In this insightful episode of the Construction Junction podcast, presenter Tonya Schulte focuses on how construction subcontractors can navigate through the complex business landscape. The show lights a torch through the historical evolution of contract risk management in construction and underscores the importance of contract negotiations and management for better cash flow and profitability.
Guest Cian Brennan shares lessons about using contract management software like Quantum to manage changes and delays, negotiate better contracts and reduce costs. They unravel the misunderstood notion of 'pay when paid' and 'pay if paid clauses' which often lead to disputes and elucidate why efficient contract management is an invaluable tool in the constant battle against risks in the industry.
The conversation goes deeper into the subject, touching on the essential transitions required when a business grows from a small to a medium scale and overlooks the essential departments needed to succeed at a higher level. Their chat explores the necessity of timely action when faced with change orders, a crucial step towards building a reputation of professionalism and efficiency in managing delays and disputes. This enlightening episode puts viewers on the right track towards achieving an increased 5% to 15% margin on each project with better cash flow. Join the intense discourse and learn about the best practices for managing, negotiating, and reviewing construction contracts.
Contact the show at hello@theprofitconstructors.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
The Profit Constructors presents Construction Junction, the junction between
accounting and construction.
Please welcome our host, Tanya Schulte.
Hi, everyone. I'm Tanya Schulte. Welcome back to this edition of the Construction Junction podcast.
(00:25):
If you have been listening to this podcast for any length of time,
you know that I'm pretty passionate about subcontractors and the space in which
they land as far as how they take on a lot of risk and how better ways that
we can help them mitigate that risk. There's so many ways.
I mean, if we think about it from an accounting standpoint, one of the things
(00:48):
that we are consistently counseling our subcontractor clients on is how can
we build up the right kind of
capital to be able to manage through some of those harder periods, right?
Cash being everything that it is and how you need to have cash to have a business run.
One of the things that we talk about all the time is let's make sure that we
have a good line of credit available.
(01:09):
Let's make sure that we have cash on hand for in the event that that is necessary.
You know, we have to make payroll. We have to buy materials,
all those types of things.
And we're going to be talking more about that in our podcast later today as
when our Our guest joins us.
But from the accounting standpoint, which is really where I come from,
I'm all about helping clients really mitigate that risk.
(01:30):
You know, we use a lot of tools on the accounting side of things.
So again, we help you with a cash management system where you're basically like
putting money aside in envelopes.
Basically, it's like the Dave Ramsey system on steroids.
And some of that can really help. A lot of our clients will often tease and
call it the internal line of credit. it.
So we love to help the subcontractor clients that we work with mitigate that
(01:53):
type of thing that if something goes wrong, and you're not being paid,
and you need to go and dispute that and take care of that, you'll have the cash,
the funds, the finances, and the ability to continue moving your business forward
when something goes wrong.
But let's think about what's better than doing that. Well, what would be even
better than that would be mitigating as much risk as possible.
(02:13):
Now, any lawyer will tell you, and I have some really good construction lawyer
friends, some of them have been on this podcast.
Any lawyer will tell you, you can't mitigate all of the risk.
That's just not possible, right?
But what you can do is start thinking about what are better ways to handle contracts?
What are better ways to handle the things that we are taking on?
And if you start to think through those things up front, your business will be elevated.
(02:37):
And so the guest that we're going to be talking to today has a really great
solution for helping you do that, right?
And really, if you think about it, what does everything boil down to in our
society and in the way that we interact with one another?
It's contracts, right? So much of what we do is on a contract basis.
And in the construction world, everything comes down to that contract.
And if we start at the very beginning of every project, just sort of blindly
(03:00):
signing the dotted line on every contract, we're not really taking the time
to think through how is each one of these contracts that I'm signing affecting my business?
And what should I be thinking about when I go down that road?
And what types of things am I not being protected on? Or am I just blindly signing away?
So it's my advice to you to not do that.
(03:21):
And I would love for you to stick around because you're going to hear from an
expert that's It's about to show up in just a few minutes on how to get around
doing that and how to do it in a way that does not going to cost you an arm
and a leg, right? So let's talk about that.
We'll come back in just a few minutes and we'll talk with my friend Kian. We'll be right back.
(03:42):
If you would like to share your company or product on the Construction Junction,
email hello at theprofitconstructors.com to become a sponsor.
Welcome back to this next segment of the Construction Junction podcast.
I am your host, Tanya Schulte. I'm here with Kian of Quantum.
Kian, tell us a little bit about Quantum and what Quantum is. How did it get started?
(04:07):
Well, Quantum is an online company that helps construction subcontractors with their contracts.
It helps them negotiate better contracts up front, and it helps them manage
their contracts, all their paperwork, and give them access to experts.
So before Quantum, to get that level of expertise, you'd have to pay day rates,
(04:31):
or you'd have to employ someone internally, and it would cost you a lot of money.
Now, you can get that information, you can get that access to doing all the
letter writing and change orders
and all of that stuff that most people don't want to do in a business.
They'd rather just get on with delivering the work on site.
And yeah, we're experts at that. that. Yeah.
(04:52):
And I think as you know, when you and I chatted before this,
I sit on the local chapter board for our American Subcontractors Association.
And this is a subject that's really near and dear to my heart because as you
have expressed to me, if we don't get the subcontract right.
That's like the foundation of everything else, right?
(05:12):
If it crumbles, tell us what could could go wrong i
mean what's at stake here five to
fifteen percent yeah yeah that's that's
it right and that's that's been shown many times over
you know many different studies and so what
you like when you're in bed
with a gc or main contractor depending where you
(05:35):
are in the world yeah that five to
fifteen percent is up for grabs someone's going
to take that five to fifteen percent is it it going to be you as
a subcontractor or is it going to be is it
going to be the gc right that's what the contracts is because
if you think about the contracts it's it's
the money side of construction it sets up the set of rules
(05:56):
about how risk is is
is transferred and how money is transferred
between parties and what will happen
is when you get a contract from a gc they
you you very rarely see standard contracts
and actual standard contract anymore right so the aia
if you see that on its own great that's
(06:18):
good right right but they're always amended right so they look like a standard
contract but they're actually not or they just have a their own contract that's
been written for lawyers and what what have they what they've done is they've
pushed all the risk onto you and made it so they can have better cash flow themselves.
Because GCs are, if you think about it again, are a finance company.
(06:42):
They get a loan from the bank to finance a project. They win a project from
a client, so they get paid from the client.
And they subcontract out all the work, and they get paid on the delta between the two.
So the game that they're playing is about cash flow and margin.
And so if they can withhold a lot of that and push the risk down to you,
(07:04):
then they're going to do better.
