BIF Implementation and Evaluation Panel€¦ · The Panel’s Evaluation Plan is to: 1. formulate evaluation questions which address each TOR as it relates to the 4 categories of

BIF Implementation and

Evaluation Panel Evaluation Plan, Stakeholder Engagement Plans

and Work Plans

BIF Implementation and Evaluation Panel – Evaluation Plan, Stakeholder Engagement Plan & Work Plans

October 2018 Page 2 of 27

Table of Contents

1. Introduction……………………………………………………………………………………………………………………………………………………..………4

1.1 Suite of building and construction reforms 4

1.2 Terms of Reference 5

2. Evaluation Plan….…………………………………………………………………………………………………………………………………………….………..6

3. Stakeholder Engagement Plan..……………………………………………………………………………………………………………………………………..8

3.1 The Industry Reference Group 8

3.2 Government bodies and stakeholders 8

3.3 Indicative timing for stakeholder engagement activities 10

4. Work Plan 1 – Project Bank Account Reforms……………………………………………………………………………………….………………………….10

4.1 Summary reforms 10

4.2 Term of Reference 1: Determining the effectiveness of the government’s implementation of the suite of building industry reforms 12

4.3 Term of Reference 2: Determining the effectiveness of the legislative framework in achieving policy intent 14

4.4 Term of Reference 3: Determine opportunities to realise improved security of payment outcomes for industry prior to the

commencement of project bank accounts in the private sector 15

4.5 Term of Reference 4: Determining the indicative economic impacts and outcomes of the building industry reforms 16

5. Work Plan 2 – Payment Reforms…………………………………………………………………………………………………………………………………..18

5.1 Summary reforms 18








6. Work Plan 3 – Minimum Financial Requirement Reforms……………………………………………………………………………………..……………...23

6.1 Summary of the reforms 23








1. Introduction

In May 2018 the Queensland Government appointed the Building Industry Fairness Implementation and Evaluation Panel (Panel) to support the review of the operation and effectiveness of the suite of building and construction industry reforms introduced by the Queensland Government in 2017.

This document sets out the Evaluation Plan, Stakeholder Engagement Plan and Work Plans which have been developed by the Panel. There are six sections:

• section 1 sets out the background and relevant legislation

• section 2 sets out the Evaluation Plan

• section 3 sets out the Stakeholder Engagement Plan

• sections 4 to 6 set out the Work Plans.

1.1 Suite of building and construction reforms

In 2017, the Queensland Government passed legislation to reform various aspects of the regulation of building and construction in Queensland. The legislation is:

• the Building and Construction Legislation (Non-confirming Building Products-Chain of Responsibility and Other Matters) Amendment Act 2017 (NCBP Act) which received Royal Assent on 31 August 2017

• the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) which received Royal Assent on 10 November 2017.

Pursuant to the above Acts, the following regulations have been made:

• the Queensland Building and Construction Commission (Non-conforming Building Products Code of Practice) Notice 2017 published on 6 November 2017

• the Queensland Building and Construction Commission and Other Legislation (non-conforming Building Products) Amendment Regulation 2017 which commenced on 1 March 2017

• the Building Industry Fairness (Security of Payment) Regulation 2018 which commenced on 1 March 2018

• the Building Industry Fairness (Security of Payment) (Transitional) Regulation 2018 which commenced on 1 March 2018.

Amendments were made to the BIF Act via the Plumbing and Drainage Act 2018. The Panel’s evaluation will have regard to any amendments made to the

BIF Act during the term of its appointment.



The reforms within the NCBP and BIF Acts, and any regulations made pursuant to these Acts prior to the Panel providing its report, are the ‘suite of building and construction reforms’ that will be considered by the Panel. However, for the purposes of this document, only provisions of the NCBP Act which relate to the BIF Act will be evaluated as part of the Panel’s initial work. The approach to the evaluation of the NCBP Act more broadly will be set out in a separate document in due course when requested by the Minister for Housing and Public Works, Minister for Digital Technology, Minister for Sport (the Minister)

In broad terms the work of the Panel carried out pursuant to this document will consider the reforms under the following categories:

1. The introduction of project bank accounts (PBA) under the BIF Act (PBA Reforms). The PBA Reforms introduce a requirement for PBAs for certain types of building projects. Phase 1 of the PBA Reforms commenced in March 2018.

2. The amendment of parts of the BIF Act (Payment Reforms) which provide:

- procedures for progress payments and dispute resolution through adjudication (the amendments commence in December 2018)

- the simplification of the process by which subcontractors can lodge a subcontractors’ charge over unpaid monies held by higher contractors (the amendments commence in December 2018)

- for the prohibition of unfair contract terms and the inclusion of mandatory contract terms into certain types of construction contracts (the amendments will commence on 1 January 2019.)

