There are four common times a builder can serve a progress claim.
This includes the three times a contract usually allows for it and then the other under the Security of Payments Act (SOPA).
The Security of Payments Act adheres to really strict conditions. Time frames, reference dates, evidence, and service are important factors and just a few of these conditions.
“I served a progress claim and didn’t receive a payment schedule. Now they have to pay me”
This is a common misunderstanding of the Security of Payments law. To help clear this up we’re going to outline the 4 times a builder can serve a progress claim, starting with the first three.
First 3 times you can serve a claim
1. Where the contract specifies a reference date.
2. Where the contract specifies a milestone in the completion of works.
3. Where the contract specifies an event.
Being a specialist building and construction lawyer, I could go to town writing about each of these but for now I’m going to get you crystal clear with the basics.
Your contract can provide one or any combination of the three times to serve a progress claim.
For a reference date, the contract should state a day that a claim can be made. This may be weekly, fortnightly, monthly etc. Best practice is to serve your progress claim on the day – not before and definitely not after the specified day.
If the contract specifies milestones for the completion of works then you can serve your claim when you achieve that milestone. I often recommend to my home building clients to use milestones. It’s an effective approach for agreeing to payment.
Where the contract specifies an event can be tricky to understand. People often get confused because they are relying on the reference date. However, an event really depends on what your contract says.
For example: if the contract says ‘the final claim may be made at the end of the Defects Liability Period and the Builder has completed all of its obligations under the contract’, the time to serve the progress claim is not a reference date it is as the event states:
“end of the Defects Liability Period and the Builder completing all of its obligations under the contract.”
The 4th time to serve a progress claim
The fourth time to serve a progress claim is under the Security of Payments legislation. The legislation specifically says progress claims may be served at the end of the month where the contract does not specify when the progress claim may be made.
Unfortunately, if you find yourself relying on this time to serve a progress claim, you may not be in the best situation to enforce your payment rights.
It is important for a builder and for contractors to know the time when they can serve their progress claim before they start work, However, it is also critical that you read your contract to be sure.
Want a free Security of Payments Progress Claim system to help run your business efficiently? Great! Small Builders Business Software offers SOPA compliant systems to to do just that and you can try it for free.
Or call us at Small Builders for to discuss your compliance and book in for Free Business Consult on: 02 0896 8576.
We’d be very happy to talk this all through with you.