🇦🇺Australia

Unbilled Work & Progress Payment Undervaluation

3 verified sources

Definition

Progress payment claims require 'clear and plain language' descriptions of work stages and must reflect the 'value of works completed.' Manual tracking of site progress, lack of real-time documentation of variations, and incomplete record-keeping leads to: (1) work items completed but not included in claim (forgotten items), (2) variations performed but not formally documented (scope creep absorption), (3) underclaimed percentages due to manual estimation errors, (4) materials on-site not recognized in valuation. Lenders often apply more conservative valuations than contract specifications, reducing claimed amounts.

Key Findings

  • Financial Impact: AUD 5,000-20,000 per residential project (1-4% of contract value); approximately 8-12 hours/month of finance staff time identifying missing claims
  • Frequency: Occurs on 60-80% of residential building contracts with variations or extended timelines
  • Root Cause: Manual site documentation, lack of integrated materials/labour tracking, absence of real-time progress capture, variations not formally documented, lender valuation more conservative than commercial value, communication gaps between site and finance teams

Why This Matters

The Pitch: Australian residential builders lose AUD 5,000-20,000 per project (on average AUD 500k builds) through underclaimed progress payments and missing variation documentation. Digital work capture and automated claim generation recovers 90% of this leakage.

Affected Stakeholders

Project Managers, Site Supervisors, Finance/Accounts Receivable, Commercial managers

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Progress Claim Processing Delays & Cash Flow Drag

AUD 15,000-45,000 per project annually (interest on withheld funds: 6-8% p.a. on average 60-90 day cash conversion cycle); approximately 40-60 hours/month manual processing per project manager

Progress Payment Compliance Violations & Legal Risk

AUD 5,000-50,000 per dispute (legal fees, adjudication costs, work suspension damages); estimated 2-8% of contracts >AUD 100k experience payment disputes annually

Manual Progress Claim Administration Bottlenecks

40-80 hours/month per project manager (AUD 25,000-40,000 annual salary impact); estimated 1-2 additional projects foregone due to capacity constraints (AUD 50,000-150,000 gross profit loss annually per firm managing 5+ concurrent builds)

Inaccurate Progress Payment Valuations & Lender-Contract Misalignment

5-15% reduction in claimed progress payment amounts (AUD 25,000-75,000 per AUD 500k project); 8-12 hours/project rework due to resubmission of claims with adjusted valuations

Variation & Change Order Dispute Resolution Costs

AUD 15,000–50,000 per residential project (5–15% of typical AUD 300k–500k residential build). Typical mediation: AUD 5,000–15,000; adjudication/arbitration: AUD 20,000–100,000+

Project Completion & Payment Delay Due to Unapproved Change Orders

AUD 500–1,500/week per stalled project (based on 12% financing cost of AUD 30k–100k contract value). Average delay: 2–8 weeks per change = AUD 1,000–12,000 working capital cost per change

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