Articles from the Silver Shemmings Ash Team on contractual matters, recent case law changes and items of interest in the construction and property world

Growing Businesses – Facing The Challenge Of Funding & Liquidity by Henry Hathaway

January 31, 2019 | Silver Shemmings

Having spent 12 years working in the construction industry as a civil engineer prior to becoming a solicitor, I spent my years working for designers, developers and contractors. One of the key benefits of acting for such clients now as a solicitor, is that I gain the privilege of having the perspectives of each of these entities when it comes to forming/discharging contracts and especially when it comes to disputes that arise. I am more aware of the many demands and pressures entailed in running a successful business

Solicitors are in a privileged position, in both senses of the word – not only to have the trust of clients to act in their best interests, but we are also privy to patterns and trends that arise and can hopefully signpost others and flag potential issues before they come up

It is crucial to remember that most disputes are created during the formation of the agreement, whether it be in unclear language, challenges not addressed or something else. Certainly, this is when the seed is sown for a potential dispute down the road. The courts will generally seek to understand what the common intention was at the time of contract when attempting to rule in these matters

A regular concern that emerges is the wide gulf between employers and contractors/sub-contractors, specifically how these relationships are viewed internally. Repeatedly, employers or contractors who employ sub-contractors will say that they struggle to find those parties who will deliver a product in time/cost to the right quality without a threat of insolvency

Small companies still face the threat of delayed and disrupted cash flow and non-payment. The quality a small company can deliver becomes irrelevant if they simply cannot meet their own payment obligations, especially when the significant sums of labour are considered. This is when liquidity becomes an issue; it introduces boundaries and parameters that can threaten the ultimate success of the project. Having acted in several corporate insolvency matters, it is a repeated process that is sadly quite regular. Cash management is a cornerstone for success but managed badly it will cause significant and unwelcome pressures

Inherently, this is an internal conflict that exists within the construction industry and when viewed from the outside in, appears to be counterproductive and resistant to growth. What is clear from the banking sector is that there is an appetite to support small companies who wish to grow, however, such small companies are often seen as high risk to traditional banking with little collateral or leverage to offer. From speaking and working with the banking sector, considerable efforts have been made to address this, but companies still need to present themselves as viable and with the correct procedures and systems in place to make themselves attractive. BITA member Bridgeen Stone of Metrobank, has offered the bank’s support to SMEs, providing advice and guidance, and going to far as to assist in developing business plans, as well as financial support. Metrobank want to take a helicopter view of the business, the people behind it, their aspirations, goals and delivery, something we also do at SSA.

We became involved with BITA to help businesses; we are committed to nurture and grow SMEs through coaching and targeted advice and support. It is a tough time for smaller businesses, and we want to offer them what they need for a successful future.

For the past year we have held free educational seminars and going forward we look to work alongside BITA and the regulated banking sector with a view to making available the required resources to assist smaller companies. Over the course of 2019, there will be back to basics seminars and workshops designed to assist SMEs that will be available at no charge to BITA members

Author Henry Hathaway is a Partner with Silver Shemmings Ash and is a graduate of Trinity College Dublin (Civil Engineering). He is a qualified Civil & Structural Engineer and has previously spent twelve years in the Construction Industry representing both Contractors and Clients in Engineering and Project Management, he specialises in Pre-Contract Negotiation, Contract Formation, Project Lifecycle, Tender Development, Identification of Delay & Disruption, Establishment of Claims, Ascertainment of Costs

At Silver Shemmings Ash, we provide seminars and training alongside our core activities in contentious and non-contentious matters. The purpose of these is to facilitate a greater knowledge and understanding of construction and property law. There remains a considerable lack of training in such areas for companies and this is an issue which we are looking to address

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