Victoria's revised security of payment regime has now been operating since 15 April 2026. While it remains early in the life of the new regime, the first five months have already provided valuable insights into how project participants, contract administrators, contractors and principals will need to adapt their approach to payment disputes and project administration. 

The reforms to the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act) represent the most significant overhaul of Victoria's security of payment framework in many years. The reforms abolished the excluded amounts regime, replaced reference dates with a statutory monthly entitlement to claim, restricted respondents from raising new reasons in adjudication, introduced a new statutory framework dealing with performance security and gave adjudicators greater scope to examine the fairness of notice-based contractual time bars. 

On paper, many of these changes appear procedural. In practice, however, the reforms have already begun to change behaviour on projects. Payment claims are becoming broader. Payment schedules are becoming more important. Security disputes are emerging as a new category of adjudication. Most importantly, the reforms are placing greater emphasis on contemporaneous project administration and record keeping. 

In response to the security payment regime changes, Victoria is moving away from a regime where adjudications frequently turned upon technical jurisdictional arguments and toward a regime where outcomes are increasingly driven by project records, contractual administration and the contents of the payment schedule itself. Parties can no longer assume that deficiencies in project administration can be repaired later during adjudication. In many cases, the adjudication outcome has effectively been shaped months earlier through the notices issued, records maintained and decisions made on site. 

That shift reflects a broader change in the way the SOP Act now operates. Whilst adjudication remains a fast-track interim payment process, the reforms have expanded the scope of claims capable of being pursued and increased the importance of the documents exchanged before an adjudication application is ever lodged. The strongest payment schedule is no longer one prepared quickly after a payment claim arrives. It is one supported by a project team that has maintained proper records, documented its position contemporaneously and preserved its contractual rights throughout the life of the project. 

Five months is not enough time to draw definitive conclusions about every aspect of Victoria's revised security of payment regime. However, several practical trends have already emerged.

In this article, we examine three of the most significant developments: the growing importance of payment schedules, the increasing role of project administration in adjudication outcomes and the broader range of claims now capable of being pursued through adjudication. In the next article in this series, we explore emerging issues relating to performance security, unfair time bars and dispute escalation.

 If there is one lesson that has emerged most clearly because of the recent SOP regime changes, it is that payment schedules now matter more than ever before. 

Historically, many respondents approached payment schedules as the beginning of their defence rather than the complete articulation of it. While a payment schedule was undoubtedly important, parties often regarded the adjudication response as the primary opportunity to develop detailed factual, contractual and legal arguments. Issues that had not been fully addressed in a payment schedule could frequently be expanded upon or refined later in the adjudication process. 

One of the most significant reforms to the SOP Act is the restriction on respondents relying upon reasons in an adjudication response which were not identified in the payment schedule. In practical terms, the payment schedule has become the document that defines the boundaries of the respondent's case. Arguments omitted from the payment schedule may be difficult and in some circumstances impossible, to raise later. As a result, the quality of the payment schedule itself is becoming increasingly determinative of adjudication outcomes. 

The practical consequences of this change are already being felt across the industry. When a payment claim is received, project participants frequently have only a relatively brief period to understand the claim, investigate relevant events, review supporting documents, consult project personnel and prepare a compliant payment schedule. Under the new regime, that compressed timeframe must also accommodate the identification and formulation of all reasons for withholding payment. 

The challenge becomes even greater when one considers the broader range of claims now capable of being pursued through adjudication. Payment claims can now encompass substantial variation claims, delay claims, latent condition claims and other entitlements that would previously have fallen outside the SOP Act framework. Respondents are therefore being asked to analyse more complicated claims, involving larger amounts and more extensive evidentiary issues, within the same statutory timeframes. 

As a result, the payment schedule is no longer simply an accounting or administrative exercise. It is increasingly the first and most important advocacy document in the dispute. A well-prepared payment schedule should identify all factual issues, contractual issues, valuation issues and legal issues relied upon by the respondent. Where issues relating to variations, delay, defects, programming, notices, latent conditions or contractual interpretation are relevant, they should be carefully addressed in the schedule itself rather than left for later development. 

