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$vuetify.icons.faPhone1300 650 620

A guide to progress payments in Western Australia

In the WA residential building industry, a right to claim a progress payment generally arises with the completion of a stage of work as defined in a building contract. The following information sheet provides some guidance on the legal and commercial issues which should be considered when taking payments under a residential building contract.

Legal framework

The Home Building Contracts Act 1991 (HBCA) governs contracts for ‘home building work’ in Western Australia, valued between $7,500 and $500,000. This includes rules that apply to progress payment claims and deposits.

Home building work includes:

  • constructing a new home
  • placing a transportable home on land
  • altering, improving or repairing an existing home; and
  • carrying out any ‘associated work’ in connection with constructing a new home or placing a transportable home on land.

‘Associated work’ includes installing swimming pools, spas, pergolas, carports, garages, sheds, fencing, retaining walls, paving, driveways, landscaping and other similar types of work.

Rules for progress payments and deposits

For lump sum, fixed price home building work contracts valued between $7,500 and $500,000, prior to the commencement of the works, the builder may claim a deposit of no more than:

  • 6.5% of the total value of the contract; or
  • 20% of the total value of the contract, where the value of off-site cabinetry work is more than 50% of the total contract price.

After commencement of the works, only a genuine progress payment for work already performed or materials or services already supplied may be demanded or received from the owner.

As such, a claim for a progress payment cannot be made before the works for the relevant stage have been completed.

Beyond these requirements, builders and contractors should be guided by commercial and business factors in determining how to structure their progress payments.

In HIA’s lump sum contracts for home building works valued between $7,500 and $500,000, comply with the requirements of the HBCA.

Progress payment schedules

Numerous factors must be taken into consideration when determining the appropriate progress payment schedule including the:

  • time that each stage takes;
  • complexity and size of the job;
  • different materials, inclusions, or services; and
  • assessments or reports which may need to be undertaken by the builder or various professionals throughout the build.

Banks and financial institutions may attempt to prescribe ‘standard’ progress payment schedules, however there are no standardised progress claims stages or percentages/values which must be adhered to in WA. However, over time, certain progress payment stages have become understood and are widely used for typical builds.

Some example stages for progress payments for a typical, single storey residence are set out below. These stages are not required by law and serve only as a general guide, as they may not be suitable for all building works.

 

Further, each contract should clearly define what is included in that stage.

Stage

Description

1. Deposit

Payment received before the commencement of the home building work.

The amount must not exceed 6.5% of the total costs of the work or 20% where the off-site cabinetry work is more than 50% of the total contract price.

2. Slab Down

Footings poured. Stumps, piers, or columns complete. Internal and external drainage complete. Electrical gas and plumbing, rough in below the floor complete. Floor slab poured.

3. Wall plate height

Completion of the walls of the structure that provide a platform for the construction of roof frame. All window and door frames have been built into the walls and internal walls have been constructed.

4. Roof cover on

The roof cover of the building has been installed, along with all valley flashings or gutters, fascia, and down pipes. Depending on the type of roof material being used, flashings and linings have been installed and ridge capping placed but not necessarily grouted so that the roof is watertight. In some cases, down pipes may be incomplete to facilitate painting or rendering later.

5. Lockup

The structure is now able to be secured. All external doors and windows have been installed. In some cases, external door openings are secured temporarily to prevent damage to specialist timber frames and doors, but generally all glazing and glass sliding doors have been fitted. Surfaces of external walls have usually been installed but painting or texturing often comes later. Utilities are in place and internal wall surfaces have been applied.

6. Second fix

Completion of work to a final finish stage such as tiling, plumbing fit-off, cabinet work and carpentry and electrical fit-off.

7. Practical completion

As outlined in HIA’s lump sum residential contracts from home building works between $7,500 and $500,000:

When the building works are complete, except for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their usual purpose.

House and site cleaned internally and externally. Rubbish and excess removed from site.

To find out more, contact HIA's Workplace Services team

Email us

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