Ping and Bojan Gangur from Level Playing Field join Master Plumbers Radio to discuss discuss cash flow solutions, business solutions and legal advice tailored to the construction industry.
Transcript
Daniel: G’day and welcome to another episode of Master Plumbers Radio. I’m your host Daniel Caroll and today I’m joined by Ping and Bojan Gangur from Level Playing Field. They provide legal expertise, cash flow solutions and business solutions tailored to the construction industry.
Bojan: Thanks for having us.
Ping: Thanks.
Daniel: Welcome guys, thanks for coming and sharing your time with us. Can we start I guess by telling our listeners a little bit about each of yourselves?
Ping: Sure, so I’m Ping. I’m a practicing solicitor and I’m a registered builder as well. People ask me a lot how I got started in the construction industry and I’m not exactly what you would expect in the construction industry. I’m a small Asian woman obviously. My family were in property development and I started running construction projects and I wanted to become a registered builder. So I went along and I went to Master Builders and got my Cert IV in Building & Construction and I became a registered builder.
Ping: I started to see first hand some of the issues that tradespeople deal with on site. They had a lot of issues with money that they were owed and they had a lot of issues getting instructions for variations and things like that.
Bojan: My name is Bojan. I finished university as an engineer. I’ve sort of been in the construction game since a little kid, you know renovating and building units here and there with my family as well. Then decided to go into the construction industry a bit more seriously then met Ping and we started our own building development game. Previously it was a trade as well so I’ve got a bit of experience in that field and at the same time as Ping was sort of saying we saw the same common faults that were happening which was payment delays. Most people are pretty good in the game, they pay well but once in a while you do get caught out and like most trades I had no idea what to do or who to approach. Some people say put this on your invoice, I had no idea what that meant and how do I follow it up. But once you start getting into larger contracts and the bigger game it gets a lot more complex.
Ping: And we discovered security of payments and we had some debts we needed to collect and so we used security of payments. Everything is done on paper. We put the application in and then it was three weeks and we had a determination and the builder paid us. This is for our steel business. And I thought wow, this is amazing, we’d done other debt recovery methods. We had debt collectors in, we had Magistrate’s Court claims and it just took so long to get the money that it was really debilitating for our business. Once we discovered security payments we found that we could use it to not only get paid at the end but also to negotiate and say well look we’ve got these rights under the Act so, you know, pay us.
Daniel: Yep, so you mentioned security of payments. So through your businesses and your experiences you got together, pooled your knowledge in the different fields and sort of complimenting each other and now you’ve established your own business Level Playing Field.
Ping: That’s it.
Bojan: Yeah.
Daniel: So I guess you’re out there … it’s happened to you it’s more than likely happening to a lot of other people out there. So you sort of put your hand up to say okay guys, we’ll put a system in place to help other people. Tell us how that’s going.
Bojan: I can take care of that one. So what happened was primarily as builders ourselves we experienced a lot of our trades coming up to us and then requesting money earlier for our jobs and we were just asking sort of, “What’s the reasoning behind it?” And they said, “Oh you know I got shafted by another builder and I’m late payments and I’ve got to pay by boys.” They were sort of really struggling to … they were great trades, they were just really struggling with their business following up their cashflow. Ping was running with their family steel business doing that and I said, “You know, can you maybe help out some of these trades here.” It wasn’t a substantial amount of money in relative but it still sort of put a bit of a … it made them sort of stressed out a fair bit.
Daniel: Yep.
Bojan: Yeah, you know even if it’s $1,000, $2,000 they sort of feel a bit cheated and sometimes it’s more $10,000, $20,000, $50,000 some of those smaller people with more trades.
Daniel: Yeah, well everyone that does any type of work whether it be cleaning or what-
Bojan: Correct.
Daniel: If you do the work you’re more than obliged to be paid for the work that you carry out.
Bojan: Correct, so we helped out a fair few of them. We just realized that what was missing fundamentally from these really good trades people was just an education on understanding what it meant and I said to Ping, “You know I think this is …” One, it was affecting our construction business so why am I supporting another bad contract builder at the same time? We’re funding his projects. We’ve seen from let’s say a developer stops paying a bill, developer stops paying a trade and trade stops paying their supplier, and that just goes on and on and on. We said the industry really needs to have some sort of legal support or someone in place to help them out and we just weren’t seeing it in this state and then we realized that Queensland and New South Wales really implement this security payments into their system and Victoria is just sort of behind unfairly.
Ping: There’s a huge lack of eduction in terms of what are the rights and responsibilities of a trades person? So much of what will happen in that project is based on the negotiations at the start. So what are they agreeing to? The scope of works, the site conditions, the construction program, the staging. I get so many phone calls obviously about debts but a lot about scope of works so there’s an issue with the site condition, do I have to deal with it? Do I need to go and fix that before I can go on or does the builder need to prepare the site conditions so I can continue working? Or sometimes it’s the builders broken up the jobs for his benefit and now instead of five stages it’s ten stages. What does that look like for me in terms of the trades person to get paid for that extra staging.
