This episode was recorded on the land of the Wurundjeri people of the Kulin Nation. We pay our respects to their elders, past, present and future.
Richard: Hello and welcome to another episode of Precisely Property. I’m your host Richard Temlett. I’m excited to have you with us today. If you’re here for the first time, thank you for joining us. I encourage you to listen to our previous episodes where we discuss all things property with a focus on dynamic discussions with industry leaders. In this episode, we’ll be talking about payment structures in the building and construction industry with Paul Reid of IPEX. So sit back, relax, and let’s get started.
Paul is a CEO at IPEX, an Australian construction software platform that provides transparency around subcontractor and supplier payments. Under Paul’s leadership, IPEX has become a trusted tool for developers and financiers, including Goodman Group, WINIM, Fortis, Trilogy Funds, MaxCap and INGWE Capital. IPEX is currently deployed on more than $1.5 billion in projects. With experience spanning sales, operations and technology, Paul’s current work bridges the finance and construction sectors to deliver safer, more efficient capital deployments. Prior to joining IPEX, Paul held senior leadership roles at BCI Media Group (now Hubexo), over eight years, including as Chief Operating Officer and various sales management positions across Australia and New Zealand. Welcome, Paul.
Paul: Thanks very much. Thanks for having me.
Richard: Paul, as we were discussing offline in today’s episode, we’re going to talk about payment structures in the building and construction industry. And I completed our State of the Apartment Market Report just a couple of months ago now. Part of that report, I actually spoke to the industry and I asked them what some of their major problems and issues in the industry were. I’ve spoke with the builders and the subcontractors as well as developers, financiers and so forth. But one of the issues that really just became apparent to me right now, it did start with the financiers because they were worried about the solvency of various developers, builders or subbies (sub contractors). But more recently when I spoke with the subbies, there was a major issue with them actually getting paid and paid on time. And when I… really spoke with some of the liquidators and people like that that have actually come on this podcast, I was quite astounded with how, how I suppose really if I want to call it unregulated to the payment structures in the current system are or could be taken advantage of. And I’m keen to talk to you about what you’re seeing on the ground and obviously what the platform is that has been created to start to solve these problems.
Today’s session, I’m keen to teach everyone that’s not so close with what happens in the building and construction sector in terms of payments of subcontractors and contractors, talk to them about what actually happens right now and what some of these issues are and what the risks that people need to be aware of, whether you’re a financier or developer or even a subcontractor yourself. And then I’m keen to then explore the IPEX platform with yourself and you’re very kindly offered to talk through some of the case studies at live examples of what’s actually been happening with the product. But before we get into that, I am keen with every guest this season, to have an icebreaker question. And the question is as follows. If you could live anywhere in the world for a year, no work, responsibilities, where would you go?
Paul: Very good question. I’m sure there’s a few people who are questioning me about the no responsibilities bit, but yeah, it’s probably a number of good places, but the one that sticks out is Monaco. And I have no idea… I do know why I think as a young bloke being an F1 fan, I must’ve managed to convince someone to let me up long enough to watch a few laps one time. And it just looks like a bit of an amazing place. So I’ve never actually been. So maybe my answer would change if I managed to get there. But yeah, I think that stands out, probably Grand Prix weekend, probably the worst time of the year to live there. But yeah, I think that’s the one that stands out at the moment.
Richard: Well, as an FYI, suppose to yourself, but also our listeners, I’ve not been to Monaco, but also it is on my to-do list. It just looks absolutely stunning. So I hope, for both our sake, one of these days we were able to actually get there because it does, it looks just absolutely amazing over summer.
Paul: No, think the pictures convinced me. Would love to go one day. Living there, might be a stretch, but yeah, I would love to visit.
Richard: All right. Thank you very much for that. Let’s get into the main, the first part of the session anyway. The current system, building and construction and payments from builders to subcontractors. Could you please talk and just paint a bit of a background picture for some of our listeners, whether they’re in the Government or perhaps not that close to some of the arrangements that are occurring right now, that are happening in the system. And what are some of the risks that people need to be aware of?
