Subcontract review: what it is, what to check, and how to get one free

The 15-point subcontract review checklist

The clauses that decide whether a job makes money, in the order to read them. Before the clauses: check the builder: Confirm the entity on the contract matches the ABN, the licence is current, and there are no insolvency notices, court actions or adjudication decisions that change the risk. Ten minutes on public registers. Builder Check, free.

1. Payment terms and your state's cap. How many days until you are paid, and whether that breaches your state's Security of Payment cap.
   Index: 25 days median payment terms (n=75)
2. Pay-when-paid and pay-if-paid. Any clause that ties your payment to the builder being paid is of no effect under every state's Act.
3. Payment claim dates and service. When and how claims must be served, because a claim on the wrong day or to the wrong address is the builder's first defence.
4. Time bars on notices. Notice deadlines that wipe out a claim entirely if you are a day late.
   Index: 100% have time bars that extinguish the claim entirely (66 of 66)
5. Extension of time. What delays qualify, how fast you must claim, and whether delay costs are excluded.
6. Liquidated damages. The daily rate for finishing late, and whether there is a cap.
   Index: 78% have liquidated damages with no cap (31 of 40)Index: $1,500/day median liquidated damages rate (n=48)
7. Variations. How changed work is directed, priced and paid, and the notice you must give.
8. Set-off and back-charges. Whether the builder can deduct money from your payments without warning.
   Index: 97% allow set-off without notice (75 of 77)
9. Retention and security. How much is held back, when it comes back, and whether it is held in trust.
   Index: 5% median retention (n=65)
10. Defects liability period. How long you are on the hook for defects, and whether the clock restarts.
11. Indemnity, consequential loss and insurance. Whether you carry losses you didn't cause, and whether your insurance covers what the contract demands.
12. Termination for convenience. Whether the builder can end your contract without any breach, and what you are paid if it does.
    Index: 88% include termination for convenience (72 of 82)
13. Suspension and default termination. Your right to stop work for non-payment, and how easily the builder can call you in default.
14. Deeds, releases and novation. Anything that makes you give up claims or makes a director personally liable.
15. One-sided standard form terms. Terms that may be void under the unfair contract terms laws if the contract is a standard form and your business is small.

What each one should say, the red flags and what to ask for instead: the full subcontract review checklist.

Free scan or construction lawyer: side by side

When a lawyer is the right call

A free scan is not the answer to every contract. Pay for a construction lawyer when:

• The exposure is large relative to your business: the contract value, an uncapped liquidated damages clause or a broad indemnity could take the business down if the job went wrong.
• You are asked to sign a deed: a deed of release, a deed of novation, a guarantee, or anything that gives up claims or makes a director personally liable.
• The contract gives you design responsibility, or flows down the terms of a head contract you have not seen.
• You are already in a payment dispute and a statutory deadline is running. Security of Payment windows are short and strict.
• You are thinking about stopping work or ending the contract. Getting the sequence wrong can hand the builder a lawful termination.
• The scan flags something you do not understand, or you think it has read the contract wrongly.

Not sure which side of the line you are on? That is what the scan is for. See also what a subcontract review costs and why walking off site is the riskiest move a subbie can make.

What the free scan does

• Reads the whole subcontract and rates each risk clause: payment terms, liquidated damages, set-off and back-charges, time bars on EOT and variation claims, retention and security, termination and suspension, indemnity and insurance.
• Checks the payment clauses against the Security of Payment Act for the state the contract is in, including the statutory caps on payment terms in the states that have them.
• Benchmarks each finding against the Australian Subcontract Index, the live dataset built from real subcontracts, so you can see whether a clause is normal or an outlier.
• Turns the three worst findings into a specific negotiating position with the reasons, so you have something concrete to put to the builder.

What the free scan does not do

• It is not legal advice, and nobody at The Construction Contracts Co. is acting as your lawyer.
• It does not know the deal: what was said at tender, your pricing assumptions, or your history with this builder.
• It only reads what you upload. If the subcontract incorporates a head contract, specification or site rules you did not upload, those terms are not in the analysis.
• It can be wrong. AI models can misread drafting, and statutory deadlines change. Check anything you will act on against the contract and the current Act.
• It does not negotiate for you. It gives you the position and the reasons; you have the conversation.

National figures from the Australian Subcontract Index. Each carries its own sample size; anything under 10 contracts is withheld.

How to use both without paying twice

Scan first. If the report comes back clean on the clauses that matter, sign with a clear head. If it flags an uncapped exposure, an absolute time bar or a payment term that breaches your state's cap, take the report to a lawyer and ask them to start with those clauses.

A lawyer who starts from your three worst clauses instead of page one is quicker, and quicker is cheaper. The report is built for that hand-over: every finding quotes the clause, explains the risk and states the market position.

Doing it yourself first? The ten-minute read is in chapter 14 of Screwed Down, the five clauses that do the damage are in what to check before signing, and the common paperwork is broken down in the contract-form guides (AS 4000, AS 4901, AS 4903 and more). Check who you are contracting with using Builder Check (beta).

Next steps: put the changes in a departure schedule, compare AI subcontract review software, read what a subcontractor agreement should include, and know your rights as a subcontractor.

Before you sign, or already owed money?

Subcontract review by state

Common questions