3. Changes to the minimum financial requirements for licensees (MFR Reforms) under the BIF Act: The minimum financial requirements licensees must meet will be set out in regulation rather than in Queensland Building and Construction Commission board policy. The QBCC has increased powers to monitor the financial viability of licensees and, where possible mitigate the impact of insolvencies. These provisions will commence in January 2019.

The BIF Act increased penalties for existing offences relating to the carrying out of building work by unlicensed contractors. The Panel considers that it will not be possible to evaluate any impact of increased penalties in the time available and therefore these reforms, whilst acknowledged in our work, will not be evaluated. QBCC enforcement powers set out in the NCBP Act and relating to the BIF Act reforms will be evaluated as part of consideration of those categories of reforms.

1.2 Terms of Reference

The Panel has been established under section 200A of the BIF Act to support the review of the operation and effectiveness of the reforms. Terms of Reference (TOR) have been issued to the Panel. The TOR sets out the objectives, terms of reference and scope and functions of the Panel. They state that the Panel is appointed for a term of approximately 12 months commencing on 14 May 2018.

As per the TOR, the Panel will work with the government, building and construction industry and other stakeholders to determine:

1. the effectiveness of the government’s implementation of the suite of building industry reforms (TOR 1)

2. the effectiveness of the legislative framework in achieving policy intent (TOR 2)

3. the opportunities to realise improved security of payment outcomes for industry prior to the commencement of PBAs in the private sector (TOR 3)

4. the indicative economic impacts and outcomes of the building industry reforms (TOR 4).



The scope and functions of the Panel include:

• preparing this document (Evaluation Plan)

• making recommendations to the Minister in relation to the establishment of an Industry Reference Group

• agreeing data metrics and the oversight of the collection of data

• consulting with building industry stakeholders

• reviewing reports from consultants engaged by the department

• reporting to the Minister at agreed milestones.

2. Evaluation Plan

The Panel’s Evaluation Plan is to:

1. formulate evaluation questions which address each TOR as it relates to the 4 categories of reform

2. seek information from government, the building and construction industry and other stakeholders as relevant to each evaluation question, and

3. evaluate the information against the evaluation questions and Terms of Reference to reach conclusions, make observations and formulate advice to the

Queensland government.

Information will be sought in the following ways:

• In relation to Phase 1 PBAs, collection and analysis of benchmarking data against emerging data

• Seeking oral and/or written information from government departments and relevant agencies in relation to implementation activities

• Issuing discussion papers and inviting submissions from stakeholders and the community generally

• Seeking input from the Industry Reference Group

• Face-to-face consultation with selected groups or individuals

• Roundtable discussions with multiple stakeholders

• Consultation as part of case studies

• Industry forums.

The Panel will also have regard to relevant reports or reviews including:

• Public Works and Utilities Committee report 55 and related submissions and public hearing records

• Reports of Commonwealth Senate Economics Reference Committees into Insolvency in the Construction Industry (Dec 2015)

• Australian Small Business and Family Enterprises Ombudsman report on Payment Times and Practices (April 2017)

• Review of Security of Payment Laws by John Murray (Dec 2017).



Sections 4 to 6 of this Evaluation Plan sets out the Panel’s three Work Plans. The Work Plans are based on the categories of reform referred to above. Each

Work Plan identifies evaluation questions, evidence or information that will be sought and methods for collecting evidence and information for each of the

TOR. For some TOR, the Panel will consider multiple categories of reform so that the overarching framework of the legislation is considered. For example, in

considering TOR 1, effectiveness of implementation by government, the Panel will consider the implementation actions of government as well as the overall

timing for the staged introduction of the reforms. Government bodies and stakeholder groups that will be consulted are also identified in general terms in the

Work Plans.

The evaluation questions and sub-questions are intended to set out the issues that will be explored by the Panel. The final report will not necessarily make

findings or observations about each question or issue identified in the Work Plan.

For some of the above categories of reform, there will be limited post commencement data available for evaluation before the Panel must issue its report. Whilst this evaluation will seek to identify trends indicative of change within the building and construction industry, it must be acknowledged that it may take some time to fully realise economic impacts and outcomes. A further evaluation and analysis of impacts and outcomes is to be completed three years after the commencement of the BIF Act.

The content of the Work Plans will, necessarily, be subject to change. The work of the Panel will be based on this document, but the Panel will respond to

and adjust their activities to address issues as they arise.

The ‘Overview of Evaluation’ document sets out the overarching approach to the Panel’s work.

