Security of Payment Act: Claiming Progress Payments for Construction Work Done

Last updated on January 29, 2024

Contractors, plumbers, electricians, architects and other construction industry professionals may sometimes face difficulties in collecting payments from their clients. Often, small and medium enterprises may feel that they have no choice but to write off bad debts due to the time and money involved in going to court to enforce their rights.

However, with the Building and Construction Industry Security of Payment Act (SOPA), a simpler, confidential and lower-cost adjudication procedure for contractors and related professionals to recover timely payments – both while a project is ongoing and after it has been completed – is available.

The SOPA is supplemented by the Building and Construction Industry Security of Payment Regulations.

Can I Use the Adjudication Process?

The SOPA covers payments arising from ‘construction work’,  and covers any work done on buildings or structures which would form part of the land, any long-term installations within those buildings or structures such as air-conditioning or lighting, and any operation which is closely linked to work in either of the two categories (e.g., the prefabrication of components, whether in or outside Singapore).

Additionally, the SOPA only applies to contracts made in writing on or after 1 April 2005, for construction work or the delivery of services or commodities for Singapore construction projects. For example, with regard to the prefabrication of components, the SOPA only applies to contracts for the supply of these prefabricated components for construction work to be carried out on a construction site in Singapore.

The writing requirement may be satisfied by an exchange of correspondence via email or even WhatsApp messaging. Where a contract is recorded or agreed otherwise than in writing, the contract is treated as being made in writing if, subject to the provisions of the SOPA, the matter in dispute between the parties to the contract is in writing.

Minor residential repairs which do not require approval from the Building and Construction Authority (BCA) are excluded from this adjudication process.

What Can I Claim?

Significantly, the SOPA makes provision for progress payments even when these have not been stipulated in the contract. Progress payments are instalment-like payments for work done to date which can be claimed before a project is completed. Hence, the SOPA can be used to claim payment while a project is still ongoing. It can also be used to claim a one-off full payment at the end of a project.

Where the contract had a specified progress payment schedule, the claimant would simply be entitled to what he agreed to. However, even where progress payments have not been specified, a company or individual providing construction work may still claim a progress payment. The amount claimable would depend on the total contract price less any costs for rectifying defects. Progress payments may also be calculated according to market norms.

Some may be concerned that they will not be eligible to claim progress payments as their contract has a “pay when paid” clause that stipulates they will only be able to receive payment for construction work if and when the other contracting party has received payment from some third party. The SOPA makes such clauses unenforceable. Such clauses can therefore be ignored and progress payments can be claimed as if no such clause had ever been part of the contract.

How Do I Make a Claim?

The adjudication process is only available after payment has become due. Where the contract specifies progress payment dates, payment is due according to the contract. Even when there is a payment schedule, a contractor may still ask for progress payments at other points, which would become due 35 days after a tax invoice or payment claim has been sent to the other party. Where the contract was silent on progress payments, this is reduced to 14 days after submitting a tax invoice.

Alternatively, payment becomes due if the claimant serves a payment claim on the respondent and the respondent does not make payment (typically no more than 21 days). Note that only one progress payment claim may be made if there is no contractual requirement for multiple progress payments.

If any of these disputes arise, the party seeking payment would be entitled to make an adjudication application. The claimant can alternatively make an adjudication application where the other party challenges the amount claimed.

For the purposes of making an adjudication application, BCA provides applicants with a brochure of the adjudication timelines and some guidelines on making an application.

Once this has been filed, strict timelines apply to the determination of the adjudicator and the handing down of the adjudicator’s judgment. There is no right of appeal but an aggrieved party may apply for review of the decision.

Enforcing the Adjudicator’s Decision

In terms of enforcement, a wide range of measures are available. Section 27 of the SOPA allows for an adjudication decision to be enforced as if it were a court order.

However, additional measures are available. For example, some may be concerned that their claim may be good in law but is practically useless, such as when the other party is insolvent. In such cases, section 24 of the SOPA allows successful claimants to claim the adjudicated amount against the principal, or the party who is ultimately funding the project. This tends to be applicable in larger projects where the builder is contracting with a subsidiary company within a corporate group which has fewer assets than its parent company. Additionally, successful claimants have the right to take back goods supplied until payment has been made. Similarly, successful claimants have a right to suspend work or supply of goods until payment is made.

Finally, claimants should note that claims are subject to a 30-month limitation period starting from:

  • For supply contracts:
    • The date on which the goods and services to which the amount in the payment claim relates were last supplied
  • For construction contracts (whichever is latest):
    • The date on which the construction work was last carried out;
    • The issuance date of the last document certifying the completion of the construction work under a contract; or
    • The issuance date of the last temporary occupation permit.

What are the Costs Involved?

When applying for adjudication, adjudicators appointed by the authorised nominating body (currently the BCA) will charge a fee for their services. The Singapore Mediation Centre (SMC) will charge certain fees too. Applicants should check the current schedule of BCA and SMC fees when considering making an application under the SOPA.

