Understanding Construction Contracts

Podcast Transcript

Steven Rossi-Zalmons: 

Hello there and welcome to the Construction Revolution podcast. My name is Steven Rossi and here on the show we explore the latest trends, technologies, people, and organizations that are revolutionizing or disrupting the construction industry and are changing what the industry will look like tomorrow. Today on the show I’m speaking with Cian Brennan, the founder and CEO at Quantum Contract Solutions. Cian has an extensive background in construction management, consulting, and engineering, which led him to realize the importance of being contractually literate. 

Through his experience, he also discovered that many construction companies do not thoroughly understand or review their contracts. With this insight, Cian set out to help contractors navigate and decipher contracts, resulting in lower project risk and stronger project cashflow. Tune in to learn more about Quantum Contract Solutions and how Cian and his team are making construction contracts hassle-free. Hi Cian, welcome to the Construction Evolution podcast. It’s nice to have you on. 

Cian Brennan: 

It’s very good to be on, Steven. How are you?  

Steven Rossi-Zalmons: 

Good, good. It’s nice and early here, but I’m glad you were able to stay up, working late for us, so we could talk. 

Cian Brennan: 

That’s fine. That’s fine. This is part and parcel of having a company that deals in all different parts of the world. I had a meeting a couple of weeks ago at 2:00 in the morning. So that was fun. And then I was in Ireland for a wedding in the last couple of weeks as well, so that was actually quite nice. I was able to get a few more normal timed meetings as well. So that’s just the world we live in now, Steven. 

Steven Rossi-Zalmons: 

Yeah, that’s the joys of working with people around the world, whether customers or your own team. 

Cian Brennan: 

Exactly. 

Steven Rossi-Zalmons: 

So yeah, I’m excited to have you on today to learn more about you and about Quantum Contract Solutions as well. So, to get us started, could you just tell us a bit more about how you founded Quantum Contract Solutions and what inspired the idea for the company? 

Cian Brennan: 

My background is, I did the usual. Went to university, did a master’s in construction. That was advice given to me by my parents. And my granddad was a construction contractor he said, “Do not go into construction contracting because subcontracting world, it’s not where you want to be. You’re better off going a different way.” So, I did that, and I graduated and started working in some of the biggest companies in the world, in the construction. So Chevron, Impacts is the Japanese version of Chevron. Woodside is the Australian version, so big oil and gas projects. And then later on, I started working for consultancy to give specific advice around contracts. How to manage contracts, and really from the client side, how to save as much money via contracts as possible. And if you want to use it in layman’s terms, it’s how to extract the most amount of money out of the contractors. Or how to pay them the least amount of money, is really what we’re talking about. 

So this involves bringing in closeout teams onto projects who all of a sudden their job is to save money, the projects not going to plan. These guys come in and they make sure that they save money, generally not by paying claims, by rejecting claims, by saying some claims are not valid, they haven’t been contractually done the right way. That’s typically how those type of strategies worked. After that, I went to work for Shell in the Middle East and it was there where I was working, and I just honestly, I just got fed up of, one, just contractors and subcontractors being battered over the head. Being bullied contractually. And to be honest, they just didn’t know what they were doing. They were just playing a game that was so risky. They were taking on so much risk and they were just not getting paid what they should be getting paid and they were going out of business time and time again. 

And then I felt that it was me who was doing this and I just didn’t want to be that person anymore. So all of a sudden my work satisfaction went off a cliff. I just wasn’t interested in doing it anymore. And so the idea came to me was, well, I actually know how all of these big companies work. How all the insides of the GCs work, how all of the insides of these larger organizations. And what the contractors, subcontractors, whatever you want to call them on a project, didn’t understand was in most of these companies there’s stage gates. Stuff that needs to happen to get something approved. And if you submit a crappy document or you sign a contract on the front end that’s terrible, you don’t go through the stage gate and you just get stopped and rejected. And they don’t understand that there’s a person there that needs to take your document, turn around internally, and present it to a committee or to a boss of some kind. 

