Security of payment adjudication in NSW: how the process and timeframes actually run

Most NSW residential builders meet the Security of Payment Act for the first time when a progress claim sits unpaid and the principal stops returning calls. The instinct is to treat it like any other dispute: send a firm email, threaten to stop work, suggest a sit-down. That instinct costs money, because the Act runs on a separate clock and a separate set of rules from the contract dispute you think you are having.

Adjudication is a statutory process for getting a progress payment decided quickly. It does not resolve every argument between the parties, and it does not replace mediation, the tribunal or a defects claim. What it does is force a decision on the amount payable under a payment claim, on a compressed timetable, on the papers, and with a determination that the respondent must pay unless it succeeds in having the determination set aside.

This article walks through the mechanics and the timeframes. If you understand why each step exists, you can reason about a job the article never describes — a claim served on the wrong entity, a schedule that arrives late, an adjudicator who asks for further submissions — and still work out what to do next.

What the Act actually does, and what it does not do

The Building and Construction Industry Security of Payment Act 1999 (NSW) creates a right to a progress payment for a person who has carried out construction work or supplied related goods and services under a construction contract. That right exists whether or not the contract says anything about progress payments, and it cannot be contracted out of. The Act then sets up a machinery to enforce that right: a payment claim, a payment schedule, and adjudication if the two do not match.

What the Act does not do is decide the whole contract. It determines the amount of a progress payment on a particular payment claim. Questions about defective work, extensions of time, variations, delay damages and final account adjustments can still be run in another forum. An adjudicator may consider a defence that is genuinely raised in the payment schedule, but the adjudicator is not conducting a full trial of every issue between the parties.

That distinction matters commercially. A builder who wins an adjudication has a determination, not a final judgment on the project. A builder who loses one has to pay the adjudicated amount even while arguing that the underlying position is different. The Act is deliberately rough justice in the interests of cash flow, and the rough edges are where the cost sits.

Payment claims: what makes one valid and when it can be served

A payment claim is the document that starts everything. Under the Act it must be in writing, must identify the construction work or the related goods and services to which the claim relates, must state the amount claimed, and must be served on the respondent. The NSW Government’s guidance on making a payment claim sets out those elements in plain terms. If any of them is missing, the claim is vulnerable to being treated as invalid, and an invalid claim cannot support a valid adjudication application.

The timing rules are where most builders come unstuck. A payment claim can only be served on or after a reference date, and the reference date comes from the contract or, if the contract is silent, from the Act. The claim must be served within the period allowed after that reference date. Serving early, serving late, or serving a second claim for the same reference date are all common errors, and each gives the respondent an argument that the claim is not a valid payment claim at all.

If your contract sets out a progress payment schedule, the reference dates and the periods for service are usually defined there. The article on changes you have to notify covers how those clauses interact with the statutory default. The practical point is that you should be able to point to the clause or the statutory provision that authorises the claim on the day you serve it. If you cannot, you are guessing, and the respondent’s adviser will not be.

Service is not a formality. The Act and the contract each say where and how a claim or notice is to be served, and a claim served on the wrong person, at the wrong address, or by a method the contract does not recognise may not have been served at all. Keep a record of the date, the method and the person served. In an adjudication, the question of whether and when a claim was served is often the whole case.

Payment schedules: the respondent’s response and the consequences of silence

Once a valid payment claim is served, the respondent has a limited period to respond. If it intends to pay less than the claimed amount, it must serve a payment schedule that identifies the claim, states the amount it proposes to pay, and sets out the reasons for the difference. A payment schedule is not a negotiating position to be filed once the parties have talked. It is a statutory document that defines the scope of any later adjudication.

If the respondent serves no payment schedule at all within the time allowed, the consequences are severe. The claimant can generally treat the claimed amount as a debt due and recover it in court, without going through adjudication. Alternatively, the claimant can still apply for adjudication, and in that case the respondent is usually barred from raising reasons that should have been in the schedule. Either way, silence is not a defence.

