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Builders and contractors may receive payment on a continuous basis throughout the entire process of building a home by submitting progress claims on their undertaking. A progress claim itemizes the completed work, products or services delivered to the customer or loan lender, enabling builders to continue working on the project.
Progress claims are a part of the Federal Building and Construction Act 2002, also known as the Federal Specialty Construction Act of 2002, which provides that progress payments made to third parties for building activity are considered as security. Thankfully, you don’t have to feel overwhelmed by this process. Please rely on the experts at Section 94 for all of your accounting needs.
When To Make A Claim
This straightforward monetary system simplifies the reimbursement process for the client or directly with the loan provider, without problematic disputes or the requirement for lawyers. Progress claims can apply to different kinds of construction, including residential, engineering, electrical, landscaping, maintenance, architecture, surveying, plumbing, and supply of materials.
Depending on the contract, the reference date by which a claim needs to be submitted can vary. Progress claims are kept to each stage in construction schedules (usually 5 stages) that are usually anticipated at the financial stage (bank prefunding) to give the bank an overview of the cash flow.
If you are single after a one-payment installment, the reference date is the day after you finish working or supplying the goods or options. The reference date for final payments is the day after the end of any period under the contract for rectifying defects or omissions, or the day after the final certificate is issued.
The Process Of Making A Claim
Before contractors or builders can be paid for any goods, services or industry work they have done, they must first submit a claim. To make a claim, it’s crucial to have all the required documents and pay attention to these three details.
- The specified work, goods or services
- The amount claimed
- The Security of Payment Statement
The first step involves determining the total amount paid for completed work and materials during the declared time period and itemizing them in the invoice to ascertain the full payment due. The invoice should include the figure agreed upon in the construction contract, which is one of the main reasons you should have a thorough construction budget at the beginning of your project.
Any variations to the underlying contract can likewise be claimed if there’s a change in the scope of work under the contract. However, such variations can be contested by the recipient.
By providing all of the above information, a payment claim looks and acts similarly to an invoice, but a payment claim will also include the security of the payment statement so that the recipient knows that the SOP Act applies.
For a reimbursement to be made, it is crucial to include the phrase, This is a reimbursement under the Building and Construction Industry Security of Payment Act 2002.
Three Reasons For Adjudication In Victoria
Regular reports and payment claims can ease fiscal difficulties, but problems can still arise. A respondent can take action or enter adjudication if a payment schedule outlines that they intend to pay less than what the builder has claimed, the respondent does not follow a payment schedule, or the respondent fails to provide a payment schedule or pay the claimed amount.
To decrease the likelihood of disputes over progress claims, registered quantity surveyors such as the crew at Section 94 investigate the fine print of the claim to prevent mistakes and improper expenditures.
Our professional quantity surveyors evaluate the work that has been accomplished and verify the accuracy of the claimed progress against the budget and schedule, before creating photographic proof of the completed work.
Financially, the claim process is a significant cost to builders. However, if you have a claim, the chances are that you are insured, and that the insurance company is doing the legwork of submitting the claim. If you have your claim and the insurance company is paying, you’ll be better off to work with the insurance company to get your claim paid and then move on with your life.