And if that document makes them look bad, then ultimately they’re just not going to do it and they’re going to get rejected. So if I could teach these guys and show them, and ultimately do that on their behalf, navigate the insides of those companies, the people in those companies don’t really care. It’s a procedure. It’s like, yeah, okay, tick box, tick box, tick box, tick, paid. Box ticked, box not ticked, not paid. And so if we can learn how to tick all the boxes on the way through, that’s how you can get paid. So that’s how Quantum started, and from there we started in 2019, we’ve grown, we’ve won two awards. One for innovation, one for outstanding growth. Personally, have won a 40 under 40 award and Entrepreneur of the Year finalist, and that’s all just on the back of finding a problem, really, that needed to be solved and solving in an innovative way where we do everything remotely. 

And so just like you’d be on a construction site, if you needed a lawyer, let’s say you work for a big construction company like Turner, the biggest out there, right? Essentially. And so you needed legal help. You go back to your desk, and nowadays you’d book in a Zoom call with them. You wouldn’t go to the head office to talk to the lawyer, you just book in a Zoom call and then they’d give you advice. That’s essentially what we do, in that we can give you contractual advice to anyone on site, we’ll do all of the paperwork for you, and then it’s done, essentially, for a retainer. So it allows the subcontractors, contractors to get access to top tier advice and top tier systems that they normally wouldn’t have. Does that make sense? 

Steven Rossi-Zalmons: 

Yeah. Absolutely, yeah. That’s really interesting. It’s quite a shift from, I can imagine going from one side of the business to the other, but it’s an interesting story as to why you did that. 

Cian Brennan: 

It is. It’s more rewarding, I’ll put it that way. A lot more rewarding. 

Steven Rossi-Zalmons: 

Yeah, I bet. So you sort of touched on, you have a lot of experience in the construction industry, and I think you mentioned that your family was in the business even before you were. I’m wondering what made you want to get into the industry in the first place? And despite the challenges you had, why have you stayed in it? 

Cian Brennan: 

So, years ago, different time, and I’m not super old. I’m turning 40 soon. But in the grand scheme of things, it’s a little bit older in comparison to some of the new kids on the block. But when I was 13, my father knew a builder and he was like, I need to get this guy to earn a bit of money to do something during the summer holidays. And so, he put me and my cousin on a building site as a laborer. And so we got on that, and within a couple of weeks we were both driving dumper trucks around the place. We were literally fully integrated in there and we made decent money. We made more money than we’d ever make in a shop or anything. And so I think it was just an instant reward where it was like, if I work hard, I get paid. 

And that kind of connection just stood at me over time and it was like, even now … Building of a cinema was what I was part of back then. It was, they were building a cinema. And we drive by that old cinema now, and I go, “Oh, I built that. I remember sitting on that thing having lunch.” And so I’m the type of person that likes a change, and so in construction you get lots of projects. And so you start one and you finish one, you get to do a full cycle, and that’s nice. Then you do another one and you finish one and you get a full part and you get to see the fruits of your labor most of the time. And so that cycle is something I’ve really, really enjoyed in my career. And then, to be honest, as the career progressed it was the adventure. It was the adventure of going to Australia, it was adventure of going to Qatar, Iraq, Saudi Arabia, all of that stuff. That adventure in construction. I mean, that’s what construction can give you, essentially. 

Steven Rossi-Zalmons: 

Yeah, absolutely. There’s construction everywhere. It’s interesting that you’re able to leverage that to travel and see the world. 

Cian Brennan: 

Exactly. 

Steven Rossi-Zalmons: 

Coming back to the company and what you guys do, what are some common issues that you see in the industry with contracts? And what are a lot of companies doing wrong and how do you guys help them to avoid that? 

Cian Brennan: 

Yeah, so the biggest thing I would say, and it depends on the company. It depends on how big a construction company you are. So I’m going to tailor this advice to small to mid. So we’re talking 5 million to 20 million, maybe. Something like that. So those specific companies oftentimes are of the opinion that, in the front end, front end of the project, if I try to negotiate they’re going to give the work to somebody else. They’re going to think I’m difficult, subcontractors are a dime a dozen, and they’ll give the work away. And so I completely understand why they think that, because a lot of times you’re trying to negotiate something and you probably really need the job. And you’re just like, I might just accept it as is because I really need this job. However, that actually isn’t the case. 