Bojan: There’s a bit of a I suppose discord between … let’s say as a builder or trades person you sort of think to yourself lawyer, wow it’s really expensive process. I don’t understand, how am I going to communicate to them? We thought hey, we understand the language. We understand what a beam is and- what a pipe is
Daniel: Oh okay, fair enough.
Bojan: [crosstalk] wouldn’t even know how to understand what goes on in a day to day.
Daniel: Bit like myself being new to the plumbing industry I’m very lucky to share an office with a very knowledgeable plumber and my knowledge of the industry is coming on quickly but there’s still a lot I don’t know.
Ping: The yellow one’s gas.
Daniel: Yeah.
Bojan: The yellow one’s gas, yeah.
Ping: Just trying to help you out there.
Daniel: Yeah well, we’ve also done some renovations on my home recently and I figured that one out as well.
Bojan: Yeah.
Daniel: But it’s such a fascinating industry, plumbing. There’s no reason why a lot of this stuff can’t be transferred across or it is transferrable across industry as well.
Bojan: The whole game, you know.
Daniel: Yeah, so if somebody … going back to the security of payments, what are the obligations of the I guess from both sides from the person that’s running the job and the person that’s wanting to get paid. How does it all come together in regard to that?
Ping: So the fantastic thing about security payments is that it was created by the government so it’s a legislation. It sits above things that you agreed to with the contract. So you have a right under the Act separate to your contract to get paid. You have a right obviously under the contract but you also have this additional right under security of payments to get paid. People always have on the invoice, “This is a payment claim under the blah, blah, blah … Building Construction Industry Security Payments Act.” That’s enacting the legislation. Once you put that on your invoice you’re starting the process, whether you know it or not, you’re starting the process under security of payments. But I think the problem that trades people face is that they don’t know the nuts and bolts of enforcing so they put that on the invoice and they forget about it. I don’t know many trades who have actually been through the process of enforcing it.
Ping: What we try to teach people … we run monthly seminars on security of payments. We try to teach trades people what does it actually look like. So you run a claim, what does it look like at the end? What are the costs involved? So people can consider that. They think I can negotiate with this builder and maybe get paid but what’s my fallback position if he’s not going to pay me?
Daniel: Right.
Ping: Okay, so I’m going to have to spend X and I’m going to have to prepare my paperwork like this so I can get paid. A lot of it’s about preparing your paperwork so then when you need to enforce it everything is ready to enforce it.
Bojan: And the other thing it was sort of the trades perspective is that what you sort of asked before was their obliged to one, when they have a contract to understand what that means, and two, to do the job correctly. This is not one of those scenarios where you do some dodgy work and you think I want to get paid, I’m just going to call up and get that money. That’s not correct. A contract is technically an agreement that you have and that you have to understand what you have agreed to. Sometimes on site you might get that, “Oh, just do that or just do that and you’ll be right, I’ll pay you later on.” It will be a variation and when it comes down to the end of it if you don’t follow the proper procedure legally you have nothing to stand on. So we want to make sure that they understand what that means and variations and all that is very crucial, it can be a substantial amount of money.
Daniel: Yep.
Ping: It’s also the conduct in relation to defects. I get phone calls a lot from concretors about how do I deal with this defect. So I’m getting allegations of defects. We advise people on the correct conduct in order to resolve the defect. That kind of thing as well.
Daniel: Okay, sure and you mentioned that you run workshops for tradies?
Ping: Yes.
Daniel: What sort of timeframes are involved in the workshops?
Ping: So we offer two packages. If people want to come to the monthly classes then we provide them all the templates to be security of payments compliant in terms of documentation and it takes about half a day to go through the session. Then we have a follow up phone call maybe two weeks later and we run through the concepts under security of payments because there are a few concepts that are a bit technical and it’s good to have the class and then that follow up phone call afterwards or if people want we can come to their business and we’ll run a seminar just specifically for that person’s business. We also start looking their debtors list and advise them about how we can start to bring the arrears in.
Daniel: Okay, yep, fantastic. And for anyone out there looking to attend one of the workshops we’ll have a link attached to this post so keep an eye out and if you’re interested, reach out to the guys and book in.
Ping: Yeah, definitely.
Bojan: The key thing is to take away from that class is we sort of use the 80/20 principle. So if you have just 20% of knowledge it covers 80% of what we believe is a real common occurrence. You don’t need to understand the complete Security Payments Act but if you just follow key procedures and just some things we see time and time again, and understand those things and then we give you the template to follow and that way what that means you can come to us and say, “I’ve been in this situation, I followed your template, let’s proceed with Security Payments Act.” And we’re like, “Great, that’s all sorted.” It comes in really cost effective way for us to operate as well.