A summary of the Work Plans showing categories of reform and the TOR is set out below:

Category of Reform TOR 1 –

effectiveness of

implementation

by government

TOR 2 – effectiveness

of legislative

framework to achieve

policy intent

TOR 3 – opportunities

to realise improved

security of payment

outcomes

TOR 4 – indicative

economic impacts and

outcomes

PBA Reforms

Work Plan 1

Work plan 1 – 4.3 Work Plan 1 – 4.4

Work Plan 1 – 4.5

Evaluation of PBA and

Payment Reforms with specific

regard to opportunities to

realise improve policy

effectiveness relating to Phase

2 of PBAs

Work Plan 1 – 4.6

Evaluation of PBA and Payment

Reforms with specific assessment

of indicative economic impacts

and outcomes based on data from

Phase 1 PBA projects.

Payment Reforms

Work Plan 2

Work Plan 2 – 5.3 Work Plan 2 – 5.4

MFR reforms

Work Plan 3

Work Plan 3 – 6.3 Work Plan 3 – 6.4 Not applicable Work Plan 3 – 6.5



3. Stakeholder Engagement Plan

The Panel recognises that the reforms affect a diverse range of industry participants. It will be essential for the Panel to engage with a broad range of

stakeholders as part of its work. The reforms will impact on adjudicators and all members of the industry that supply or purchase construction work and/or

related goods and services. There are a range of government departments and agencies also involved in the reforms.

The reforms were subject to extensive consultation between 2015 and 2017. The Security of Payment Discussion Paper was released in December 2015. In

November 2016 the Queensland Building Plan, which referred to the PBA and Payment Reforms, was released for consultation. Consultation sessions on

the Queensland Building Plan were attended by over 1100 people. The BIF Bill was subject to review by the Public Works and Utilities Committee. The report

of the Committee was informed by 33 written submissions and a public hearing attended by 36 witnesses (Report No. 55).

An Industry Reference Group will complement the work of the Panel and there will be a range of opportunities given for other stakeholders to provide input to

the Panel.

3.1 The Industry Reference Group

The Minister has established an industry reference group (IRG) to complement the work of the Panel. The IRG members may be found on the Panel’s

webpage at www.hpw.qld.gov.au. The IRG will undertake activities such as:

• providing the Panel with submissions or input

• developing the content of discussion papers, surveys and/or other tools that may be used

• identifying relevant stakeholders

• identifying a range of methods to engage with stakeholders

• attending industry forums held by the Panel

• facilitating feedback from industry through the various bodies that IRG members represent.

3.2 Government bodies and stakeholders

The Work Plans identify government bodies and stakeholder groups that will be consulted in relation to each of the evaluation questions and the ways in which

these bodies, groups or individuals will be consulted. All submissions received from industry stakeholders will be published unless a request to withhold

confidential information is made. Records will be kept of consultation meetings with industry stakeholders. In seeking information, the Panel will have regard to

the effort required by stakeholders to participate in consultation by:

• avoiding multiple requests for submissions on the same issues

• seeking advice from the IRG on the content of and processes for consultation;

• making the content of discussion papers concise and clear

• providing a range of alternatives means by which stakeholders can provide their input to the consultation process

• giving stakeholders reasonable timeframes for responding to requests for submissions or information.

http://www.hpw.qld.gov.au/



Industry forums will be conducted in at least four regional centres.

The stakeholders that may be requested for information or that may wish to participate in consultation include (but are not limited to):

1. DHPW and other departments acting as principals in Phase 1 PBA contracts

2. QBCC and QBCB

3. Adjudication Registry

4. Adjudicators

5. Head contractors and sub-contractors involved in Phase 1 PBA contracts

6. Head contractors and subcontractors undertaking construction work and suppliers of related goods and services

7. Unions

8. Licensees and applicants for a license

9. Financial institutions and representative bodies including Australian Banking Association and the Customer Owned Banking Association

10. Consultants including building certifiers, architects, engineers, quantity surveyors

11. Relevant experts that advise the building and construction sector including:

a. legal practitioners

b. accountants

c. insolvency practitioners

d. financial advisors

e. insurers

12. Industry groups and associations representing the above stakeholders.



3.3 Indicative timing for stakeholder engagement activities

The table below sets out the indicative timing for the Panel’s activities:

Consultation activity Timeframe Stakeholders involved

Engagement with Industry Reference Group From October and ongoing Industry Reference Group members

Reports from and interviews with government bodies Ongoing DHPW, QBCC, QBCB, Health and Safety Regulators, Adjudication

