• Security of Payment

    Building Management and Works (BMW) has a range of measures in place to minimise the risk of engaging a building contractor with insufficient financial capacity or a poor payment record. BMW:

    • aims to deal only with reputable and financially secure head contractors
    • uses contractual mechanisms that reduce the risk of, and consequences that flow from, head contractor insolvency
    • encourages subcontractors to raise non-payment concerns directly with BMW through a dedicated telephone non-payment complaints line
    • actively monitors and acts on warning signs that a head contractor may be in financial difficulty or is not meeting its payment obligations.

    If you are considering working on a BMW project you will need to be aware of the arrangements that are in place.

    Pre-contract stage

    Contract model

    BMW will apply project bank accounts for its construction contracts valued at over $1.5 million unless they are not required, such as when there are no subcontractors. Project bank accounts improve the speed and transparency of payments through a project’s supply chain and reduce the risks to subcontractors in the event of a head contractor insolvency.

    More information on project bank accounts is available at www.finance.wa.gov.au/cms/pba.

    Prequalification Requirements and Business Risk Assessment

    A head contractor that is struggling financially or is assessed as being unable to meet future obligations will generally not be granted prequalification under BMW’s Builders Prequalification Scheme.

    As part of the prequalification assessment BMW will consider any allegations that the applicant has not met its payment obligations and ensure it is not a ‘phoenix’ company.

    More information on prequalification and business risk assessments is available here.

    Tender Evaluation

    BMW considers cost and non-cost factors when assessing tenders, including the following:

    •  a financial assessment of the tenderer to determine it is financially secure
    •  whether the tenderer has a history of slow, non or late payment
    •  the tendered price to ensure it is reasonable
    •  the tenderer's past performance.

    More information about how BMW evaluates tenders is available here.

    Post Contract Award

    Contractual Mechanisms

    BMW’s contracts:

    • stipulate that head contractors must comply with all payment obligations to subcontractors
    • enable BMW to pay subcontractors directly in defined circumstances
    • require the head contractor to submit a statutory declaration that all subcontractors have been paid all money due and payable to them with every payment claim
    • require contractors to provide subcontractors with a subcontractor awareness package containing guidance on subcontractor common rights and obligations, including how to contact BMW’s non-payment complaints line.

    Where BMW has evidence that a statutory declaration has been falsely made it will refer details to WA Police.

    Subcontractor Complaints Line

    BMW has a centralised complaints management system, overseen by a dedicated coordinator, through which all complaints are recorded and investigated. BMW’s feedback officer can be contacted on (08) 6551 1888 or bmwcomplaintsandfeedback@finance.wa.gov.au.

    BMW also provides advice on options available to subcontractors who experience late or non-payment.

    Spot Checks

    BMW conducts regular ‘spot checks’ on subcontractor payments to monitor head contractor behaviour and investigates situations where concerns are expressed. This means that the Superintendent’s Representative contacts a minimum of two subcontractors on selected contracts, and asks a series of questions relating to payment. Outcomes are recorded and payment issues may be registered as a complaint, should the subcontractor wish.

    You can find information on spot checks in BMW’s Builders Prequalification Scheme document.

    Management of Contractors of Financial Concern

    BMW actively monitors the ongoing financial capacity of head contractors. BMW compiles market intelligence on contractors and will act decisively if it has concerns that the head contractor is at risk of becoming insolvent or meeting its obligations.

    Performance Management

    BMW is committed to active performance management of its head contractors including how they manage relationships with subcontractors.

    More information is available here.

    Other Government Initiatives

    BMW’s security of payment protections complement initiatives that are managed by other agencies. Visit the Small Business Development Corporation and the Department of Mines, Industry Regulation and Safety’s Building Commission for information about how the West Australian government helps to maximise security of payment across the entire building and construction sector.

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