Payment disputes are harder to manage when a formal claim is treated as an ordinary invoice. The people receiving and assessing it need to recognise the process and know who is responsible for the response.
Treat the claim as a formal project document
The Construction Contracts Act 2002 provides a specific framework for making and responding to payment claims in New Zealand. A claim, the payer’s assessment and the payment schedule have different purposes. The documents and deadlines need to be understood before a disputed amount reaches accounts.
The formal payment claim and schedule are different from a detailed contractual claim submission. The Australian payment regimes are also different.
Check the claim before it is served
A payment claim must be in writing, identify the contract and relevant work and period, state the amount and due date, explain the calculation and state that it is made under the Act. The prescribed Form 1 must accompany claims under construction contracts entered into on or after 1 December 2015; it is not just a residential-project requirement.
Use a checklist alongside the claim template. Confirm the contracting entity, recipient, service arrangements and supporting documents. Keep the issued version and evidence of service together. A complete assessment sitting in a project folder is not evidence that the claim reached the payer.
Explain the difference between claim and assessment
If the payer proposes to pay less, the payment schedule needs to identify the claim and scheduled amount and explain the calculation and reasons for the difference, including reasons for withholding payment. “Disputed” beside a figure gives the claimant little assistance in understanding the assessment.
Consider a claim for 600 metres of installed drainage. The assessment allows 540 metres. State whether the difference concerns measurement, the valuation date or the treatment of incomplete work. Refer to the relevant records. A disagreement about quantity should not be presented as a rejection of the whole item.
Where several variations are included, respond to each one. Distinguish a dispute over entitlement from one over price. This also gives the project team a workable list of matters to resolve before the next assessment.
Calculate the response date from the right starting point
The schedule must be provided within the contractual response period or, if none is specified, within 20 working days after service of the payment claim. The payment due date is a separate matter. Check the Act’s definition of working day, including the year-end exclusions, rather than counting weekdays on an ordinary calendar.
Allocate time within that period for measurement, review and authorisation. Set an internal deadline earlier than the date for service so that a disputed item or an unavailable signatory does not consume the final hours.
Do not rely on an informal objection
A telephone discussion about the amount should lead to the necessary written response. Record any agreement accurately, but do not assume a conversation or an intention to negotiate has dealt with the payment schedule.
Failure to provide a schedule in time can make the claimed amount payable under the Act. An underlying dispute about the work does not, by itself, remove that payment obligation. If a deadline has been missed, establish the legal position promptly rather than assuming a late assessment puts matters back on the usual footing.
Use the assessment to resolve the next month’s issues
After issuing the schedule, keep the unresolved items under review. Identify the measurement, instruction or explanation needed to settle each difference, and assign someone to obtain it. Otherwise, the same unexplained deductions can recur month after month.
Reconcile the amount assessed with the amount actually paid. A payment record should allow the team to distinguish an unresolved valuation from an agreed amount that remains unpaid. Those are different problems and need different action.
