Sunday November 29, 2020

LexTech gets smart with construction contracts

Tied up in contracts and working to razor-sharp margins, the construction industry suffers from complex payment chains and regulations leading to mountains of paperwork. LexTech has an answer

23rd February, 2020
Larry Fenelon, founder of LexTech and partner at Leman Solicitors

Founded by Larry Fenelon, a partner at construction law specialists Leman Solicitors, LexTech is on a mission. A mission to simplify management of the complicated and onerous paperwork required by the construction industry.

“We’re creating smart contracts,” said Fenelon.

It’s nothing short of a technological revolution, and one that could only have come from a business already close to the sector.

“We get what’s going on, we know the problems,” he said.

Central to this are three LexTech products that work right across the building lifecycle: incident management, contract administration and property management.

The end result is streamlined legal and regulatory administration through digitisation, automation and data capture.

“Incident management could be anything, like workplace injury, a disruption event, a delay event that means you can’t get access to something. Anything you can record,” he said.

Property management allows for the digitisation of, for example, snagging.

“You do it with photo or audio-visual notes [and] it can be in any language. Remember, for a lot of people in the construction industry, their first language isn’t English.”

Contract administration in particular promises to allow construction companies and contractors to leap forward.

Fenelon noted that in any construction contact there is not only the contract, but a plethora of supporting documents.

“It’s not unusual for even a mid-size contract to have two binders full of documents,” he said. This is inefficient and can cause major problems.

“Few builders get into building because they have a love of fine print. Rarely do they read it; rarely can they find it. We recognised that problem and developed this system. Having all the documents and making them searchable means they can check them – anyone in the business can.

“Knowledge is power and, quite often, you can just look up the clause and deal with it without having to pay a solicitor.”

It also helps with serving notices, something that is particularly important with public works and which will be of interest to subcontractors.

“If you don’t serve notice then you have a problem: your claim, otherwise valid, could be deemed invalid. This all usually falls to one person, who is often not enthused to be the contact administrator,” he said.

“Unsavvy contractors and subcontractors aren’t recovering what they should be. Things are left in notebooks; they’re not trackable and auditable.”

This can have serious financial consequences, and contractors and subcontractors are often subject to late payment.

Mechanical and electrical (M&E) engineering subcontractor Haughton and Young Ltd went into liquidation on February 18, despite having prestige clients during a notable building boom.

Reports indicate that the firm collapsed because it was not paid the full amount due on some projects.

“Some of the M&E subcontractors are bigger than tier two contractors,” said Fenelon.

“Contract administration is essential for those who want to make a profit in what is a very difficult industry.”

Fenelon acknowledged that by developing software that significantly reduced the need to pay solicitors’ fees he was, in a way, putting himself out of business.

“This prevents the problem in the first place. Some may say it’s turkeys voting for Christmas, but I see it as doing good. Lawyers doing good,” he said.

As for the construction industry, it is part of a digital revolution that needs to happen. Adopting building information modelling (BIM) is not enough, he said.

“BIM is not digital transformation [of construction]. That’s just the drawings. You need to introduce digital solutions into what is a very complex business. If you leave it [contract administration] to one person you are bound to get human failure, there’s no question about it.”

For Fenelon this transformation can’t come soon enough. The construction sector now has a chance to streamline processes.

“This is an industry where people are still carrying around the big diary under their arms. I’d rather have that than not, but there is a digital transformation under way in the world.

And the bottom line is the bottom line.

“Contract administration is where you win or lose money on a job,” he said.

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