Now, the thing that a lot of people don't understand is when they give you their
worst contract to sign, that's the starting point. It's not the end point.
And they're expecting you to negotiate. When you don't negotiate,
they don't think that you're easy to deal with. They think you're green.
(07:25):
And so what I always tell all of our clients is, think of the biggest subcontractor
in your field, right? The biggest guy, the $100 million company that's doing
what you do. Do you think they don't negotiate their contracts?
They do. And they do aggressively. Every time.
And they know what they want the contract to say. They know what they want the
(07:47):
contract to say. And that's the front end.
And then the back end is managing the contract.
So making sure that you're getting...
If you get your changes approved and your delays approved, That's the main thing
that you want to be getting approved. If you get those things approved quickly.
You're good right but if if it's the other way right
(08:09):
as first of all if you miss a change or if you miss a delay or
contractually you miss it as well your time bar
do you have a certain amount of time to respond and you don't do it then you're
just doing work for free essentially right and you're or you're taking on their
delay as your delay and so you're just eating that cost that's where the five
to fifteen percent comes in yeah and so if you think about it as well let's
(08:32):
just just take a bit of an example of a change.
And I think you'll be all over this as, as, as a kid, as accountants from a
cashflow, cashflow kills companies.
It's not like there's no big bang, right? People think I went out of business.
It was just this big bang out of business. No, that's not how it works.
What happens is your cashflow gets restricted, tighter, tighter,
tighter, you can't pay your guys.
You like you living in this constant world of anxiety about like money coming in the door.
(08:58):
Your financing cost goes up, you're bridging finance to, to be able to do it.
And so if we look at the change, right, let's just say you're on site and you're
asked to do additional work, right, which happens all the time or change what
you're currently doing, which is also a change, which also costs you money.
And so you do that work and let's just, let's just go through an example where
(09:20):
they do actually pay you, right?
But you, it takes you ages to get that paperwork in, right?
So you did month one, right? You do the work and then towards the end of the
month, you get that change in, right? right? Okay. Then they approve it.
Then maybe, right. In the following months you get paid for it,
right? So 60 days later, right?
And that's just because you're slow at it. That's not their,
(09:41):
that's not their problem. You're just slow at it.
That's hit your, that's hit your cashflow. You're one month behind on your cashflow,
right? And these things really matter to a construction business.
If you could do it quickly, like really quick, the change happens,
you get your paperwork in, you get it approved really quickly,
and then you get, you get payment for it that month. It's going to make a massive
difference to your business.
Yeah, it's huge. I think having actually just listened to some experts talking
(10:06):
about like pay when paid and pay if paid clauses, which I'm sure you're very familiar with.
And one of the things that they were mentioning, and I just to kind of harken
back to something you said a little bit earlier, kind of caught my ear.
It used to be, if we look back at the history of like why the AIA even came
into existence, the architects were taking on all of the risk, right?
So what did they want to do? They wanted to transfer the risk to the GCs.
(10:28):
And for a long time, there really was a lot of risk being taken by the GC.
They were managing everything. And so it really just, everything flows downhill,
right? Who's at the end? Right now, it's the subcontractor.
It's it just if you know what's i don't i
don't i don't want to curse on this podcast but you know
the proverbial flows downhill it's a
(10:49):
construction podcast you can say whatever you need to and i
was i'm the daughter of truck drivers so yeah it does okay well the shift flows
downhill right basically yeah so that's it but like if you think about it all
the pwc deloitte's all of these bains all of these guys have come into big gcs
and said from a risk perspective From a cashflow perspective,
(11:10):
you need, you need to do this right.
And, and, you know, people think GCs are these big, bad companies and some of
them are, some of them are, are aggressive, right?
But most of them just are just playing the business game.
Right. And you as a subcontractor also need to play because,
and this is it, the game is being played, whether you're not playing it,
(11:31):
whether you decide to play it or not, if you, if you decide,
okay, I'm just not playing this, I'm not going to negotiate,
I'm just going to rely on my relationships.
Relationships which a lot of people do well basically you've
just you're you're playing the game so you're
not playing the game but the plane's just it's just happening and you're just
taking on the risk and you're just you're just you're just eating it basically
you're playing the game and you're playing it completely under someone else's
(11:55):
rules with no say in what the rules of the game are and and you have some leeway
to say what rules you would prefer to operate under.
I love it so tell us more about how i love this is all really great background
on like why is this this important right this is really fantastic how does quantum
actually help with all of this.
So ultimately what we're talking about is the
(12:16):
five to fifteen percent more margin on each project and
cash flow that's the that's the top line right so that's that's what everybody
wants and so a lot of construction subcontractors if you think about where they
started from right it's and if you think about the the person the person or
the family a lot of these guys are family businesses right,
(12:37):
which is important to me, they.
Started off as a one-man band right the
the person themselves was probably an excellent trade
trades person right really good at the specific thing
that they did and because of that they got a
reputation for doing great work right and they grew
and then you get to the stage where start getting bigger projects and then it
(13:01):
kind of turns over instead of being that small business you become a medium-sized
business and it's that changeover of the people that you're you're playing and
the game that you're playing that people miss, right?
And there's that, okay. And all of a sudden it's not just these smaller projects.
I'm working on bigger projects.
Now all of these bigger projects have this and they don't learn the money side
(13:23):
or the game of the construction, the business of construction,
if you think about it, they're still, if they look at the departments that they
have in a construction business,
they are really only a delivery apartment, right?
I can deliver this project, production, whatever it is, right?
But they're lacking a contracts department they're lacking potentially also accountancy as well.
(13:46):
And it's that evolution of the company that needs to grow and so really how we help is,
people need people working on their contracts so
they could they can they can outsource to a lawyer one of
like one at a time which is ultimately if you
do that every single time it's gonna it's gonna cost you a lot of money you could
hire and then but then that lawyer won't do the post award word stuff right
(14:08):
which is different so then the you can hire internally right so the problem
with hiring internally is you mightn't have it there's a skill set involved
so you mightn't have the right skill set you might have people that leave all
that sort of stuff and it's expensive so so.
What we do is we plug in to their company.
(14:28):
We negotiate all their contracts for them, right?
Do a read through all the contracts, all of the hundreds and hundreds of pages of contracts.
We highlight all the risks. We say, hey, here are all the risks,
which is step one. And this is kind of where a lawyer would stop, right?
But then because we've done over 5,000 of these, we have a framework that allows
(14:51):
us to negotiate the best outcomes. So we'll also prepare the negotiation documents
that clearly says, we don't agree to this.
Here's why we don't agree to this. And here's what we want you to do instead.
And we list them all down.