Paul: Look, as you mentioned in your intro, there’s quite a lot that happens in terms of people getting paid, delayed payments, those sorts of things. So there’s rules, each state certainly has its own set of rules, but I suppose construction is one of those industries where people become accepting of, conventions. So it’s a bit of a messy mix. Everyone’s aware of the rules, but it doesn’t necessarily flow that that’s how it works. I think as a broad summary in, we’re almost exclusively dealing in commercial construction, but everyone’s paid in arrears based on a monthly assessment of work completed. Subbies are out on site doing whatever they do, doing their work. They’ll submit a claim to the builder. The builder then gets all these claims from the people who have been on site doing what they do, roll that all up in together, add their costs and margins and those sorts of things. And then they’ll submit a claim off to the developer. Now, I think again, speaking to your earlier point, it’s probably important to note that the two process, although it sounds like they should be linked and broadly they should be very close, but what the subbies claim of the builder is not necessarily what the builder will claim against that trade either. Certainly there’s always advantages and it is part of the game and it’s accepted that. Look, if the builder can claim slightly more than, then they’ve got to pay out that’s advantageous for them. And obviously it’s all about cashflow in the industry. In general, they should broadly align, but there is room for movement there. Ultimately, the builder will put a claim forward that will be assessed by the QS. There might be a bit of back and forth about how much work has been done and they’ll eventually recommend an amount to be paid. And ultimately that will be paid off to the builder who then has to distribute that cash, downstream to the subbies and consultants and whoever they need to pay for the month.
Now they’ve all got contracts and we could probably jump into some of those things a little bit later on, but certainly there’s also security of payment rules, which are meant to govern how and when those things happen. But as you said before, there is a lot of room for movement. And I think it’s probably not unfair to say that payment issues or non-payment issues probably more particularly are pretty common. It is notoriously slow for payments to drip through. As I said before, every state has its own legislation. Some are very complicated. They’re probably not well understood at every level. And look, even if someone is in breach to go and enforce legislation can be costly, which often means it’s not worth doing. And things are allowed to drift just because it’s a little bit hard to go and enforce your rights. But on the back of that, and certainly something we see and deal with a lot, there’s probably a general lack of trust throughout the process. There’s bad news from time to time, but often that gets hidden. And I suppose there’s enough stories out there with builders having gone under it. And certainly subbies having gone under as well that can put projects at risk. So, look no one wants to get burnt. I think the other side that doesn’t help the payment flow is everyone is scared of getting burnt and tend to protect their own position. So if there’s an opportunity to hold onto the cash a little longer, they’ll tend to do that. And obviously that doesn’t help liquidity down to chain.
Richard: Gotcha. I want to summarise, if I’ve understood this correctly and please correct me if I haven’t got it quite right, but applying this to an everyday example, if we have a new housing project, whether it’s apartments or let’s just use apartments for now, typically what will happen, a developer will purchase a site, they’ll get the planning approval. They will for the most part get pre-sales of some of the apartments. They’ll then go to a financier. They’ll get funding for the construction of those apartments. The builder then will also subcontract work to the subcontractors who will do things like the carpets or the fixtures or fittings and so forth. And as the development goes up, there are certain stages where the subcontractors and then the builder will submit a claim basically to the developer, if I’ve understood it correctly, and the QS, the Quantity Surveyor will come out, they’ll go on site, they’ll look at what works have been done, they’ll assess the value of those works, they’ll then rely on a stat deck (Statutory Declaration) by the builder, and basically then go to the finance and say, look, with a QS, 10% of the works have been done, all this type of work has been done, you’re able to then release the equivalent percentage of that money. That then goes to the builder then, and most builders, my understanding is to do this, but it doesn’t always happen. But most builders then will go, these subcontracts that have done the elements of the work will then get paid in due course.
But what I’ve learned more recently is just with cash flow issues, as you said, sometimes the builders might hold onto some of the payments or if there’s a breakdown in a relationship, perhaps those subcontracts don’t get paid. Or the biggest thing that actually, and I would say if I’m not being too melodramatic, what horrified me was that builders would actually use some of that money to fund some of the other projects. Again, if I’ve understood this correctly, they might be active on five or six jobs. They’ll get paid on job number one, but because they have issues on job number two or something’s happening on job number two, they might actually grab some of that money and rather than pay the subcontractors for job one, they’ll actually pay to job number two. When I started talking to one of my friends and his registered liquidator, he was just talking about the fact that in good times that seems to work, even though it screams huge risk to me. But obviously in the bad times when the music stops or when building costs increase dramatically, or as you said, subbies or contractors or builders actually go under, it can be an absolute mess.
