The Building and Construction Industry Security of Payment Act 2002 (Vic) (“the Act”) has been significantly amended and updated, with new rules taking effect from 15 April 2026.

These new rules can affect all construction contracts, including contracts entered into before 15 April 2026, subject to the transitional provisions outlined in the amended Act. If you carry out construction work, supply materials, or provide services under a Victorian construction contract, these changes affect you.

Here are the five key changes and what they mean for your business:

Performance securities are now expressly covered

The Act no longer deals exclusively with progress payments. It now also provides contractors and suppliers with a clear statutory pathway to seek the release of retention money and performance bonds. A claimant can now make a performance security claim, and the respondent must generally provide a performance security schedule within ten business days if it wishes to dispute release (sections 1, 3, 9, 12 of the Act).

Payment claim timing has changed

The old model has been replaced with a monthly entitlement to make a payment claim. The Act now sets out clearer rules about the earliest and latest times a claim can be served, and how often claims may be made.

The time to make a payment claim has effectively been extended from three to six months after practical completion of the work or supply of the goods or services, unless the contract provides for a longer period. The definition of a “business day” has also changed, with the period from 22 December to 10 January, inclusive, now excluded (sections 4, 14A, 14B, 14C, 14D of the Act).

Some contract terms are now less effective against claimants

The amended Act places stronger limits on contract terms that delay payment or release. In particular, payment and release terms are now capped at 20 business days after the relevant claim is served. The Act also further restricts pay when paid provisions and introduces a new regime allowing certain notice-based time bar clauses to be declared unfair if compliance was not reasonably possible or was unreasonably onerous (sections 12(1B), 13, 13A of the Act).

Respondents must respond earlier and more clearly

The amended Act tightens the rules for the party receiving the claim. If a respondent does not serve a payment schedule in time, the claimant must first give notice before adjudication, and the respondent then has a further five business days to serve a schedule. Similar rules now apply to performance security claims.

The Act also prevents respondents from raising “new reasons” later in adjudication if those reasons were not set out in their payment schedule or performance security schedule (sections 15, 17E, 18(2) – (2A), 18A, 21, 22(5AA) – (5AB), 23(2A) of the Act).

Respondents are locked in to their “early reasons”

The adjudication regime has been updated, including a new pathway for performance security claims. The time for an adjudicator to determine an application is now 10 business days, with a possible agreed extension of up to 20 further business days. The old review adjudication regime has been repealed. Enforcement provisions have also been expanded so that adjudicated amounts may now need to be paid or released, not just paid (sections 18, 18A, 22, 23, 28, 28M – 28R of the Act).

These changes do not relate exclusively to adjudication after a dispute arises, but also to how construction contracts should be drafted, reviewed and administered. Specifically:

  • Unpaid progress claims can be pursued via adjudication for faster payment;
  • Retention and bond release disputes now have a dedicated statutory pathway;
  • Unfair time bar clauses in your contract may no longer bind you;
  • Respondents face tighter deadlines and cannot raise new defences late.

Rankin Business Lawyers can help

Here at Rankin Business Lawyers, we can

  • Review whether the Act applies to your contracts;
  • Draft and serve payment claims and performance security claims;
  • Prepare payment schedules and performance security schedules;
  • Run adjudication applications and responses;
  • Advise on time bar clauses, payment timing provisions, and recourse to security;
  • Advise on bond drawdowns and recourse to security;
  • Facilitate court enforcement and debt recovery.

The changes to the Act are already in force. If you have unpaid claims, outstanding retention, or bonds that should be released, contact our lawyers for a confidential discussion.

The information in this article is general in nature only, and does not constitute legal advice. Please consult with us to obtain advice specific to your circumstances from Rankin Business Lawyers before acting.

Yuanchao Chen
Lawyer