The cost to use the service depends on the value of the Contract Works you are having done. Costs start at just $100 for small scale projects under $15,000 - The highest fee is for building work that is over $1m and even then the fee is only $675. (Please see our Calculators to find out how much the Registration and Administration fee will be for your specific project).
In addition to using the trust account part of the BuildSafe service when you register your building project, you also get access to our fair and independent conditions of contract, guidance on managing the construction process and various forms to help reduce the chances of there being any confusion or disputes during the works. These are all provided to registered users of BuildSafe free of charge. So, if you consider the cost to visit your lawyer to talk about whether to sign a contract or not alone, BuildSafe is clearly a very good and cost effective option.
A Subcontractor must pay a registration and administration fee to use BuildSafe. The fee is the same irrespective of the Subcontract value.
The fee for Subcontractors is $100.00 (incl GST) where the Head Contractor and the Owner/Principal are already using the Scheme.
Where a specialist tradesperson/subcontractor is contracting directly with an Owner/Principal they are, for the purpose of the Scheme, considered to be the 'Contractor' and should visit the Contractor information section of the website to find out what their obligations are and our Calculators to find out the costs involved for their specific project.
BuildSafe is an independent neutral third party which provides Services for the equal benefit of all parties to a construction contract. Therefore it is preferable that the Owner/Principal and the Contractor pay an equal share of the cost of registering and administering the Scheme. However, of course one party can pay the whole of the registration and administration fee if that is what the parties agree, but it makes no difference to how the services are provided and gives absolutely no priority whatsoever over how the services are delivered.
A Subcontractor must pay a registration and administration fee to join the Scheme. The fee is the same irrespective of the Subcontract value which simply reflects the greater extent of security available to Subcontractors in respect of lower value construction contracts.
Of course, the above fees are separate to the Security Amount that is payable by the Owner/Principal. Under the BuildSafe Security of Payment Scheme, BuildSafe holds an amount of money called the Security Amount in trust.
This Security Amount may be a value agreed upon between the parties for the purpose of their specific contract or you may choose to use the BuildSafe recommended amount - Which is calculated to be roughly the equivalent of the deposit required by most contractors under typical building contracts. That amount is also roughly the equivalent of the final payment to be paid to the contractor under the contract.
The Security Amount is held in trust by BuildSafe until the contractor has performed its obligations under the contract and the owner has certified that the work is complete and then BuildSafe releases the Security Amount to the contractor and the subcontractors, as the case may be.
Of course, if the contractor fails to perform its obligations, the money will be given back to the Owner.
The BuildSafe recommended Security Amount is determined by the total Contract Value - with the proportion of the total contract value held as security decreasing as the Contract value increases.
This is because with lower value construction contracts, the contract works should, if properly and efficiently carried out, be completed in a relatively short period of time. In some cases that will be less than one month. In such a case the risk to the contractor of non-payment due to the default by the Owner is considerable because the works would be completed before any payment is due under the contract. Under the BuildSafe Security of Payment Scheme, the Contractor is protected from significant loss on smaller jobs because BuildSafe holds a large percentage of the Contract Price and will release that to the Contractor upon proper completion. The Owner is also protected by not having to pay the Contractor a large deposit to cover the Contractor’s risk at such time as there is little or no value of work in place.
On the other hand, the greater the value of the construction contract, the longer the period over which the contract works will be undertaken and over which progress payments will and must be made monthly to ensure cashflow for the contractor. In such a case, the risk to the Contractor of loss through nonpayment is relatively small during the early stages of the project with the risk progressively getting greater as the project nears completion. Once again the Owner is protected by not having to pay the Contractor a deposit at the start of the project to cover the Contractor’s risk at such time as there is little or no value of work in place.
To find out the BuildSafe recommended Security Amount for your specific project check our Calculator.
The Security Amount is paid in order to initiate the scheme and is usually payable within five working days of receipt of an application (please note there may be exceptions to this if agreed between the parties ie, if the start date of the project is a long way away the date for payment of the Security Amount may be set at a time closer to the beginning of the project, although this is unusual).