Payment Schedule (Security of Payment)

A payment claim from a contractor or subcontractor lands, and a statutory clock starts running under the Building and Construction Industry Security of Payment Act 1999 (NSW). This page is written for the person who receives that claim, not the person who sent it — the principal, developer or client-side project manager who has to decide what to pay, put reasons in writing, and do it inside a deadline that does not wait for the superintendent's usual certification timetable.

This is general information, not legal, tax or financial advice.

What is a payment schedule?

A payment schedule is the written notice a respondent gives back to a claimant in answer to a payment claim served under the Act. It is a statutory document with its own content requirements and its own deadline — it is not the same thing as an invoice, a progress certificate, or an email saying you will get back to them. If you intend to pay less than the full amount claimed, or nothing at all, a payment schedule is how you say so in a way the Act recognises.

It exists because the Act gives contractors a right to progress payments in order, in the NSW Government's words, to support cash flow to contractors. The respondent has a short window to put its position on the record. Miss that window and the position you never wrote down effectively disappears — more on that below.

What is a payment claim, and how do you know you have received one?

A payment claim is the claimant's formal written request for payment for construction work, or for related goods and services, supplied under a contract. To be valid it has to be in writing, state the amount claimed, and describe the work or goods and services it relates to. A subcontractor whose contract is connected with a residential construction contract must also include a statement that the claim is made under the Building and Construction Industry Security of Payment Act 1999 (NSW).

Be careful reading older guidance on timing. For contracts entered into from 21 October 2019, the entitlement to a progress payment is no longer triggered by a reference date: a claim may be served from the last day of the month in which work was first carried out and from the last day of each subsequent month, or from an earlier date if the contract provides one, and only one payment claim may be served per month unless the contract allows more frequent claims. Some pages still describe the old reference-date rule, so check which regime your contract falls under before you decide whether a claim is validly made.

What must a payment schedule state?

To be valid, a payment schedule has to be in writing and addressed to the claimant, identify the payment claim it responds to, and state the amount you propose to pay — which can be Nil. Where the amount you propose to pay is less than the amount claimed, the schedule has to state all the reasons why. If you are withholding part of the claim, attach a proper explanation of how you calculated the withheld amount, not just a one-line statement that you disagree.

The schedule has to reach the claimant — posted, delivered or faxed — within 10 business days of you receiving the payment claim, unless your contract sets an earlier deadline. Check your contract first: the Act sets the outer limit, not the default.

What happens if you do not serve a payment schedule in time?

If you do not give the claimant a valid payment schedule within the required time, you become liable for the whole amount claimed, whether or not the work was actually done to that value. The claimant can then take the matter to court to recover the debt, or give notice of its intention to apply for adjudication. Either way, once you have missed the deadline, you cannot raise a defence based on the construction contract, and you cannot raise a cross-claim. The reasons you might have had for withholding payment are no longer live if you never wrote them down in time.

This is the single most consequential deadline in the whole process for a respondent, and it is worth repeating: it runs from the date you received the claim, not from your next scheduled certification date.

Does a superintendent's payment certificate satisfy this requirement?

Not automatically, and this is where AS 4000-1997 and AS 2124-1992 projects catch principals out. Both standard forms give the superintendent a contractual role assessing progress claims and issuing a payment certificate on the timetable the contract sets. That certificate is a contract document, created under the contract's own process. A payment schedule under the Act is a separate, statutory document with its own content requirements and its own deadline, as set out above.

The two can coincide, but only if whatever you issue actually contains everything the Act requires — it identifies the claim, states the scheduled amount, and states the reasons for any shortfall. If your superintendent's certificate does not do all of that, or will not be ready inside the Act's 10 business day window, you need a payment schedule that does, on its own timetable, regardless of where the contract's certification date falls.

What is adjudication, and what can a respondent raise in a response?

Adjudication is the fast, informal dispute process under the Act. Only the claimant can start it — a respondent cannot apply. A claimant can apply if it disagrees with your payment schedule, if you did not pay the scheduled amount by the due date, or if you did not give a payment schedule at all and did not pay by the due date.

A respondent can only lodge an adjudication response if it gave the claimant a payment schedule within the required time. That response has to be lodged within 5 business days of receiving the adjudication application, or 2 business days of receiving the adjudicator's acceptance of it, whichever is later. Critically, it cannot include any reason for withholding payment that was not already in your payment schedule. Whatever you did not write down when you responded to the claim, you cannot introduce for the first time at adjudication.

What is the supporting statement a head contractor must give with a payment claim?

When a head contractor serves a payment claim on a principal, it must also provide a supporting statement declaring that it has paid all amounts due and payable to the subcontractors it has engaged for that work, on the approved form for the type of contract. Amounts genuinely in dispute are not treated as due and payable, but the statement has to refer to the subcontractors those disputed amounts relate to.

As the principal, this is worth checking when a claim arrives. A head contractor who supplies a false or misleading supporting statement, or none at all, can be reported to Building Commission NSW, and the NSW Government's own guidance describes knowingly giving false or misleading information as a serious offence carrying significant penalties.

Does this work the same way in other states and territories?

Security of payment regimes operate in every Australian state and territory, and the NSW Government publishes the responsible agency for each one — the Victorian Building Authority, the Queensland Building and Construction Commission, Western Australia's Building Commission, and the equivalent bodies in the Northern Territory, South Australia, Tasmania and the ACT — on its own changes-to-laws page. The deadlines, forms and processes described above are the NSW ones. If you are responding to a claim on a project in another state, do not assume the NSW day counts carry over: check that jurisdiction's legislation and its agency before you respond, because this page does not state their day counts and they are not the same.

What should a developer actually do in the week a claim lands?

Record the date you received the claim — the whole timetable runs from it. Confirm it is actually a payment claim under the Act, not just an invoice or a request for information. Check whether a supporting statement was required and, if so, whether one was provided. Work out the amount you are prepared to pay and, if it is less than claimed, write down every reason why, with enough detail to survive being read by an adjudicator later.

If the claim includes variations, check them against your variations register; if it includes retention, check it against your retention record; and compare the claimed amount to your own progress claim tracking rather than taking the claimed figure at face value. If the works are approaching handover, check where the claim sits against practical completion as well.

Then serve the payment schedule inside the deadline, keep proof of when and how you served it, and do not wait for the superintendent's usual certification date if it falls later than the Act allows.