And that's a skill set on its own that because of our data set,
we're able to do really well because we know some stuff can't be negotiated.
(15:13):
Negotiated right some so there might be some insurance
provisions or a certain parts of a
gc's contract that we know for their own internal
compliance that they will never negotiate right so you might you might like
that and that's and that's that's fair but we know they won't negotiate it so
instead of trying to negotiate i think we won't we'll go hard on the things
(15:35):
that we know that they can negotiate that make the most difference to your bottom
line and to your cash So that's,
that's the, the front end and then the back end is all the paperwork that's involved with changes,
delays, disputes, we'll do all of that.
And you'll have access to experts.
You'll have a weekly sync call with, with your team. And so we typically plug into project managers.
(16:00):
So if you imagine we kind of give project managers arms and legs,
so they, if a project manager is on a project, we're, we're hooking up with
that guy and we're We're like, okay, whenever there's a change,
whenever there's a delay, you let us know.
We'll meet with them once a week, whenever there's a dispute.
Before you get into the dispute, get on the call.
We'll develop a strategy to get around this dispute, to avoid the dispute,
(16:22):
and to get you paid. That's it in a nutshell.
I think it's a fantastic service. I think there's so much value in there.
I'm going to dive in just a little bit deeper on a couple of things.
Earlier, you said, you know, change orders are a huge, huge thing,
right? And I think it's very important.
There are so many, again, when you've reached that medium business stage,
(16:43):
now you started hiring a couple of project managers, maybe dad that started
the company was project managing everything and he can't take it on anymore.
And project managers really want to please their boss, the owner of the company,
and they really want to be the GC.
And so when they're standing on the job site and the guy says,
hey, can you get over there and get that done for me? It's going to delay the
project by a week if you don't walk over there right now and get it done.
(17:04):
What does he want to do? He wants to walk over there and get it done. Yeah.
And so how do you guys interface with the project managers and help them sort
of elevate what they're doing so that they can please everybody but still keep
the company from having so much risk on those change orders?
Yeah. So this is a problem with project managers, right? And so if you think
(17:25):
about a project manager and the type of person, again, they're problem solvers.
They're constant problem solvers. They might be a project manager.
A lot of these project managers could be engineers as well, right?
Or supervisors, right? So whatever. It's kind of different roles in different businesses.
But they're problem solvers. They're the get-shit-done people,
(17:47):
right? And that's what you want from a project manager.
You want your project manager to get shit done, right? Right.
So he's going to go and do it. But the problem is they're not the type of person
that's going to come back to the the the office and do the paperwork immediately.
They're going to put it on the lock because they've got so much on their plate.
They've got all these problems on their place.
And then you expect them to come back after hours and then do the do the change
(18:09):
order immediately. Just doesn't have the time to do it. Right.
That's that's that's what we see a lot over and over and over again.
We see that particular problem and it's not their skill set.
I don't know how to do it in a proper way. And so the bottom line with your question is.
Go and do the work right get the instruction
get the instruction written right okay instructions to do the
(18:31):
work and submit the change order that day or the
next day or or sorry or the notice you probably had
there's a notice provision in the country submit the notice that day
i asked to do something something here's the change
order now with that leads
to more problems i can see people shuffling in their seats i don't
want to i don't i don't i don't want to rock the
boat here or I don't whatever I want to be seen as really easy
(18:54):
to deal with yeah now there's two different things
you want to be right you can be a pushover and be easy to
deal with or they can respect you and
think you're very professional right the latter is is
the way to go and so how to do that
is essentially you want
to like if you start midway through a
(19:15):
project or towards the end this what typically happens right in a
construction project people do nothing the first first quarter
of the project is all going really really well everyone's happy yeah we're
doing stuff we're doing additional stuff oh we'll get that change order
in oh yeah it's all good then it goes on and then
in the last quarter stuff's not getting paid cash
flow is really tight you try and get all these change orders in and then they
(19:37):
start rejecting left right and center your time barred no i don't agree with
that right so all everything and then then they get annoyed as well and fair
because you've been this passive guy the whole way through the project and then
at the end you're You're just banging in all of this stuff, right? And now they're...
So if you just put on their side, their project managers' hat.
(19:59):
His project is tracking it down lovely, right?
All of a sudden, this subcontractor is going to increase the cost massively.
And it could be delays, right?
Which makes him look bad. However...
If you're, if you, that's the wrong way to do it. If the right way to do it
is as the project goes from the very start, you start submitting notices and
(20:19):
change orders and delays like very quickly as they happen, right?
They go, Oh, these guys are switched on. They know what they're doing.
That's what the big companies do. Right.
And then they just think you're a super professional. They're switched on.
They know, they know about everything.
They're really good at what they do. And when actually what happens is your cashflow is better.
You're, which gives you breathing room. you're gonna be
(20:41):
making a bit more money which is great which means you can't
afford to do additional stuff right you might find yourself
in a in a in a in a project where now you're
asking you to do additional stuff maybe get more guys on on site
and you're already tight on cash flow and you can't do the additional work and
they're like we're asking you to do additional stuff and you're not doing it
and you're like oh i can't do it i've got no cash flow so it makes you end up
(21:04):
looking worse and getting like a bad reputation i love what you said about thinking
Thinking about it from the other project manager's standpoint,
I mean, that's customer service 101 is make them the hero of the story, right?
If they're able to bring the change order back to the owner right away and say,
you know, because this happened, this is going to increase the price.
And that happens right the same day that it's talked about.
(21:26):
Everybody knows that's the thing that happened. That's what created the change.
And everybody's on the same page. they're going to look so much more professional
in the eyes of the owner that they're building this for than they are if they
have to shove in you know hundreds of thousands fifty thousand dollars worth
of change orders right at the end they don't look professional either and so
you have to see they don't want
that they don't want to appear unprofessional in front of their owners.
(21:47):
And if you do it at the start the amounts and and
as they happen the amounts are smaller yes right
and so they're like it's not too hard to get approved because it's all
well we asked him to do this additional thing right and he's
like oh yeah fair it's just it's just whatever a certain amount
of money yeah it's simply a psychological thing it doesn't even look like
that much money even if it's the exact same amount at the end of
the project all told oh yeah exactly 100 yeah
(22:10):
i love it what do you
guys work with a particular software are you sort
of software agnostic is there anything that it's a software come
into it or is it really just a one-on-one people thing it we
because it's a people business and it's a relationship business
right so it is it is
people right so obviously we have our own software
(22:32):
internally so when people submit all of
this stuff to us we we can manage it and organize it in a specific way perfect
but the people side of it is it's a service right so service-based business
now there's nuances in these things where if someone submits someone lets us
know we have been delayed right and And,
(22:52):
or so we have been delayed or we have had a change, but.