Now, to be fair, that might be the case while you’re very, very small. If you are a dime a dozen subcontractor, if there are 20, 30, 40 of you around the place, then maybe that is a fair assumption. However, if you’re a larger company where there might only be five to 10 of you to choose from, there might be millions. And even then it’s an expensive, tendering process to go with someone else. It’s not as simple, as long as we’re in a proper organization. In those scenarios, if you don’t negotiate, and so imagine you’re sitting on the other side of the table, as I was, and you get five bids come across your table. And one guy doesn’t try to negotiate his contract, he just leaves it as is. You don’t think this guy is, “Oh, great, we’re going to deal with him. He’s just signed, he’s easy to deal with.” 

They don’t think that at all. They think, this guy has no clue. Because the game is, they give you their worst contract, that’s it. They have backup clauses or backup sections for every single thing, and so you not playing the game is a red flag to them. And so if you do negotiate, they then think, “Ah, this guy, he’s been here before. He’s played with the big boys before,” and at the end of the day it gives them confidence that you know what you’re doing. So the benefit is, you end up with a way less riskier contract. And so that’s the first thing. The second thing is, you look more professional and you’ve given them confidence that you know what you’re doing by negotiating. Conversely, what people tend to do is they tend not to negotiate and they tend to think that they can’t negotiate. And that’s just not true. So that’s probably the biggest mistake. 

The second mistake is, same again, it’s another belief thing. It is that in the post-award phase, when you’re on site, the contract specifically says you have to do all of these notification provisions. You have to submit EOTs, extensions of times, you have to submit change orders in a specific way. They tell you you need to do it and yet no one ever does it. They don’t follow it. They just don’t. Again, they feel like, oh, I’ll appear too contractual and they won’t give me any more work. Again, this is essentially nonsense. The only way that can come into play is if you are non-contractual, you don’t do any of the paperwork the whole way through the project, and then at the end you decide to get really contractual. Then they’re like, “Oh my god, what’s happening here?’ And that’s how most people do it. 

But if you start off from the very beginning doing exactly what the contract says, anytime you’re delayed, you submit a notice, then you submit your EOT. Or anytime you’ve been asked to do additional work, you submit your notice, then you submit your change order exactly how the contract says, they will be trained to do it. They’ll be trained to approve it, they will absolutely approve it the whole way through. They’ll think you’re super professional. And if you look at the biggest companies in your sector, whatever sector as a company you’re in, the biggest guys will always do this and have a reputation for being professional. Not a reputation for being contractual or difficult to deal with. They’ll have a reputation for being professional and good at what you do. 

And ultimately that’s going to lead to better cashflow because you’re going to have more change orders and EOTs approved, which is going to have an easier project for you. And ultimately, if you’ve got more margin you’re going to deliver a better service. And then the next project, hopefully you can deliver an even better service. That’s what actually matters, not whether you are perceived as easy to deal with or not. 

Steven Rossi-Zalmons: 

Absolutely. Yeah, that’s a good point. There’s a reason those clauses and everything are in place and the companies that are writing those obviously have processes and are expecting those. So yeah, it makes a lot of sense that you would want to follow through that. In terms of, you mentioned that five to 20 million contractor market, is that your guys target persona or is there …  

Cian Brennan: 

We are full on because we’re online and we’ve got staff everywhere, basically. Our minimum is 5 million. And look, our vision as a company is to take an industry that’s on its knees onto its feet. People get bullied around, they get bullied contractually, and so the smallest guy we can take is probably 10 million, but we take 5 million because we really want to help a lot of these subcontractors as much as possible. But our biggest client is almost half a billion. And so there’s a big range in companies, but we try our best to help as many people as we can. You’re not normally able to get access to the level of expertise and systems without employing people indirectly and buying systems to do it yourself.  

Steven Rossi-Zalmons: 

Absolutely. So I was wondering, when you’re talking about and introducing Quantum to potential clients, I know a lot of contractors, especially with something as important as contracts, they like to keep things very close to them. Have visibility on everything. So I’m wondering what sort of pushback you get when pitching Quantum to these contractors?  

