Further Insights into SOP
Helix Compliance Articles by Michael Chesterman
Fragmented Adjudication: A Ticking ‘Time Bomb’ of Inefficiency in Construction
In this article, I argue that the inconsistent adjudication timeframes across Australian jurisdictions create significant inefficiencies that impact contractors working in multiple states. Each jurisdiction sets its own rules for key timeframes like payment claims, payment schedules, and adjudication responses. This lack of harmonisation results in a confusing landscape that forces contractors to navigate a maze of differing requirements, often leading to increased costs, delays, and frustration.
The core problem lies in the fragmented approach adopted by successive governments, despite the recognition of how crucial time is in construction. Adjudication—which should provide a swift resolution to payment disputes—is compromised by differing regulations. I propose harmonising four key timeframes related to adjudication to create a more efficient, unified approach. Starting with these practical steps could eventually build momentum for broader reforms in the Security of Payment (SOP) space, helping to improve industry-wide efficiency.
Time is the essence of construction, and the current disjointed system is nothing short of a ticking time bomb for industry productivity. By standardising the adjudication process across jurisdictions, we can eliminate inefficiencies, simplify processes, and support contractors to focus on what truly matters—delivering quality projects on time.
Adjudication in Queensland: Challenges and Opportunities Ahead
Reflecting on my experiences with Security of Payment (SOP) legislation, this article revisits the evolution of adjudication in Queensland. The original Building and Construction Industry Payments Act 2004 (BCIPA 2004) was designed to be straightforward, aiming to help contractors secure fair payment outcomes efficiently. However, subsequent amendments, particularly those under the Building Industry Fairness (Security of Payment) Act 2017 (QLD SOP Act), have layered unnecessary complexities onto the adjudication process, making it more difficult for contractors to navigate.
A concerning trend has emerged—adjudication decisions have steadily declined over the years, from 754 in 2008/2009 to just 171 in 2022/2023, a staggering 77% reduction. While this decline highlights the system’s growing challenges, there are also some positive factors at play. Improved dispute avoidance strategies, a shift toward collaborative contracting, and an emphasis on preserving reputations have all contributed to the decline in adjudication cases. Despite these shifts, adjudication remains crucial when disputes do arise, and I believe that a return to a simpler framework is needed to ensure the process remains accessible, effective, and affordable.
The quality of adjudication outcomes ultimately rests on the adjudicators themselves. Supporting adjudicators through targeted professional development and ensuring a robust registration process is vital for maintaining the integrity of the system. The industry must work towards creating a more efficient adjudication process that reflects the needs of modern construction practice.
Revisiting Adjudication: Calls for a Simplified Approach in Payment Disputes
In this piece, I emphasise the need for simplicity in the adjudication process—a principle that guided the drafting of the original BCIPA 2004. The straightforward nature of BCIPA 2004 allowed contractors to understand their rights and obligations easily, making adjudication a widely used tool for payment disputes. Unfortunately, amendments in 2014 and the introduction of the QLD SOP Act in 2017 have transformed adjudication into a convoluted system filled with bureaucratic hurdles that deter contractors from using it.
Recent amendments have only further complicated matters, with rigid formatting requirements and excessive compliance details making the process difficult to navigate. The decline in adjudication decisions since 2012 correlates strongly with the increased complexity of the legislation. Many contractors now avoid adjudication entirely due to the risk of tripping over technicalities.
Adjudication remains the best statutory dispute resolution process available, but it will only fulfil its potential if we simplify it once more. By stripping back unnecessary requirements and focusing on accessibility, we can ensure that contractors feel confident using the system when disputes arise. It’s time for a thorough review of the QLD SOP Act to make adjudication what it was always meant to be—a simple, effective means for fair payment outcomes.
From Enthusiasm to Evasion: Understanding the Shift Away from Adjudication
This article delves into the reasons behind the declining use of adjudication in Queensland, a trend that began in 2012. Initially, adjudication under BCIPA 2004 was embraced enthusiastically, providing a much-needed statutory route for resolving payment disputes. However, with the introduction of amendments and the eventual shift to BIFA, adjudication has steadily lost favour—a decline I attribute to multiple factors.
While complexity in the legislation has been a major deterrent, other contributors include the loss of procedural support from Authorised Nominating Authorities (ANAs) and the oversupply of adjudicators, which has diluted the quality of decision-making. Improved defensive strategies by respondents, a desire to avoid the public scrutiny of adjudication outcomes, and a growing trend toward collaborative contracting have also played a role in moving away from adjudication.
I argue that adjudication—once seen as a necessary tool in an adversarial contracting environment—is now often avoided in favour of collaboration and private dispute resolution. While adjudication still plays a critical role where disputes cannot be otherwise resolved, the shift towards fewer applications may reflect a healthier industry culture, one where parties seek resolution over conflict. The decline doesn’t signify the failure of adjudication but rather highlights a move towards collaboration, which, ultimately, should be seen as a positive evolution.