Daniel: Yeah.
Ping: It basically increases your ability to recover under security of payments but it also reduces your costs because we don’t have to spend as much time on your file. That’s what it’s about.
Daniel: Yeah, okay, cool. Without going through the whole process for what you’d be teaching in your workshops, for a summary you’ve got someone’s completed some work. Is there a timeframe that has to lapse before any type of recovery can be enacted?
Ping: So you can choose to enforce any payment claim under the Act at any time on a project but generally we would suggest to trades people to do it at the end of the job because obviously when you’re still on site, if you start talking about recovering money under security of payments, there’s going to be animosity on site there. There’s going to be angry people.
Daniel: Sure.
Ping: Generally once you’ve finished work on site, so when you leave site you need to invoice under the Act within three months. So if you’re thinking about preparing your second last or last claim and you think that a dispute is going to arise, that would be the time to contact us and start preparing an application for adjudication.
Daniel: Okay, and I guess there’s a lot of people, I know a lot myself, that come into losses through business and they think the easiest way is depending on the value of that loss is just to sort of suck it up and keep going.
Bojan: Correct.
Daniel: So that would be going on all over the place. While people are happy to do that, if someone was to enact recovery via this scenario, what in your experience is the likelihood of a successful recovery? Whether that be the full amount or a percentage.
Bojan: Should the procedure be followed?
Daniel: Yes.
Bojan: Yeah, it is high. It is highly likely.
Ping: If you’ve done the work and then you’ve responded to any defects allegations properly, then we do have a high success rate in terms of … there’s a very limited scope under security of payments. In a general sense it’s mostly about value on site. So if you’ve got value on site, defects can be defended and you can make out your variations. Making out variations means that you’ve got a site instruction. The best would be to have written site instructions. If you get an email that says do this and then we can prove it’s outside your scope of works, then we can obviously can prove the valuation and the variation itself.
Daniel: So I guess the ideal thing there is to make sure all of your paperwork is up to scratch.
Ping: Exactly.
Daniel: And everything that you’re completing on your job is included in a working diary or is that part of the-
Bojan: Photos, photos, photos, photos.
Daniel: Photos, photos, okay.
Bojan: Emails, photos. In the old days it was oh yeah mate, no handshakes, we’ll just get it done, you’ll be fine. But it just doesn’t exist any more.
Daniel: I suppose it’s not really that difficult to do considering everyone’s got a camera in their pocket these days as well, they can still-
Bojan: Correct, 100%. And this goes down from all levels, from your manager’s supervisors down to your apprentices, conversations, emails. This is where they’re sort of make it sound … to sort of make it simple. It’s basically getting to a situation towards the end where you’ve done the job correctly, you get towards the end. You say, “I want to get paid.” They say, “Well no, blah, blah, blah …” you say, “Okay cool, I decided to follow the Security Payments Act.” And you go in front of a judge and it’s the quickest way. There’s not a judge in a-
Ping: Adjudicator.
Bojan: Adjudicator, I apologize. That is sort of a person that will decide … and it’s highly favorable in the trades persons-
Ping: It’s a claimant friendly process.
Bojan: Yeah.
Ping: If I can say something about variations, if you make sure that you get an email or you get a text message that’s instructing you to do that extra work, then we can look to recover that payment.
Daniel: Okay.
Ping: The difficult thing is when you’ve done a whole bunch of work and it’s not clear that something is a variation.
Daniel: Yep.
Ping: It’s not clear that it’s outside your scope of works and that kind of thing.
Daniel: Okay.
Ping: Also understanding your scope of works so you can … there might have been verbal conversations saying that this is not within my scope of works, but then the contract actually has that item as part of the scope of works and then you can’t claim a variation.
Daniel: Okay, sure.
Bojan: And you know you get this sort of common … there’s a few common things that keep reoccurring. One is that you’ll quote a job and then they’ll say, “Well I quoted for X.” But the contract might not have that in there.
Ping: Exactly.
Bojan: Then you think oh well I quoted it and I’m going to sign this contract because I quoted it. Then they come out and say, “Well, what’s happening here?” And you say, “Well, it’s different to the contract to what I quoted.” This is where a lot of those disputes … this is why we think it’s pretty key to have contract reviews and let’s just say there is a number of builders out there who are getting a bit technical and trying to sneak in a few little things here and there and you might not even understand what you’re actually signing up for. We’ve had a case just lately where it was a large wind farm and there was one little clause that basically saved the contractor a few hundred thousand dollars.
Daniel: Okay.
Bojan: And that was big.