Have I summarised, suppose, the lay of the land reasonably accurately in terms of what’s actually happening?
Paul: No, you’ve done a very good job there. And I realise I probably didn’t get to the back half of your question on the risks, but now you’re spot on ultimately to extend that message out. Once the builder is paid, certainly the work on site has been certified that 30% of the electrical work has been done or whatever it might be. So that will release that cash to the builder, but there’s no oversight of control. over whether or not that money gets passed on to the relevant subcontractor. And in the meantime, look, ultimately many things happened with that cash and look, certainly in a time where fixed price contracts, costs escalating, as I said before, look, subbie insolvencies are, they might be delayed being paid on other jobs. As you said, everyone’s working multiple jobs at once. It doesn’t take much. It’s quite a high value, low margin sort of ministry all the way through. Yeah. A $10 million apartment build all of a sudden costs 12 ($ million). That $2 million has got to come from somewhere. And I’ll be worth noting there and look, it comes back to some of the reasons that IPEX has developed the solution that we have. Although these builders are managing multiple jobs, sometimes five,10 and more, depending on the type of work they’re doing. It’s all managed out of a single bank account as a rule. Certainly there’s some that are siloing cash up and know their position on every given job. But look, we hear, and half our job is talking to builders, funnily enough. Certainly a lot wouldn’t really be able to tell you where they’re at on any given job at any given time, because everything is lumped into the single account. Money comes in, money goes out. So sometimes look, they get themselves into a little bit of trouble before they even know it. So all of those things combined to you’ll pay your money into your apartment building. You think it’s a $10 million job and you’ve put $2 million in. It doesn’t necessarily mean there’s $8 million left. And that’s something that sort of we find quite often. You get to a point where there is a problem and cost to complete is nowhere near what everyone expected it to be.
Richard: Okay. Look, with the research that I do, and I challenge the team most, most weeks by going – team, what are the problems and how are we looking to solve some of these problems? I’m interested to understand more about this IPEX platform in the sense that we’ve got a problem in the industry right now in terms of not being able to track those payments and I’m astounded to hear that it goes into a single accounts. I just had assumed, but again, we should not make assumptions. I assumed that on each project and your account would be opened up so that it would be easy to monitor because I think that would be incredibly stressful if you were a big builder working on a number of jobs and all this money was coming in and going out. There’s clearly a need for more oversight and more tracking of payments. What is the IPEX platform and how was it created? What problems are trying to solve?
Paul: So look, I think it’s probably fair to say that developers and lenders all protect themselves quite well, legally, contracts are extensive and there’s, there’s lots of different rights and things that they can act on under various circumstances. I suppose the biggest problem is information. So IPEX essentially has been built to go back to the core issue to make sure that everyone who is meant to be getting paid is actually getting paid. So it’s a piece of software that integrates with a project bank account. So what that does is one silo funds, paid in to the builder for project A from any other projects they might be doing. We have, and we have various settings, but under the standard setting, the builder can access their prelims, margins, costs, whatever is part of their claim as their cash. But the money due to subbies, suppliers, consultants is set aside. The IPAX software essentially limits who can be paid out of the account to approve subbies, suppliers and consultants. We go through KYC (Know Your Customer) AML (Anti-Money Laundering) checks and we make sure that the BSB and account numbers match the entities. So even from a builder’s perspective, there’s an extra level of fraud protection. They can’t just get an email on a Friday and say, “Hey, I’ve changed my details. Can you please pay me over here?” Both sides need to match for a payment to go out. But I think the important thing as well is it provides a commercially acceptable amount of transparency to the developer, the lender, the project manager, over how the builders distributed those funds. Now it’s still a builder owned and operated account and the builder can, as you said before, look, a subbie might need to come back on site and fix something. So they still get to determine when they pay and how much they pay. But ultimately, rather than just relying on that stat deck each month, where is again, a cause of a lot of problems down the line. And then we’ll no doubt touch on that again, the developer and the lender can go in and actually just say last month you