Cian Brennan: 

Yeah, pretty much what I said before in that they’re like, “Oh, I don’t want to be too confrontational. I don’t want to push too hard. I don’t want you to come in.” And that’s reasonable as well because if people have ever gone to lawyers before, sometimes a lawyer can absolutely red line a contract and you give it back to the client and it’s like, it’s a ridiculous amount of changes that you want. Half of it you don’t even care about. It’s just lawyers going over and back to lawyers. 

And so really what we want to do is we want to have the least amount of changes for the biggest bang for book for your risk. That’s what we’re trying to do and that’s typically what we have to try and explain to people. No, we’re not going to give you tons and tons of stuff. We’re going to figure out what are the important things to you, what are the things that, if they go wrong, are going to be very, very bad for your business, and remove them. And explain to them typically about how risks impacts a company over a longer period of time. 

Steven Rossi-Zalmons: 

That makes sense. So is there a standout case study or a customer that you guys have been working with that you could share? 

Cian Brennan: 

I can give you the average. So the average customer of clients that does what we ask them to do. So we’ve all got clients that just don’t do what you want to do, right? I’m sure you’re smiling as well. But if we have a client and they do exactly what we want them to do, the average client … Firstly, we have an 82% success rate with what we try and negotiate into the contract. So of the things that we put forward, 82% of them get across the line. So if you think about the impact to your risk, how much that reduces it, it is dramatic. So that’s the first thing. The average person saves 100-grand in a year by using our services, in comparison to having to hire someone internally as a comparison. 

And then, with regards to getting change orders and EOTs across the line, we are 50% more effective than what they were doing before. So what that ultimately leads to is better cashflow. You’re getting stuff approved, you’re getting better cashflow, you’re going to have better margin, your risk is going to be lower. And so add that up over the long term, you’re staying in business longer. And particularly in the environment we’re in now in the construction industry, where the risk is so high of people going out of business and people not getting paid, you need to be on top of your contracts 

Steven Rossi-Zalmons: 

For sure. That makes a lot of sense. So moving on to the future of Quantum, I’m wondering, with the recent developments in AI and machine learning, I’m going to say right now you guys are … it’s mostly a big team of people with law backgrounds and stuff. I’m wondering if you see a future where you incorporate AI and machine learning into your solution?  

Cian Brennan: 

Yeah. So when AI came out, we put an incentive in the company of anyone who brought in an AI tool that we used to save time, got a bonus of a particular sum of money. What we’ve done at the moment is, we know where it’s going to go and so the way I think it’s going to work, ultimately over time is, do you remember social media was free? Or actually, I’ll give you a better example. TV. Let’s say you’re into sports. Back in the day, you couldn’t just get the sports package and not all the other channels. You had to buy all the other channels, and then you got the sports as well. Which is a pain because you ended up paying, I don’t know, 40, $50 a month. So then it was like, okay, well then the sports is going to come. Now we have sports streaming just for football, now we have sports streaming for hockey, and so now they’re all on different channels again. And guess what? You still end up spending the $40 every month, so things don’t change for the consumer. 

I think eventually we’re going to get there in that, yes, I do believe that AI is going to be able to do what we can do from a contract review process. But who owns that AI? So I don’t believe an open source AI will be able to do it, or something that you can rely on, but a company that owns … maybe uses open source is able to copyright their actual answers. So for us, anyone can do a risk review of a contract, but you don’t know how we negotiate the contracts and you don’t know how we do it, how we follow up, and all the different things that happen. And that is our intellectual property. And I think that’s the thing that’s going to matter at the end of the day. And so we’re trying our best to use AI to make reviewing contracts quicker so we can get to the fun part, which is to negotiating the contracts quicker. So if we can do that for our clients, I mean it’s a bonus. But yes, AI is coming for all our jobs and I’m excited about it.  

Steven Rossi-Zalmons: 

Yeah, no, that’s a really interesting approach. It’s a good way to incentivize optimization in people’s jobs. I’m wondering if there’s any sort of standout applications you’ve seen, of staff using AI because of that incentive?  

Cian Brennan: 

Yep. I won’t talk about the ones for contract reviews and reviewing contracts because we’re still in beta with a lot of them and training up models. And frankly, I don’t know if they’re going to be good or not. We’re just trying our best at the moment. So we’re in that due diligence process, let’s say. So that’s the first bit. But for our marketing team, our marketing team use an AI called CapCut, which chops up videos very, very quickly into shorts, essentially. 

