Security of payment

How we reduce the risk of subcontractors not being paid.

We have a range of mechanisms in place to ensure we deal with reputable and financially secure head contractors. Those with insufficient financial capacity or a poor payment record may find it difficult to get work on government projects. 

Selecting the head contractor

Prequalification requirements

Most tenders over $500,000 will require a contractor to be prequalified under the Builders Prequalification Scheme. Contractors must meet minimum financial and technical requirements relevant to the value and complexity of the work they intend to undertake.  

Tender evaluation

When assessing offers, we consider cost and non-cost factors, including: 

  • whether the respondent is financially secure
  • whether the respondent has a poor payment history
  • if the offered price is reasonable
  • the respondents past work performance

After the contract is awarded 

Contracts

Under our contracts:

  • head contractors must pay subcontractors according to the terms of the subcontract and the law
  • we can pay subcontractors directly in some cases 
  • the head contractor must make a statutory declaration that all subcontractors have been paid all the money they are due
  • contractors must give subcontractors a fact sheet showing the subcontractor’s rights and obligations, including how to send complaints to us

If we think a statutory declaration is false we will contact the WA Police. 

Contract model 

We use project bank accounts for construction contracts over $1.5 million (unless they are not needed, for example, when there are no subcontractors). Project bank accounts improve the speed and transparency of payments through the project supply chain and reduce the risks to subcontractors if a head contractor becomes insolvent. 

Subcontractor complaints line

We encourage subcontractors to tell us if they have not been paid.  All complaints we get are recorded and investigated. Contact our Complaints and Feedback Officer on (08) 6551 1888 or email: bmwcomplaintsandfeedback@finance.wa.gov.au

Spot checks

We do regular ‘spot checks’ to monitor contractor payments to subcontractors. The Superintendent’s Representative will talk to at least two subcontractors and ask about their payments. We record the answers and investigate concerns raised. 

See more information on spot checks in our Builders Prequalification Scheme document. 

Management of contractors 

We actively monitor warning signs that a head contractor may be in financial difficulty. We keep market intelligence on contractors and will act if we think the head contractor is at risk of becoming insolvent or not making payments.

Other government initiatives 

Other agencies are also involved in payment security. Visit the Small Business Development Corporation and the Department of Mines, Industry Regulation and Safety’s Building Commission to see how the government is helping security of payment across the entire building and construction sector.

 

Construction worker with a mustache wearing a hard hat.
News story:
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Small Business Commissioner to oversee a Subcontractor Support Unit to deal with security of payment issues

Contact

Department of Finance works complaints and feedback
Telephone:
61 8 6551 1888
Page reviewed 14 October 2019