claimed on behalf of these five subcontracting suppliers. Before I pay you again and accept this stat dec, I can just go in and see, did those five people get their money last month? And again, we’ve got lots of different levels of transparency that can provide enough oversight without requiring the builder to give up sensitive information, their margins, their contract base and all those sorts of things. And look, in general developers and lenders don’t want to see margins in our experience anyway. They just want to know that the money’s got to the right people before they go and pay again. And I suppose that loss of oversight is where, and all the headlines when a builder goes under, they owe tens of millions and in some cases a lot more. It’s multiple projects that cost multiple payments. In essence, what IPEX is there to do is give everyone a bit of a logic check each month. You’ve paid, you just want to make sure that money’s been distributed before you pay again. So it’s more about not throwing good money after bad when if something is going bad. And certainly we don’t stop a builder from getting into trouble or going under, but it’s about picking up issues early and being able to rectify them before you drop the next month’s payment in. Certainly speaking to developers and lenders of all different sizes. If you had to, there’s obviously extremes, but generally speaking, when things go wrong, most of them will tell you they’re out three payments and on a decent sized job, that’s a big chunk of money. It’s potential that there’s no more profitability left in a job after that. Ultimately, we’re there to make sure everyone gets their money. That includes the builder. But it’s about transparency. Everyone’s got great legal coverage, but again, how do you pick a false stat deck from a true one? You might have step in rights to jump in if a builder is not paying their subbies, but how do you know? Usually by the time you actually find out a good chunk of money is gone. So we’re there to help add practical controls to the existing legal protections, just so everyone’s got enough info early enough to act.
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Richard: In the bio and in the introduction, obviously I mentioned a few financiers or developers that have signed up to the platform. Is it across all sectors? So not just a particular sector, for example, residential is it across all sectors and how are some of the clients actually finding it?
Paul: Look, it probably started more in the private residential apartment buildings, townhouse type sector. Not for any reason other than our sales and marketing tended to hit those, those types of people sooner and quicker. Certainly some of those private developers had more skin in the game themselves. Look, we’ve had chats with Government and we’ve got some council jobs happening and things like that, but it can be a little bit harder and a little bit slower to get to some of those sorts of organisations. But certainly started with multi-residential developers that has expanded. We’re doing a bit in industrial now and those sorts of sectors as well. Same principals, look, it doesn’t really matter if you’re paying a builder and hoping that they’re going off to pay subbies and suppliers, then the concept works. But I suppose of late, probably the last 12 months or so, we’ve always talked to the lenders and the lenders have always loved the idea, but we are now starting to see lenders actually mandate the controls as a condition of lending into certain jobs. Now they might deem them slightly above neutral risk or certainly a develop lender, develop builder. Lending is one where the risk profile is a little different, but certainly the lenders are starting to not so much give the developers the option in some instances and actually require the additional oversight to support the project.
Richard: Okay. I must admit, I do a lot of work for the lenders, whether they’re big full banks or private credit. And particularly now, this is where I first started hearing some of the issues about where the funds were going. And it was keeping a lot of lenders up at night. The pandemic kept lots of people up at night, of course, but just the stability of the system and how transparent it was. And I’m just wondering, have you spoken to them about, it seems that this is a very clever risk mitigation tool or risk management tool. And I know our QS team, for example, had to work much harder for, and they work hard, but had to work really hard for private credit because they’re trying to explore and understand all the risks in the system. Do you think that with a more secure or transparent payment system, the risk might be reduced and perhaps then I don’t know if it’s really, I’m assuming that it would be priced into the lending fees and stuff like that, or the financing. Do you think, I suppose what I’m trying to say is, I’m a big fan of having things at de-risk development and investment. And this sounds like it could actually act as a risk rating tool as well as de-risk the segment of the market. Is that what the finance is like or have they spoken to you about how it’s helping them mitigate risk in the projects?
