How should i protect advanced payments required by my off-site manufacturing specialist?

Question

Find out more about alternative ways you can protect your payments by visiting the Construo Resources tool.
Which method do you prefer?
What are the pros and cons of each?
What other alternatives have you considered?

Andrew Crawford · Answer

Steve

The article does cover the answer to your question although I would note that the emphasis placed in the article is heavily weighted to the risk to the Employer if the Contractor becomes insolvent.

To my mind there is a equal if not greater risk of the Sub-Contractor providing the modular bathroom pods for example, becoming insolvent, rather than the Contractor. Whilst the articles does briefly touch on this, the greater emphasis should be on ensuring that an Advance Payment Bond is in place with the surety for the Sub-Contractor immediately after the execution of the Sub-Contract. This protects the Contractor and at the same time, the Contractor provides an Advance Payment Bond to the Employer.

Over recent years there have been many off-site modular companies becoming insolvent and the supply chain in this area is not large to begin with, so there is a greater risk with this package compared to some other traditional work packages. Coupled with the fact that a lot of these firms are based in Europe and further afield just adds to the risk of engaging another firm should the existing firm become insolvent..

In addition to these financial risk measures, the Contractor and the Employer's representative should also make regular visits to the Sub-Contractor manufacturing premises not only to inspect progress of the manufacturing of the off-site works, but also the quality of the works so that checks are made that those works are manufactured in accordance with the Sub-Contract. This will include the witness of all tests and review the data of the individual components for the product so that they comply with the standards set out in the Sub-Contract.

How should i protect advanced payments required by my off-site manufacturing specialist?

Insolvency

advance-payment

Modern-Methods-of-Building

Offsite-Manufacturing

Steve Hardy

Create your FREE Account