Note that adjudicators have the flexibility to make awards as to costs. Typically, the losing party will bear the costs of the proceedings.

Is the Adjudication Process Suitable for Me?

The adjudication process prescribed by the SOPA offers certain benefits. It is relatively fast, with short, fixed deadlines for adjudicators to give their judgments for example. In turn, this cuts costs for parties. Additionally, all matters disclosed during adjudication which are not already in the public domain will remain confidential, unlike a hearing in open court. This helps “save face” for both parties as clients may be wary of dealing with a company facing legal issues of any kind.

The SOPA expressly preserves the rights of parties to a construction work payment dispute to seek other remedies, such as seeking a court order in the form of a judgment debt. For the largest and most complex of cases, a full court hearing may be desirable as the strict timelines for adjudication prescribed by the SOPA may mean there would not be enough time to fully examine the particulars of the claim.

Another alternative is arbitration. Although arbitration tends to be relatively expensive and can be slower, it preserves the anonymity of the parties. However, parties should note that it is not possible to “contract out” of the SOPA, meaning that a contractual clause which says something like “the Building and Construction Industry Security of Payments Act shall not apply to this agreement” will be ignored. It would therefore typically always be open to a party seeking payment to seek adjudication under the SOPA.

Ultimately, this statutory adjudication process can be used by companies providing construction-related goods and services to aid their cash flow and to enforce their contractual rights.

Before Making a Claim
  1. Drafting an Enforceable Settlement Agreement in Singapore
  2. Should I Make A Police Report or Should I Sue?
  3. Differences between Criminal Law and Civil Law
  4. Should You Sue? 8 Things to Think About Before Suing
  5. How to Write a Cease and Desist Letter in Singapore
  6. Limitation Periods: What's the Deadline for Suing in Singapore?
  7. What to Do If Someone Sues Your Singapore Business
  8. Arbitration and Mediation: When They Can be Useful for Business Disputes
  9. Can I Sue a Foreigner or Foreign Company in Singapore?
  10. Mediation in Singapore
  11. Arbitration: When and How to Arbitrate Business Disputes in Singapore
  12. Third-Party Funding for Litigation in Singapore
  13. Using Neutral Evaluation to Resolve Civil Disputes in Singapore
Making a Claim - The Beginning of a Dispute
  1. What is a Breach of Confidence and How to Prove It
  2. Victim of a Wire Fraud? Here’s What You Can Do
  3. How to File an Originating Claim in a Singapore Lawsuit
  4. How to Bring a Class-Action Lawsuit in Singapore
  5. Letters of Demand and Their Usages in Singapore
  6. Law on Writ of Summons in Singapore
  7. Received a "Without Prejudice" Letter? Here’s What It Means
  8. What if I Cannot Find the Party I Want to Sue?
  9. Filing a Claim with the Small Claims Tribunals in Singapore
  10. First Meeting With Your Business Dispute Lawyer: What to Expect
  11. Negotiating a Settlement in a Business Dispute
  12. Security of Payment Act: Claiming Progress Payments for Construction Work Done
  13. Engaging a Queen’s Counsel or King's Counsel in Singapore
The Litigation Process
  1. Can You Withdraw Your Court Case in Singapore?
  2. Wasting the Court’s Time and Resources: Legal Consequences
  3. Natural Justice Explained: Your Right to a Fair & Unbiased Hearing
  4. Civil Litigation: How to Sue in Singapore (Step-by-Step Guide)
  5. Originating Application: What It Is and How to File in Singapore
  6. Notice of Intention to Contest or Not Contest: What is It?
  7. Affidavits in Singapore: What Are They & How to Prepare One
  8. Default Judgments and Summary Judgments in Singapore
Matters relating to Witnesses and Evidence
  1. Can My Minor Child be Subpoenaed to be a Court Witness?
  2. Giving Evidence via Video Link in a Singapore Lawsuit
  3. Prima Facie: What Does It Mean and How to Establish
  4. Hearsay Evidence: Admissibility and Objection of It in Singapore
  5. Admissibility of Evidence in the Singapore Courts
  6. Subpoenaed to be a Court Witness in Singapore: What You Need to Do
  7. Who is an Expert Witness and How to Use Expert Evidence in Singapore
  8. Destroying and Tampering With Evidence in Singapore
  9. A Guide to Legal DNA Testing in Singapore
Remedies Available for Civil Litigation
  1. Types of Injunctions in Singapore
  2. Specific Performance: Obtaining this Equitable Remedy in Singapore
  3. Judicial Review in Singapore: What is It and How to Apply
After the Lawsuit
  1. After the Lawsuit: Who Has to Pay Whom, and How Much?
  2. Enforcement of Court Judgments and Orders in Singapore
  3. How to Get an Order for Seizure and Sale to Enforce a Judgment