Daniel: Okay.
Ping: When we do contract reviews it’s about understanding the transaction as a whole. We understand what’s going to escalate your costs? Because if something is going to escalate your costs and the contractors allow you to provide a variation for that, then you’ll have issues claiming a variation. So that’s part of the contract review.
Daniel: So part of what you were just saying then about not understanding particular things sort of brings me to my next point of in addition to recovering debt there’s a lot of other problems that subcontractors are facing out there at the moment. Are you able to elaborate on any of those and how you’re able to help out?
Ping: So I think insolvency is probably the biggest thing that people talk about that in the construction industry everyone has dealt with insolvency at whatever level. I think this year has been quite bad because the funding constraints have come in. That’s definitely slowing down the cashflow in the industry. There’s a monitoring service that we subscribe to which looks at I guess commercial data out there. So who is defaulting on payments in the industry. If there’s anything out there in terms of court actions, so winding up action. If the credit risk insurers are extending credit … sorry, extending insurance over certain builders then you know that they’re probably okay for now. So that kind of commercial information we gather and we are part of the monitoring service and we tell our clients about any concerns we have about certain builders and things like that.
Daniel: Yep, okay. So it’s an important resource to … if you’re thinking about signing up to any particular contract or entering a job where there’s other people, a very good thing to know.
Bojan: And even half way through you know. If you’re half way through a job and you’re thinking things are looking shaky, we can offer that service too. Say well, okay yeah it is shaky so you might want to enact the security payments a little bit early and get paid early as fast as possible.
Daniel: Okay.
Bojan: And there’s a whole bunch of legal ramifications should insolvency be called by the builder. But there’s also a lot of avenues that you can go down to get-
Ping: Start enforcing payment early. That’s the key thing. People that leave their arrears for a long time I think in the minds of a lot people they may not think they’re indebted to them any longer. They might think well look this date is so old, I don’t need to pay this person so I’m going to fight it. There’s that aspect but also insolvency is definitely something that starts to be a concern for old debts.
Daniel: Okay.
Bojan: And the biggest one we have right now is actually retention.
Daniel: Right.
Bojan: So there’s been a few cases where the money has to be returned to … Ping can explain that one a little bit better.
Ping: So in February of this year there’s a High Court case where it actually made retentions based on the head contract void. So we’ve run a number of adjudication cases for clients where the retention is not … hasn’t been returned and they’re able to get that returned quicker.
Daniel: Okay.
Ping: So what that means is that most retentions are based on either the head contractors practical completion, the PC. Or the end of the defects liability period. Both of those events are based on head contract. The High Court has said that those retention clauses are now void which means that the builders don’t have the right to hold retentions if the clause is written that way. So under security of payments, if you finish the job you can actually call in your retentions early.
Daniel: Okay.
Ping: So that’s the kind of information that trades people aren’t aware of.
Bojan: That’s a lot of money for a lot of guys out there.
Daniel: Yeah, well just sort of trying to make it sense of it then as you’re explaining. I’m glad you’re offering that service to sort of wade through all of the different rules and regulations there because it could be pretty tricky to understand all that. I can imagine going-
Bojan: Going to a class. We’ll break it down for you. You can ask all the questions you want and-
Daniel: I can imagine that a lot of people … they’ve got enough on their plate with just doing their jobs without worrying about how to understand a lot of these things. It would be so much easier just to have somebody say, “Okay, this is what’s involved and this is how we’re going to do it.”
Bojan: And we’ll speak that language, you know.
Ping: We do that monthly health check so we … some of our clients, they’re on like a monthly health check, so we review their debtors list once a month and we start to tell them … They’ll say, “I’m a bit concerned about this.” So we’ll kind of formulate the strategy with them and say, “We’ll monitor, monitor, monitor until a certain point and then if we need to escalate, we’ll escalate it to enforcement.”
Daniel: Is there a expiration date on a debt?
Ping: Under security of payments there is. You have to be doing work on site. You have to be doing work under the contract and when you leave site that last claim you need to start thinking about enforcing under the Act. So a payment claim under the Act must be made within three months from when you last do work under the contract.
Daniel: Yep.
Ping: But if you use other enforcement methods such as VCAT, Magistrate’s Court, Supreme Court, that kind of thing, there is a six year or seven year limit on it.
Daniel: Okay.
Bojan: But it’s a lot more expensive process.
Daniel: Yeah, I can imagine.
Ping: So we try to do everything under security of payments and that obviously has a very tight timeframe.
Daniel: Sure.
Bojan: And we can explain all that … that’s one of the sort of things I was saying to you. Once you understand that process, then you will say, “I’ll have to make that decision soon.”
Daniel: Yep.
