For builders and contractors to receive regular, ongoing payments throughout the build process, they must enter the process of making progress claims of their construction project. This payment claim itemises the completed work, goods or services provided to the client or loan supplier, allowing builders to continue working on the project.
Progress claims are a part of the Building and Construction Industry Security of Payment Act 2002, otherwise known as the SOP Act, which ensures that those carrying out residential and non-residential building receive progress payments for work or supplies as determined by the construction contract. Thankfully, this process doesn’t have to be daunting, with the help of the expert team at Section 94.
When to make a claim
This straightforward payment scheme provides a quick and easy process to recover payment increments from the client or directly with the bank providing the loan without stressful disputes or the need for lawyers. Progress claims apply to all kinds of construction work including residential, civil engineering, electrical, landscaping, maintenance, architecture, surveying, plumbing and supply of materials.
If not contractually specified, the date to provide a claim, called the reference date, can vary. Typically progress claims fall in line with each stage of construction in a progress claim schedule (usually 5 stages), typically forecasted at the finance stage (bank prefunding) to give the lender an idea on cash flow. If you’re after a single payment, the reference date is the day after you finish working or supplying the goods or services. The reference date for final payments is the day after the end of any period under the contract for rectifying defects or omissions, or the day after the final certificate is issued.
The process of making a claim
The first step for contractors or builders to be paid for goods, services or work performed is to make a payment claim. To make a claim, it’s important to have all documents in order and include these three important details.
- The specified work, goods or services
- The amount claimed
- The Security of Payment Statement
This involves first identifying the completed construction work or goods provided during the indicated period and itemising them in the payment claim to determine the amount of money that is due. The payment claim should take into account the estimated price outlined in the construction contract, which is one of the many reasons it’s important to have a clear construction budget from the very beginning of the build. Any variations to the construction contract can also be claimed if there has been a change in the scope of work under the contract. However, these variations can be disputed by the recipient.
By providing all the above information, a payment claim looks and acts similarly to an invoice, but a payment claim will also include the Security of Payment Statement so that the recipient knows that the SOP Act applies. For a payment claim to proceed, it is integral to include the phrase, “This is a payment claim under the Building and Construction Industry Security of Payment Act 2002.”
Once the client has received a payment claim from the contractor or builder, they must pay the full amount by the due date or respond within ten days of receiving the claim with a payment schedule. Their response must confirm how much they intend to pay and include any reasons for variation from the proposed amount in the claim.
Three reasons for adjudication in Victoria
Although detailed progress reports and payment claims help lessen disputes and deter lack of payment, issues can still occur. A claimant can take action or enter adjudication if the payment schedule outlines that the respondent intends to pay less than what the builder has claimed, the respondent does not follow the payment schedule they provided or if the respondent fails to provide a payment schedule or pay the claimed amount. The Victorian Builders Association can assist by getting the builder in touch with an Authorised Nominating Authority (ANA) to help with the adjudication process.
To reduce the likelihood of costly disputes over progress claims, registered quantity surveyors like the expert team at Section 94 confirm all the details of the progress claim to avoid incomplete work or mismanaged funds. Our talented quantity surveyors audit the work completed and validate the claimed progress against the invoice and contract schedule, before providing photographic evidence of the work completed to create an accurate report for the builder, client, and bank’s records.
Need help with a construction progress claim?
Section 94 is comprised of Australia’s premium and experienced building quantity surveyors and experts in preparing progress claims for the construction industry. This expertise helps builders, suppliers and contractors to attain regular payments through detailed inspections of the construction site and thorough documentation.
With over a decade of industry experience, our qualified building quantity surveyors will assist you with all your construction budget and management services such as providing bank prefunding reports, construction budgets and section 94 reports.
Give us a call today on 0413 953 869 or email us at info@section94.com.au to learn more about our premium surveying services.