They're promising us all this additional work if we just go ahead and do it.
Right. Right? And say nothing. Yeah.
Then we want to, like, because if it was software, they just pumped it out.
Right. Right? Which is, then it's, oh, that goes away.
And there's these little smart nuances that people want. Like,
(23:14):
they want to make business decisions like that. So we'll prepare the paperwork
and give it back to the PM.
And we'll still empower the PM to make that decision. Okay, it's all done. It's all ready to go.
Right? We've done it all. but if you don't
want to submit it because of something like this right then
don't yeah right or or
or do right so we can
(23:37):
have that conversation and jump on a call and be like okay well let's
let's just be real here if they're gonna give you an additional two
million dollars one million dollars worth of work on this other side if
you just eat this particular thing because you're you're safe you're making
the project manager safe face might be a
good it could be a good investment let's talk about it right or is
he just full of shit and he just wants to cover his ass right
(23:58):
you know we'll hide those type of stuff and we'll go from our
experience here's here's here's what we think and
then that way they can make an informed decision i love that i love that you
guys are looking at it from all sides too and and you know not just thinking
in terms of like one project at a time we're just going to mitigate risk there
could be all types of other factors that are are coming into every single decision
(24:21):
that needs to be made throughout the lifetime of the project.
You know, I think when we first started talking, you were mentioning like we
handle contracts and it seems like, okay, I think often in our minds,
we think of contracts as sort of a one and done sort of thing, right?
Like, okay, we got the contract, we negotiated, we marked it up with our red pen, right?
We sent it back and that's great. But you guys are actually sort of hand holding
every step along the way throughout the whole project.
(24:43):
Yeah. And there's, there's, there's never just one contract, right?
Because if you, if you've got one contract and you've got one job,
right, you're not a great construction business, right?
So, but you, you're always bidding for work or you're always creating relationships to get more work.
And then you should be always, if you're as part of the bidding process,
you're, you're still getting contracts that you need to sign up for as part of the bid, right?
(25:06):
So you're going to submit your price and they also give you the contract at that stage.
So that stage, that's when you need to negotiate your
contract and you might win all of those yeah which
is the expense if you go to a lawyer and you're doing that for every
single one every so let's just say you're making you're doing
four bids two or three or four bids a month that's
three or four contracts a month right which could cost you
(25:27):
three thousand dollars per contract which costs
you nine nine thousand dollars and just reviewing contracts every single
month yeah because that's what you and or you
can choose not to negotiate your contracts and that's
and then you win that project and then you go oh actually now i've won a project
now i want to negotiate and they're like well you agreed not to right so that's
(25:48):
that's the kind of area that we help in yeah what do you think is like the number
one reason that folks really get a lot of value out of using your services.
More cash flow more margin yeah yeah it's like you started at the very beginning
it's that five to fifteen percent and really like you said in our world and
on the accounting side cash flow is king Right.
(26:09):
Like if you do not have cashflow, we can't even make this thing go.
There's no reason for us to even step in and try to help you understand what your books say.
You won't pay us. We won't pay you. Cashflow is king. So I love that you guys
are really helping to sort of guard subcontractors cashflow.
I think you and I have a similar passion in that regard. Right.
(26:29):
About this whole idea that everything, as you said earlier, it's all rolling downhill.
That's exactly how life works. And the other idea, too, like,
you can't not pay payroll.
There are laws against that. And most of your material suppliers have a 30 day
terms or sometimes you have to pay, you know, a point of sale.
(26:50):
So there's just no way the subcontractor is just getting squeezed in the middle.
And so I think this is such an important service.
Well, then if you think about it as well, and this is why this is a real bee
in my body. Paid when paid is so unfair.
Yeah, it is. It is crazy unfair because it's the same thing as not paying your employees.
It's it's like saying to your employees i'll pay
(27:12):
you when i get paid there's no difference right it's like treating a
company as as as some sort of
lower class citizen that is is is
you know we don't have to pay because we haven't got paid and contractually
i also think is bullshit because i'm in
a contract i'm not in a contract with with the
client i'm in a contract with you and we
(27:33):
have a contract where you said you would pay me if i do work
i don't care about your client right that's your problem
your relationship and your cash flow i'm not in your
financial weeds so your financial health
is not my problem we have a deal for where you should
pay me and so in in most countries in the world tanya that's illegal yeah yeah
not here like i said pay when pays very often here and then as i said in the
(27:58):
contracts class i was sitting in just last week they were talking about pay
if paid which is a whole other level
of risk that that I don't think any subcontractor should ever take on.
You know, there's a whole pay when paid, we can talk about if that's a timing
issue and whether it should be illegal, and I agree with you.
Pay if paid, I think you should never ever accept a pay if paid clause, ever.
(28:20):
You have no control. Yeah, yeah. You've completely given up all control and
just said, basically, well, if the whole project, if the entire project goes
downhill, I am taking on all that risk as the sub.
The one who's actually physically doing the work.
Exactly, exactly. And then the mistake mightn't be your fault. Right?
(28:42):
So the same game happens that I'm talking about. The same game happens at GC
and client level or GC and owner level.
So if they didn't get their change order in, right, so that shit flows uphill, right?
So if they've asked you to do additional work, you got your change order in,
like that's approved, right?
(29:03):
And then they are too late sending in their change order. And then that doesn't get approved.
Then the pay if pay thing kicks in where like, well, we didn't get paid for it, right?
Well, we were actually really slow on doing it and we prepared bad documents.
And so we're not going to pay you.
Yeah, no. And even, you know, here in Arizona, we had a big fight several years
(29:25):
ago about this whole idea of transferring risk and what should be legal and should not be legal.
So we do have some good laws on the books here in the state of Arizona around
some of this and the transfer of risk.
But, you know, not just like it's all flowing uphill, but what if,
you know, another subcontractor on the job has caused certain delays and different things are going on?
(29:48):
Like none of that should flow back down to you if you've done your work if you've
performed the work you should be able to be paid for the work that you've done
exactly exactly and if you think about it all of this stuff happens all the
time in construction people don't get paid for stuff.
People don't get paid but people dispute okay well i asked you to do this thing
and then that's exactly how i did it and then whatever or the the amount that
(30:11):
you're asking to be paid might be wrong or incorrect so this stuff happens all
the time so taking on the risk of other people people doing the right thing and doing it properly,
but we know that they don't, is a valid idea.
No, 100% agreed. I just want to know how people can learn more about Quantum.
Like, how can they find out more and learn more about your services and get hooked up with you?
(30:33):
So just go to quantumcontracts.com. And there's a video on there.