Registry

Face to face consultation and information gathering Ongoing Invited stakeholders

Case study reviews and engagement for Phase 1

PBAs

October 2018 – February 2019 Banks and parties to Phase 1 PBA contracts

Discussion paper PBA & Payment Reforms Release – Late Nov 2018

Close – early Feb 2019

All

Industry forums During period that the

discussion paper is open

All

Consultation following close of written submissions Feb - March 2019 Invited stakeholders

4. Work Plan 1 – Project Bank Account Reforms

4.1 Summary reforms

The BIF Act states that its purpose is to help people working in the building and construction industry in being paid for the work they do (section 3(1)). The policy objective set out in the explanatory notes to the Bill, as relevant to PBAs, was to “improve security of payment for subcontractors in the building and construction industry by providing for effective, efficient and fair processes for securing payment, including the establishment of a framework to establish Project Bank Accounts”. The notes go on to state:

• that PBAs are intended to provide greater security in events such as insolvency, where money within the account is effectively quarantined for subcontractors who are beneficiaries to the trust

• it is also expected to lead to faster progress payments

• the overarching objective is to make systemic changes designed to effect cultural change in the industry and protect subcontractor payments. This will lead to reduced family breakdown, greater business confidence and more fairness in the industry.

Main features of the PBA Reforms are:



• creating an obligation on head contractors to establish 3 PBAs for each project

• making the head contractor the trustee of the PBAs

• making the head contractor and first tier sub-contractors beneficiaries of the PBAs

• requiring head contractors to provide specified information to principals and subcontractors

• requiring all payments from the principal to be made into the general PBA

• requiring payments from the PBAs due to subcontractors to take priority over payments to the head contractor

• where there are insufficient funds to pay subcontractors, requiring the head contractor to deposit funds to cover the shortfall

• requiring any retention money to be held in the retention bank account

• requiring any ‘disputed funds’ be held in the disputed funds account

• in the event of insolvency of the head contactor, the principal can take over the administration of the trust funds and the head contractor must provide the principal with enough information to undertake ongoing administration.

Failure to comply with these provisions will be an offence by the head contractor.

The Act provides for implementation of PBAs in two phases. Phase 1 commenced in March 2018 and applies to government building and construction

projects between $1 to10 million, excluding engineering projects. Engineering projects include infrastructure such as bridges, roads and ports. Phase 2 will

require PBAs in all building and construction projects valued over $1 million, again excluding engineering projects. Phase 2 will commence on or after 1

March 2019. Phases 1 and 2 will apply to first tier subcontractors, that is, subcontractors who contract directly with the head contractor. The Bill also enables

application of PBAs to lower tier contractors and suppliers at a later date.



4.2 Term of Reference 1: Determining the effectiveness of the government’s implementation of the suite of

building industry reforms

Key questions

Sub-questions/ components

Evidence and/or information required

Activities to collect and assess evidence and/or information

Government bodies and stakeholder groups

What implementation activities were/are being undertaken?

• Resources allocated to

implementation activities

• Activities undertaken by

the department pre and

post commencement both

proactively and reactively

• Number and types of

stakeholders that

accessed information

issued by the department

(e.g. website traffic)

• Ongoing implementation

activities

• Copies of any educational materials

used

• Details from department of activities

undertaken proactively (e.g. information

sessions held, written material issued,

use of social media, engagement with

stakeholder organisations) and

reactively (e.g. management of

enquiries to department and actions

taken based on enquiries)

• Details of number and types of

stakeholders who have accessed

resources on PBA.

• Details of information sought by

stakeholders from department

• Details of ongoing proactive or reactive


• Details of any implementation activities the QBCC have been involved in

• Request report from the

department

• Review materials used in


• Meet with department and/or

QBCC to discuss report and

materials as necessary

• Review details of range of

stakeholders proactively

engaged or that contacted

department for information

• DHPW

• QBCC



Key questions





Were the implementation activities effective?

• Did the implementation

activities create an

acceptable level of

awareness of the new

laws amongst relevant

stakeholders?

• Did the implementation

activities help stakeholders

to know what action to

take to comply with the

new laws?

• Have stakeholders

complied with the new

laws?

• Overall timing of staged

commencement of various

reforms

• Consider any self-evaluation of

activities undertaken by the department

• Feedback from stakeholder groups

about whether the implementation

activities improved their awareness and

understanding of the new laws

• Feedback from stakeholders involved in

contracts with PBAs about whether

implementation activities assisted them

to comply with new laws

• Data and information about each

government contract where a PBA is

required including access to information

submitted to principals under the

legislation or contracts

• Request details of any self-

evaluation done by the

department

• Submissions from

stakeholders in response to

discussion paper

• Feedback at Industry Forums

• Ask questions regarding


during consultation meetings

with banks and parties to

Phase 1 PBA contracts

• Case study analysis of

selection of PBA projects

• Data and information on PBA

projects held by department

• DHPW

• Banks and parties to Phase 1 PBA contracts

• Principals, contractors and subcontractors generally

• Industry groups



4.3 Term of Reference 2: Determining the effectiveness of the legislative framework in achieving policy intent

Key questions





Based on early information post commencement, do the reforms appear to achieve the policy intent?