Paul: Yeah, I think I’m into a large extent. Goals align a little bit between the developers and lenders at certain levels. So there’s a couple of points there. Going back to the start, I suppose, not an unintended consequence. It was expected, but it is playing out in the real world. I think the first step is they don’t want to appoint a builder that’s already in trouble. Now everyone’s doing a very thorough job of financial due diligence these days. And we hear all the lenders are stepping all those up, but look, there’s certainly enough builders that have gone under not too long after winning new jobs. And we’ve looked into a number that I’ve gone under and read the administrators reports. And certainly in our experience, there’s been more than enough that, yeah look, you’d like to think if they’ve passed due diligence, they would not be in trouble so soon afterwards. Look, I think ultimately on that front, it is just a point in time check and it is reliant on information that may well be selective or overly optimistic or a job that’s meant to come in, doesn’t come in or whatever it might be. One of the I suppose things that we’re finding is including IPEX as part of the tender process and a requirement of winning a job. You get anyone who’s in a little bit of strife already self-selecting out the idea that they can’t use funds from this job to fill holes elsewhere tends to make it less appealing. So again, doesn’t replace financial due dilligence at all, but it’s a nice little add on to what a lot of lenders are doing. So from there on, I suppose the other side of it is there is no ongoing due diligence. Builders winning new contracts, costs are going up. Maybe subbies go under on a job, but there’s no sort of chance to go in and check every three to six months and see where they’re at now. So ultimately it’s about real world check of their financial situation before you appoint them. And then operationally, you get some protection as they go in case that position deteriorates over time. And as we said before, look, high value, low margin. Things can change quite quickly. It doesn’t take more than one or two jobs where costs jump or something goes wrong. And all of a sudden you’re in a bit of a hole and we back to that situation you talked about before. It’s a bit of pass the parcel. You’re very healthy development all of a sudden inherits a shortfall from one or two other jobs that haven’t gone so well. So look, they’re obviously two major things. I suppose the third thing is if the worst does happen, we’ve spoken to developers and lenders of all sizes that have been through this process before. And one of the hardest things is look, builder gets into trouble, not much you can do about it, but you’ve got to the project back up and running again. But unfortunately you’ve got no idea who’s being paid what and when. So it’s pretty common feedback that subbies have all got their hand up saying, “Hey, I haven’t been paid for two months or three months or four months.” And unfortunately they don’t know. And look, there’s warranties and things that are linked to somebody’s being paid before things can progress. And certainly the easiest way is to keep the team together and keep everyone happy and keep everyone working. Unfortunately, the general option is you pay everyone again. We had a couple of instances where multiple builders have gone under consecutively on a project. So yeah, those developers were quite upset at having to pay the same bill probably two and three times.
But the other thing that, that people really like with IPEX is you’ve got an audit trail. So ultimately if it does go wrong, you’re not guessing. If a subby says I haven’t been paid, you’ll know if that’s the case. And if it is, you can sort it out. If the worst does happen. You tend not to be dealing with historical non-payment over months and months. And you certainly know where you stand position on who’s got what.
Richard: It’s fascinating. As I just talked to you, I’m just wondering, I know in New South Wales, they’ve just put out that iCIRT (independent construction industry rating tool) rating tool. And I’m just wondering if you’ve looked into that in terms of how it just assesses the credit worthiness and the things like that. If I’ve understood it correctly, or the quality of builders and stuff like that. I wonder if there’s more tools like that one or your one that you obviously put together that will actually just help the industry become more productive. Because certainly when I’ve studied this sector and I’ve spoken to number of participants, it’s very clear that it is still a very, it’s an industry that does need to innovate. In fact, I actually think it’s ripe for disruption. And I like these types of ideas that are actually thinking outside the box to solve problems and to actually just help keep people in alignment. And perhaps it is managing risks or relationships before they’re completely destroyed.
Just before I forget, you made a comment about, already maybe picked up that you said there was three non-payments. You said something like a rule of thumb, three non-payments is a very good indicator of there might be a red flag.
Paul: Look I mean, there’s extremes and certainly we’ve heard of worse than this, but what I was referring to there is when we talk to a developer or a lender that has had the experience of having a builder go under in general, when, you know, the dust settles and they’ve done their numbers, they’re probably behind by about three payments. So when you’re talking about cost to complete, they might expect to be in a certain position when everything shakes out on average most will tell you it’s roughly three payments is what has been the damage. Obviously you’ve got your delays and those sorts of things as well. Again, because the only rule mechanism month to month is the stat deck. If money does need to be moved, it can be moved undetected for quite a while. Obviously the subbies will eventually complain and put their hand up and et people up the chain know that they haven’t been paid, but it takes a little bit of time and the damage that can be done in the interim is I suppose where those three payments comes in. But yeah, that’s what I was referring to there.