And the video on there shows you how to grab back that 5% to 15%.
So check out that video. Hopefully, it's of value.
I love it. Thank you so much for talking with us today, Kian.
It's been a really great conversation. And like I said, I think you and I are
very much passionate about the same thing and about really helping these subcontractors
(30:56):
learn how to play the game and elevate what they do.
So I'm excited to see what comes of it and looking forward to talking with you more.
You too, Talia. Thanks, Kian.
Thank you for tuning in to Construction Junction. To find out more about the
junction between accounting and construction, please email hello at theprofitconstructors.com.
The Profit Constructors presents Construction Junction, the junction between
accounting and construction.
Please welcome our host, Tanya Schulte.
Hi, everyone. I'm Tanya Schulte. Welcome back to this edition of the Construction Junction podcast.
(00:25):
If you have been listening to this podcast for any length of time,
you know that I'm pretty passionate about subcontractors and the space in which
they land as far as how they take on a lot of risk and how better ways that
we can help them mitigate that risk. There's so many ways.
I mean, if we think about it from an accounting standpoint, one of the things
(00:48):
that we are consistently counseling our subcontractor clients on is how can
we build up the right kind of
capital to be able to manage through some of those harder periods, right?
Cash being everything that it is and how you need to have cash to have a business run.
One of the things that we talk about all the time is let's make sure that we
have a good line of credit available.
(01:09):
Let's make sure that we have cash on hand for in the event that that is necessary.
You know, we have to make payroll. We have to buy materials,
all those types of things.
And we're going to be talking more about that in our podcast later today as
when our Our guest joins us.
But from the accounting standpoint, which is really where I come from,
I'm all about helping clients really mitigate that risk.
(01:30):
You know, we use a lot of tools on the accounting side of things.
So again, we help you with a cash management system where you're basically like
putting money aside in envelopes.
Basically, it's like the Dave Ramsey system on steroids.
And some of that can really help. A lot of our clients will often tease and
call it the internal line of credit. it.
So we love to help the subcontractor clients that we work with mitigate that
(01:53):
type of thing that if something goes wrong, and you're not being paid,
and you need to go and dispute that and take care of that, you'll have the cash,
the funds, the finances, and the ability to continue moving your business forward
when something goes wrong.
But let's think about what's better than doing that. Well, what would be even
better than that would be mitigating as much risk as possible.
(02:13):
Now, any lawyer will tell you, and I have some really good construction lawyer
friends, some of them have been on this podcast.
Any lawyer will tell you, you can't mitigate all of the risk.
That's just not possible, right?
But what you can do is start thinking about what are better ways to handle contracts?
What are better ways to handle the things that we are taking on?
And if you start to think through those things up front, your business will be elevated.
(02:37):
And so the guest that we're going to be talking to today has a really great
solution for helping you do that, right?
And really, if you think about it, what does everything boil down to in our
society and in the way that we interact with one another?
It's contracts, right? So much of what we do is on a contract basis.
And in the construction world, everything comes down to that contract.
And if we start at the very beginning of every project, just sort of blindly
(03:00):
signing the dotted line on every contract, we're not really taking the time
to think through how is each one of these contracts that I'm signing affecting my business?
And what should I be thinking about when I go down that road?
And what types of things am I not being protected on? Or am I just blindly signing away?
So it's my advice to you to not do that.
(03:21):
And I would love for you to stick around because you're going to hear from an
expert that's It's about to show up in just a few minutes on how to get around
doing that and how to do it in a way that does not going to cost you an arm
and a leg, right? So let's talk about that.
We'll come back in just a few minutes and we'll talk with my friend Kian. We'll be right back.
(03:42):
If you would like to share your company or product on the Construction Junction,
email hello at theprofitconstructors.com to become a sponsor.
Welcome back to this next segment of the Construction Junction podcast.
I am your host, Tanya Schulte. I'm here with Kian of Quantum.
Kian, tell us a little bit about Quantum and what Quantum is. How did it get started?
(04:07):
Well, Quantum is an online company that helps construction subcontractors with their contracts.
It helps them negotiate better contracts up front, and it helps them manage
their contracts, all their paperwork, and give them access to experts.
So before Quantum, to get that level of expertise, you'd have to pay day rates,
(04:31):
or you'd have to employ someone internally, and it would cost you a lot of money.
Now, you can get that information, you can get that access to doing all the
letter writing and change orders
and all of that stuff that most people don't want to do in a business.
They'd rather just get on with delivering the work on site.
And yeah, we're experts at that. that. Yeah.
(04:52):
And I think as you know, when you and I chatted before this,
I sit on the local chapter board for our American Subcontractors Association.
And this is a subject that's really near and dear to my heart because as you
have expressed to me, if we don't get the subcontract right.
That's like the foundation of everything else, right?
(05:12):
If it crumbles, tell us what could could go wrong i
mean what's at stake here five to
fifteen percent yeah yeah that's that's
it right and that's that's been shown many times over
you know many different studies and so what
you like when you're in bed
with a gc or main contractor depending where you
(05:35):
are in the world yeah that five to
fifteen percent is up for grabs someone's going
to take that five to fifteen percent is it it going to be you as
a subcontractor or is it going to be is it
going to be the gc right that's what the contracts is because
if you think about the contracts it's it's
the money side of construction it sets up the set of rules
(05:56):
about how risk is is
is transferred and how money is transferred
between parties and what will happen
is when you get a contract from a gc they
you you very rarely see standard contracts
and actual standard contract anymore right so the aia
if you see that on its own great that's
(06:18):
good right right but they're always amended right so they look like a standard
contract but they're actually not or they just have a their own contract that's
been written for lawyers and what what have they what they've done is they've
pushed all the risk onto you and made it so they can have better cash flow themselves.
Because GCs are, if you think about it again, are a finance company.
(06:42):
They get a loan from the bank to finance a project. They win a project from
a client, so they get paid from the client.
And they subcontract out all the work, and they get paid on the delta between the two.
So the game that they're playing is about cash flow and margin.
And so if they can withhold a lot of that and push the risk down to you,
(07:04):
then they're going to do better.
Now, the thing that a lot of people don't understand is when they give you their
worst contract to sign, that's the starting point. It's not the end point.
And they're expecting you to negotiate. When you don't negotiate,
they don't think that you're easy to deal with. They think you're green.
(07:25):
And so what I always tell all of our clients is, think of the biggest subcontractor
in your field, right? The biggest guy, the $100 million company that's doing
what you do. Do you think they don't negotiate their contracts?
They do. And they do aggressively. Every time.
And they know what they want the contract to say. They know what they want the
(07:47):
contract to say. And that's the front end.
