Building and Construction Industry Security of Payment Act 1999 in New South Wales

LAW23092019150

1. Working of the Building and construction industry security of payment act 1999
The Building and construction industry security of payment act 1999 is responsible for
regulating the New South Wales construction projects. All set of professionals related to the
construction industry are included under this act. This legal framework includes principals, head
contractors, suppliers and subordinates in context of making payments, withholding payments
and receiving payments. The law suggests that any individual who has been associated with a
construction work must receive progress payment as the work continuous. It also includes any
supply of goods which are related to the construction project. The scheme of progressive
payment is applicable for each of the belongings in a construction project and thus it cannot be
withheld (Coggins et al. 2016). The most suitable section of people who have been largely
benefited by this legal framework are the construction workers in New South Wales. In many
cases the courts were unable to proceed with adequate opportunities for making provisions for
partial payments in a construction project. But as this legal structure provides them with an
opportunity to make decisions concerning the workers and their right to get partial payments.
This act provides the contractors to get their progress payments in case of any available
contractual obligations such as written, verbal or absent contracts. However, the independent
contractor agreements in every case provides supportive information in concern with the
obligations and rights which must be provided to each of the related parties. This legal system
works independently and the calculation of progress payment is made based on the valuation of
work or commodity supplies which are made during a construction process. The contractual
terms play a major role in idealizing the growth pattern which is supported to functionalize
progress payments in each of the construction processes. The operational accountability for
service acceptors are mentioned under the specifically drafted contract which implies specific
terms and conditions which are entitled to produce significant impacts on the overall growth
possibility across the region. There are segments which signify the appropriate strategies and
accountabilities for measuring changes in these institutional obligations and thus the overall
acceptability factor is highly appreciated certainly (Legislation.nsw.gov.au, 2019).
The act incorporates separate provisions for related dispute resolutions. It provides possibility of
consultation from an independent arbitrator who can act as a resolution providing agent for each
of the involved parties. There are separate provisions for payment claims on accounts that how
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and in what circumstances it must be paid. The overall operability index which is related to a
principal, contractor and a subcontractor are different and this timeline must be maintained for
future operations. These obligations in terms of time and conditions of payment are set by the act
and remain same for each of the cases. In the case of breach, a series of financial as well as
criminal penalties are put in to place for the responsible parties (Mays and Marston, 2016). An
intentional breach of this act can lead to severe enforcement actions against the respective
sections. The strict possibility for penalty and enforcement actions are highly influential in order
to secure the rights and obligations of each section of the construction sector.
2. Introduction of the act
The Building and construction industry security of payment act 1999 or the security of payment
act was introduced with a sole intention to limit the losses faced by construction contractors due
to payment failures. The state and the country as well were facing acute issues in concern with
the lack in payment structure and its modifications. The losses were huge and many major
incidences of insolvency led to the deformation of this sector in a larger ways. The overall
operability factor which was put in to action soon after this legal framework was developed was
the lack in amount of insolvency for the construction industry organizations. This describes the
most certain need for this act. This act was introduced in an attempt to secure the rights and
obligations of the construction contractors. The incidences of payment failure were largely
increasing which were having a negative impact on the economic conditions across this industry,
thus a stiff operational model was necessary to cope with this unwanted issue. The basic idea
behind establishment of this act was to provide a protective atmosphere and some basic rights to
the available construction contractors. In addition to this, the act aimed to provide a secure way
to extract payments based on recovery progress payment systems (Vba.vic.gov.au, 2019).
The situation was unacceptable as the construction contractors were not able to get their partial
payments and this led to huge losses for their companies and ultimately fallout. The government
recognized this huge issue in late 2018 and put in context the act to secure progress payments for
each of the constructors. However, the other states in Australia have already been involved in
such operations, the New South Wales authorities will be putting it in to action on 21st October
2019. Since the act provides a series of enhancements to the contractors in terms of durable and
easy payment opportunities from their clients, the dying nature of this industry is liable to grow
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