• Phase 1 PBA data

• Comparison with

similar government

contracts without PBAs

• Actions by parties to

Phase 1 PBA contracts

to comply

• Enforcement and

monitoring activities by

QBCC

• Data and information about each

government contract where a

PBA is required including access

to information submitted to

principals under the legislation or

contracts

• Benchmarking data from similar

government projects without

PBAs

• Benchmark data on adjudications

relating to similar government

contracts without PBAs

• Information from parties to PBA

contracts about payments under

PBA process

• Data about enforcement and

monitoring activities by QBCC

and any difficulties faced in using

powers

• Information obtained from

consultations with banks,

principals, head contractors and

sub-contractors involved in

government contracts with PBAs

• Collection and assessment of

data and information on

government contracts with and

without PBA projects held by

department

• Case study analysis of selection

of PBA projects

• DHPW

• Adjudication Registry

• QBCC


• Industry groups representing the above

Based on the legislative framework, are the reforms likely to achieve the policy intent?

• PBA Reforms

• Payment Reforms

• Are powers of QBCC

likely to be adequate

and effective?

• Feedback from stakeholders on

framework

• Relevant legislation in other

jurisdictions and reports/reviews

by others (see p 6)

• Information from relevant experts

e.g. legal/accounting/

insolvency/insurance

practitioners

• Submissions from stakeholders

responding to a Panel’s

discussion paper


• Input from QBCC and

department

• Review of relevant provisions

• Request advice from relevant

experts

• Research on similar frameworks

(or elements of framework) in

other jurisdictions and review of

relevant reports/reviews

• DHPW

• QBCC



• Relevant expert




4.4 Term of Reference 3: Determine opportunities to realise improved security of payment outcomes for industry

prior to the commencement of project bank accounts in the private sector

The PBA and Payment reforms will be considered together under this part of Work Plan 1.

Evaluation questions:

1. What have been the key issues identified with respect to the implementation of the suite of building industry reforms (TOR 1) and the effectiveness of the

legislative framework (TOR 2)?

2. Can these issues be addressed by amendments to the legislative framework and, if so, how?

3. Does the QBCC have an appropriate regulatory role and powers to achieve prudential oversight of the PBA scheme and to facilitate least-cost and

highest-reliability compliance in industry?

4. Is the current legislative framework going to be suitable for Phase 2 of PBAs? And if not, what changes are recommended?

5. If recommended changes are adopted, what would be a reasonable timeframe to allow prior to extending the requirement for PBAs?

6. Are there specific implementation activities recommended prior to the commencement of an extension of the requirement for PBAs?

The evidence and information obtained in the evaluation relating to TOR1 and TOR2 will inform the evaluation questions for TOR3.



4.5 Term of Reference 4: Determining the indicative economic impacts and outcomes of the building industry

reforms

The PBA and Payment reforms will be considered together under this part of Work Plan 1.

Key question Sub-questions/ components




What are the indicative outcomes?

• Improve the likelihood of appropriate payments being made to sub-contractors in a timely manner

• Improve the likelihood of subcontractors recovering retained money from head contractors

• Improve the likelihood of subcontractors recovering amounts ordered following adjudications

• Improve the competency of adjudicators

• Dispute resolution systems are more accessible and effective

• Improve the process for subcontractors to make a charge over payments due

• Try to ensure that licensees are financially viable

• Removal of unfair practices arising from unfair terms in contracts

• Data and information about

each government contract

where a PBA is required

including access to

information submitted to

principals under the

legislation or contracts

• Benchmark data on payments to subcontractors under similar government contracts that do not have Phase 1 PBA

• Feedback gained under TOR 2 about levels of compliance and outcomes of enforcement action

• Information from relevant experts e.g. legal/accounting/ insolvency/insurance practitioners

• Any available information on rates and outcomes of adjudications following commencement of Payment Reforms and comparison with benchmark data

• Submissions from stakeholder

groups responding to a Panel’s

discussion paper


• Data and information on PBA projects held by department

• Case study analysis of selection of PBA projects

• Collation of benchmark data on similar government contracts to those in Phase 1 of PBAs (subcontractor costs, payments to subcontractors – amounts and timing)

• Collation of early data on adjudications and of benchmarking data to compare against


experts

• Reports and/or interviews with and/or data from QBCC and Adjudication Registry

• DHPW

• QBCC



• Adjudicators


• Relevant experts

• Industry groups



Key question Sub-questions/ components




What are the indicative economic impacts?

