By Peter Waller – Special Counsel – QLS Accredited Specialist – Commercial Litigation and Naomi Mole Law Graduate at MBA Lawyers
With tightening conditions in the construction industry and several high-profile insolvencies, it is a good time to be reminded of options available to contractors and subcontractors to secure payments owed.
The Queensland Building and Construction Commission (QBCC) has just released its annual report on its activities and performance for 2022. The report includes data on adjudication applications for progress claims under the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act), being a critical avenue for securing payment for builders. We have extracted the relevant tables from the annual report and presented them with data from previous years to provide a snapshot of the recent trends in adjudication applications to secure payments owed in the construction industry.
The BIF Act mainly applies to commercial building work[1], so the data in the tables below are principally related to commercial (non-residential) building work.
We believe that the relevant data in the QBCC annual reports securing payments owed under the adjudication application process is mirroring and responds to the value of commercial work being undertaken in Queensland at any one time.
The value of non-residential building work commenced in Queensland in 2022 is so far and is predicted to stabilise after the fall of 2021 (Table below). The construction approved during COVID appears to be being worked through together with rebuild and repair work after the major weather events.
In relation to adjudications application for progress claims, the last 5 years have seen the number of applications, the average amount claimed, and the total claimed peak in 2019/2020, with a downward trend during 2021 and leading to a stabilisation in 2022. Importantly for builders, the average time taken for the adjudication process that determine the amount owing for claims under $750,000.00 has remained consistent at around 20 business days. This is an effective timeframe for determining entitlements to progress payments.
Overall, the data indicates that the construction industry has recently been (2021) and continues to be (2022) under some pressure. It also demonstrates the adjudication process can be an effective and timely way of recovering progress payments for those experiencing that pressure.
Number of Valid Adjudication Applications
The table below sets out the number of adjudications received by the QBCC during 2021-2022.
| Adjudication Application Type | Total |
| Standard (less than $750,000) | 364 |
| Complex (greater than $750,000) | 29 |
| Total number of applications | 293 |
The majority of applications are for claims of less than $750,000 in value. The last 5 years saw the number of applications peak in 2019, with a downward trend during 2020 and 2021 and an increase in applications in 2022. The increase in applications could be a symptom of tighter economic conditions in the industry.
Adjudication Claimed Amounts
The table below outlines the total amount claimed from the adjudication applications received by the Registrar. We have also compared the average amount claimed by builders in the adjudication applications with the average amount awarded by adjudicators from 2018 to 2022.
| Total value of claims | $101,938,586 |
| Maximum claim | $9,949,440 |
| Minimum claim | $522 |
| Average claim | $347,913 |
As can be seen in the chart below, the average amount claimed by builders is consistently higher than the amount awarded by adjudicators. Although, the gap between the amount claimed and the amount awarded has been closing during 2021 and 2022.
We have also compared the maximum claimed in each year with the total value claimed. Those amounts mirror each other and also reflect the overall trend peaks in 2019/2020, with a downward trend during 2021 and leading to a stabilisation in 2022.
Adjudication Decisions Released
The chart below compares the total amounts awarded by adjudication decisions with the amounts claimed. It reveals the significant disparity between the amounts claimed and the amounts awarded.
Total Amounts Awarded by Region (2021 – 2022)
Average Number of Business Days from Application to Decision
Every claim is unique and adjudication times for claims will vary, depending on a range of factors. Simpler claims can be processed quickly (for example, deposit refunds where no work has started). However, more complex non-completion claims require careful consideration and may therefore take longer to assess. However, the 2022 QBCC report reveals that for standard claims (under $750,000) the average time it takes from filing the application to receiving the decision is approximately 21 business days. For complex claims, the average time is 47 business days. These timeframes have remained consistent over the last 5 years. This consistency ought to give builders reasonable confidence that they will know the outcome of their claims, on average, within 20 business days.
2021 – 2022
| Standard claims | Complex claim | |
| Maximum time | 38.0 business days | 93.0 business days |
| Minimum time | 50 business days | 21.0 business days |
| Average time | 20.8 business days | 47.2 business days |
How We Can Help
Peter Waller of our construction law team at MBA Lawyers can help you with recovering payment claims, including advice on subcontractors’ charges and claims under the BIF Act.
For more information, contact Peter Waller on 07 5619 7312 or peter.waller@mba-lawyers.com.au and Naomi Mole on 07 5619 7311 or naomi.mole@mba-lawyers.com.au
[1] The BIF Act does not apply to construction contracts involving domestic building work if a resident owner is a party to the contract and lives in or intends to live in the building.