The State Government has announced a review to improve security of payments for subcontractors in Western Australia’s building and construction industry, and the establishment of an Industry Advisory Group (IAG), which will include representatives from CCF WA.
The IAG will consider the need for new or amending legislation to provide fairer contracting practices. Other reforms for consideration include introducing trust arrangements to protect funds owed down the contracting chain, in case a head contractor experiences financial difficulty.
CCF WA will be represented at the first IAG workshop later this month. This workshop will focus on opportunities for reforms to the Construction Contracts Act adjudication process.
Future workshops will look at other areas for reform.
CCF WA members who wish to provide input are welcome to contact Member Services Manager Andy Graham on email@example.com to discuss.
Terms of Reference
1. Whether amendments should be made to the Building Services (Registration) Act 2011 to:
- a. introduce a demerit point system (or other appropriate power) to sanction registered builders that do not pay debts owed to subcontractors and suppliers in a timely manner, or engage in behaviour designed to dissuade a subcontractor or supplier from enforcing their rights under security of payment legislation;
- b. require applicants for registration as a builder to demonstrate sufficient managerial and business acumen qualifications; and
- c. place greater limits on the ability of directors of failed building companies to obtain a new building contractor registration.
2. Consider the need for new or amended legislation to provide fairer contracting practices in the industry by:
- a. regulating dealings with retention amounts withheld under construction contracts, including mandating maximum amounts and time periods for release;
- b. introducing defined processes for calculating deductions from payment claims made under construction contracts;
- c. introducing defined procedures relating to variations and appropriate sanctions where variation costs have not been approved prior to work commencing;
- d. simplifying and standardising construction contracts by mandating minimum documentation requirements;
- e. prohibiting unfair terms and implying certain reasonable terms into construction contracts; and
- f. mandating the use of standard form construction contracts.
3. Whether improvements can be made to the rapid adjudication process under the Construction Contracts Act 2004 to:
- a. assist subcontractors and suppliers with small value disputes use the adjudication process; and
- b. improve the compliance framework and standards for registered adjudicators.
4. Whether statutory trust arrangements should be introduced to protect monies owed to subcontractors in the event a head contractor on the project experiences financial difficulty, and, if so, a preferred model for such trust arrangements.
5. Consider any alternative and/or complementary reforms or measures which will improve fairness and security of payment for subcontractors and suppliers in the building and construction industry.
In addition, there may be further issues that warrant consideration which the IAG is at liberty to identify and consider. This may include findings made by recent reviews into payment issues in the building and construction industry completed by the Commonwealth and State and Territory governments.
The IAG should, as far as practicable, identify any negative impacts or additional regulatory burden that may arise in connection with any recommended reform, which may be the subject to a Regulatory Impact Assessment at a later date.