Richard: Okay. I had a question that I wanted to ask you just about, I suppose, putting the platform together. You also would have had lessons that you’ve learned, maybe things that didn’t go quite right. What maybe is one of the biggest lessons that you’ve learned just out of putting this venture together?
Paul: Look, I think to go back to absolute basics. Developers and lenders are not too fussed and think I mentioned earlier about wanting to see builders margins or stopping them getting their money. They really just want to know that the subbies are being paid and things are progressing onsite as they’re meant to. So although we’ve got lots of different options and certainly we can ramp up security to an oversight quite tightly. Most don’t go anywhere near the sort of more extreme ends. It’s always running a fairly commercially acceptable manner. They do want to work with the builders. We can come back and talk about the impact on good builders as well, if you like, but non-payments paint an issue for forever in a day. It’s not just linked to the pandemic or the recent cost escalations, this problem has been around forever. A lot, whether it be Government or the private parties, have brought new things in to try and deal with it and try and fix it. There’s trust account legislation and we talk to developers who have tried to strengthen stat deck requirements and add checks and balances, but it is by and large either adding legal protections or it’s adding admin and extra box checking and things like this. So ultimately, I suppose the biggest lesson for us is you can have all the legal protections in the world, but you really need a practical approach. You need to, you need information, you need to be able to see, and I suppose at some level, some control over what’s happening to actually prevent these things that are standard industry protections just aren’t overly effective at stopping these payment issues. And there’s lots of different methods and processes that have been discussed about being brought in. Obviously, Queensland’s already brought some stuff in. New South Wales and WA have retention trust schemes as well, but extra legal obligations and maybe doesn’t necessarily help you stop it happening in the moment. And I suppose that’s what we’ve arrived at. We need the combination. You need the practical elements as well as the legal elements to really get the money going to the right place.
Richard: Great. I made a note, you mentioned the impact on good builders. I wouldn’t mind just teasing that out probably for the last theme for today. What is the impact on good builders? Cause you’re right. I can see obvious benefits to the industry on perhaps the builders that aren’t doing the right thing, but for the good builders, what’s the benefits?
Paul: Look, going back to deterring distressed builders, that’s straight away a positive for those builders who are in good shape and can actually put reasonable bids in and hope to win work. But certainly everyone gets dabbed with the same brush, which is obviously not ideal. Everyone’s being asked to jump through hoops to prove that they’re financially stable and prove that they’re paying their subbies. But again, the checks and balances that exist don’t prove either. So everyone keeps getting paid in arrears and probably going back to the start. Everyone’s protecting their position. Again, cashflow and liquidity are big problems. So once there’s a little bit of oversight and control over where the cash goes. So we’ve certainly got builders who are proactively offering IPEX as a differentiator, a tender. Building new relationships and trying to make sure that they strengthen existing ones. But more practically, when there’s an element of control over where the cash can go, we’ve certainly got builders who are, who have negotiated some cash in the bank upfront for site establishment or for certain supply deposits. Modular constructions, one where we’re starting to have some conversations where, you know, as much as it may well make sense productivity wise, funding it is an issue. And obviously people releasing cash without knowing that if something goes wrong, they’ll actually own the thing is a problem holding that back. So certainly payment oversight is helping to open up different possibilities in terms of how people get paid. So look, some of the builders have latched onto it quite quickly. It’s not about getting more money than they’d necessarily get under the contract, but under some circumstance, they might be able to get some earlier, which means they don’t carry those costs of funding, supply deposits or whatever it might be. In the interim, the idea overall being, as I said before, it’s really not anti-builder. It’s just about making sure everyone gets their money and the money goes to the right places. And when those controls are in place, people don’t have to protect their position quite so aggressively as maybe they, they have to without any oversight.
Richard: Right. Look, I know we’ve got through a lot today. Are there any other concepts or ideas that you wanted to leave our audience with?