Bojan: One of the common first reactions we get from the trades is, “Well, I don’t really know if I want to use a legal card so early.” They feel like they’re probably going to intimidate the builder and then they’re scared about getting future work. But what we find is it’s the actual opposite effect. The builders tend to respect people that run their crew properly. Once you get a reputation that you are a good company and you’re getting paid and you’re doing the job correctly, you will get more and more work.
Ping: You also get less push back with things like … when people tell me the builders said there’s defects on site so they’ll go and do some minor defect and they’ll be asked to be doing all this other work, pretty much using them as labor hire. Then I’ll tell them if you’re not getting instructed tell them to give you an instruction in writing for that variation and then they suddenly just say, “Oh no, we don’t need you to do it.” It’s those costs as well, like knowing where you can push back or when you should actually be doing the work.
Daniel: Yep. I mentioned before about how confusing some of this stuff could be. You’ve got your own job to worry about. You’ve learnt your trade, you’ve gone to school, done your years, you’re experienced in what you do, having to know all this additional stuff can sometimes be a little bit sort of overwhelming. I’m assuming that although I guess you learn it in trade school, something like a contract would be pretty daunting to sign up for especially if you’re on a larger job when that situation is going to arise more often. Do you sort of help people understand contracts and really get a handle on what they’re actually signing up for?
Bojan: 100%.
Ping: Yeah, so when we do contract reviews most construction contracts will have very similar clauses and we’ll go through the process of trying to explain to people what are the risks involved. Obviously a construction contract by nature is risky. It’s not about saying you can’t sign up to a contract, it’s about saying this clause the relative risk is this and can we try to negotiate to this. It’s also based on how much you want the contract. If you really … I always try to negotiate a cap on liquidated damages but it will depend on how much that person wants the contract. So we obviously respect the decisions of people in terms of how much risk they want to take on but it’s about knowing I’m actually signing up for this.
Bojan: Yeah, and some good builders out there actually want their contractors to be what they call healthy and responsible and they want to make sure that they will pay you no problem. They want to make sure that the other builders that they’re going out … it’s like us, we want other builders to continue on to understand that there’s no room to try and screw down some guys because it has a massive ripple effect across the industry and we want healthy businesses on our jobs because I don’t want to get … Last thing I want is half way through a project and then the trades person goes under. That could have a huge impact on the builder as well.
Bojan: The system needs healthy businesses to keep growing and like you were sort of saying before is that once you finish trade school I don’t know how much education you take on to continually running a business. You’re great at a trade, I understand that, you’re probably really good at doing your job, but fundamentally the boss will have to take … Understand that he is running a business and that education doesn’t sort of stop. Again, put it to the side it’s sort of saying, “You should be right, should be right.” Until it’s not alright. That’s when we start seeing a lot more phone calls, we start seeing a lot more, “Hey, I’m really under … what do I do now?” It’s like, “Okay, if you just took a couple of precautions just beforehand.” We can help a lot of people in that hole, it’s just that it’s a lot easier to get the education and to understand the process of how it all works.
Ping: So it becomes a bit more like business as usual. I have a lot of clients who they … if a contract is a certain nature like a fixed priced contract or it’s over a certain value, then they will get me to review the contract and sometimes I even negotiate on their behalf. It just depends on what kind of level of assistance they require and/or the budget.
Daniel: Okay. So you touched on before, you go to school for a couple of years, you learn your craft. You start getting experience with that. A lot of guys or the majority of the industry out there is people working for themselves. If you’re part of a big business you’re more than likely got somebody that’s going to run your finances. Got somebody that’s going to do all your quoting and invoicing for you. You’ve got someone to help you do recruitment and marketing and every other bits and pieces that go with running a business. Most of the people out there probably most of the people out there tuned in will be doing all this themselves up till late at night doing their paperwork and managing all their people. Apart from recovering debt, is there any other things that you are able to help these people with?
Ping: Yeah, so there’s that contract review service that we provide in terms of going into a contract because that contract dictates how that project is going to be run. It’s your scope of works, it’s what clauses you have in relation to delays and those kind of things. It’s very important to not only understand the contract that you’re signing up to but what areas that need to be negotiated. If you think about it like this, the builders have a standard form of contract that they use and that has been prepared by a law firm. Then the trades people are getting these contracts, they don’t understand what they’re signing up to and they’re agreeing. So obviously that contract is heavily weighted towards the builder. In my experience, dealing with subcontractors and the contract review service that we provide, once you go back and you negotiate a few clauses, the builders are receptive to those kind of things. Obviously some things they won’t agree to but it might be just about limiting the liability of certain things.
Bojan: And in that training we provide a sort of like a framework on how you should operate every job. How you should document what you’ve done and how you should document variations and how you should document … you know keeping that sort of system. Even putting little calendar reminders for yourself of what day means what. What day do I get paid on? What day do I follow it up on? We’ve got a little calendar we made up just as a reminder for them to say to them, “Okay, this day you should be checking your books.”
