Delayed payments remain one of the most significant hurdles in the construction industry. For builders, subcontractors, and suppliers, unpaid progress claims can place immense pressure on cash flow and jeopardise project delivery. This is where the Security of Payment Act (SOPA) plays a vital role.

What is the Security of Payment Act?

When building disputes arise, delays, payment issues and project pressure can quickly affect everyone involved. For builders, subcontractors and developers, understanding the difference between mediation and adjudication can help resolve disputes more efficiently and reduce the need for lengthy court proceedings.

Both processes are commonly used across the construction industry, but they serve different purposes depending on the nature of the dispute.

Back to Basics Business Training supports construction professionals through practical training focused on dispute resolution, contract administration and communication within construction projects.

What is mediation?

Mediation is a voluntary dispute-resolution process where an independent mediator helps parties discuss issues and work toward a practical agreement.



Unlike court proceedings, mediation focuses on open discussion and negotiation rather than a formal legal ruling.

Mediation is often used when parties want to:

• Resolve disagreements early
• Maintain professional working relationships
• Avoid lengthy legal processes
• Reach flexible commercial outcomes
• Keep projects moving where possible

Any agreement reached during mediation generally becomes formal once both parties agree in writing.

Example

An architect and a builder disagree over the interpretation of facade specifications, resulting in additional project costs. Rather than allowing the issue to escalate further, both parties enter mediation and negotiate a shared solution that allows the project relationship to continue.

What is adjudication?

What Is Adjudication?



Adjudication is a more formal dispute-resolution process commonly used for payment disputes under the Security of Payment Act.

In adjudication, an independent adjudicator reviews the available documentation and makes a temporary binding decision about the disputed payment claim.

Adjudication is commonly used when:

• Progress payments are disputed
• Payment schedules are contested
• Contractors experience delayed payments
• Work has been completed but payment is withheld

The process is designed to help money continue flowing through construction projects while disputes are being addressed.

Example

A subcontractor completes framing works but does not receive the final progress payment due to disputed defect claims. The subcontractor lodges an adjudication application under the Security of Payment Act, and the adjudicator determines that part of the payment must be released while the broader dispute continues to be resolved.

Understanding the difference between mediation and adjudication matters

Mediation and adjudication play a critical role by providing structured pathways to resolve disputes without lengthy and costly litigation. Adjudication offers a fast, legally enforceable mechanism to maintain cash flow, while mediation helps parties reach mutually acceptable outcomes. Together, they provide a balanced dispute resolution that protects project delivery, reduces downtime, and supports long-term industry stability.



Master the art of construction dispute resolution and protect your project margins with our nationally accredited SCB3 course. Enrol today to gain the practical skills needed to navigate and resolve any building dispute with professional confidence.