Progress claims: how to submit, defend, and enforce payment

TL;DR

Progress claims are the staged invoices a builder serves on the client (or head contractor) as defined construction milestones are reached. In NSW the Home Building Act 1989 (NSW) caps deposits at 10% and requires a progress payment schedule for any contract over $20,000 (verified 2026-05-09). The typical HIA residential schedule runs six stages: deposit, base, frame, lock-up, fixing, and practical completion. When a client disputes or withholds payment, the Building and Construction Industry Security of Payment Act 1999 (NSW) gives the builder a fast-track adjudication path: the adjudicator’s determination usually lands within 10 business days of accepting the application (verified 2026-05-09). The most common delay on residential jobs is a client refusing to pay because a stage “isn’t quite finished” when the contract says payment falls due on completion of specified work, not the client’s satisfaction.

When you do this

A progress claim is issued every time a defined stage of work is complete, or on a date agreed in the contract. The schedule in the contract is the trigger. Standard residential contracts (HIA, MBA) set out the stages and the percentage of contract price due at each. The builder submits the claim; the client pays within the agreed timeframe or serves a payment schedule setting out reasons for any reduction.

The obligation to pay arises from the building contract, not from the Security of Payment Act. The SOP Act is the enforcement mechanism if payment is refused.

Who’s involved

Builder (or subcontractor): prepares and serves the progress claim.
Client / principal: receives the claim and either pays or serves a payment schedule disputing it.
Lender (if the client has a construction loan): draws down funds against each stage. The lender often sends their own progress inspector before releasing funds.
Building surveyor or private certifier: may be asked to confirm stage completion before the claim is paid, particularly for the frame stage (which requires surveyor sign-off under the HIA contract definition).
Adjudicator (if disputed): an independent third party appointed by an Authorised Nominating Authority (ANA) under the relevant state SOP Act.

The standard HIA stage payment schedule

The HIA New Homes Contract uses a six-stage structure. Stage definitions are set out in the contract (verified 2026-05-09, HIA, Progress payments for residential building work):

Stage	Work required to be complete
Deposit	Due on contract signing, before work commences. Capped at 10% in NSW under s 8 of the Home Building Act 1989 (NSW) (verified 2026-05-09).
Base	Concrete floor (slab) or base brickwork complete, depending on floor type.
Frame	Structural frame complete and approved by a building surveyor or private certifier.
Lock-up	External wall cladding and roof covering fixed, external doors installed, windows fixed.
Fixing	Internal cladding, architraves, skirtings, internal doors, built-in cabinets, baths, basins, sinks complete.
Practical completion	All contracted work complete, ready for handover. Final payment triggers practical completion (or a PCI defects list is agreed).

The NSW Government does not prescribe specific percentages for each stage under the HBA. In practice the percentages are negotiated between the parties and often driven by the client’s construction lender, which has its own drawdown requirements (verified 2026-05-09, NSW Government, Contracts for residential building work). A common industry split in NSW is deposit 5-10%, base 15-20%, frame 20%, lock-up 25%, fixing 20%, completion 10-15%, but these are indicative, not statutory.

Victoria: statutory stage caps

In Victoria, the Domestic Building Contracts Act 1995 (VIC) s 40 sets maximum stage payment percentages that builders cannot exceed. For a contract to build all stages (verified 2026-05-09, Consumer Affairs Victoria, Paying for building work):

Stage	Maximum percentage of contract price
Base	10%
Frame	15%
Lock-up	35%
Fixing	25%
Completion	Remainder

Deposits in VIC are capped at 5% for contracts of $20,000 or more, and 10% for contracts below $20,000 (verified 2026-05-09). Builders who demand or receive more than the statutory cap face a penalty of up to 50 penalty units.

MBA contracts

The MBA BC4 Residential Building Contract for NSW follows the same broad stage structure as the HIA contract. Stages are defined in the schedule; percentages are agreed between the parties. The MBA contract also incorporates SOP Act compliance obligations and requires a written payment schedule if the full claim is not accepted (verified 2026-05-09, MBA, BC4 Residential Building Contract).