If the respondent does serve a schedule, the claimant’s options narrow to what the schedule puts in issue. Reasons that were not raised in the schedule are generally not available to the respondent later, which is why a schedule that simply says “not accepted” or “under review” is a gift to the claimant. It is also why a builder receiving a schedule should read it as a map of the fight to come, not as a status update.

Adjudication applications: who can apply, where, and by when

If the amount paid or scheduled is less than the amount claimed, the claimant may apply for adjudication. The application must be in writing, must be properly authorised on behalf of the claimant, must be lodged with an authorised nominating authority, and must be made within the statutory period after the payment schedule is received or after the time for a schedule has expired. The claim itself is attached, because the adjudicator determines the claim that was made, not a new claim invented at the application stage.

Who can apply matters. A company must apply in its own name and through a person authorised to act for it. A trustee must apply in the right capacity. A partnership needs to get the parties and the authorisation right. These are not technicalities for their own sake: the adjudicator’s jurisdiction depends on a valid application by a valid claimant, and a respondent looking for a way out will test exactly these points before it engages with the merits.

The nominating authority is the gatekeeper. It receives the application, checks it against the statutory requirements, and appoints an adjudicator. If the application is incomplete or out of time, the authority may decline to accept it. That is why the application should be prepared before the deadline is close, not on the day. The clock does not pause because you are waiting on a document from the principal or a statement from a subbie.

How the adjudicator decides: on the papers, on a short clock

Adjudication is a documents-based process. The adjudicator considers the payment claim, the payment schedule, the adjudication application, any adjudication response and any further submissions the adjudicator calls for. There is no hearing in the ordinary sense, no examination of witnesses, and no opportunity to repair a weak evidentiary position by giving oral evidence. If a fact is not in the documents, it effectively does not exist.

The adjudicator must determine the amount of the progress payment payable, and may also determine the date on which it becomes payable and the rate of interest. The adjudicator can value the work, accept or reject the reasons in the schedule, and decide what is properly payable on the claim as made. The adjudicator cannot decide matters outside the claim, and cannot make an award of general damages for breach of contract.

The statutory timetable is short by litigation standards, and both the adjudicator and the parties are working to deadlines. Extensions are limited, and the adjudicator must be careful about the time allowed for submissions. For a builder, the practical implication is that the application and the response are the case. Every document you want considered should be in the bundle, indexed and legible, with the figures reconciling to the contract.

The determination is binding on the parties on an interim basis. The respondent must pay the adjudicated amount within the period the Act sets, and if it does not, the claimant can enforce the determination. The respondent can seek to have it set aside in court, but the grounds for doing so are narrow and the fact that the adjudicator got a valuation wrong is generally not one of them.

What adjudication costs and what it recovers

There are fees along the way: the nominating authority’s fee, the adjudicator’s fee, and whatever you pay a lawyer or consultant to prepare the application or the response. The Act allows the adjudicator to determine who pays the adjudicator’s fees, and a determination can include an order that a party bear them. Recovery of your own professional costs is a different question, and the Act is not a costs-shifting regime in the way court litigation is.

Set that against the commercial reality of not being paid. A progress claim that sits unpaid through the back end of a project is cash out of your business, and the interest and fees are rarely the largest number in the equation. The larger number is the working capital you have to find elsewhere, and the subbies and suppliers who expect to be paid on time regardless. The article on what to do when a homeowner refuses to pay covers the surrounding options, but adjudication is usually the fastest route to a decision.

Adjudication is not cheap in absolute terms, and it is not worth running for a small claim if the fees will eat the recovery. That is a judgement call, not a rule. What is not a judgement call is the timeframe: if you are going to apply, you apply within the period the Act allows, and you prepare the application before that period starts running down.

Worked example: a builder caught by the response deadline

Consider a builder in western Sydney doing a first-floor addition for a homeowner. The contract has a progress payment schedule, and the builder serves a claim for the frame stage. The homeowner’s project manager responds by email saying the claim is “being reviewed” and asks for more time. The builder, wanting to keep the relationship, agrees and waits.