Future Directions: Simplifying QLD Adjudication for Better Outcomes
Throughout my career, I have been a strong proponent of Security of Payment (SOP) legislation, particularly the original BCIPA 2004, which was crafted with simplicity in mind. The original version of BCIPA was a straightforward, easy-to-navigate system that provided clear pathways for payment claims, payment schedules, and adjudication applications—its simplicity was its greatest strength. However, with amendments in 2014 and the introduction of the QLD SOP Act, simplicity has given way to complexity.
Recent legislative changes have added cumbersome new requirements, like specific document formatting rules and compliance-related penalties, which have made adjudication more difficult for contractors to access. This erosion of simplicity is in my view, a reason for fewer adjudication applications and decisions, diminishing the effectiveness of what was once a powerful tool for ensuring fair payment outcomes.
To restore adjudication to its intended role, I call for a review of the QLD SOP Act that prioritises simplicity. We need to strip away the excess layers of regulation and get back to a system that is accessible and effective. Adjudication is still the best tool we have for resolving payment disputes in construction, but for it to fulfil its purpose, contractors must be able to understand and use the process without facing bureaucratic hurdles. It’s time to simplify adjudication for better outcomes in Queensland’s construction industry
Summary of Helix Legal Articles
Why is the Building and Construction Industry Payments Act 2014 (BCIPA) so divisive?
This article explores the divisive nature of the Building and Construction Industry Payments Act 2014 (BCIPA). As a key player in the introduction and administration of BCIPA, I explain that the Act was designed to favour claimants (mainly subcontractors) in their pursuit of payment for work done. The Act’s effectiveness is highlighted by the rapid resolution of thousands of adjudication decisions. However, I acknowledge that the extent to which the Act favours claimants has been a point of contention, leading to its repeal and incorporation into the BIF Bill.
QLD Security of Payment is a minefield… but it might surprise you who is in danger
In this article I discuss the complexities of SOP in the construction industry, particularly in Queensland. I point out that the BIF Bill, which focuses on improving payment outcomes for subcontractors, could have unintended consequences that may worsen the situation for them. These include the potential for more disputes, increased litigation, and contractual uncertainty. Due to this, I called for a broader industry perspective in resolving SOP issues.
Folk stories and other urban myths
This article addresses misconceptions about the 2014 amendments to the Building and Construction Industry Payments Act 2014 (Qld) (BCIPA). Here, I explain that the amendment that gives a second opportunity to propose a payment schedule before proceeding to adjudication had always existed under BCIPA. I elaborate that there was never a penalty for the failure to provide a payment schedule, and the change to allow new reasons in an adjudication response applied to only 4% of all adjudications since 2014. I emphasise the need for a fact-based analysis of these amendments.
This article reflects my extensive involvement with the Building and Construction Industry Payments Act 2004 (now repealed), which will be replaced by the BIFA from July 1, 2018. To this, I provide my ‘top 10’ observations of the BCIPA and categorise these under three specific headings; abandoned, retained and unknown. This article showcases the positions I adopted or strongly supported surrounding the BCIPA where I put the best interests of the industry first.
Is Adjudication Shopping about to make a comeback in Qld?
I discuss in this article the concept of “adjudication shopping”. This is the practice where a claimant chooses an Authorised Nominating Authority (ANA) whose panel of adjudicators are perceived to be ‘claimant friendly.’ I suggest that ANAs, which were abolished in Queensland in 2014, may make a comeback due to the Commonwealth Government’s exploration of harmonising SOP laws in Australia. I express concerns about the potential bias and lack of transparency that could arise from this system.
SOP is a State of Origin battle
In this article I discuss the differences in the SOP initiatives between New South Wales and Queensland, arguing that these differences could pose challenges for contractors operating in both jurisdictions.
In Queensland, the SOP initiatives have been developed and implemented through the BIFA. In contrast, New South Wales has developed new strategies but has not yet implemented them through the Building and Construction Industry Security of Payment Amendment Act 2018 .
I find it surprising that these two states are adopting different strategies to resolve payment problems in the industry, given the current push for all states and territories to harmonise their SOP legislation.
The article then provides a detailed comparison of the current and future SOP strategies in both states, focusing on progress payments and adjudication. I conclude that the differences between the two states’ SOP laws are significant and widening, and contractors operating in both states need to have tailored contract administration practices and procedures to address these differences.