Steps

1. Check the payment schedule in the contract

Before submitting a claim, confirm which stage is complete and what the contract says must be done. The HIA and MBA contracts define each stage precisely. “Substantially complete” is not the same as “complete” under most fixed-price contracts.

2. Prepare the progress claim in writing

Every progress claim must be in writing and include:

The amount claimed
A description of the work covered
The stage milestone reached
Supporting documents the other party may reasonably require (photographs, inspection certificates, surveyor approval for the frame stage)

If the claim is made under the SOP Act in NSW, the claim must also state: “This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999” (verified 2026-05-09, NSW Government, Making a payment claim).

Head contractors on residential work must attach a supporting statement declaring they have paid all engaged subcontractors. Different forms apply for standard vs. owner-occupier contracts.

3. Serve the claim on the correct party

Serve the written claim on the client or, for subcontractor claims, on the head contractor. Reference date rules under the NSW SOP Act allow one claim per named calendar month unless the contract specifies other claim dates.

4. Client responds within the deadline

The client has a maximum of 10 business days after receiving the claim to pay in full or serve a payment schedule (verified 2026-05-09, NSW Government, Making a payment claim).

For subcontractors on owner-occupier residential work in NSW, the payment schedule response deadline is 5 business days.

If no payment schedule is served within the deadline, the full claimed amount becomes due and payable. The client cannot raise new reasons for non-payment in adjudication that were not in the payment schedule.

5. Payment due date

Default payment terms under the NSW SOP Act (verified 2026-05-09):

Claimant type	Due date after claim
Head contractor (from principal)	15 business days
Subcontractor (non-residential)	20 business days
Subcontractor (residential / owner-occupier)	10 business days

Contracts may set shorter terms. They cannot set longer terms than the statutory defaults.

6. If payment is withheld or disputed

If the client serves a payment schedule for less than the claimed amount, or fails to pay by the due date, the builder can apply for adjudication.

Adjudication application window: 10 business days after receiving the payment schedule, or 20 business days after the payment due date if no payment schedule was served (verified 2026-05-09, NSW Government, Making a payment claim).

Adjudication timeline (NSW):

Step	Timeframe
Adjudicator accepts application	Within 4 business days
Respondent’s reply	2 to 5 business days after receiving application
Adjudicator’s determination	Within 10 business days of the date the response was required
Payment obligation	5 business days after determination

The full process from claim to adjudication payment takes approximately 40 business days in NSW (verified 2026-05-09, Turtons Lawyers, NSW Security of Payment Act).

Documents needed

Signed building contract with the agreed progress payment schedule (Schedule 2 in HIA contracts)
Written progress claim document (with supporting statement if head contractor)
Stage inspection photographs or building surveyor certificate for the stage claimed
Any approved variation orders that adjust the contract sum
Payment schedule (if the client disputes the amount)
Adjudication application form (if enforcement is required)

Common holds

Stage “not complete”: the client or their lender’s inspector argues the stage is not fully complete. Check what the contract says constitutes completion of that stage. For the frame stage, the HIA contract requires building surveyor approval, which is an objective trigger.

Defects at stage: the client wants to withhold payment because of a defect. Under most residential contracts, defects at an intermediate stage do not entitle the client to withhold the full stage payment. The client may serve a payment schedule reducing the amount by the estimated cost of rectification, but cannot hold back the whole stage without a genuine dispute over stage completion.

Lender holds up the drawdown: the bank or lender’s progress inspector hasn’t approved the draw yet. This is between the client and their lender. The contract payment obligation runs from the builder to the client, independently of the client’s financing arrangement. Delays in bank drawdown do not generally extend the client’s payment deadline.

Missing paperwork on head contractor claim: if the head contractor’s claim does not include a valid supporting statement, the claim may be defective under the SOP Act. Fix the paperwork and re-serve.

Reference date dispute: the respondent argues the claim was served before an available reference date. Under the NSW SOP Act, only one claim can be made per reference date. Check the contract for claim dates; if silent, claims can be made on the last day of each named month.