And then the back end is managing the contract.
So making sure that you're getting...
If you get your changes approved and your delays approved, That's the main thing
that you want to be getting approved. If you get those things approved quickly.
You're good right but if if it's the other way right
(08:09):
as first of all if you miss a change or if you miss a delay or
contractually you miss it as well your time bar
do you have a certain amount of time to respond and you don't do it then you're
just doing work for free essentially right and you're or you're taking on their
delay as your delay and so you're just eating that cost that's where the five
to fifteen percent comes in yeah and so if you think about it as well let's
(08:32):
just just take a bit of an example of a change.
And I think you'll be all over this as, as, as a kid, as accountants from a
cashflow, cashflow kills companies.
It's not like there's no big bang, right? People think I went out of business.
It was just this big bang out of business. No, that's not how it works.
What happens is your cashflow gets restricted, tighter, tighter,
tighter, you can't pay your guys.
You like you living in this constant world of anxiety about like money coming in the door.
(08:58):
Your financing cost goes up, you're bridging finance to, to be able to do it.
And so if we look at the change, right, let's just say you're on site and you're
asked to do additional work, right, which happens all the time or change what
you're currently doing, which is also a change, which also costs you money.
And so you do that work and let's just, let's just go through an example where
(09:20):
they do actually pay you, right?
But you, it takes you ages to get that paperwork in, right?
So you did month one, right? You do the work and then towards the end of the
month, you get that change in, right? right? Okay. Then they approve it.
Then maybe, right. In the following months you get paid for it,
right? So 60 days later, right?
And that's just because you're slow at it. That's not their,
(09:41):
that's not their problem. You're just slow at it.
That's hit your, that's hit your cashflow. You're one month behind on your cashflow,
right? And these things really matter to a construction business.
If you could do it quickly, like really quick, the change happens,
you get your paperwork in, you get it approved really quickly,
and then you get, you get payment for it that month. It's going to make a massive
difference to your business.
Yeah, it's huge. I think having actually just listened to some experts talking
(10:06):
about like pay when paid and pay if paid clauses, which I'm sure you're very familiar with.
And one of the things that they were mentioning, and I just to kind of harken
back to something you said a little bit earlier, kind of caught my ear.
It used to be, if we look back at the history of like why the AIA even came
into existence, the architects were taking on all of the risk, right?
So what did they want to do? They wanted to transfer the risk to the GCs.
(10:28):
And for a long time, there really was a lot of risk being taken by the GC.
They were managing everything. And so it really just, everything flows downhill,
right? Who's at the end? Right now, it's the subcontractor.
It's it just if you know what's i don't i
don't i don't want to curse on this podcast but you know
the proverbial flows downhill it's a
(10:49):
construction podcast you can say whatever you need to and i
was i'm the daughter of truck drivers so yeah it does okay well the shift flows
downhill right basically yeah so that's it but like if you think about it all
the pwc deloitte's all of these bains all of these guys have come into big gcs
and said from a risk perspective From a cashflow perspective,
(11:10):
you need, you need to do this right.
And, and, you know, people think GCs are these big, bad companies and some of
them are, some of them are, are aggressive, right?
But most of them just are just playing the business game.
Right. And you as a subcontractor also need to play because,
and this is it, the game is being played, whether you're not playing it,
(11:31):
whether you decide to play it or not, if you, if you decide,
okay, I'm just not playing this, I'm not going to negotiate,
I'm just going to rely on my relationships.
Relationships which a lot of people do well basically you've
just you're you're playing the game so you're
not playing the game but the plane's just it's just happening and you're just
taking on the risk and you're just you're just you're just eating it basically
you're playing the game and you're playing it completely under someone else's
(11:55):
rules with no say in what the rules of the game are and and you have some leeway
to say what rules you would prefer to operate under.
I love it so tell us more about how i love this is all really great background
on like why is this this important right this is really fantastic how does quantum
actually help with all of this.
So ultimately what we're talking about is the
(12:16):
five to fifteen percent more margin on each project and
cash flow that's the that's the top line right so that's that's what everybody
wants and so a lot of construction subcontractors if you think about where they
started from right it's and if you think about the the person the person or
the family a lot of these guys are family businesses right,
(12:37):
which is important to me, they.
Started off as a one-man band right the
the person themselves was probably an excellent trade
trades person right really good at the specific thing
that they did and because of that they got a
reputation for doing great work right and they grew
and then you get to the stage where start getting bigger projects and then it
(13:01):
kind of turns over instead of being that small business you become a medium-sized
business and it's that changeover of the people that you're you're playing and
the game that you're playing that people miss, right?
And there's that, okay. And all of a sudden it's not just these smaller projects.
I'm working on bigger projects.
Now all of these bigger projects have this and they don't learn the money side
(13:23):
or the game of the construction, the business of construction,
if you think about it, they're still, if they look at the departments that they
have in a construction business,
they are really only a delivery apartment, right?
I can deliver this project, production, whatever it is, right?
But they're lacking a contracts department they're lacking potentially also accountancy as well.
(13:46):
And it's that evolution of the company that needs to grow and so really how we help is,
people need people working on their contracts so
they could they can they can outsource to a lawyer one of
like one at a time which is ultimately if you
do that every single time it's gonna it's gonna cost you a lot of money you could
hire and then but then that lawyer won't do the post award word stuff right
(14:08):
which is different so then the you can hire internally right so the problem
with hiring internally is you mightn't have it there's a skill set involved
so you mightn't have the right skill set you might have people that leave all
that sort of stuff and it's expensive so so.
What we do is we plug in to their company.
(14:28):
We negotiate all their contracts for them, right?
Do a read through all the contracts, all of the hundreds and hundreds of pages of contracts.
We highlight all the risks. We say, hey, here are all the risks,
which is step one. And this is kind of where a lawyer would stop, right?
But then because we've done over 5,000 of these, we have a framework that allows
(14:51):
us to negotiate the best outcomes. So we'll also prepare the negotiation documents
that clearly says, we don't agree to this.
Here's why we don't agree to this. And here's what we want you to do instead.
And we list them all down.
And that's a skill set on its own that because of our data set,
we're able to do really well because we know some stuff can't be negotiated.
(15:13):
Negotiated right some so there might be some insurance
provisions or a certain parts of a
gc's contract that we know for their own internal
compliance that they will never negotiate right so you might you might like
that and that's and that's that's fair but we know they won't negotiate it so
instead of trying to negotiate i think we won't we'll go hard on the things
(15:35):
that we know that they can negotiate that make the most difference to your bottom
line and to your cash So that's,
that's the, the front end and then the back end is all the paperwork that's involved with changes,
delays, disputes, we'll do all of that.
