The first thing we have learned is that sub-contractors are more robust than we first thought. Whilst there have been a few subsequent failures within the Carillion supply chain, thankfully the majority of us ‘subbies’ have ridden the resulting storm. No doubt this is due in part to the government’s encouragement to the financial industry to be gentle with us, but we suspect that the biggest factor is more likely associated with Carillion’s supply-chain being far more financially prudent than their client!
Whilst we can’t speak for anyone else, now that the dust has settled, we can speak for this ex-member of the Carillion supply chain and reflect on our experience…
When NACWL took on a contract with Carillion to complete the facade works (ironically, following the failure of a previous facade contractor), it was the only contract we had with them. It is true to say that we deliberated extensively on whether or not we should take on the work. Having received a number of reassurances from Carillion’s middle management and also our own belief that “Carillion are just too big to fail”, we chose to take on the contract and in doing so we even signed up to their infamous ‘Early Payment Scheme’.
Despite the obvious flaws in our judgement (hindsight is a wonderful thing!), we still managed to get our first payment released early through the EPS, but sadly we were within hours from receiving our second payment when Carillion succumbed to their fate.
When we left the office that Friday evening, knowing our payment was due to be paid the following Monday, we still felt confident that Carillion would be bailed out by the Government and a ‘stay of execution’ would allow us to reach a point of being sufficiently cash-positive by our third payment that we would not lose any money. We still remember the feeling in our stomachs when Vince Cable MP, was interviewed that weekend on national media.
Thankfully for us, over the following couple of weeks, Carillion’s ex-client worked closely with us to reach a mutually beneficial arrangement to complete the remaining works on his project. Ultimately, we managed to successfully negotiate this potentially damaging scenario into a profitable one. Furthermore, we now have a happy client who also managed to navigate through the choppy waters of the Carillion legacy and get his project completed. A fact that we are all now genuinely grateful for!
So, what does this mean for NACWL going forward? Well, firstly we will be doubly cautious about working with a contractor who is rumoured to be floundering. Secondly, we will be avoiding contract terms that create payment timescales that can be exploited. And finally and most significantly, we will work harder to ensure that we build long-term relationships with our preferred client base, so that we simply won’t have the need to dip our toe into the uncertain waters of the Carillion-like contractors that we still see so evident within our industry today.
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