Cian Dillon Brennan explains the Defects Liability Period, a standard 12-month warranty after construction completion. Poorly written contracts can auto-extend it another 12 months each time a defect is fixed, trapping cash flow. His fix: keep the DLP fixed at 12 months, and limit re-warranty extensions only to the specific repaired work.
Chapters
Hey, so we're just giving away everything now. We're going to show you in this training exactly how to negotiate your defects liability period in your contract, understanding what defects liability or warranty periods is. At the end of this, you're going to be a complete expert in defects liability. It's going to make a difference to your business. You learn how to do this, it's going to stand with you for the rest of your business. Hi, my name is Cian Dillon Brennan. I'm CEO of a construction consulting company called Quantum Contract Solutions, and the reason we make these videos is so many construction companies don't know how to deliver on their contractual aspects of the project. They end up losing money, making silly mistakes. I've seen it time and time again working for larger construction companies and owners, and I don't want it to happen to you. So listen to this training, implement it, it's going to make a big difference to your life. And please like and subscribe, pass it on to any of your friends in the construction. The more you like, subscribe, or comment, it's going to help people find it, and they're going to be able to implement it into their business. You're going to stop them losing money, going out of business too. So let's go. Okay, last but not least, defects liability period. So we're almost there, stay focused, let's keep going. Okay, so defects liability period is this final 12 months here. Okay, we have finished the work on site, which means that the 12 months we've had, we got our practical completion certificate signed. Now our 12-month defects liability period starts. We've gotten half of our security back That's where we are. We're in this section here. Okay. We've got to wait 12 months. And then if we get our 12 months, we get the other half of our security back and the contract will be complete. Now, what is DLP? It is a period of time, usually 12 months after you finish the work on site, whereby the contractor promises, I'll come back and I'll fix anything that happens that is a result of, of me, basically, our poor workmanship or something's come undone. Or, you know, even if you look at your own house, you know, you moved into a new house and there's cracks on the walls the guys should come back and they fix the cracks on the wall, that sort of thing. And that's really what DLP is. Now, what you see here, let me tell you a quick story about one of our old clients. This is what you call a solar farm. Basically solar panels, tons and tons and tons of them. And design is to just get loads of energy. And under each solar panel, there's a concrete structure that holds up a metal structure that holds up the solar panel. The contractor that we're talking about, their job was to do the little concrete structure at the bottom. They did it, they hit PC, they went into the defects liability period. During that defects liability period, some of these concrete structures started to crack. And so with that cracking, that meant that they had to come back out because they're no longer stable and fix them. And so they did. But the way their contract was written, what we need to be careful of is that whenever they fixed something, it tagged on an additional 12 months onto the defects liability period, which meant they weren't going to get their security back for an additional 12 months. But also what happened was they— it meant that it went on another 12 months in addition to their original 12 months, which meant that loads of other ones started to crack too. They had to come back to fix those, and then they went and fixed them, and another 12 months went on. To come back to fix those ones too. On and on, cost them a fortune. Okay, so that's what can go wrong. Really, we're not so worried about the initial defects liability period because normally it's 12 months. That's kind of an industry standard. Everyone's normally happy with that. And typically our clients are like, yeah, yeah, 12 months. I'm like, no, no, no, no, it's not the defects liability, it's the re-warranty period or the rectification period, whatever it's called. Sometimes the way that the contract's worded, it says the original defects liability period will apply to the rectification. Okay. So you gotta be careful of what's happening in there. And so what's the problem that we're trying to solve here? One is we want to make sure that there is no re-warranty and rectification period. We want it to just be 12 months. End of story, 12 months. And if there is a re-warranty or rectification period, it needs to only be limited to that work that they've rectified. So in the example of the, the company that came out to rectify the concrete structures, they went out to do concrete. So the 12 months additional should only apply to the structures that they fixed. The original defects liability applies to everything else. So once that's up, that's done and dusted, and we're only waiting on this particular thing for the additional stuff. I hope that makes sense. And why it's important to clients is you don't want them waiting forever to get the rest of their security back because it's cash flow that makes a big difference to their business. And that's it, week 1. So your overall goal for the whole week is to have a document with Loom links of you explaining these things back to us. By doing that, by getting yourself into that rhythm, into that process of how to do it, you are basically teaching yourself to be able to speak it, which is what you will eventually need to do. It's not about writing things down, it's about speaking out loud. Do whatever you need to do to be able to do it, to be able to explain these things in detail. If you have any issues whatsoever, just ping us on Slack and we're more than happy to help. All right, take it easy. Chat to you soon. Bye.
