Data on Adjudication Applications and Outcomes under Building and Construction Industry Security of Payment Act 2004 and Strengthening Safeguards for Retention Monies

Mr Victor Lye asked the Minister for National Development whether the Government has data for each of the past five years on the (i) number and total value of adjudication applications under the Building and Construction Industry Security of Payment Act 2004 (ii) median value claimed and awarded (iii) proportion of applications made by subcontractors against main contractors and (iv) time periods that payments are outstanding before adjudication was sought.

Mr Victor Lye asked the Minister for National Development whether the Building and Construction Authority (BCA) has studied (i) the extent that SMEs choose not to pursue adjudication under the Building and Construction Industry Security of Payment Act 2004 due to concerns over cost, complexity or future commercial relationships (ii) how value and duration of retention monies impact SME cash flow and (iii) implementing more safeguards such as maximum retention periods, mandatory release milestones or segregated retention accounts.

The total number and value of adjudication applications under the Building and Construction Industry Security of Payment Act (SOPA), as well as the median value claimed and determined annually between 2021 and 2025, are in the table below.

Table 1: Data on Adjudication Applications and Outcomes Between 2021 and 2025

The Building and Construction Authority has not received industry feedback indicating that cost or complexity is a significant barrier to SMEs pursuing SOPA adjudication. Some small and medium enterprises may, however, choose not to pursue adjudication to preserve business relationships with their customers and suppliers.

As construction projects vary widely in scale, complexity and duration, retention arrangements between private firms are commercially negotiated according to the needs of individual contracts. Prescribing binding limits on the amount or duration of retention monies could inadvertently reduce the flexibility for contracting parties to agree on arrangements suited to their circumstances.