Madam, – Seeing two construction companies fold in Dundee breaks my heart because I know how hard the management will have been working to save their businesses.
I know the stress they will have been under.
Firstly, works have to be ‘estimated’ where we make many assumptions which might not be clear at tender stage.
We then have to compete against, often, six other contractors for the work.
So prices have always to be skimmed to the barest minimum before works even start.
There is no payment for all the efforts put in to tendering.
Only the successful tenderer gets any form of reimbursement.
Once secured the works will proceed but payment terms become a farce.
Many contracts state 45-day payment terms, but that is seldom met.
Works carried out in January are invoiced at the end of the month but seldom paid until the end of March, meaning the contractor has to finance three months of costs.
It could be a lot longer if the client decides to challenge any of the charges made.
Things have eased a bit but we as a specialist company went through many years of average payment times from issue of invoice to payment of 96 days, thus we were financing roughly 126 days business.
You then have to add into that a 5% ‘retention’ that the client will hold on to for a year after completion of the contract.
That can be reduced to 2.5% if all works are approved, but it is still 12 months after the ‘final’ invoice.
We cannot pass this retention on to product suppliers who demand 28-day payment terms .
McGill will have struggled through December and January because of the two-week shut down over Christmas and New Year where each month is reduced to three productive weeks.
Contractors also have two full weeks wages to pay out with no financial return.
I appreciate that other industries have the same problem but they do not have the same tendering pressures as the construction trade.
When pricing contracts you have to assume maximum productivity and cannot make accurate allowances for weather restrictions such as rain snow frost or, believe it or not, extremely hot weather.
The ‘hot’ period’ of 2018 cost my companies a lot of money, because many of the products we use have temperature restrictions on them.
Also, tendering is often done well in advance of a contract proceeding, so inflation may have occurred between tender and contract start dates.
There is a process on larger projects to make claims for inflation but not on small contracts.
Even claiming back the time formulating a ‘claim’ is often more costly than the inflation so it creates a negative return.
I read so often of the work related stress of doctors, teachers, bankers etc, and I shake my head.
My staff work ‘silly’ hours under constant stress to achieve quality and meet completion dates which are seldom realistic .
I would say a 12-hour day and a six-day week are fairly standard for my managers. They are also likely to drive 800 to 1,000 miles a week travelling round contracts.
As well as estimating and contract management, they have to be social workers, dealing with the problems of a wide range of operatives.
We receive approximately 2,500 tender inquiries per annum which have to be priced.
Our success rate is approximately 10% although it used to be 30% only 10 years ago.
However it was 30% of a smaller inquiry level.
To all the staff at McGill I offer my sincere condolences and am so sorry that you have been put in this dreadful situation.
The Fraser Bruce Group.
Fund could sort cash flow issue
Madam, – Having been a small sub contractor for a number of years I have seen and experienced the problems of the construction sector.
The problem has always been cash flow, or the lack thereof, due to non-payment of bills.
The solution is very simple but needs money and the will of government to help.
Begin with a government fund of around £10 million, which could be maintained annually with a subscription from contractors joining the system, of one and half percent of turnover.
Once set up a contractor submits authenticated invoices unpaid for 30 days or more.
After confirming date of service, the government then pays that invoice within seven days, less VAT.
The result is no more cash flow problems, suppliers have confidence in being paid, keep supplying materials for future work and jobs are safe.
The downside is debtors may think the government will cover their costs, but they could recover monies from income tax, VAT, or national insurance, not to mention sheriff officers, and the courts.
The system is logistically simple and solves the cash flow problem.
Climate change ‘quackery’
Madam, – Climate quackery is in the news again with claims that we are currently in the warmest period since records began, and dire predictions that in five years temperatures will pass some arbitrary level and we’ll enter uncharted territory.
Here’s another prediction. In five years nothing remarkable will happen and the climate alarmists will have moved the goal posts to a further year.
The claim that it is warmer than ever is false.
23 Braeface Place,
McManus has more to offer
Madam, – I read the letter from Dr Rev John Cameron regarding the V&A and I completely agree with him.
I think the building is a monstrosity and the contents therein are boring in comparison to other museums. In my opinion the McManus Galleries have more to offer.
Just because it was designed by a renowned Japanese architect it seems to be fashionable to extol the virtues of the building and I feel there is an Emperor’s New Clothes syndrome relative to the V&A.
Although there is little that can be done to the building, hopefully the exhibits will become more interesting in the future.
12 Boyack Crescent,
Concert a ringing success
Madam, – At the Tayside and Fife Health Services Christmas Carol Concert held in Caird Hall, Dundee, the sum of £8,700 was raised. It has now been forwarded to CLIC Sargent.
Kay A S Simpson.
12 Smithy Road,