Paul: Not overly, like I said, look, from our point of view, it makes a lot of sense. The idea, and look, as you mentioned at the start, I don’t come from a development background, but the idea that millions and tens of millions of dollars get released every month on the back of a, a stat deck. And someone says, I promise I paid everyone. And all of a sudden the money flows, was slightly surprising to me as it sounds like surprising to you. So look, ultimately nothing we’re doing changes a builder’s obligations under their contract or under SOPA (Security of Payment Act) or anything like that. It’s just making sure that everyone’s doing the right thing along the lines. And those that are don’t really notice a difference working with us. It’s really just making sure that yeah, from a developer’s and lender’s point of view, they can feel comfortable that when they put money into the project, it’s being spent there and not elsewhere. It’s what should happen ultimately. So yeah, look from our perspective, it’s all hopefully pretty logical. It’s all meant to work in with the way that everyone else works already. So it’s nothing overly new or anything along those lines in terms of new technology to learn or anything like that. It’s play on, but just the right thing tends to happen.
Richard: Great. Look, I wanted to thank you very much for coming on the show today. I think that this platform is actually very clever in the sense that it is solving an industry problem that I’ve become very aware of quite simply when I, the question I ask a lot of the subbies or the builders as I go, what’s keeping you up at night? I literally asked that and it’s that cashflow, lack of cashflow, not getting paid. And again, as I said earlier in the session, I think that there’s a lot that can occur to just improve the industry, the quality of the industry, which hopefully then goes to lower prices, less risk, which I’m convinced there will be, and then also more adequate reporting and probably just an overall better industry. So I want to thank you very much for coming on the show.
Paul: Thanks very much for having me. Appreciate it.
Hi everyone. I hope that you enjoyed the session with Paul yesterday. I thought it was absolutely fascinating to do a bit of a deeper dive into what’s actually happening on the ground with payments in the building and the construction sector. The first points I wanted to just make before we get into the three findings as follows.
I asked Paul to come onto the show and talk about the IPEX platform. Charter Keck Cramer will always be independent and we’re not actually looking to necessarily promote products. That’s not the point of the podcast. However, and in my discussions with the industry, I know that this has become such a major issue right now that I thought it was very, very well worth having himself, and you can see the wealth of knowledge, on the show to talk about that platform. And moving forward, I’m actually proposing to do a similar sort of thing with other um innovative products, whether it’s disrupting planning or sales and marketing. And I would encourage people do reach out him and learn more about the platform if you’re interested, because I do feel that these are certain tools that can disrupt the industry and just improve the industry for a good way. So I just wanted to make that clear at the outset of this closing.
The three findings that I learned from Paul, and there were a number of them, but the three that I’d like you to walk away from the session are as follows. I like the fact now that there is basically an audit trail. It provides then payment oversight, and in my mind, definitely reduces the risk. Or to risk mitigation tool and that can be used for the industry, which I think is absolutely critical. And I must have, and I can’t believe that something like this has not been introduced earlier on just to help with tracking payments.
The second point I thought was very clever is the potential for this platform or this type of procedure to actually self-select or cause people to self-select out of actually getting involved in these platforms, which I also, think is very clever because it’s all just improve the industry. My research seems to suggest that the majority of people in the industry actually want the right thing and do the right thing. But unfortunately there are bad apples out there and that does impact the industry more broadly. So giving it a little bit more credibility and regulation and rigor, think is only a good thing in the industry.
Finally, then I actually, one of the questions I have been asked by the builders in the most recent research that I’ve been doing is how they can differentiate themselves from the industry or improve the reputation with, I suppose, the end users, because right now in the media, there are negative media headlines. And again, all the headlines seem to say that builders are unreliable or they do defective work, which as we all know is not correct. I think the iCIRT rating system, and I also think this type of platform and the opportunity to actually improve the relationship and the reputation of builders through using these types of platforms and payment methods can only be a good thing. And I can’t help thinking that getting involved in these things and advertising that you’re doing it will actually give more comfort to the end user, the buyers of apartments and industry needs all the help it can get to educate buyers and that apartments are good things to buy or investments to make. And I think that improving the reputation of the construction sector for the end users, the buyers who read the headlines, is really important. Anyway, that’s all I need to say. I hope you have a good rest of the day.
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