The reforms have also changed the role of project teams and contract administrators. Under the previous regime, there was often a degree of comfort in knowing that lawyers and claims consultants could become heavily involved once an adjudication application had been lodged. The revised regime requires that escalation occur much earlier. Project managers, contract administrators, superintendents and commercial teams now play a central role in preserving and assembling the information that will support the respondent's position. In many cases, the success or failure of an adjudication may depend upon whether those project personnel identified and documented the relevant issues before the payment schedule was served. 

For principals and head contractors, this means implementing systems that allow payment claims to be reviewed immediately upon receipt and escalated to the appropriate decision-makers without delay. It also means ensuring that legal advisers are engaged early enough to assist with complex claims before the payment schedule deadline expires. Waiting until an adjudication application arrives may simply be too late. 

For contractors and subcontractors, the lesson is equally important. Although the reforms are often viewed through the lens of respondent risk, claimants also benefit from understanding the new significance of the payment schedule. A deficient schedule may substantially narrow the issues genuinely available for dispute in a subsequent adjudication and influence both settlement discussions and adjudication strategy. Sophisticated claimants are increasingly paying close attention not only to the amount assessed in a payment schedule, but also to the reasons given and, just as importantly, the reasons omitted. 

Most significantly, the reforms have reinforced a broader principle: adjudications are no longer won or lost solely by the quality of the submissions prepared after a dispute arises. Increasingly, outcomes are being shaped by the quality of the payment schedule itself. In practice, that means the strongest adjudication responses are often built weeks or months before an adjudication application is ever lodged, through disciplined project administration, effective record keeping and the careful preparation of payment schedules when disputes first emerge.  

 A key practical effect of the reforms is that project administration and dispute strategy are now more closely aligned than ever before. 

Historically, many parties viewed project administration and dispute resolution as separate disciplines. Project teams were responsible for managing the day-to-day delivery of works, while lawyers, claims consultants and commercial managers became heavily involved once a formal dispute emerged. Although good project administration was always important, deficiencies in record keeping could often be addressed later through witness statements, expert reports and additional submissions during the dispute process. 

The revised SOP Act has changed that dynamic. 

The abolition of the excluded amounts regime means that adjudicators are now increasingly required to assess larger and more complex disputes involving variations, delay costs, disruption claims, latent conditions and other entitlements that previously sat outside the adjudication process. At the same time, the restrictions on raising new reasons in adjudication have increased the importance of the information available when payment schedules are prepared. These reforms have combined to place enormous weight on contemporaneous project records. 

In practice, adjudicators do not determine disputes based upon how events are reconstructed months or years later. They determine disputes based upon the evidence available to them. The parties that are best positioned under the new regime are increasingly those who have consistently created and maintained reliable project records throughout the life of the project. 

This means that project records are no longer merely administrative documents. Site diaries, progress reports, meeting minutes, variation registers, delay notices, extension of time claims, cost records, programmes, emails and photographs can now become central pieces of evidence in an adjudication. In many cases, those records will carry considerably greater weight than explanations generated after a payment dispute has emerged. 

The reforms have also increased the importance of documenting contractual compliance as events occur. Whether a party seeks to establish a variation, justify an extension of time, demonstrate delay, explain disruption or rely upon a contractual entitlement, the strength of that position will often depend upon the quality of the contemporaneous records supporting it. The first five months of the reforms have reinforced a reality familiar to experienced project participants: if a matter is not documented at the time, it becomes harder to prove later. 

Contract administrators, superintendents and principal representatives therefore occupy an increasingly critical position under the new regime. Their role is no longer limited to assessing payment claims and certifying work. They are often the first people responsible for identifying issues that may subsequently become adjudication disputes, ensuring relevant records are maintained and preserving the information required for a future payment schedule. As a result, the effectiveness of a party's adjudication strategy may depend upon decisions made by project personnel well before lawyers become involved. 

The practical consequence is that project teams should assume that every significant event on a project may be scrutinised in adjudication. Variations should be documented when they arise. Delay events should be recorded when they occur. Project correspondence should be maintained in an organised and accessible manner. Cost records should be capable of demonstrating the basis upon which amounts have been claimed or withheld. Waiting until a payment claim is received to gather this information is increasingly becoming a high-risk approach. 

