Follow‐up empirical study of the performance of the New South Wales construction industry security of payment legislation

Abstract

Purpose

The purpose of this paper is to report on findings of follow‐up research into the performance of the Building and Construction Industry Security of Payment Act 1999 (NSW), which was undertaken in 2007. The research aims to re‐assess the performance of the Act in the light of strong demand for adjudication of construction payment claims in New South Wales.

Design/methodology/approach

A cross‐sectional survey of member firms of The Master Plumbers & Mechanical Contractors Association of NSW and the National Electrical & Communications Association (NSW Chapter) was undertaken using a comprehensive multiple‐choice questionnaire administered by post. The questionnaire comprised 23 questions, whereby all but one question was of a multiple‐choice type. In answering the questions, the sampled claimants were required to draw on their understanding of the Act, and their experience with the adjudication process. Results were compared with a pilot study undertaken by the authors in 2004.

Findings

The results indicate that the object of the Act is generally being achieved. Whilst the culture of making late payments remains well entrenched in the construction industry, there appears to be a modest downward trend in the frequency of late payments since the 2004 study. It is now reasonably certain that the act of endorsing payment claims encourages communication between the parties, thus providing an opportunity for early dispute avoidance or resolution. However, the level of knowledge of the Act amongst subcontracting organisations overall has not improved since 2004 study, and may have even declined. It is clear that contractors and subcontractors are not taking full advantage of the Act.

Originality/value

The paper provides evidence of the performance of the Building and Construction Industry Security of Payment Act 1999 (NSW) between 2004 and 2007. The research compares key performance indicators for the purpose of determining whether or not the Act produces the expected result of increasing security of payment, and whether the results are consistent with the reason for the Act. It also provides important insights into the operation of similar legislation in other jurisdictions.

Citation

Brand, M.C. and Uher, T. (2010), "Follow‐up empirical study of the performance of the New South Wales construction industry security of payment legislation", International Journal of Law in the Built Environment, Vol. 2 No. 1, pp. 7-25. https://doi.org/10.1108/17561451011036496