecting to make profit on it is not really the art of what you’re trying to do. So number one, go into it with that mentality. You want to get your money back to reset you to the same position that you were. And secondly, that separating your claim for time from your claim for money was always good practice as how I was always advised in that you would say, look, I want to agree that we’re 10 weeks late. And eventually get to the point where they say, okay, yeah, your extension of time is not, you don’t finish on the 31st of December. You finish on, I don’t know, the 10th of March or whatever 10 weeks would be. That’s agreed. And then separately you would say, okay, now the impact of me finishing those 10 weeks late is 100,000 pounds. I want to be paid for that. Talk to me about that and what your view is. You look like a man who is filled with skepticism.

Cian Brennan: So –

Paul Heming: He’s going to destroy me now.

Cian Brennan: Yeah. So I don’t see the benefit of that, to be honest. Because it’s a tricky conversation. And do you really want to have that conversation twice?

Paul Heming: Twice? Yeah.

Cian Brennan: And so it’s, I don’t know if we have, say you’re trying to get someone on a sales call for your business, trying to get him on two sales calls is infinitely harder. Okay. And then also if you’re just going to talk about it once, you might as well talk about the cost and just get it wrapped up so it’s –

Paul Heming: The elephant in the room otherwise, I guess.

Cian Brennan: Instead of thinking of it as EOTs and a scope of work, so you could change or you could end up having a change order. The numbering of the matters will get confusing because you have EOT four and then you have variation seven four EOT four. And then that really gets confusing where if you just have EOT four that has the cost in it, it’s just a matter, we’re just getting rid of that matter. It’s done and dusted. And so a lot of these issues end up at their ends. If you play them all the way out, end up with a senior management sitting at the table going, right, what about that one? What about that one? Okay, right. Well, let’s agree to whatever and we’ll knock 5% off and let’s just get them done. Right? So if you can prepare for that thing to happen to make it easy, well then you’re putting yourself in a better stead.

Paul Heming: Yeah, a hundred percent. And what about the recovery of cost versus making profit out of it? What’s your thought on that?

Cian Brennan: You are only entitled to damages.

Paul Heming: Yeah.

Cian Brennan: You’re not entitled to loss of profit. And so it depends on how you’re going to skin your card. Most people will still just put it in rates though, won’t they?

Paul Heming: Yeah.

Cian Brennan: But that’s for their QS to catch is my view.

Paul Heming: Yeah. I completely agree. That’s the trouble, isn’t it? When it gets really tedious when you put in your rates and they say, no, prove your costs, and then you kind of –

Cian Brennan: Open your books. So show me, open your books and then you open the books and you’re like, oh, so you applied at 20%, 5% margin on this. Oh, that’s absurd. And then it goes downhill quickly.

Paul Heming: Yeah, no, incredibly, it is one of the most difficult parts of the puzzle, isn’t it? EOT is in and claim for claim and claim for delay. Well, I think we are kind of at the end of the show. I believe that we should probably start talking more regularly about lots of different topics because there’s such an interesting perspective that you have. And I have a construction, commercial, contractual podcast, but I’d very much encourage absolutely everyone to go and check out yours because having listened to it myself, it triggered a lot of the conversation that we’re having today. Just tell the listeners where they can find you. And I’ll put it in the podcast description as well. 

Cian Brennan: So just search construction secrets. You’ll find it on all the podcast place. If you prefer to see me in front of you, maybe –

Paul Heming: You want to see him guys, honestly.

Cian Brennan: See you with your eyeballs and some bad graphics. It’s on YouTube as well. So, but look, all it is basically going through issues that pop up on construction sites. So if you just listen to episode one to one hundred and whatever we are at, at the end of that, you’ll be pretty switched on construction, I promise.

Paul Heming: Yeah. And they’re quite short form, aren’t they, in terms of like duration. It’s snappy, isn’t it? It’s really digestible content. 

Cian Brennan: So what I like to do, let’s just say for example, a recent one is acceleration, right? So I got off a client call and was like, ah, this is a great thing, right? So I’m going to record a podcast on this. So what happened in this scenario was acceleration. So he was asked to accelerate the work, so he accelerated the work and then went to submit his variation for accelerating the work. And they’re like, what do you mean? We’re not paying that, you were late, that’s why we asked you to accelerate and so we’re not paying for it. And so he was like, no, I was like, anyway, that was the argument, right? So the learning from that is if someone ever asked you to accelerate the work, you have to be clear, are they, why? Why are you asking me to accelerate? Do you think I’m late and therefore you’re getting me to put on extra equipment, in which case you don’t have –

Paul Heming: Or are you late?

Cian Brennan: Or are you late and you’re trying to speed stuff up, in which case you have to pay me. 

Paul Heming: Because in that example, he’d spent his 500 grand, not exactly 500 grand, but he’d spent his money and then he was the one who was shouting.

Cian Brennan: That’s it, I need to recover it. 

Paul Heming: These are the kind of nuggets that I know that everyone would get great value out of listening to. What I would say is yes, I don’t have as nice accent as Cian, but there’s room for two commercially minded podcasts.

Cian Brennan: For sure. Absolutely.

Paul Heming: All jokes. So, it has been absolutely cracking having you on the show. Really enjoyed it. I’ll put your details in the description and yeah, perhaps we do this again. And I will speak to you soon, mate. 

Cian Brennan: Absolutely love you Paul. Nice to chat. Cheers mate. Take it easy.