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Unlocking cash three months after beginning work on the account

Specialist subcontractor
Construction claims
Manchester, United Kingdom
£2.5m subontract

Our client is a world-renowned provider of high-performance, engineered construction products and perform design, supply and installation contracts on some of the UK’s largest construction and infrastructure projects, including Crossrail, Sellafield and HS2.

We were asked to recover time and costs that had been incurred due to changes by the management contractor and the local authority client. Our client’s financial year-end was looming with annual cash and profit targets at risk due to our client’s level of expenditure relative to its revenue receipts on this contract.

Focus on the urgent need

When we were commissioned, the forecast final account was circa £4m and our client had incurred costs at around this level. The managing contractor and its local authority client were certifying circa £2.5m which meant our client was funding the project to the tune of £1.5m.

At the time, the focus of the project team was demonstrating its entitlement to time. Whilst this was an important issue, delay damages were not looming, and the additional preliminaries costs accounted for around 25% of the additional costs claimed. Most of the costs, the 75% balance, related to cost increases caused by design changes.

We proposed and agreed a two-stage plan where, in the first stage, all initial efforts would be focused on recovering costs caused by design changed before moving onto programme recovery in the second stage of the commission.

The plan aligned with our client’s objective to improve its cash position in the short term before then going on to secure the final account position it required.

Delivering the plan

We deployed specialist resources who worked alongside the project team to understand the scope of the changes, comb its finance system to identify relevant costs, value the variations and submit these to the managing contractor and its local authority client.

We attended and led meetings with the managing contractor’s team and the local authority’s professional representatives to agree the value of the variations.

Addressing the relationship imbalance

Alongside this, we needed to address the imbalance in the relationship between our client and the managing contractor. There were unfounded and unfair claims that our client had caused programme delay, and there was no evidence to support these claims.

There were commercial behaviours at play with commitments to pay variations which were not followed up with action. We attended numerous meetings, alongside our client, and steered these towards solutions-based discussions about how the parties could work together to solve the various outstanding technical issues, the programme to completion and the final account.

Getting results

We helped our client navigated a turbulent account towards a successful resolution. Our client achieved its year-end position and avoided third party resolution by achieving a negotiated settlement.

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What our client said...

"Quantik offer an insightful service into the strategic operations of the industry. We found this particularly helpful when looking at options of resolution."

Head of Commercial

"Quantik were able to draw the main contractor to the table and are a professional company with fantastic experience in the engineering and construction market. They are able to demonstrate the scale of entitlement which unlocked cash three months after beginning work on the account."

Managing Director