Progress claims clause: getting paid as the work advances

Sample clause

a head contract between Kurrajong Health Properties, a fictional developer, and Blackbutt Constructions, a fictional builder, for a two storey medical suites building in Orange, New South Wales

15. Progress Claims 15.1 Blackbutt Constructions may submit a Progress Claim on the 25th day of each month for work carried out up to that date. 15.2 Each Progress Claim must identify the work claimed against the Schedule of Values, include the value of approved variations, and be accompanied by a statement that subcontractors and workers have been paid the amounts then due to them. 15.3 Within 10 Business Days after receiving a Progress Claim, the Superintendent must issue a Payment Schedule stating the amount Kurrajong proposes to pay and, if that is less than the amount claimed, the reasons. 15.4 Kurrajong must pay the scheduled amount within 15 Business Days after the Progress Claim was made. 15.5 Payment of a Progress Claim is payment on account only and is not evidence that the work is complete or free of defects. 15.6 Nothing in this clause limits any right under the Building and Construction Industry Security of Payment Act 1999 (NSW).

Sample wording, not legal advice.

Variants

What to negotiate

• Claim date and frequency

  Contractors want to claim as often and as early as possible, while principals want one claim a month on a date that suits their own finance drawdowns. Security of payment law in most states guarantees at least a monthly claim, so the real negotiation is the day of the month and whether a stage claim can be made mid month once a milestone is reached.

• Supporting evidence

  Principals ask for quantity reports, photos, subcontractor payment statements and updated programmes with every claim. Contractors accept reasonable evidence but resist conditions that would invalidate a claim if one document is missing. Because a contract cannot cut down statutory claim rights, missing evidence is better treated as a reason to schedule a lower amount than as grounds to reject the claim outright.

• Unfixed materials

  Contractors buying expensive plant or materials months before installation want to claim for them. Principals will pay only if ownership passes on payment, the goods are marked, stored securely and insured, and there is evidence that no supplier holds a registered security interest over them that could defeat the principal's ownership.

• Deductions from a claim

  Principals want to deduct delay damages, defect costs and other amounts from progress payments. Contractors ask that any deduction be shown in the payment schedule with reasons, limited to amounts actually due, and not taken for unrelated matters. The schedule is the right place for it, since an unexplained deduction is exposed quickly at adjudication.

The risk of leaving it out

Without a progress claims clause a contractor on a lump sum has traditionally had no right to payment until the whole work is done, although security of payment legislation now supplies a default monthly right to claim. That statutory default does not settle what evidence is needed, who assesses the claim, or how variations and materials are treated, so disputes follow.

The claim to payment timetable in NSW

For a head contract in New South Wales the sequence runs like this. The contractor makes a claim on the date the contract allows, or on the last day of the month if the contract is silent. The principal then has at most 10 business days to give a payment schedule, and if it gives none the full claimed amount becomes payable. Payment is due within 15 business days after the claim for a head contractor and within 20 business days for a subcontractor. A head contractor claiming from a principal also has to serve a supporting statement that its own subcontractors have been paid.

How this clause relates to security of payment

Security of payment legislation in each state gives a statutory right to claim and a fast adjudication process, and it overrides contract terms that exclude, modify or restrict those rights. A progress claims clause therefore does its best work on the matters the statute leaves to the parties: the claim date, the schedule of values, the evidence expected, how variations and unfixed materials are claimed, and who assesses the claim for the principal. The statutory process and adjudication belong in the security of payment clause.

Where it sits in a generated document

In a generated head contract the progress claims clause follows the contract sum and variations clauses, numbered so the retention and set off clauses can refer to it. The claim date, the response times and the milestone amounts are written in as content. The document does not cite the security of payment legislation, so any statutory wording a claim must carry should be checked for the state concerned.

Documents that carry this clause

Subcontractor agreement template that flows the head contract downA subcontract exists to pass the head contract's obligations down one level and move the money back up on time. This one names the scope by drawing, sets the progress claim dates against the security of payment rules, holds retention and states the insurances, so the trade knows exactly when it is paid and for what.Electrical contractor agreement with a licence clause and staged paymentsElectrical work is the one trade where the paperwork at the end matters as much as the work, because without the certificate the installation is not signed off. This agreement ties the last payment stage to that certificate and sets the progress claim deadlines the payment legislation actually uses.Roofing contract template with a materials table and a weather ruleA roof replacement is the one job where the house is open to the sky at the end of the day, so the clause that matters most is the one about closing it. This contract limits how much roof can be stripped at once, names every product with its warranty years, and says who pays when water gets in.Landscaping contract template with a plant schedule and an establishment periodA garden build is two jobs in one: construction that is finished when it is finished, and planting that is only finished three months later. This contract prices the construction in four stages, lists every plant with its pot size and quantity, and holds the landscaper to a 90 day establishment period for anything that dies.

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