No payment schedule is served within the period the Act allows. When the builder eventually serves a second claim for the same reference date, the project manager points out that the first claim was never supported by a schedule, and that the second claim is not valid for the same reference date. The builder has now lost time and given the respondent an argument.

The correct move at the first email was to treat the silence as a statutory event, not a social one. The builder could have served a notice of intention to suspend work under the Act, which is a separate statutory right and is covered in the article on suspending work under an NSW residential contract. Alternatively, the builder could have applied for adjudication on the basis that no payment schedule was served, which would have limited the respondent to the reasons, if any, it had given in time. Either route protects the position. Waiting does not.

The point is not that the builder should have been aggressive. The point is that the Act’s timeframes are not suspended by a request for more time, and a respondent who is allowed to run the clock down will do so. A builder who understands the mechanism can be reasonable about the relationship and still protect the claim.

Adjudication compared with mediation, the regulator and the tribunal

Adjudication is one of several ways a building dispute can be dealt with in NSW, and it is not always the right one. The NSW Government’s guidance on resolving building disputes sets out the other pathways, which include direct negotiation, mediation, and the relevant tribunal or regulator depending on the nature of the complaint. Those pathways deal with the dispute as a whole; adjudication deals with a payment claim.

The differences are practical. Mediation is consensual and can resolve a broader set of issues, but it depends on both parties attending and engaging, and it does not produce an enforceable payment outcome on its own. Regulator involvement is about compliance and licensing, not about ordering one party to pay another. Tribunal proceedings can determine a broader dispute but run on a slower timetable and are not designed around the progress payment cycle.

Adjudication is fast, narrow and binding on the payment question. That makes it the right tool when the issue is that a progress claim has not been paid and the contract machinery has stalled. It is the wrong tool when the real issue is defective work, a variation that was never documented, or a final account dispute that needs a full hearing. A builder who uses adjudication for the wrong dispute will spend money and still be in the same argument.

There is also a sequencing question. A determination does not prevent either party from later pursuing the same issues in another forum, and the Act preserves that position. So adjudication can be run first to get cash moving, with the wider dispute resolved afterwards. That is often the sensible approach, but it should be a deliberate strategy, not something that happens because nobody thought about the order of events.

Getting the contract and the paperwork right before you need them

Everything above depends on documents that should have been created before the dispute started. A written contract that clearly identifies the parties, the scope, the contract sum, the progress payment schedule and the notice provisions is the foundation. A payment claim that can be generated from the job’s own records on the reference date is the next. Without those, an adjudication application becomes a scramble to reconstruct a position from emails and site diaries.

Builders who run adjudications well tend to have three habits. They serve claims on time and to the right address, keeping proof of service. They read every payment schedule as a statement of the respondent’s case and respond to it in the adjudication application. And they diarise the statutory deadlines as soon as a claim goes out, so the response period, the application period and the adjudication period are all visible before they arrive.

That is a systems problem more than a legal one, and it is the kind of thing that NSW builder CPD is meant to keep sharp. The guide to how NSW builder CPD works explains the requirements, and the PointCPD course catalogue has courses on contracts, payment and dispute handling that cover the mechanics in more depth. None of it replaces advice on a specific job, but it does mean you recognise the deadline while you can still do something about it.

If you are reviewing your own contracts and payment systems, start with the clause that sets the reference dates and the period for serving a claim. If that clause is vague, or if your progress claims are generated when someone gets around to it, the Act’s default rules will apply and they may not suit the way you run a job. Fix the contract and the process while the relationship is good. The alternative is learning the timeframes from the wrong side of an adjudication.

Questions builders ask

• Contracts
• Disputes
• Money
• Security of payment

Published 25 July 2026. General information for builders, not legal, financial or engineering advice for a specific job. Check current requirements with the relevant regulator or standard before relying on them.