Australia’s $300 billion construction industry is booming, with the latest ABS data revealing building approvals increased by 13.1% since August 2014, the largest annual increase on record.

However, industry experts have expressed concern that this rate of growth will be hampered by an increasingly costly burden on the construction sector – contract disputes. A CRCCI study[1] even put a dollar figure to the problem stating that these disputes are costing the Australian economy around $7 billion a year, adding 6 percent to the overall cost of each project.

According to construction experts, contract disputes are a result of outdated, manual methods of processing progress claims including spreadsheet reconciliations and paperwork.

“The construction industry plays a most significant role in our economy as the third largest contributing industry, so it’s important that we adopt methods to streamline efficiencies where possible to increase productivity,” said Brian Seidler, Executive Director of the Master Builders Association of NSW.

To address the problem, former construction company CFO Lincoln Easton recently launched Progressclaim.com, software tailor-made for the construction industry to process payment claims anytime and anywhere.

“As we’ve seen in several recent public disputes, the archaic methods of processing progress claims are causing inaccuracies, disputes and hold-ups on the build– impacting our broader economy,” he said.

In recent months, a number of legal rows over payments have led to construction being interrupted or coming to a total standstill on major public projects, such as the Perth Hospital and the Wiggins Island Coal Export Terminal.

“With residential and commercial construction predicted to grow exponentially over the next few years to cater for Australia’s population boom and major infrastructure upgrading, how the contracting parties deal with various payment processes needs to be resolved,” said Mr Seidler.

Industry data reveals that the construction sector’s reliance on pen and paper processes has resulted in:

• 20 percent of projects leading to payment claim disputes between parties, typically over variations and contracts[2]
• Approximately 22 percent of all domestic and commercial projects in Victoria alone involving disputes, with 23 percent related to contract and scope of work[3]
• The average cost of contract and scope of work issues equating to approximately $117 million per year in Victoria[4]

Mr Easton said the data represents the frustrations around progress claims felt by most CFOs in the construction industry.

“When I was a CFO at a building company, I couldn’t believe a business that turned over $50 million annually was basing its contract variations on manual processes,” said Mr Easton.

“I witnessed arguments, project managers bogged down in paper work and subbies threatening no-shows at work because they hadn’t been paid – all due to poor progress claim documentation. I kept thinking that there had to be a better way, and so Progressclaim.com was born.”

Emma Shipley, CFO at Built, a construction company with an annual turnover in excess of $1 billion and over 500 employees, said the company will be rolling out Progressclaim.com on all national building sites because it is a user friendly technology that increases collaboration and efficiency.

“Built is the first major builder to adopt Progressclaim.com. Our focus is to continually find smarter ways to do things and take unnecessary processes and costs out of our projects for all concerned,” said Ms Shipley.

“We want transparency and collaboration between our finance staff, project managers and sub-contractors and this software allows for this.

“We’re already using Progressclaim.com and have noticed in some projects a 40 percent saving in time.”

Mr Seidler said with the advent of more mobile technology giving access to the many layers of the construction sector, this is an opportunity for industry to improve its productivity.

“There’s a plethora of technological and mobile options for construction businesses and subcontractors to increase efficiencies, which in turn will have a positive impact on our economy.”

For more information on Progressclaim.com, visit the website

[1] Cooperative Research Centre for Construction Innovation, Guide to Leading Practice for Dispute Avoidance and Resolution, 2009

[2] Building Commission, Reducing building disputes in Victoria, March 2005

[3] Building Commission, Reducing building disputes in Victoria, March 2005

[4] Building Commission, Reducing building disputes in Victoria, March 2005