Building Businesses: Adjudication is no longer the flavour of the month
This article discusses the declining trend in adjudication decisions in the construction industry. Through analysis of adjudication decision statistics from 2005 to 2018, I highlight a significant decrease. I attribute this decline to parties working harder to resolve payment disputes through negotiation and respondents effectively defending payment claims. Despite the ‘claimant focused’ reforms under the BIFA, within this I predict that the trend will not reverse. I conclude by advocating for negotiated payment outcomes and focusing on other significant business and legislative initiatives to improve contractors’ financial positions.
Adjudication is in the right hands
Here, I discuss the role of the Adjudication Registrar in the construction industry within Queensland. The article showcases my support of the decision by the Queensland Government to retain all existing key responsibilities of the Adjudication Registry, including receiving adjudication applications and referring applications to adjudicators.
I acknowledge that some people believe in the abolishment of Authorised Nominating Authorities (ANAs) has led to a decline in the number of adjudication decisions. However, I contend that this decline is due to parties working harder to resolve payment disputes by negotiation and respondents defending payment claims more effectively.
I also highlight the importance of adjudication in resolving payment disputes and believe that it should remain in the hands of the Government to administer all key functions. Throughout the article, I maintain that the current Queensland position, with the Adjudication Registrar receiving adjudication applications and referring them to adjudicators, is essential due to public sector accountability, transparency, and crime and corruption requirements and obligations.
Adjudication shopping must not be allowed to make a comeback in QLD
In this article, I discuss the potential return of ‘adjudication shopping’ in Queensland. The article outlines my disagreement with the recommendations of Mr. John Murray’s report, which suggests a hybrid model of private and government involvement in adjudication. I contended that the commercial consequences of adjudication decisions necessitate a system free from bias, and thus, adjudication should remain entirely in the hands of the government for reasons of accountability, transparency, and corruption prevention.
The future of adjudication rests on the shoulders of adjudicators
In this article, I discuss the evolution of SOP research and adjudication in the construction industry over the past 20 years. As somebody who has been involved in the development of the adjudication regime and served as the inaugural Adjudication Registrar, I am a strong advocate for adjudication as the quickest, cheapest, and most efficient system for resolving progress payment disputes.
I highlight the emergence of two distinct adjudication models throughout Australia, namely a ‘West Coast Model’ and an ‘East Coast Model’. The East Coast Model, particularly in Queensland and New South Wales, has seen significant differences in progress payment and adjudication processes over time.
I contend that the future of adjudication is not dependent on the specific details of the process, but rather on the commitment of adjudicators to continuously improve their skills and expertise in deciding payment disputes.
The article also provides information on the number of registered adjudicators in Queensland, the referral policy for adjudication applications, the number of adjudication decisions handed down in the 2018/2019 financial year, and how adjudicators are remunerated.
Adjudication is ‘simply the best’
This article is a call to action for the best dispute resolution process for resolving payment disputes, namely adjudication. In my view, I believe that adjudication is the best because it is fast, cost-effective, and provides a decision that is enforceable. However, I also acknowledged that adjudication is not perfect and that it is a divisive process due to its interim ‘pay now, argue later’ consequences.
‘Back to basics’ adjudication for an economy in hibernation
This article explores the role of adjudication in the construction industry during the COVID-19 pandemic. As a strong advocate of adjudication, I explained how it has significantly aided businesses in getting paid for their work since its inception in 2004.
SOP ideas for building back better
In this article, I along with Sarah Shirley, discuss the SOP legislation in Australia.
The article points out that Australia has eight state and territory SOP Acts, all with the common objective of improving payment practices within the construction industry and enhancing cash flow outcomes for parties. However, the legislation varies greatly between states and territories, leading to different contract administration processes for contractors operating across borders.
I suggest that the harmonisation of SOP legislation across all states and territories is an unrealistic dream.
Instead, I suggest focusing on uniform key timeframes such as lodging a payment claim, providing a payment schedule, and lodging an adjudication application adjudication response. This would reduce the legislative differences in these jurisdictions and simplify the process for contractors working in more than one jurisdiction.
Let’s support the future of adjudication
In this article, I advocate for the use of adjudication in dispute resolution within the construction industry. Despite its divisive nature due to its ‘pay now, argue later’ approach, I express the view that adjudication is a tool to bring parties to the negotiation table and achieve transparent, commercial outcomes.
Did you hear the one about the adjudicators who walked into a bar?
In this article, I use a metaphor of adjudicators in a bar to illustrate the diversity and individuality of adjudicators. I point out that adjudicators come from varied backgrounds and experiences, and while they all must follow a contractual and legislative ‘roadmap’ in arriving at decisions, there is plenty of scope for them to apply their knowledge and understanding of the construction industry.
I maintain that a lawyer adjudicator may see aspects of a payment dispute in an entirely different light than a quantity surveyor (QS) qualified adjudicator. Both could write a sound and well-reasoned decision, but the outcome may differ. I also mention that attempts are made to match the skill sets of adjudicators with the various applications received by the registry.
