01.06.2009

BDAV Engagement Agreement Saves the Day

Members urged to have the BDAV Building Designer Agreement signed for every project

by Roy Hodgson, FBDAV

As part of my standard administrative office practice, I have been using the BDAV Building Designer Engagement Agreement since it was launched in 2000, and for good reason. Whilst I rarely have any issues with contracts, fees or disbursements, two issues have emerged over the last 12 months.

I was contracted to prepare design and construction documentation for a very large worldwide entity. A project manager was put in place by my client and made life a misery for me, the consultants and the builder. The project budget blew out due to client changes that necessitated a complete new main switchboard to be installed at a cost into the hundreds of thousands. The client instructed the project manager to start clawing back money to offset this, and to make the book balance more palatable for the board of directors. An issue of refusal to pay was received when I raised several invoices for disbursements, including payment for sub-consultant professionals to close out the project. I raised concern with my client and to the project manager who stated that he would look into it.

I started to get a bit worried, and sat down to check my contract I had with my client. After a lot of stalling tactics and some three months later, I was sitting in my client’s office with a wad of invoices that hadn’t been paid in one hand, and the BDAV Engagement Agreement in the other hand. After an hour of pawing through each and every single item noted on my invoices, I then calmly pointed out that I was not liable to pay the sub-consultants as I was acting on behalf of the client as written in our agreement that was signed by the client, the project manager and the CEO of the company. I was paid in full the very next day directly into my account. I still carry work out for this client and haven’t had any issues since.

On another project, I was contracted to prepare design and construction document-ation and, through the building process, to troubleshoot any issues on site. I had raised an invoice for the last part of the project at the building’s completion. My client ran into some serious administrative issues, including mismanagement of funds and superannuation that caused the Federal Government to step in and appoint external administrators to run three of the businesses in the interim. Needless to say, all funds were frozen and the auditors were brought in to sort out this multi-million dollar mess. Being the small fry in the pan, I didn’t have any hope of getting paid as the banks were at the front of the line. That was until I reviewed my contract and noted that I hadn’t signed with the clients’ business, but actually had a contract personally with the client. I checked and found that all my invoices over the duration of the project had also been in my client’s name and had been sent to their home address.

There was no disagreement from the client that payment was due, but refused to pay stating that it was their business that was to pay. I had other thoughts. Knowing that they were certainly not short of a dollar and I was, I made a claim though VCAT. The hearing was heard and a copy of the BDAV Building Designer Engagement Agreement issued as evidence was greatly received, and a Tribunal Order was given for the client to pay the sum by a given date. The client did not attend the hearing so it was a very quick result. To date, the client has not paid the Tribunal Order, despite attempts to contact them. My option now is to apply to the Magistrates Court for debts up to $40,000. A Warrant to Seize Property will then be considered and a Sheriff’s Officer will go to the address to demand money. If payment is refused, assets may be seized to be auctioned. Sounds tough, but we are out-of-pocket whilst my client is still living very comfortably indeed. The businesses have since been sold and I am currently working with the new owners.

My recommendation for members is to have the BDAV Building Designer Agreement signed for each and every project, and to invoice regularly and often. Any issues will then be raised sooner so that steps can be taken to minimise your financial risk.

We have probably signed hundreds of the BDAV agreements, and I never really thought too much of its content, as our projects seem to run pretty trouble-free. But I never knew how powerful this document actually was until these issues emerged. It made me sit down and actually read the agreement, item by item. Although I probably could have won out in both cases in the end without the agreement, it would have taken a lot more of my time and effort to justify. The BDAV Building Designer Agreement has made my business life so much easier, working with confidence that the document has served me well, and will continue to do so into the future.

The BDAV Building Designer Agreement is only available to Full Members of the BDAV, who can order it via the webshop at the BDAV’s website (remember to log in as a Member first, to be able to order this item).