• Compliance costs relating to Phase 1 PBAs incurred by banks, principals, head contractors and subcontractors e.g. informing themselves of obligations/duties, bank fees, systems, administration costs

• Costs to regulate – implementation costs, additional staff, new processes to manage complaints and develop decision making, legal advice

• Indicative compliance costs for adjudicators

• The positive economic impact of PBAs on small subcontractor and suppliers’ businesses and the community (for example from less subcontractor insolvencies)

• Decrease in subcontractor supply costs due to increased certainty of payment

• Details from banks and parties to Phase 1 PBA contracts

• Details from QBCC, adjudication registry and department


• Details from adjudicators

• Submissions from stakeholder

groups in response to Panel’s

discussion paper


• Data and information on PBA projects held by department

• Case study analysis of selection of PBA projects

• Collation of benchmark data on similar government contracts to those in Phase 1 of PBAs (subcontractor costs, payments to subcontractors – amounts and timing)


experts

• Collation of early data on adjudications and of benchmarking data to compare against

• Reports and/or interviews with and/or data from department, QBCC and Adjudication Registry staff about compliance costs

• DHPW



• Adjudicators



• Industry groups



5. Work Plan 2 – Payment Reforms

5.1 Summary reforms

The Payment Reforms are set out in Chapters 3, 4, 5 and 9 of the BIF Act. They cover procedures for progress payments, the adjudication process, the laws

governing the use of subcontractor charges and statutory requirements to prevent unfair contract terms.

The explanatory notes to the Bill set out the objectives, relating to the Payment Reforms, as being:

• to modernise and simplify the provisions for making a subcontractor’s charge

• to increase ease of access to security of payment legislation

• reduce opportunities for head contractors to delay payment and allow subcontractors to take action to resolve payment issues faster

• to enhance the independence and operation of the Adjudication Registry within the QBCC, and streamline the adjudication process for greater ease of use

• the overarching objective is to make systemic changes designed to effect cultural change in the industry and protect subcontractor payments. This will lead to reduced family breakdown, greater business confidence and more fairness in the industry.

Progress payments and the adjudication process

Chapter 3 of the BIF Act will replace the existing Building and Construction Industry Payments Act 2004 (BCIPA). The chapter applies to all ‘construction

contracts’ which are contracts for ‘construction work’ and/or related goods and services. Relevant definitions are set out in section 64 and 65 of the BIF Act. A

much broader range of building projects are covered by the progress payment provisions than the PBA requirements therefore these reforms affect more

participants in the building and construction industry.

The progress payment chapter uses different terminology from the PBA, which acknowledges that other than the principal, the parties can wear multiple

‘hats’. For example, head contractors and subcontractors can be both claimants and respondents (‘payers’) depending on where in the contractual hierarchy

they sit for that particular construction contract.

The provisions provide that under a construction contract a claimant can make a ‘payment claim’ at times in accordance with the terms of their contract or on

the last day of each month that work is carried out by the claimant – this is known as a ‘reference date’. In response to a ‘payment claim’ a payer may pay the

amount claimed in full or issue a ‘payment schedule’ which sets out what amount the payer intends to pay and the reasons why it will not pay the full amount

claimed.



If a payer does not pay the full amount of a ‘payment claim’ and does not provide a payment schedule, the claimant may either:

• Enforce the debt in any court of competent jurisdiction and the payer cannot claim a defence or counterclaim

• Apply to have the matter adjudicated within 30 business days1

• Suspend works

If the payer provides a payment schedule disputing the amount claimed, the claimant may apply for the matter to be adjudicated within 30 business days2.

Under the adjudication process, adjudicators are appointed by the Adjudication Registry. The adjudication process is intended to be a fast track dispute

resolution process to enable timely and fair payment of claimants on an interim basis. The BIF Act imposes mandatory timeframes for the adjudication

process. Parties in dispute are bound by the decision of the adjudicator and must make any payments ordered promptly. However, they can commence

proceedings for breach of contract later if they wish to relitigate issues determined in an adjudication.