And you'll have access to experts.
You'll have a weekly sync call with, with your team. And so we typically plug into project managers.
(16:00):
So if you imagine we kind of give project managers arms and legs,
so they, if a project manager is on a project, we're, we're hooking up with
that guy and we're We're like, okay, whenever there's a change,
whenever there's a delay, you let us know.
We'll meet with them once a week, whenever there's a dispute.
Before you get into the dispute, get on the call.
We'll develop a strategy to get around this dispute, to avoid the dispute,
(16:22):
and to get you paid. That's it in a nutshell.
I think it's a fantastic service. I think there's so much value in there.
I'm going to dive in just a little bit deeper on a couple of things.
Earlier, you said, you know, change orders are a huge, huge thing,
right? And I think it's very important.
There are so many, again, when you've reached that medium business stage,
(16:43):
now you started hiring a couple of project managers, maybe dad that started
the company was project managing everything and he can't take it on anymore.
And project managers really want to please their boss, the owner of the company,
and they really want to be the GC.
And so when they're standing on the job site and the guy says,
hey, can you get over there and get that done for me? It's going to delay the
project by a week if you don't walk over there right now and get it done.
(17:04):
What does he want to do? He wants to walk over there and get it done. Yeah.
And so how do you guys interface with the project managers and help them sort
of elevate what they're doing so that they can please everybody but still keep
the company from having so much risk on those change orders?
Yeah. So this is a problem with project managers, right? And so if you think
(17:25):
about a project manager and the type of person, again, they're problem solvers.
They're constant problem solvers. They might be a project manager.
A lot of these project managers could be engineers as well, right?
Or supervisors, right? So whatever. It's kind of different roles in different businesses.
But they're problem solvers. They're the get-shit-done people,
(17:47):
right? And that's what you want from a project manager.
You want your project manager to get shit done, right? Right.
So he's going to go and do it. But the problem is they're not the type of person
that's going to come back to the the the office and do the paperwork immediately.
They're going to put it on the lock because they've got so much on their plate.
They've got all these problems on their place.
And then you expect them to come back after hours and then do the do the change
(18:09):
order immediately. Just doesn't have the time to do it. Right.
That's that's that's what we see a lot over and over and over again.
We see that particular problem and it's not their skill set.
I don't know how to do it in a proper way. And so the bottom line with your question is.
Go and do the work right get the instruction
get the instruction written right okay instructions to do the
(18:31):
work and submit the change order that day or the
next day or or sorry or the notice you probably had
there's a notice provision in the country submit the notice that day
i asked to do something something here's the change
order now with that leads
to more problems i can see people shuffling in their seats i don't
want to i don't i don't i don't want to rock the
boat here or I don't whatever I want to be seen as really easy
(18:54):
to deal with yeah now there's two different things
you want to be right you can be a pushover and be easy to
deal with or they can respect you and
think you're very professional right the latter is is
the way to go and so how to do that
is essentially you want
to like if you start midway through a
(19:15):
project or towards the end this what typically happens right in a
construction project people do nothing the first first quarter
of the project is all going really really well everyone's happy yeah we're
doing stuff we're doing additional stuff oh we'll get that change order
in oh yeah it's all good then it goes on and then
in the last quarter stuff's not getting paid cash
flow is really tight you try and get all these change orders in and then they
(19:37):
start rejecting left right and center your time barred no i don't agree with
that right so all everything and then then they get annoyed as well and fair
because you've been this passive guy the whole way through the project and then
at the end you're You're just banging in all of this stuff, right? And now they're...
So if you just put on their side, their project managers' hat.
(19:59):
His project is tracking it down lovely, right?
All of a sudden, this subcontractor is going to increase the cost massively.
And it could be delays, right?
Which makes him look bad. However...
If you're, if you, that's the wrong way to do it. If the right way to do it
is as the project goes from the very start, you start submitting notices and
(20:19):
change orders and delays like very quickly as they happen, right?
They go, Oh, these guys are switched on. They know what they're doing.
That's what the big companies do. Right.
And then they just think you're a super professional. They're switched on.
They know, they know about everything.
They're really good at what they do. And when actually what happens is your cashflow is better.
You're, which gives you breathing room. you're gonna be
(20:41):
making a bit more money which is great which means you can't
afford to do additional stuff right you might find yourself
in a in a in a in a project where now you're
asking you to do additional stuff maybe get more guys on on site
and you're already tight on cash flow and you can't do the additional work and
they're like we're asking you to do additional stuff and you're not doing it
and you're like oh i can't do it i've got no cash flow so it makes you end up
(21:04):
looking worse and getting like a bad reputation i love what you said about thinking
Thinking about it from the other project manager's standpoint,
I mean, that's customer service 101 is make them the hero of the story, right?
If they're able to bring the change order back to the owner right away and say,
you know, because this happened, this is going to increase the price.
And that happens right the same day that it's talked about.
(21:26):
Everybody knows that's the thing that happened. That's what created the change.
And everybody's on the same page. they're going to look so much more professional
in the eyes of the owner that they're building this for than they are if they
have to shove in you know hundreds of thousands fifty thousand dollars worth
of change orders right at the end they don't look professional either and so
you have to see they don't want
that they don't want to appear unprofessional in front of their owners.
(21:47):
And if you do it at the start the amounts and and
as they happen the amounts are smaller yes right
and so they're like it's not too hard to get approved because it's all
well we asked him to do this additional thing right and he's
like oh yeah fair it's just it's just whatever a certain amount
of money yeah it's simply a psychological thing it doesn't even look like
that much money even if it's the exact same amount at the end of
the project all told oh yeah exactly 100 yeah
(22:10):
i love it what do you
guys work with a particular software are you sort
of software agnostic is there anything that it's a software come
into it or is it really just a one-on-one people thing it we
because it's a people business and it's a relationship business
right so it is it is
people right so obviously we have our own software
(22:32):
internally so when people submit all of
this stuff to us we we can manage it and organize it in a specific way perfect
but the people side of it is it's a service right so service-based business
now there's nuances in these things where if someone submits someone lets us
know we have been delayed right and And,
(22:52):
or so we have been delayed or we have had a change, but.
They're promising us all this additional work if we just go ahead and do it.
Right. Right? And say nothing. Yeah.
Then we want to, like, because if it was software, they just pumped it out.
Right. Right? Which is, then it's, oh, that goes away.
And there's these little smart nuances that people want. Like,
(23:14):
they want to make business decisions like that. So we'll prepare the paperwork
and give it back to the PM.
And we'll still empower the PM to make that decision. Okay, it's all done. It's all ready to go.
