Auditor General’s overview

It is unusual for me to report on similar issues twice in one year. However, I agreed to a request by Parliament to conduct this audit after my report on payment of construction subcontractors at the Perth Children’s Hospital in June 2016. My decision reflects the importance of the building and construction industry to Western Australia and acknowledges reforms underway to improve the security of payment of construction subcontractors.

When contractors become insolvent, subcontractors can be at a disadvantage. The pyramid nature of subcontracting, where primary subcontractors award work to other subcontractors, makes those subcontractors at the bottom of the pyramid extremely vulnerable.

In 2013, the Small Business Development Corporation completed an investigation of this area. It made 17 recommendations to improve tendering, risk management and payment processes to reduce the risk of non-payment, and to provide for better dispute resolution processes.

I have followed up on the implementation of these recommendations. However, as my report shows, even though processes across the board have improved, none of these are a guarantee that subcontractors will be paid.

I recognise there has been progress in agencies working together to introduce change in the industry. This cooperation is necessary to bring about further improvements identified in this report and for the implementation of Government initiatives. Given the progressive state of work taking place, I consider it likely this is an area I will revisit.


  Page last updated: December 22, 2016 Next: Executive summary