The key changes from the BCIPA are:

• payment claims will not need to be endorsed to trigger the protections of security of payment

• claimants will have 30 days to lodge an adjudication application in most instances and they do not need to give a second chance notice, which allowed

the payer (respondent) a second chance to provide a payment schedule and raise a dispute

• to enforce and unpaid payment claim in court claimants must, within 20 business days of the due date for payment, give the payer a warning notice, of

the claimant’s intention to start proceedings

• it is an offence for a payer not to issue a payment schedule within 15 days from the receipt of a payment claim unless they have paid the payment claim

in full

• the process for adjudication of ‘complex claims’ has varied in that reasons that were not stated in the payment schedule can no longer be introduced by

the payer during the adjudication process.

Adjudicators

Chapter 5 of the BIF Act deals with adjudicators. Adjudicators will need to hold qualifications to be registered by the Adjudication Registry. There will be a

code of conduct applying to adjudicators and they will be required to undertake compulsory professional development. Registered adjudicators may be

suspended or cancelled if they contravene the code of conduct or are no longer suitable for registration.

Subcontractors charges

Chapter 4 of the BIF Act will replace the Subcontractors Charges Act 1974. The new provisions are intended to bring together the subcontractor’s entitlement to a charge over monies payable to a higher contractor and the progress payment and adjudication provisions. The changes relating to subcontractor charges are not substantive.

1 Of the later of either the due date or the last day that the payer could have given a payment schedule. 2 Of receiving the payer’s payment schedule.



Prohibited and mandatory contract provisions

Part 4A of the QBCC Act contains provisions which mandate that all building contracts for works over $10,000 (other than domestic building contracts) must

be in writing. The BIF Act amends the QBCC Act to provide that a contractor that enters into a contract that does not include mandatory conditions or

includes prohibited conditions commits an offence. The ‘mandatory’ and ‘prohibited’ conditions will be set out in future regulations. New provisions also

require any retentions amounts withheld to be released at the end of 12 months after practical completion of the contract. It is an offence for a head

contractor not to release retention amounts and the head contractor must give the subcontractor notice about the amounts to be withheld or released 10 days

before the defects liability period ends.



Key questions





What implementation activities will be undertaken?


implementation activities –

budgeted and actual

• Activities to be undertaken

by the QBCC and/or

department pre and post

commencement both



stakeholders that

accessed information

issued by the QBCC

and/or department (e.g.

website traffic)

• Plan for ongoing


• Copies of any educational materials

used

• Details from QBCC and/or department

of activities to be undertaken

proactively (e.g. information sessions

held, written material issued, use of

social media, engagement with



enquiries to department and actions

taken based on enquiries)



resources on progress payment

reforms.


stakeholders from department

• Details of plan for ongoing proactive or

reactive implementation activities

• Request a report from QBCC

and department

• Review materials to be used

in implementation activities


QBCC staff to discuss report

and materials as necessary




QBCC or department for

information

• DHPW

• QBCC



Key questions





Are the implementation activities likely to be effective?

• Are the proposed


likely to create an

acceptable level of

awareness of the new

laws amongst relevant

stakeholders?

• Are the implementation

activities likely to help

stakeholders to know what

action to take to comply

with the new laws?



reforms

• As above – Note: timing is not likely to

allow collection of feedback from

stakeholders about implementation

activities post commencement of these

reforms

• As above – Note: timing is not

likely to allow the collection of

feedback from stakeholders

post commencement of these

reforms

• DHPW

• QBCC




Key questions





Based on early information post commencement, do the reforms appear to achieve the policy intent?

• Post commencement data

Jan/Feb

• Number of adjudication

applications

• Timeframes for processes

involving complex claims

• Enforcement and monitoring

activities by QBCC

• Information on adjudications

and/or complaints to QBCC

about payment issues post

commencement

• Data about enforcement and

monitoring activities by QBCC

and any difficulties faced in

using powers

• Request early data from QBCC

and Adjudication Registry post

commencement of Payment

Reforms

• DHPW


• QBCC


Based on the legislative framework, are the reforms likely to achieve the intent?

• Will subcontractors make

greater use of the

adjudication process given

they have more time to

lodge and application and

they do not need to endorse

their payment claim?

• Will head contractors issue

payment schedules on time

if they are not paying the

payment claim in full?

• Will the adjudication process

for complex claims be more

efficient?

• Are adjudicators more likely

to be competent and

effective?

• Are retention amounts more

likely to be released as a

result of the new provisions

relating to contract terms?

• Feedback from stakeholders on

framework

• Review of similar reforms in

other jurisdictions

• Relevant reports/reviews (see p

6)

• Information from relevant

experts e.g. legal/accounting/


practitioners


responding to a Panel’s

discussion paper


• Input from QBCC and

department


• Research on similar

frameworks (or elements of

framework) in other jurisdictions

and review of relevant

reports/reviews

• Request early data from QBCC

and Adjudication Registry post

commencement of Payment

Reforms


experts


• Relevant expert




Key questions





• Are the prescribed

mandatory and prohibited

contract terms likely to make

contracting fairer?