Post-completion retention: where retention applies, the final progress payment is reduced by the retained amount. See retentions clause for how the two-stage release works.

Security of Payment Act coverage: state summary

The NSW SOP Act applies to all construction contracts in NSW including owner-occupier residential contracts as of 1 March 2021. The owner-occupier exemption was repealed and the Act was further amended on 20 August 2024 to close a loophole around unlicensed builders on residential work (verified 2026-05-09, K&L Gates, Owner-Occupiers Beware: NSW Security of Payment Act Now Applies).

State / territory	Act	Residential coverage
NSW	Building and Construction Industry Security of Payment Act 1999	Applies, including owner-occupier residential contracts (since 1 March 2021)
VIC	Building and Construction Industry Security of Payment Act 2002 (as amended 15 April 2026)	Applies to commercial construction; domestic building contract coverage has expanded under April 2026 reforms
QLD	Building Industry Fairness (Security of Payment) Act 2017	Applies broadly; head to subcontractor claims well covered
WA	Building and Construction Industry (Security of Payment) Act 2021	Applies to contracts entered from 1 August 2022
SA	Building and Construction Industry Security of Payment Act 2009	Applies
TAS	Building and Construction Industry Security of Payment Act 2009	Applies
NT	Construction Contracts (Security of Payments) Act 2004	Applies
ACT	Building and Construction Industry (Security of Payment) Act 2009	Applies

Victoria’s SOP Act was significantly reformed by the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (VIC), which took effect 15 April 2026. Key changes include removal of the “excluded amounts” regime, maximum payment terms of 20 business days regardless of contract terms, and expanded contractor rights to claim time-related costs (verified 2026-05-09, MinterEllison, Changes to Victoria’s Security of Payment regime).

What can go wrong

No written payment schedule in the contract: if stages and amounts are not described in clear, plain language, the client can dispute what constitutes completion of any stage. A vague schedule is a cashflow liability.
Claim served before stage is actually complete: adjudicators can and do reject premature claims. Only submit when the defined work is done.
Missing or incorrect supporting statement: head contractors who omit the statutory supporting statement have a defective claim. This is a procedural failure, not a substantive one, but it can delay payment.
Exceeding the deposit cap: in NSW, demanding more than 10% before work starts exposes the builder to a Fair Trading penalty. In VIC, exceeding statutory deposit caps (5% on contracts of $20,000 or more) triggers penalty exposure.
Client misusing defects to withhold payment: a client who refuses to pay an entire stage claim because of minor defects is likely acting in breach of contract. A valid payment schedule must specify the reason and estimated amount of any deduction. Blanket withholding without a schedule leaves the client exposed to adjudication.
Letting the adjudication window close: the application windows under the SOP Acts are strict. Miss the 10-business-day window after receiving the payment schedule and the claim for that reference period is gone. Set calendar reminders the moment a disputed payment schedule arrives.
Not claiming retention when it falls due: once a retention release trigger is met (practical completion or DLP end), the builder must submit a claim. Released retention is a progress payment for SOP Act purposes; adjudication is available if the client fails to release.

References

Building and Construction Industry Security of Payment Act 1999 (NSW) (verified 2026-05-09)
Home Building Act 1989 (NSW) s 8 (deposit cap), s 8A (progress payment schedule requirement) (verified 2026-05-09)
NSW Government: Making a payment claim under Security of Payment laws (verified 2026-05-09)
NSW Government: Contracts for residential building work (verified 2026-05-09)
Consumer Affairs Victoria: Paying for building work (verified 2026-05-09)
Domestic Building Contracts Act 1995 (VIC) s 40 (verified 2026-05-09)
HIA: Progress payments for residential building work (verified 2026-05-09)
MinterEllison: Changes to Victoria’s Security of Payment regime have now commenced (verified 2026-05-09)
K&L Gates: Owner-Occupiers Beware: NSW Security of Payment Act Now Applies (verified 2026-05-09)
Turtons Lawyers: NSW Security of Payment Act (verified 2026-05-09)