Right? We've done it all. but if you don't
want to submit it because of something like this right then
don't yeah right or or
or do right so we can
(23:37):
have that conversation and jump on a call and be like okay well let's
let's just be real here if they're gonna give you an additional two
million dollars one million dollars worth of work on this other side if
you just eat this particular thing because you're you're safe you're making
the project manager safe face might be a
good it could be a good investment let's talk about it right or is
he just full of shit and he just wants to cover his ass right
(23:58):
you know we'll hide those type of stuff and we'll go from our
experience here's here's here's what we think and
then that way they can make an informed decision i love that i love that you
guys are looking at it from all sides too and and you know not just thinking
in terms of like one project at a time we're just going to mitigate risk there
could be all types of other factors that are are coming into every single decision
(24:21):
that needs to be made throughout the lifetime of the project.
You know, I think when we first started talking, you were mentioning like we
handle contracts and it seems like, okay, I think often in our minds,
we think of contracts as sort of a one and done sort of thing, right?
Like, okay, we got the contract, we negotiated, we marked it up with our red pen, right?
We sent it back and that's great. But you guys are actually sort of hand holding
every step along the way throughout the whole project.
(24:43):
Yeah. And there's, there's, there's never just one contract, right?
Because if you, if you've got one contract and you've got one job,
right, you're not a great construction business, right?
So, but you, you're always bidding for work or you're always creating relationships to get more work.
And then you should be always, if you're as part of the bidding process,
you're, you're still getting contracts that you need to sign up for as part of the bid, right?
(25:06):
So you're going to submit your price and they also give you the contract at that stage.
So that stage, that's when you need to negotiate your
contract and you might win all of those yeah which
is the expense if you go to a lawyer and you're doing that for every
single one every so let's just say you're making you're doing
four bids two or three or four bids a month that's
three or four contracts a month right which could cost you
(25:27):
three thousand dollars per contract which costs
you nine nine thousand dollars and just reviewing contracts every single
month yeah because that's what you and or you
can choose not to negotiate your contracts and that's
and then you win that project and then you go oh actually now i've won a project
now i want to negotiate and they're like well you agreed not to right so that's
(25:48):
that's the kind of area that we help in yeah what do you think is like the number
one reason that folks really get a lot of value out of using your services.
More cash flow more margin yeah yeah it's like you started at the very beginning
it's that five to fifteen percent and really like you said in our world and
on the accounting side cash flow is king Right.
(26:09):
Like if you do not have cashflow, we can't even make this thing go.
There's no reason for us to even step in and try to help you understand what your books say.
You won't pay us. We won't pay you. Cashflow is king. So I love that you guys
are really helping to sort of guard subcontractors cashflow.
I think you and I have a similar passion in that regard. Right.
(26:29):
About this whole idea that everything, as you said earlier, it's all rolling downhill.
That's exactly how life works. And the other idea, too, like,
you can't not pay payroll.
There are laws against that. And most of your material suppliers have a 30 day
terms or sometimes you have to pay, you know, a point of sale.
(26:50):
So there's just no way the subcontractor is just getting squeezed in the middle.
And so I think this is such an important service.
Well, then if you think about it as well, and this is why this is a real bee
in my body. Paid when paid is so unfair.
Yeah, it is. It is crazy unfair because it's the same thing as not paying your employees.
It's it's like saying to your employees i'll pay
(27:12):
you when i get paid there's no difference right it's like treating a
company as as as some sort of
lower class citizen that is is is
you know we don't have to pay because we haven't got paid and contractually
i also think is bullshit because i'm in
a contract i'm not in a contract with with the
client i'm in a contract with you and we
(27:33):
have a contract where you said you would pay me if i do work
i don't care about your client right that's your problem
your relationship and your cash flow i'm not in your
financial weeds so your financial health
is not my problem we have a deal for where you should
pay me and so in in most countries in the world tanya that's illegal yeah yeah
not here like i said pay when pays very often here and then as i said in the
(27:58):
contracts class i was sitting in just last week they were talking about pay
if paid which is a whole other level
of risk that that I don't think any subcontractor should ever take on.
You know, there's a whole pay when paid, we can talk about if that's a timing
issue and whether it should be illegal, and I agree with you.
Pay if paid, I think you should never ever accept a pay if paid clause, ever.
(28:20):
You have no control. Yeah, yeah. You've completely given up all control and
just said, basically, well, if the whole project, if the entire project goes
downhill, I am taking on all that risk as the sub.
The one who's actually physically doing the work.
Exactly, exactly. And then the mistake mightn't be your fault. Right?
(28:42):
So the same game happens that I'm talking about. The same game happens at GC
and client level or GC and owner level.
So if they didn't get their change order in, right, so that shit flows uphill, right?
So if they've asked you to do additional work, you got your change order in,
like that's approved, right?
(29:03):
And then they are too late sending in their change order. And then that doesn't get approved.
Then the pay if pay thing kicks in where like, well, we didn't get paid for it, right?
Well, we were actually really slow on doing it and we prepared bad documents.
And so we're not going to pay you.
Yeah, no. And even, you know, here in Arizona, we had a big fight several years
(29:25):
ago about this whole idea of transferring risk and what should be legal and should not be legal.
So we do have some good laws on the books here in the state of Arizona around
some of this and the transfer of risk.
But, you know, not just like it's all flowing uphill, but what if,
you know, another subcontractor on the job has caused certain delays and different things are going on?
(29:48):
Like none of that should flow back down to you if you've done your work if you've
performed the work you should be able to be paid for the work that you've done
exactly exactly and if you think about it all of this stuff happens all the
time in construction people don't get paid for stuff.
People don't get paid but people dispute okay well i asked you to do this thing
and then that's exactly how i did it and then whatever or the the amount that
(30:11):
you're asking to be paid might be wrong or incorrect so this stuff happens all
the time so taking on the risk of other people people doing the right thing and doing it properly,
but we know that they don't, is a valid idea.
No, 100% agreed. I just want to know how people can learn more about Quantum.
Like, how can they find out more and learn more about your services and get hooked up with you?
(30:33):
So just go to quantumcontracts.com. And there's a video on there.
And the video on there shows you how to grab back that 5% to 15%.
So check out that video. Hopefully, it's of value.
I love it. Thank you so much for talking with us today, Kian.
It's been a really great conversation. And like I said, I think you and I are
very much passionate about the same thing and about really helping these subcontractors
(30:56):
learn how to play the game and elevate what they do.
So I'm excited to see what comes of it and looking forward to talking with you more.
You too, Talia. Thanks, Kian.
Thank you for tuning in to Construction Junction. To find out more about the
junction between accounting and construction, please email hello at theprofitconstructors.com.
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