• Are adjudication

applications more likely to

be valid due to the decrease

in requirements for payment

claims?

5.4 Term of Reference 3: Determine opportunities to realise improved security of payment outcomes for

industry prior to the commencement of project bank accounts in the private sector

See Work Plan 1 and 4.4 above.


reforms

See Work Plan 1 and 4.5 above.

6. Work Plan 3 – Minimum Financial Requirement Reforms

6.1 Summary of the reforms

The QBCC Act currently requires that licensees meet minimum financial requirements as determined by a policy of the QBCC. The reforms amend the QBCC

Act to provide for the minimum financial requirements to be set out in regulations. The minimum financial requirements will apply to any person seeking or

renewing a licence. The DHPW has released a discussion paper setting out proposals for the content of the new regulations and calling for submissions.

Submissions close on 9 October 2018. The Panel will seek information from the Department on the submissions received.





Key questions





What implementation activities will be undertaken?


implementation activities –

budgeted and actual

• Activities to be undertaken

by the QBCC and/or

department pre and post

commencement both



stakeholders that accessed

information issued by the

department (e.g. website

traffic)

• Plan for ongoing


• Copies of any educational

materials used

• Details from QBCC and/or

department of activities to be

undertaken proactively (e.g.

information sessions held, written

material issued, use of social

media, engagement with



enquiries to department and

actions taken based on

enquiries)



resources on progress payment

reforms.


stakeholders from QBCC or

department

• Details of plan for ongoing

proactive or reactive


• Request report from QBCC

and department

• Review materials to be used

in implementation activities


QBCC to discuss report and

materials as necessary




department for information

• DHPW

• QBCC



Key questions





Are the implementation activities likely to be effective?

• Are the proposed


likely to create an

acceptable level of

awareness of the new laws

amongst relevant

stakeholders?

• Are the implementation

activities likely to help

stakeholders to know what

action to take to comply with

the new laws?



reforms


likely to allow collection of

detailed feedback from

stakeholders post

commencement of these reforms


likely to allow collection of

detailed feedback from

stakeholders post

commencement of these

reforms

• DHPW

• QBCC




Key questions





Are the reforms likely to achieve the intent?

• Does the legislation indicate

reforms will achieve policy

intent?

• Are licensees likely to be

more financially viable

• Is the rate of insolvency of

licensed contractors likely to

reduce?

• Enforcement and monitoring

activities of the QBCC’s

• Feedback from

stakeholders on

framework in response to

DHPW discussion paper

• Relevant legislation in

other jurisdictions and/or

relevant reports/reviews by

others

• Information from QBCC

about expected monitoring

and enforcement activities

and likely adequacy of

powers

• Information from relevant

experts e.g.

legal/accounting/


practitioners


responding to DHPW discussion

paper

• Input from QBCC and department


• Review reforms in other jurisdictions

and/or relevant reports/reviews by

others


experts

• QBCC




6.4 Term of Reference 3: Determine opportunities to realise improved security of payment outcomes for

industry prior to the commencement of project bank accounts in the private sector

Not applicable to MFR Reforms.




reforms

Key questions

Sub-questions/ components Evidence and/or information required



What are the indicative outcomes?

• Decrease in insolvency rates for licensed contractors

• QBCC is able to intervene to minimise the impact of insolvencies

• Feedback from stakeholders about likely outcomes of reforms in response to DHPW discussion paper




paper

• Review of legislation


experts

• QBCC

• Licensees


• Industry groups

What are the indicative economic impacts?

• Compliance costs to licensees to report on MFR

• Costs to regulate – implementation costs, additional staff, new processes to manage complaints and develop decision making, legal advice

• The positive economic impact of more

solvent licensees on small

subcontractor and suppliers’ businesses

and the community (for example

increased chance of subcontractors

receiving payment causing less

subcontractor insolvencies)

• Decrease in subcontractor supply costs

due to increased certainty of payment

• Feedback from stakeholders about likely outcomes of reforms in response to DHPW discussion paper

• Information from QBCC about likely resources to monitor and enforce

• Information from experts e.g. legal/accounting/ insolvency/insurance practitioners



paper

• Report from and/or interviews with

QBCC


experts

• Licensees

• QBCC

• Expert advisors

• Industry groups

Documents

BIF Implementation and Evaluation Panel€¦ · The Panel’s Evaluation Plan is to: 1. formulate evaluation questions which address each TOR as it relates to the 4 categories of