Subbing on a Government-Funded Project? How the Money Gets Down the Chain to You

Subbing on a Government-Funded Project? How the Money Gets Down the Chain to You

Government-funded projects are some of the best work a subcontractor can win. The funding is secure and the pipeline is long.

Your contract isn't with the government, though. On most infrastructure, council and public building projects, the government or council engages a head contractor, and the head contractor engages you. The money has to get through that chain before it reaches your account.

How the payment chain works

  1. The principal (the government body or council funding the work) pays the head contractor against its progress claims.
  2. The head contractor pays its subcontractors against their claims.
  3. Subcontractors pay their suppliers and crew.
Each level has its own contract, claim cycle and payment terms, and they don't have to line up.

Your claim is protected by law

Every state and territory has security of payment laws for construction work. The details differ, but in most of the country the basics are similar:
  • You can claim regularly. If your contract doesn't set claim dates, you can generally claim from the last day of each month.
  • Your customer must respond formally. If they plan to pay less than you've claimed, they must give you a payment schedule saying what they'll pay and why. If they miss the deadline, they can become liable for the full amount.
  • "Pay when paid" clauses are void. A head contractor can't make your payment depend on being paid first.
  • Disputes have a fast track. You can apply for adjudication rather than going straight to court.
The Northern Territory works a little differently. Instead of a payment schedule, a customer who disputes a claim must give a formal notice of dispute, and set terms apply where the contract doesn't cover payment.

The timeframes around Australia

These are the timeframes the laws set for a subcontractor's progress claim. Your contract can set shorter periods.
  • NSW: A payment schedule is due within 10 business days, and payment no later than 20 business days after the claim.
  • Queensland: A payment schedule is due within 15 business days. For building work, payment is due no later than 25 business days after the claim, or 10 business days if the contract is silent.
  • Victoria: A payment schedule is due within 10 business days, and payment no later than 20 business days after the claim.
  • SA: A payment schedule is due within 15 business days. Payment is due when the contract says, or 15 business days after the claim if it's silent.
  • ACT: A payment schedule is due within 10 business days, and payment no later than 15 business days after the claim.
  • WA: A payment schedule is due within 15 business days, and payment no later than 25 business days after the claim.
  • Tasmania: A payment schedule is due within 10 business days. Payment is due when the contract says, or 10 business days after the claim if it's silent.
So even when everyone pays on time, a subcontractor can wait three to five weeks from claim to payment. Add the time spent doing the work and preparing the claim, and you're often carrying labour and materials for well over a month.

Retention: the money held back

Most subcontracts let the head contractor hold back a percentage of each progress payment as retention, usually released in stages at practical completion and at the end of the defects liability period.
  • NSW: On projects of $20 million or more, head contractors must hold subcontractors' cash retention in a trust account.
  • Queensland: Eligible contracts need project and retention trust accounts. These apply to eligible state government contracts of $1 million or more and other eligible contracts of $10 million or more. Further expansion was paused in 2025 pending a review.
  • WA: Cash retention on most construction contracts of $20,000 or more entered into since February 2024 must be held in a retention trust account.
  • Other states and territories don't currently require retention to be held in trust, so it stays with the head contractor until it's released.
These rules protect retention if a head contractor gets into trouble. They don't release it any sooner.

Getting paid as smoothly as possible

  • Know your claim dates and payment terms, and make every claim complete, clearly identifying the work, the amount and the contract.
  • Keep records as you go. Site diaries, photos, sign-offs and variation approvals make claims easier to assess and harder to dispute.
  • Track payment schedules and retention. Note what's due and when, and act quickly if something is late or cut.

Where invoice finance fits

Security of payment laws make sure you get paid. Invoice finance helps with when.

Once you've invoiced for completed work, Brunswick can advance up to 80% of the invoice value upfront. When the head contractor pays as normal, we collect the payment and the balance goes to you. It doesn't change your contract or your rights. It just means the money you've earned can cover wages and materials sooner.

It suits well-run subcontractors with good processes, reliable customers and a clear short-term need for cash, such as carrying a larger package on a government project.

The takeaway

On a government-funded project, the funding is secure. Your payment still has to make its way down the chain. Know your rights, know your timeframes, and plan for the wait before it starts.

Waiting on progress payments from a head contractor?
Reach out to the team today about turning your invoices into cash. Let's talk!
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