The State of Australian SubcontractsSeptember 2026

Executive summary

This report analyses 80 distinct Australian subcontracts run through The Construction Contracts Co.'s free Subcontract Risk Scanner between May and September 2026, across seven states and territories. It measures what the contracts say, clause by clause, and counts a clause only where the drafting could be identified.

The picture is consistent. In every contract where the notice drafting could be read (57 of 57), missing a notice deadline does not just weaken a claim, it extinguishes it. The median window to notify a delay is 5 days (n=60), a third of the 15 days in the Queensland regulator's own published template. 65 of 67 contracts (97%) let the builder deduct from a subcontractor's payment without notice, and 29 of 34 (85%) with liquidated damages set no cap on them.

The clauses rarely appear alone. Of the 55 contracts where all three could be identified, 49 (89%) combine an absolute time bar, set-off without notice and termination for convenience. The one term that consistently sits at the market norm is retention: 53 of 58 contracts hold exactly 5%.

The sample is the contracts subcontractors chose to bring to the scanner, not a random sample of the market, and it is weighted to Queensland (45 of 80). The direction of every headline finding holds when the analysis is restricted to the 40 contracts uploaded directly by 33 separate users.

Miss a 5-day deadline and the claim is gone

Every contract in the corpus where the notice drafting could be identified makes a missed deadline fatal: late notice of a delay or variation does not reduce the claim, it extinguishes it. Not one of the 57 treats notice as procedural only.

The windows are short. The median time to notify an extension of time is 5 days (n=60) and the median time to notify a variation is also 5 days (n=51). 15 of 60 contracts (25%) allow 2 days or fewer to notify a delay.

97% let the builder deduct from your payment without telling you first

Set-off lets the head contractor deduct amounts it says it is owed (back-charges, defects, delay costs) from a subcontractor's progress payment. In 65 of 67 contracts it can do so without prior written notice.

Among the contracts subcontractors uploaded themselves, the pattern is the same: 30 of 31 allow set-off without notice.

85% of liquidated damages clauses have no cap

Liquidated damages are a fixed daily amount charged for late completion. Where a contract carried LDs and the cap position could be confirmed, 29 of 34 (85%) set no aggregate limit, so exposure grows for as long as the delay runs.

The median LD rate is $1,500 per day (n=42). The middle half of contracts sit between $500 and $5,000 per day, and 11 of 42 set a rate of $5,000 per day or more.

Median 25 days to be paid, and 38% of contracts ask for longer

The median payment period is 25 days from claim to payment (n=68). 26 of 68 contracts (38%) set a period longer than 25 days, and 21 of 68 (31%) start the clock at the end of the month rather than on the claim, which can add up to a further month before the stated period begins.

The spread differs by state. Queensland, where the Building Industry Fairness (Security of Payment) Act 2017 caps subcontract payment terms at 25 business days, clusters tightly: 23 of 40 Queensland contracts state exactly 25 days and the median is 25 (n=40). The Victorian median is 35 days (n=12) and the New South Wales median is 30 days (n=10).

Walk-away rights, release deeds and uncapped indemnities are the norm

Beyond deadlines and deductions, the contracts shift a wide band of risk down the chain. 63 of 73 (86%) let the head contractor end the subcontract without cause. 54 of 71 (76%) make signing a release deed a condition of final payment. 63 of 70 (90%) contain an indemnity with no cap.

45 of 67 (67%) pass the head contract's liquidated damages down to the subcontractor on top of the subcontract's own LDs, a delay exposure set by a contract the subcontractor has usually never seen. In all 29 contracts where the defects clause could be read on this point, rectified work restarts the defects liability period.

The clauses travel together: 89% carry all three

These are not isolated clauses in otherwise balanced documents. Of the 55 contracts where all three could be identified, 49 (89%) combine an absolute time bar, set-off without notice and termination for convenience.

For a subcontractor that means the same document which lets a late claim die after a few days also lets the builder deduct without warning and end the job without cause.

Retention is the one term that sits at the market norm

Retention, the security held back from progress payments, is the exception to the pattern. 53 of 58 contracts (91%) hold exactly 5% of the subcontract sum, the market-normal cap. 2 of 58 hold more than 5% and 3 hold less.

The risk in retention sits less in the percentage than in when it comes back, which the release and defects findings above bear on.

By state

State figures are shown only where that state has at least 10 contracts with the clause identifiable. Queensland (45 contracts), Victoria (14) and New South Wales (12) meet that bar for some measures. South Australia (4), Western Australia (3), the ACT and the Northern Territory (1 each) are included in the national figures only.

Shares show contracts with the clause over contracts where it was identifiable. n<10: withheld.

Methodology

Source. Subcontracts analysed by the free Subcontract Risk Scanner between 11 May 2026 to 22 September 2026. When a contract is scanned, a separate extraction step records 18 normalised fields (payment period, notice windows, set-off, retention, liquidated damages and their cap, termination and indemnity terms and others) into a structured table. This report is computed from that table using exactly the rules of the live Australian Subcontract Index.

The corpus. 80 distinct contracts: 40 uploaded directly by 33 separate users, 26 real subcontracts scanned by The Construction Contracts Co. in the course of its own review work, and 14 publicly published standard forms and templates (including the QBCC's commercial template). A document scanned more than once counts once. Test scans are excluded.

Counting rules. A clause is counted only where the contract states it explicitly: "not identifiable" is never treated as a no, so each measure has its own denominator, shown beside it. Any measure with fewer than 10 qualifying contracts is withheld, nationally and by state. Medians use the Index's definition, the middle value (the upper of the two middle values on an even count). Periods are recorded in days as drafted, business or calendar, and are not converted.

Privacy. Aggregates only. No contract, party, project or business is named or identifiable, consistent with the Terms of Use and Privacy Policy.

Limitations

• Not a random sample. These are the contracts subcontractors chose to bring to the scanner, plus published templates. People may be more likely to scan a contract they are worried about, which could push the figures towards the onerous end.
• Weighted to Queensland. 45 of 80 contracts are Queensland contracts. National figures lean on Queensland drafting.
• Machine extraction. Fields are extracted by an AI model instructed to return nothing rather than guess. Extraction errors are possible, and the extraction has been refined over the period, so some fields (such as the defects restart) exist only for more recent scans.
• Small samples. Several measures rest on a few dozen contracts. Treat percentages as indicative, and always quote the n.
• A fixed edition. Figures are as at 27 September 2026 and will not be updated. The live Index moves as new contracts arrive.

This report describes how contracts are drafted. It is general information, not legal advice. Statutory references are summaries; check the current Act before relying on any period.

How to cite

Kennedy, M. (2026). The State of Australian Subcontracts, September 2026. The Construction Contracts Co. https://review.theconstructioncontracts.co/benchmarks/report

Short form: "The State of Australian Subcontracts, September 2026 (The Construction Contracts Co., n=80)". Licensed CC BY 4.0: quote any figure freely with credit and a link. Please carry the sample size with the number. This edition never changes; for the latest figures cite the live Index or a monthly snapshot.

Press and research enquiries

Mat Kennedy, Founder, The Construction Contracts Co., is available for comment and can provide custom cuts of the data (state, clause or contract type, subject to the n=10 rule): mat@theconstructioncontracts.co.

Mat has worked on both sides of Australian subcontracts, for head contractors and subcontractors, on more than $200 million of projects. He is the author of Screwed Down, a guide to subcontracts for Australian trades, which reached #1 in Contract Law on Amazon Australia in September 2026.

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