Progress Claims

# Chapter 19: Progress Claims and Certificates  Managing progress claims sits at the intersection of technical assessment, financial prudence, and relationship management. For early career architects in Victoria, this responsibility has become increasingly complex as builder insolvencies reshape how we approach certification, while new legislation fundamentally changes the payment landscape. ## **The Evolution of Progress Assessment in Today's Market** Traditional progress certification once focused primarily on measuring completion percentages against agreed schedules. You'd walk the site, check work against drawings, calculate percentages, and issue certificates. This straightforward approach worked when builders were financially stable and payment chains functioned smoothly. Today's reality demands a more sophisticated approach that considers financial health alongside physical progress. The shift began accelerating after high-profile collapses like Porter Davis and Lloyd Group, which left hundreds of Victorian homeowners stranded. Now, when you assess a progress claim, you're simultaneously evaluating physical completion, verifying payment flows through the construction chain, and monitoring for insolvency indicators. This means understanding that a contractor claiming 80% completion might have only paid subcontractors for 50% of their work, creating a dangerous gap that could leave the project exposed if insolvency strikes. Your certification carries weight beyond simple payment approval. Courts have established through cases like Hunt v Optima that architect certificates create contractual warranties, meaning third parties who rely on your assessments can pursue you for negligent misstatements even without direct contracts. This elevated liability makes thorough verification essential, transforming progress assessment from administrative task to critical risk management function. ## **Navigating Site Verification in the Digital Age**  Physical site inspection remains the cornerstone of accurate assessment, though technology is revolutionising how we conduct and document these visits. When you arrive on site, you're comparing actual progress against three benchmarks: the contractor's claim, the construction programme, and your professional judgement of reasonable progress. This triangulation helps identify discrepancies that might indicate problems beyond simple delays. Modern documentation goes well beyond traditional site notes. Using platforms like Procore or Payapps, you can capture geo-tagged photos linked directly to specific claim items, creating an audit trail that protects both you and your client. Drone surveys provide particularly valuable oversight for large sites, capturing progress that might be missed from ground level while creating time-stamped visual records. The Office of Projects Victoria now mandates such digital documentation on major infrastructure projects, setting standards that increasingly flow through to private sector work. The integration of 4D BIM visualization adds another dimension to progress verification. By linking construction schedules to 3D models, you can visualise planned versus actual progress, identifying areas where claimed completion doesn't match expected sequencing. This becomes particularly valuable when assessing complex projects where traditional percentage completion metrics fail to capture interdependencies between trades. For instance, mechanical services might appear 70% complete by installation metrics, but if commissioning prerequisites aren't met, the real progress toward practical completion might be substantially less. ## **Understanding Payment Timing's Cascade Effects** Payment timing creates ripple effects throughout projects that early career architects often underestimate. Under Victoria's current Security of Payment Act, respondents have ten business days to issue payment schedules after receiving claims. Miss this deadline, and the full claimed amount becomes automatically payable regardless of your assessment. This harsh consequence reflects legislation designed to maintain cash flow through the construction chain, recognising that delayed payments cascade into subcontractor defaults and project disruptions. The 2025 reforms will introduce monthly claiming cycles and cap payment terms at 25 business days, intensifying the rhythm of assessment and payment. You'll need to establish efficient review procedures that balance thoroughness with statutory timeframes. This means developing systematic approaches: preliminary desktop reviews within 48 hours of receipt, site inspections scheduled for days 3-5, and final assessments completed by day 7, leaving buffer time for queries and clarifications. Understanding contractor cash flow dynamics helps you anticipate and manage payment pressures. Most subcontractors operate on 30-day payment terms while facing weekly wage obligations, creating constant liquidity pressure. When main contractors experience payment delays, they often can't bridge this gap for more than one or two cycles before facing insolvency. Recognising these patterns helps you identify when expedited assessment might prevent project collapse versus when delays signal deeper problems requiring protective measures. ## **Managing Off-Site Materials and Vesting Complexities**  Off-site materials have become increasingly significant as supply chain disruptions create longer lead times and contractors seek earlier cash flow relief. When structural steel takes six months to fabricate or electrical switchboards require twelve-week procurement periods, contractors legitimately need payment before materials reach site. However, this creates complex liability scenarios you must carefully navigate. The VVB M & E Group v Optilan precedent fundamentally