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Building and Construction Industry Payments Act 2004

What is the Building and Construction Industry Payments Act 2004 (BCIPA)?

The Building and Construction Industry Payments Act 2004 (BCIPA) provides a fast payment system, which helps people undertaking construction work, or supplying related goods and services to get paid.

The Act does this by:

  1. setting up a payment process that separates undisputed and disputed claims;
  2. providing adjudication to determine claims, especially disputed claims; and
  3. eliminating “paid when paid” clauses.

The Payment Process

The Act sets up a payment process, in which:

  • The claimant serves a payment claim on the payer (the respondent) for a progress claim;
  • If the respondent disagrees with the amount claimed, the respondent should provide a payment schedule within 10 business days or less if stated in the contract;
  • If the respondent does not pay the claimed amount in the payment claim by the due date and no payment schedule has been received the claimant must send a section 20A notice to keep its claim alive. The section 20A notice allows the respondent 5 business days to send a payment schedule;
  • If the respondent sends a payment schedule within the required time, the respondent must pay the amount stated as owing in the payment schedule (the scheduled amount) by the due date.

The Act requires that payment claims, payment schedules and section 20A notices contain certain elements to be valid. See our pages on payment claims with payment schedules and section 20A notices for further information.

If the payer (respondent) doesn’t pay, the claimant is able to enforce payment by:

  • Issuing court proceedings for a judgment debt; or
  • Applying for adjudication proceedings if no payment schedule is provided in response to a section 20A notice; and/or
  • Suspending works.

Each one of these options provides an effective method for obtaining payment from the respondent. We discuss these options individually and provide further information in later pages.

Adjudication

The Act sets up a fast track dispute resolution service called adjudication.

Adjudication determines disputes arising from the payment claim/payment schedule process. Adjudication claims can only be brought by claimants and have extremely tight time frames for applications and submissions to be filed.

Once the adjudication claim and response are received the adjudicator can have as little as 10 business days to deliver a decision.

Paid When Paid

Prior to BCIPA, payers were able to withhold payments by including clauses in their contracts that made payment to the claimant contingent on the payer being paid by another party or making the due date for payment contingent on a third party or the operation of another contract.

The effect of paid when paid clauses was to starve the trades and subcontractors of payment. Therefore by eliminating the paid when paid clause, BCIPA helps free up cash flow between the payers and the claimants.

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