Adjudication Process in Property Development: How to Resolve Payment Disputes Fast and Protect Your Project

Adam Bahrami
2 days ago
5 min read

In property development, disputes over money are not uncommon. Progress payments, variations, delays, and scope changes can all lead to disagreements between developers, builders, and subcontractors. When those disputes arise, the biggest risk is not just the disagreement itself, but the impact it has on cash flow and project momentum.

This is where the adjudication process becomes critical.

Adjudication is a fast, legally enforceable dispute resolution mechanism designed specifically for the construction and property development industry. It allows parties to resolve payment disputes quickly, without the time, cost, and complexity of court proceedings. For developers, understanding how adjudication works is not just helpful, it is essential to managing risk across any project.

Understanding the Adjudication process in property development Australian

Adjudication sits within Australia’s Security of Payment legislation, such as the Building and Construction Industry Security of Payment Act 1999 (NSW) and equivalent laws across other states. These laws were introduced to address a long-standing issue in the construction industry: delayed or withheld payments.

At its core, adjudication allows an independent expert, known as an adjudicator, to review a payment dispute and determine how much money must be paid. The decision is binding in the short term, meaning the paying party must comply, even if they intend to challenge the outcome later through litigation or arbitration.

This is often described as a “pay now, argue later” approach, and it exists for a very practical reason. Construction projects rely on consistent cash flow. If contractors or suppliers are not paid, work slows down or stops altogether, creating a ripple effect across the entire development.

Why Adjudication Is So Important in Property Development

Unlike many other industries, property development involves multiple contractual relationships operating simultaneously. A developer may be managing a head contractor, who in turn manages subcontractors, consultants, and suppliers. Each of these parties relies on timely payment to continue performing their role.

When payments are delayed or disputed, the consequences can escalate quickly. Contractors may reduce resources on site, subcontractors may suspend work, and disputes can become entrenched. This is particularly problematic in developments where timelines are linked to financing, approvals, or pre-sale commitments.

Adjudication exists to prevent this scenario. It provides a rapid pathway to resolve payment disputes, ensuring that money continues to flow through the project while broader issues are resolved separately if needed.

Act now before a payment dispute costs you the project.

How the Adjudication Process Works

The adjudication process follows a structured legal framework, and one of its defining features is the strict timeframes imposed on both parties. These deadlines are not flexible, and failing to comply can significantly affect the outcome.

The process begins with a payment claim, issued by a contractor or supplier. This is not just a standard invoice. It is a formal claim under the legislation, setting out the amount owed for work completed.

The receiving party, often the developer or head contractor, must then respond with a payment schedule. This document outlines how much will be paid and, importantly, the reasons for withholding any portion of the claim. If a payment schedule is not issued correctly or within the required timeframe, the respondent may lose the right to dispute the claim altogether.

If the claim is not paid in full, or if the claimant disagrees with the scheduled amount, a dispute arises. At this point, the claimant can proceed to lodge an adjudication application through an Authorised Nominating Authority.

Once the application is submitted, an adjudicator is appointed to assess the matter. The respondent is given a very limited window, often as little as five business days, to provide a formal response. This response must be carefully prepared, as it is generally restricted to the reasons already outlined in the payment schedule.

The adjudicator then reviews the submissions, along with the contract and supporting evidence. In most cases, a determination is issued within ten business days, making adjudication one of the fastest dispute resolution mechanisms available in the industry.

If the adjudicator determines that money is owed, the respondent is required to make payment, typically within five business days. If they fail to do so, the claimant can enforce the decision through the courts as a judgment debt.

When Should Adjudication Be Used in Property Development?

Adjudication is most effective when used strategically, particularly in situations where time and cash flow are critical.

It is commonly used when progress payments are not made on time, or when there is a significant discrepancy between what has been claimed and what has been approved. Disputes over variations are another frequent trigger, especially in projects where scope changes are not clearly documented or agreed upon.

For developers, adjudication often arises when a contractor initiates the process due to non-payment or underpayment. However, it is equally important to recognise that adjudication can be used downstream, for example, by a developer against a head contractor in certain circumstances.

The process is particularly valuable where maintaining momentum on site is essential. Rather than allowing a dispute to stall the project, adjudication provides a mechanism to resolve the immediate payment issue so that work can continue.

Don’t wait for a dispute to slow your project.

Situations Where Adjudication May Not Be Suitable

While adjudication is highly effective for payment disputes, it is not designed to resolve every type of issue that may arise during a development.

Disputes involving defective work, professional negligence, or complex contractual interpretation are often better suited to litigation or arbitration. These matters typically require detailed evidence, expert analysis, and a more comprehensive legal process than adjudication allows.

Similarly, adjudication is not intended to provide a final resolution. Although the determination is enforceable, it is still considered interim, meaning the parties can revisit the dispute in court if necessary.

Key Considerations for Developers

For developers, adjudication represents both a risk and a tool.

On one hand, it can be used against you if payment processes are not managed correctly. Failing to issue a valid payment schedule, or missing statutory deadlines, can result in being liable for the full claimed amount, regardless of the merits of the dispute.

On the other hand, understanding the process allows you to manage disputes proactively and maintain control over project outcomes.

Strong contract administration is essential. This includes keeping detailed records of variations, communications, and site progress, as well as ensuring that all contractual and statutory requirements are met on time.

The Importance of Preparation and Timing

One of the defining features of adjudication is speed. While this is one of its greatest advantages, it also means there is very little time to react once a dispute escalates.

Preparation should begin well before adjudication is initiated. As soon as a payment claim is disputed, both parties should assume that adjudication may follow and begin organising their documentation accordingly.

In many cases, the outcome of adjudication is heavily influenced by the quality and clarity of the documentation provided. Well-structured submissions, supported by clear evidence, can significantly improve the likelihood of a favourable determination.

Be ready before the dispute hits — preparation wins adjudication.

Final Thoughts

The adjudication process in property development plays a critical role in maintaining the financial stability of construction projects. It is not a substitute for broader dispute resolution, but it is one of the most effective tools available for resolving payment issues quickly and keeping projects moving.

For developers, the key is not just understanding how adjudication works, but knowing when and how to use it strategically. When managed properly, it can protect cash flow, minimise disruption, and ensure that disputes do not derail the success of a project.