changed how we approach off-site materials certification. The court found that including materials in gross certificate values triggers title transfer even when net payment is zero due to retention or other deductions. This means the moment you certify off-site materials, you're potentially transferring ownership regardless of actual payment. If the contractor subsequently enters insolvency and materials disappear or are subject to retention of title claims, your certification might leave the client exposed without recourse. Proper vesting procedures require multiple verification steps. First, confirm materials are specifically manufactured for your project, not generic stock that could be redirected. Second, verify they're stored separately and clearly marked with project identification. Third, ensure comprehensive insurance covers both physical damage and title risks. Fourth, obtain formal vesting certificates from both contractor and supplier confirming clear title transfer. Finally, document everything with photographs showing materials, markings, storage conditions, and insurance certificates. This might seem excessive, but when managing hundreds of thousands of dollars in materials that won't reach site for months, thorough documentation becomes your professional protection. ## **Recognising and Responding to Insolvency Warning Signs** Builder insolvency rarely occurs without warning, though recognising early indicators requires understanding both financial and behavioural patterns. Financial stress typically manifests through progressive stages: first, extended payment times to suppliers; then, requests for accelerated progress payments or advances; followed by key staff departures; and finally, statutory demands or winding-up applications. By the time public indicators like court proceedings appear, it's usually too late for protective measures. Behavioural changes often provide earlier warnings than financial metrics. Watch for sudden switches from quality-focused to speed-focused delivery, unexplained replacement of established subcontractors with unknown entities, or resistance to providing statutory declarations about payment status. When project managers who previously welcomed site inspections become evasive or defensive, something has likely changed in their financial position. Your response to insolvency indicators must balance project protection with avoiding precipitous actions that might create self-fulfilling prophecies. Immediately document all concerns in writing to both client and insurer, ensuring you've raised red flags even if decisions are made to continue. Consider recommending enhanced protective measures like direct payment arrangements to critical subcontractors, increased retention percentages, or requiring bank guarantees for advance payments. Most importantly, avoid certifying work that hasn't been thoroughly verified, as insolvency administrators will scrutinise recent certificates for potential clawback under preference payment provisions. ## **Building Competency for Registration and Beyond** For early career architects pursuing registration, progress claim administration offers crucial experience across multiple NSCA competency areas. Each claim assessment demonstrates PC57 (contract administration), PC46 (cost planning and control), and PC51 (construction sequencing and programming). The challenge lies in gaining sufficient exposure when design and construct procurement dominates the Victorian market, limiting architectural involvement during construction phases. Strategic career planning can overcome these limitations. Seek employers who maintain traditional procurement projects allowing full architectural services. Volunteer for payment assessment tasks even when not directly responsible, building experience under supervision. Document every involvement meticulously in your logbook, noting specific responsibilities, decisions made, and lessons learned. The APE examination frequently tests progress claim scenarios, particularly around variation assessment, extension of time impacts on claims, and practical completion certification timing. Continuous professional development becomes essential as legislation and technology evolve rapidly. The transition to the Building and Plumbing Commission from July 2025 will introduce new requirements and procedures you'll need to master. Similarly, digital competency in platforms like Payapps or Procore increasingly determines employability. Investing time in understanding these systems now, while building fundamental assessment skills, positions you advantageously for registration and career advancement in Victoria's transforming construction industry. **Key Terms:** - **Progress claim**: Monthly formal payment request documenting completed work percentages, unfixed materials, and variations, requiring specific Security of Payment Act wording - **Payment schedule**: Respondent's formal reply within 10 business days stating payable amount with detailed reasons for any differences from claimed amount - **Vesting certificate**: Legal document confirming ownership transfer of off-site materials, requiring clear identification, storage details, and insurance confirmation - **Statutory declaration**: Sworn legal statement confirming subcontractors and suppliers have been paid, with false declarations carrying criminal penalties - **Reference date**: Current monthly anniversary of contract date triggering claiming rights (being simplified to calendar months in 2025 reforms) - **Retention of title clause**: Supplier's reservation of ownership until full payment, potentially conflicting with vesting certificates - **Preference payment**: Payment to creditor shortly before insolvency that liquidators can reverse if it provided unfair preference over other creditors