Daniel: Okay.
Bojan: It’s those sort of administrative processes that should be in place for you and at the minimum you have to have this system in place because it’s not … Most of the day you’ll be fine but it’s a good habit to get into because in those moments when you do get caught out and that could be really critical timing for your business as a growth, you know you’re going through a growth phase. You’re probably got a little bit leverage and the money you’ve got, more staff, they get paid weekly and you get paid every so often.
Daniel: Yeah, I guess it’s one of those things that’s anything that’s different or away from your usual day-to-day stuff, it could take a little bit of getting used to but once you’re establishing as you mentioned turning these things into habits, they won’t be as much of a new thing anymore.
Bojan: That’s correct.
Daniel: And it will be helping their business.
Bojan: 100%.
Daniel: How long have these workshops been going for? How long you’ve been doing those?
Ping: A couple of years now.
Daniel: A couple of years? I’m sure over that time you’ve helped lots of people.
Bojan: Yeah.
Daniel: Have you seen any sort of trends happening with particular questions these guys are coming to you with or has it just been sort of a range from we’ve got a lot of people recovering debt, a lot of people wanting to understand contracts, people wanting to rather than chase down debts sort of mediate and meet in the middle somewhere. Is there any particular trends that emerge or is it just a little bit of everything?
Ping: It is a little bit of everything but I think the key issue that I see with the industry is that lack of understanding about their rights and responsibilities.
Daniel: Right.
Ping: I think that underlies the problem with everything that we see. When you get to a payment dispute at the end and people don’t get paid, it’s more complex than the builder doesn’t want to pay them. Sometimes it’s as simple as insolvency or they’re having cashflow issues but we’re finding a lot of it is to do with the complexity of the construction industry which is about people not understanding what their scope of works are or what are the expectations that they have under the contract.
Daniel: Right.
Bojan: Yeah, and a lot of the people we see is people that are growing their businesses. They’re going from that really small to medium and wanting to take on these [inaudible] There is a construction boom going on. There is a shortage of trades. There is people stepping up from domestic to commercial to industrial, all that sort of stuff. They really want to know how do I take that leap? How do I get involved? They just haven’t had that experience down from let’s say from a domestic level and they want to know what else do I need before it comes? This is the questions that we get. This is why we think that education at that critical point is. We didn’t see anything out there that provides that information. As any business goes, your legal rights you have to address it at any point. Whether you’re a builder or developer or a trades person.
Daniel: You said something just then that resonates with me a lot and it’s education.
Bojan: 100%.
Daniel: I’m 37 now and there was a good period of my career where I thought I knew everything.
Bojan: Of course.
Daniel: Like a lot of people. But I’ve been sort of putting a focus on my personal career in learning as much as I can and I know Master Plumbers especially is advocating for CPD for the industry because what you learnt a couple of years ago may have had some tweaks here and there and being able to constantly remind yourself of new things and just even if it’s a refresher for something you haven’t done in a long time, it’s sort of going to make a big difference.
Daniel: In addition to having a lot of these things that are foreign from what someone might have started with, is there any other tips that you can sort of suggest to people that can help them get into the habits that they’re going to need to progress with this sort of stuff?
Ping: I think now that most people are using cloud servers it’s about having well organized documentation. We actually do the folder setup of how if I was running your business how I would set up the documentation.
Daniel: Yep.
Ping: So the contract administration precedes the legal claim. If you’ve got very good contract administration it’s really going to cut down your legal fees. If things go to a dispute, but it’s also in terms of running the project, you want to know exactly where you’re at. We help people in terms of organizing their extension time claims. How it should be organized. I think a lot of people don’t even understand exactly how you put in an extension of time and how you show the effects on the critical path. Because we have that building background and we know how to use Microsoft Project and work out where you’ll finish and where the builder … what information the builder needs to know about your delays, we assist with things like the contract administration, how to set up your cloud servers and your information so that it’s accessible and it’s organized.
Daniel: So you’re not suggesting anyone out there to become a computer guru. Everyone these days has got their phone on them and the phone is one of the best-
Bojan: Tools.
Daniel: I was talking a few people out there did a poll on Facebook recently, what’s the one thing you can’t leave the house without and a lot of people said the phone. Unless I’ve got my phone I can’t operate my business.
Ping: They don’t even need wallet these days because you’ve got your cards on your phone.
Bojan: Yeah.
Daniel: Yeah.