The broader lesson is that successful adjudication outcomes are no longer driven solely by legal arguments. They are increasingly driven by the quality of project administration. The strongest payment schedules and adjudication responses are often supported by months of disciplined record keeping, contractual compliance and contemporaneous documentation. In that sense, project administration has become an adjudication strategy in its own right. 

For many years, Victoria's security of payment regime occupied a more confined space than equivalent legislation in some other Australian jurisdictions. The excluded amounts regime meant that significant categories of construction disputes, whilst capable of giving rise to contractual claims, could not readily be pursued through adjudication. As a result, many parties viewed adjudication as a mechanism primarily concerned with straightforward progress payment disputes rather than broader project disputes. 

One of the more significant practical consequences of the abolition of excluded amounts is that respondents can no longer assume that claims involving variations, delay costs, prolongation costs, latent conditions or liquidated damages adjustments automatically fall outside the adjudication process. The question is increasingly becoming whether the claim can be substantiated, rather than whether it can be brought at all. 

Many claims that were previously outside the practical reach of adjudication can now form part of a payment claim. Depending upon the circumstances, this may include substantial variation claims, latent condition claims, delay-related claims, disruption costs, liquidated damages disputes and other amounts that would historically have been left to final account negotiations, expert determination, arbitration or litigation. The distinction between a "payment dispute" and a broader contractual dispute is becoming increasingly blurred. 

In practical terms, this means that payment claims are becoming larger, more complex and heavily documented than those commonly seen under the previous regime. A payment claim can now involve numerous interrelated issues, including valuation disputes, programming disputes, variation entitlement questions, contractual notice arguments and causation issues. In some cases, matters that might previously have developed into standalone litigation are now capable of forming part of an adjudication process conducted within compressed statutory timeframes. 

The significance of this development should not be underestimated. One of the key strategic assumptions under the previous Victorian regime was that certain categories of disputed amounts would be determined elsewhere. That assumption frequently influenced how projects were administered, how records were maintained and how payment claims were assessed. The reforms have substantially reduced the comfort traditionally associated with that approach. 

Project participants should now proceed on the basis that many of the disputes that arise throughout the life of a project may need to be analysed and responded to within the SOP Act framework. This requires a different mindset. Issues relating to variations, delays, latent conditions and project costs can no longer be treated as matters that will necessarily be dealt with at the end of the project. Instead, they should be documented, assessed and administered on the assumption that they may become the subject of a payment claim and adjudication at short notice. 

The reforms also increase the importance of early project assessment and dispute identification. Where multiple claims are capable of being pursued through adjudication, respondents are often required to analyse not only the valuation of the claim itself, but also entitlement, contractual compliance, notice requirements, delay analysis and supporting evidence. Larger claims inevitably require more resources, more detailed records and more careful preparation of payment schedules. 

For principals, developers and head contractors, this means that payment claim assessment processes may require greater internal involvement from commercial managers, project personnel and legal advisers than was previously necessary. The days of treating a payment claim as a simple valuation exercise are rapidly disappearing. Increasingly, payment claims may involve significant contractual and legal issues that require detailed consideration before a payment schedule is issued. 

For contractors and subcontractors, the reforms create opportunities but also responsibilities. Broader categories of claims may now be pursued through adjudication, but those claims still require proper substantiation. The first five months of the new regime suggest that merely asserting entitlement is unlikely to be sufficient. Parties seeking to pursue larger claims through adjudication will still need contemporaneous evidence, contractual foundations and detailed supporting records capable of withstanding scrutiny in a fast-track adjudication process. 

The removal of excluded amounts has expanded both the opportunities and the risks created by Victoria's security of payment regime. While adjudication remains an interim payment process, the disputes now being brought within its scope increasingly resemble disputes that would previously have been reserved for arbitration or litigation. Participants who continue to treat adjudication as a narrow payment mechanism may find themselves underprepared for the scale and complexity of claims that can now be advanced under the reformed SOP Act.

While the reforms have already changed the way payment claims are prepared and assessed, they are also reshaping other aspects of project risk and dispute management.

In the next article in this series, we examine the emergence of performance security disputes, the impact of Victoria's new unfair time bar provisions and why project participants are increasingly needing to identify and escalate disputes earlier.

To discuss how Victoria's security of payment reforms may affect your payment claim, payment schedule and contract administration processes, please contact our Construction & Engineering team.