And so if you look at our YouTube channel construction series, there’s a lot of shorts that have been done. Apparently, they’ve told me that it saved them four hours a day. So four hours a day is huge. It’s another employee, basically. Or half an employee, essentially. To be honest, the stuff that’s out there at the moment is very good for marketing. So we use ChatGPT for headlines, descriptions, anything that’s reasonably simple to do, we’ll use ChatGPT to do it and refine it as well. Grammarly is another one to make sure that all our spelling is correct in all our documents. So lots of little things like that, they all make a difference.  

Steven Rossi-Zalmons: 

Yeah, for sure. Yeah, as someone in marketing, I can definitely relate to that. There’s definitely a lot of new and cool softwares, and yeah, CapCut being a great example of that. So looking more broadly at the construction industry, but also with contracts, I’m wondering where you see the industry going in the next 10-ish years.  

Cian Brennan: 

I think the biggest leap, if I go all the way and we talk about AI, and right now AI is basically white collar jobs. Everyone thought what was going to happen is the blue collar jobs are going to be the first people to be replaced by automation. But the thing about automation is it’s very expensive because you have to build all this machinery to do the thing. And so the AI replacing white collar jobs, and I say replacing, I’m going to say [inaudible 00:23:02]. When I say replacing, let’s just think adding to. It’s going to improve the speed in which we can develop plans, drawings, and the accuracy of everything. So ultimately we could come up with a concept at the start and we can go, “Here, AI, give us five different drawings with these parameters for a skyscraper.” And it turns out five, whatever, five different options. 

You pick an option, you edit the option, you get it to edit. Then you go to the next AI, the engineering AI, “Make this work, essentially. Give me all of the plans, right to the specs of this working.” Done. Instantly. So now you’ve got that. So that’s the next five or 10 years of AI, in my opinion, in the construction industry. But where I think it’s going to get super, super powerful is when AI and automation not become one, but when they merge. When AI becomes smart enough to develop automation that it can use to develop the skyscraper or to develop equipment. All of a sudden, now you’ve got a full circle from the concept of here’s the drawing that I’m going to put into AI at the start, to the plans, to the drawings, to the feed, to the equipment. And then bang, essentially where it’s doing almost the whole thing. That’s where I see the construction industry going. So it’s just going to keep adding to the process and that’s going to allow us to be able to build more projects and get stuff done quicker. 

Steven Rossi-Zalmons: 

Yeah, that’s great. Generally, I think we’re all looking for construction projects to move quicker, whether we’re heavily invested in them or just driving by them every day and inconvenienced by the construction. I think that would benefit everybody. 

Cian Brennan: 

Yeah, for sure. And construction as well people are like, “Oh, we can’t keep building stuff.” But construction, I mean New York, they don’t build anything new hardly ever. Everything is a reno because everything’s already there. So people in construction, it’s a lot of regeneration, facelifting a lot of stuff, as well as building new stuff. 

Steven Rossi-Zalmons: 

Yeah, for sure. So I think to wrap up, if people are interested in learning more about Quantum and getting started with you guys, where should they go? 

Cian Brennan: 

Basically everything we do, we put out for free. So as I said, our vision, our mission is to help construction, subcontractors particularly, understand contracts, stop being bullied around. So we’ve got a podcast called Construction Secrets. There’s a YouTube channel called Construction Secrets, which has essentially got more visuals. If you’re not an audio person, you’re a video person, all that stuff is on there. There’s loads and loads of stuff. There’s actually a playlist on the YouTube channel which walks you through every item in the contract and what you need to do, essentially. So if you’re someone who wants to do it by themselves, go in, do all of it. You’ll understand everything. You’ll be far more contractually savvy. The podcast itself is basically lessons learned. So we come across an issue, we talk about the issue, so by listening to it, hopefully you’re not going to come across those issues anymore. Which is good. And then, if you want to work with Quantum, you go to quantumcontractsolutions.com, check us out there. 

Steven Rossi-Zalmons: 

Okay. Thanks so much for joining us. It’s great to learn more about you guys and it’s great that you’re so passionate about this and about helping contractors to succeed. 

Cian Brennan: 

Thanks, Steven. Great to be on.