Bojan: Here’s a great thing that I try and tell people. You run a business, primarily you’re taught tools, right? In the plumbing world especially it’s changed so drastically in the last few years with different systems out there. Greater tools, faster, do this better-
Daniel: And it’s only get more. As we go into the future it’s only going to get more-
Bojan: We went from copper pipes to plastic pipes and connections and that sort of stuff and I watched the boys work and I said, “You know, how many times have you actually focused on tools that help your business?” The best example I’ve got is back in the day who had that bag of receipts just in the back of the ute. You’re sitting there and you’re like-
Daniel: A bag? A bag of receipts, that organized.
Bojan: Well, a Santa sack, a Santa sack, that’s right. Then you sort of come in and Ping would come to me and say, “Right, are you doing your … you checked the receipts? You got that receipt? And I’d be like, “Oh, I’ve got to go through it all.” And there’s this one app that we just literally take a photo of it and it goes right to the accounting system.
Daniel: Okay.
Bojan: And it’s like you can throw that receipt out now and it’s all documented for you. Then there’s all those things out there for your business to make … Like you said before, you’re staying late up night trying to do this. There are so many systems out there to help your business out. You just got to understand that you could save so much time by using these tools and this is a-
Ping: A lot of them are really cheap, they’re quite cheap. I think Receipt Bank’s maybe $25 or something a month when you first get started. You have that thing where you take a photo of a receipt and it puts all the information to accounting system so it will tell … it will say the supplier, the GST, all that stuff.
Daniel: What’s that one called?
Ping: Receipt Bank.
Daniel: Receipt Bank.
Ping: So it connects to Xero, I think it connects maybe …
Bojan: We’ve got no affiliation with Receipt Bank, if they want to pay us royalties. [crosstalk]
Daniel: I actually use an app called Scanbot which is … if you’ve got a bit of paperwork you need to hold to but it might be getting ripped or whatever. Put it on the table, hover your camera over the top of it. It will identify where the edges of the document are and scan it and then keep a PDF copy you can email or do whatever. If you get the pro version you can identify all the text in there and copy and paste and whatever but I recently did a review on that for our internal newsletter for our members and I guess that’s part of why we’ve decided to put this podcast together is there’s so much information out there that can help our members and the wider industry for that … I guess is why I’ve got you guys here is helping everybody understand that they don’t have to do this all themselves. There are people and tools and systems out there that they can implement relatively easily to their business and it will help them a lot.
Bojan: And it’s a lot more affordable than they really believe, you know. Like I said at the start, you think a lawyer, you’re thinking huge money, huge expenses, I’ve got to go to court, it’s going to take months and then VCAT. They’ve had that sort of experience in the past and we’re like saying, “Well no, hold on a second, this is the fastest way to get paid out there.”
Ping: We’re very lucky in the construction industry because the Security of Payments Act is specific to the construction industry so no other industries have access to this fast track debt recovery method, so …
Bojan: Yeah, that’s the reason why because it was one of the highest insolvencies in any industry.
Ping: I think we’re represented maybe 20% of all insolvencies or maybe more than that, is the construction industry. So you think about that in terms of how big construction is for all of Australia and then being represented 20% of insolvencies, that’s a lot.
Daniel: Yeah, I guess with an industry that goes through periods of boom and is so competitive for everybody to do the job for the best price and in the quickest timeframes. There is probably … there’s likely to be a high volume of things that don’t quite go so right.
Bojan: Yeah.
Ping: I think also because we get paid on account. It never happens in for example professional services where you … say you do 10% of the work and you get paid. You get paid on account so they can always back charge from that amount. On a project you’re getting paid progressively but you won’t know exactly how much you’ll get paid for that job until the end because they can back charge you in relation to any of those claims in the past.
Bojan: We keep a monitor constantly of current cases that are happening in the court systems. New updates, new regulations and what it means to your business and then we try and inform our subscribers to say this is a new rule that’s come out, this is how it’s going to happen from now on, not how you knew for the last 30 years, this is how it’s going to happen from now on and this is how you … it’s a protection for yourself. One of the things I was always saying to trades people, they’d call me up and say … their friends, they’d say, “Oh I got this huge contract.” and I said, “Yeah you’ve quoted for it, you’ve done the job, but until you get paid you’ve made nothing. You’ve almost lost money until you get paid.” Understand that part. It wasn’t always a guarantee. Back in the day maybe it was, it was a bit more hand shaky, but these days we’re just seeing more and more. Fundamentally we just thought it seems like very unfair that what Ping touched upon was that the head contractors would get this huge legal team and a lot of the subcontractors were just-
Daniel: Can’t afford to compete.
Bojan: Can’t afford and then-
Ping: Just knowing where to start I guess.
Bojan: Yeah.
Daniel: Yeah.
Bojan: And we said, “Oh what can we call the business? Why don’t we call it Level Playing Field where even the little guys can act as big as the big guys that have got that experience.”
