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2 Int'l J.L. Built Env't 7 (2010)

handle is hein.journals/jppel2 and id is 1 raw text is: The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1756-1450.htm

Follow-up empirical study of the
performance of the New South
Wales construction industry

security of payment legislation                                       7
Michael Charles Brand and Thomas Uher
The University of New South Wales, Sydney, Australia

Abstract
Purpose - The purpose of this paper is to report on findings of follow-up research into the
performance of the Building and Construction Industry Security of Payment Act 1999 (NSW), which
was undertaken in 2007. The research aims to re-assess the performance of the Act in the light of
strong demand for adjudication of construction payment claims in New South Wales.
Design/methodology/approach - A cross-sectional survey of member firms of The Master
Plumbers & Mechanical Contractors Association of NSW and the National Electrical &
Communications Association (NSW Chapter) was undertaken using a comprehensive
multiple-choice questionnaire administered by post. The questionnaire comprised 23 questions,
whereby all but one question was of a multiple-choice type. In answering the questions, the sampled
claimants were required to draw on their understanding of the Act, and their experience with the
adjudication process. Results were compared with a pilot study undertaken by the authors in 2004.
Findings - The results indicate that the object of the Act is generally being achieved. Whilst the
culture of making late payments remains well entrenched in the construction industry, there appears
to be a modest downward trend in the frequency of late payments since the 2004 study. It is now
reasonably certain that the act of endorsing payment claims encourages communication between the
parties, thus providing an opportunity for early dispute avoidance or resolution. However, the level of
knowledge of the Act amongst subcontracting organisations overall has not improved since 2004
study, and may have even declined. It is clear that contractors and subcontractors are not taking full
advantage of the Act.
Originality/value - The paper provides evidence of the performance of the Building and
Construction Industry Security of Payment Act 1999 (NSW) between 2004 and 2007. The research
compares key performance indicators for the purpose of determining whether or not the Act produces
the expected result of increasing security of payment, and whether the results are consistent with the
reason for the Act. It also provides important insights into the operation of similar legislation in other
jurisdictions.
Keywords Payments, Laws and legislation, Construction industry, Australia
Paper type Research paper
1. Introduction
In 2004, the authors attempted to assess the performance of the Building and
Construction Industry Security of Payment Act (1999) NSW (the Act) through a
survey administered to trade contractors (hereafter referred to as the 2004 study).
The data for the 2004 study were sought from a random sample of 400 members of          International

NSW
construction
industry

Journal of Law in the

Built Environment
Vol. 2 No. 1, 2010
The authors wish to gratefully acknowledge The Master Plumbers & Mechanical Contractors                                   pp. 7-25
Association of NSW and the National Electrical & Communications Association (NSW Chapter) © Emerald Group Publishing Limited
for their support of this research.                                                                     DOI 10.1108/17561451011036496

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