The payment schedule and the twenty working day clock

The Construction Contracts Act 2002 sets up a two step exchange. The contractor serves a payment claim, and the payer responds with a payment schedule. The whole regime turns on that second document arriving, and arriving on time.

What a payment schedule must do

A payment schedule is the payer formal answer to the claim. It has to identify the claim it responds to, state the amount the payer proposes to pay, and, where that is less than the amount claimed, explain why and how the scheduled amount was calculated. A schedule that pays less without giving reasons is not a valid schedule.

• The scheduled amount. What the payer will actually pay this cycle.
• The reasons for any difference. Item by item, not a bare assertion that the claim is too high.
• The manner of calculation. Enough working for the contractor to see how the number was reached.

Twenty working days, then the claim stands

Where the contract does not set its own timeframe, the Act gives the payer twenty working days from service of the payment claim to provide the payment schedule. Miss that window and the consequence is not a warning, it is the whole claimed amount becoming due and payable. The contractor can then recover it as a debt, and the payer loses the right to argue value for that cycle.

Working days, not calendar days

The count is in working days, which excludes weekends and public holidays and, importantly in New Zealand, the whole period from the twenty fourth of December to the fifth of January. A claim served in early December has a response deadline that reaches well into the new year once that break is stripped out. Counting in calendar days will mislead both sides.

How this sits with NZS 3910

Under NZS 3910:2023 the Engineer to the Contract assesses the claim and issues the payment schedule on behalf of the principal. That contractual role does not displace the Act. The Engineer still has to get a valid schedule out inside the statutory window, and the principal carries the risk if the Engineer does not.

The discipline

On the claim side, diary the twenty working day deadline the moment you serve. On the payer side, treat the schedule as non negotiable diary work, because the cheapest schedule you ever issue is the one that went out on day nineteen, and the most expensive is the one that did not go out at all.