Daniel: Oh that’s great, that’s fantastic. You say on your website you’re focusing on the knowledge gap between subcontractors and head contractors is what you’ve been saying there. Getting everybody to play at the same level. You don’t need a huge legal team to battle these. You just need to know how go about it I guess. That’s where you guys come in.
Bojan: We give the support that they need to run their businesses and we’re happy to … I mean we get a lot of repeat clients. We get a lot of referrals from their friends. We get one contractor that we saved them and they tell all their friends about our businesses and we want to make sure that the industry … if it’s thriving and if everyone’s getting paid and the money’s flowing, everyone’s making money, everyone wins.
Daniel: Yep.
Bojan: Nothing worse than like you were saying at the start, where someone takes a hit $70,000, they just walk away from it but that $70,000 has to be made up somewhere else.
Daniel: Yeah.
Ping: And it affects everyone like the employees and their families and everyone.
Bojan: Once builders realize that not paying people affects everyone in the industry because they start upping their rates to try and … there’s like that margin.
Daniel: Yeah, it’s a domino effect.
Bojan: Well, there’s that margin that you think well okay if I don’t get paid 1/10th of my contracts I have to add that percentage on to the fee the years and it’s like well the reason you’re not making money and working twice as hard is because you’ve missed out on those few payments and that’s a compounding effect across the whole industry and we just want to make sure that it goes back to where it was and that everyone can provide and everyone can play and then the industry … We’ve seen a lot of good, good trades people just disappear because they’ve been wiped out and it’s a key that’s missing in the chain which is like you think about they train apprentices, they would create better workers and all that going on. We want to see those businesses thrive.
Daniel: Yeah, you don’t want to have to tack on another year or two to get guys with business practices and even that would only be scratching the surface.
Bojan: Yeah, that’s right.
Daniel: Yeah, and it’s I guess when people are put in a situation where they having to recover a debt for work that they’ve done, it can also play on how they are personally. We’ve got mental health is in focus at the moment now and I can imagine that being able to or not being able to recover their debt would play a lot-
Bojan: It’s huge.
Ping: It’s a huge emotional toll and that’s why in the workshops we help people set up the templates and the cloud servers so then if something does go to dispute all the information is there. The hardest thing is to prepare an adjudication application in the limited timeframe. Sometimes you have maybe 10 business days. I’ve had people call me about adjudication applications in one or two days and I’ve had to just work late nights to get it done.
Daniel: Okay.
Ping: But to do all that in a short period of time is a huge stress on the business and employees so if you can just produce your paperwork so it’s business as usual. If you go to dispute you just send me a link to your cloud server and we have the information we need.
Daniel: Yep.
Bojan: And once they’ve gone through that process once, man their faces change really quick. They understand-
Ping: Once you get that win then for sure all the cards.
Bojan: They get that win and they’re like-
Daniel: I can do this.
Bojan: I can do this, yeah. It wasn’t that bad, and then they tell all their friends about it.
Daniel: I wish I had known about this when I started.
Bojan: Exactly mate, exactly. Then this is why we’re trying to get the word out to most people out there. There is support out there and like you brought up before it is so stressful man to not get paid. Even sometimes the small amounts, you feel cheated, you feel angry. We’re seeing people just like lose it and I’m like man, that affects your trades people, that affects your apprentices, it affects the whole team of what your business is. It is unfair and you feel hopeless and you don’t know where to turn to and you don’t know what is actually out there but there is support, there is practices and if you get in early if you educate yourself continually and understand that there’s better ways of doing it and if you’re on that mind of growing your business you have to be open minded to other systems out there.
Daniel: Sure.
Bojan: And not the way it was always done because sometimes that dies out. That’s phased out. There’s new ways of doing things and use the tools that you have. Use your phone, use the people and businesses out there that can support.
Daniel: Yep. I saw a good quote the other day on Instagram, “Even if you’re on the right path, if you don’t keep moving ahead you’re still going to get taken over.” Or something like that, I’ve probably just wrecked it now but even if you go along the right thing you can’t stay still, you’ve got to keep moving and keep up with what’s happening in the industry, all the things that can help your business whether it be the tools that you use or the systems that you implement in your system.
Bojan: 100%.
Daniel: It’s all about keep an eye on what’s out there and the good news is you don’t have to do it all yourself. You’ve got these people that can come and help you do that. Ping and Bojan, thank you very much for coming onto the show.
Ping: Thanks Daniel.
Daniel: And for anyone that’s interested in coming to one of your workshops, where do they go?
Ping: Just contact us on the website, there’s our details.
Daniel: Yeah, we’ve got a link down the bottom of the screen.
Ping: Then we’ll schedule you in.
Daniel: Thank you very much for being on the show.
Bojan: Thank you, cheers.
Ping: Thanks.
Daniel: Cheers.
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