Security of Payment Act (SOPA) Singapore: Progress Payments and Adjudication for Owners and Contractors

Cash flow is the oxygen of the construction industry, and payment disputes are where it runs out. Singapore’s answer is the Building and Construction Industry Security of Payment Act 2004 (SOPA, also called the SOP Act). It gives anyone who carries out construction work, or supplies goods or services for construction work, under a written contract a statutory right to progress payments, and a fast adjudication process to enforce that right. It took effect on 1 April 2005, and its current form reflects amendments that commenced on 15 December 2019.³

SOPA is often described as a contractor’s statute, and its machinery is triggered by the party claiming payment. But it is just as important for owners, MCSTs, managing agents and main contractors who receive claims. The Act imposes strict deadlines on respondents, and a respondent who misses them can lose the right to raise its objections in adjudication. An owner who understands SOPA can protect itself with very little effort; an owner who ignores it can be ordered to pay a claim it believes is wrong, and argue about it later.

This guide explains the scope of the Act, the payment-claim and payment-response cycle, the timelines, adjudication at the Singapore Mediation Centre (SMC), enforcement and suspension, and what owners and contractors should do in practice. Section numbers refer to the Act as currently in force on Singapore Statutes Online.¹ It is general information, not legal advice.

Who and what SOPA covers

Contracts in scope

SOPA applies to any contract made in writing on or after 1 April 2005 for construction work, or for the supply of goods or services, in relation to construction work carried out in Singapore (s 4(1)).¹ “Construction work” is defined widely in s 3: construction, alteration, repair, restoration, maintenance, extension and demolition of buildings and structures; installation of fittings such as air-conditioning, lighting, power, plumbing, fire protection and security systems; preparatory and finishing operations; painting and decorating; and some cleaning work. “Services” includes professional engineering, site supervision and submissions to authorities.¹

“In writing” is generous. Under s 4(4) a contract counts as written if it is in writing (signed or not), made by an exchange of written communications, recorded by a party or third party with the parties’ authority, or agreed by reference to written terms.¹

Contracts excluded

Section 4(2) excludes, among others:¹

• contracts for construction work or supply relating to residential property that does not require the approval of the Commissioner of Building Control under the Building Control Act. BCA’s quick guide gives the example of HDB flat renovation without structural works;²
• contracts of employment;
• construction work carried out outside Singapore (with special rules for prefabrication);
• terminated contracts, to the extent the contract allows the respondent to suspend progress payments until a date or event that has not yet arrived.

Section 4(3)(b) adds that the Act does not apply to claims between former parties for work done or goods supplied at the time of or after termination of the contract. Work done before termination can still be claimed.¹⁵

The 2019 amendments

The Building and Construction Industry Security of Payment (Amendment) Act 2018 and the 2019 amendment regulations commenced on 15 December 2019.³ Among the changes summarised by Allen & Gledhill: claims for work done before termination are valid; a payment claim served before the contractual date is valid (deemed served on that date); repeat claims for unpaid amounts are allowed; claimants as well as respondents can seek adjudication review in specified cases; objections not included in the payment response must generally be disregarded; claims for prolongation costs and other damage, loss or expense need agreed or certified support; and service by email and messaging platforms is recognised.⁵ Separately, s 27 was amended with effect from 1 April 2022 so that enforcement now requires the permission of the court.¹

Rules the contract cannot override

• Pay-when-paid clauses are unenforceable (s 9). A main contractor cannot refuse to pay a subcontractor because the owner has not paid it.¹
• No contracting out (s 36). Any provision that excludes, modifies or restricts the Act, or that may reasonably be construed as an attempt to deter a person from using it, is void.¹

The payment cycle

Step 1: the payment claim

A claimant serves a payment claim on the respondent (s 10).¹

• When: by the date or period the contract specifies. If the contract is silent, by the last day of the month following the month in which the contract was made, or of any later month (reg 5(1)), and for that default regime only one payment claim may be served in each month (reg 5(1A)).⁶
• Early claims: a claim served before the contractual or prescribed date is deemed served on that date (s 10(3)).¹ In Asia Grand v A I Associates [2023] SGHC 175, an adjudication application was premature because the deemed service date had not yet arrived, and the determination was set aside.⁷
• Long-stop: no later than 30 months after the work or supply to which the claim relates was last carried out, or the latest completion certificate or TOP, as applicable (s 10(2)(b)).¹
• Content: it must be in writing, identify the contract, and state the claimed amount with a breakdown of items, a description, quantities and calculations (s 10(4); reg 5(2)).¹⁶
• Repeat claims: a claimant may re-serve an unpaid payment claim (s 10(5)).¹

Step 2: the payment response

For construction contracts, the respondent must provide a payment response (s 11(1)):¹

• by the date in the contract, or within 21 days after the claim is served, whichever is earlier; or
• if the contract says nothing, within 14 days after the claim is served.

The response must identify the claim, state the response amount, and, where that amount is less than the claimed amount, state the reason for the difference and for any amount withheld (s 11(3)). The regulations require item-by-item amounts, reasons and calculations, and a “nil” response must still give reasons (reg 6).¹⁶

Step 3: the due date for payment

Under s 8, for construction contracts:¹

Interest on late payment runs at the higher of the contract rate and the rate prescribed for judgment debts (s 8(5)).¹

Step 4: the dispute settlement period

If the claimant disputes the payment response (by not accepting it in writing), or the respondent fails to provide one, a dispute settlement period of 7 days follows the payment response deadline (s 12(2), (3), (6)). During it, either side may seek clarification, and the respondent may still provide or vary a payment response (s 12(5)).¹ If the dispute is not settled by the end of that period, the claimant becomes entitled to apply for adjudication.

If the respondent accepts a response amount but then fails to pay it by the due date, the claimant can apply for adjudication on that basis (s 12(1)).¹

Adjudication

Applying

Before applying, the claimant must serve a written notice of intention to apply for adjudication (s 13(2)). The adjudication application must be lodged with the authorised nominating body within 7 days after the entitlement first arises (s 13(3)(a)).¹ The High Court has held that this period starts on the day the entitlement arises, so the 7 days run from the following day.⁷

The authorised nominating body is the Singapore Mediation Centre.³ It serves the application on the respondent and notifies the principal (if known) and the owner, and must confirm the adjudicator’s appointment within 7 days (ss 13(4), 14(3)).¹

The respondent’s adjudication response

The respondent must lodge an adjudication response within 7 days after receiving a copy of the application (s 15(1)). Critically, it must not include any objection that was not included in the payment response, unless the circumstances arose later or could not reasonably have been known when the payment response was given (s 15(3), (4)).¹ A late adjudication response must be rejected (s 16(3)(b)).¹

The determination

The adjudication commences when the period for the adjudication response expires (s 16(1)). The adjudicator must determine the application:¹

• within 7 days, if the respondent failed to make a payment response and to lodge an adjudication response, or failed to pay an accepted response amount; or
• within 14 days in other cases;

or a longer period agreed by both parties (s 17(1)). The adjudicator decides the adjudicated amount, the date it is payable, interest, and the split of adjudication costs (s 17(2)).

Two rules matter greatly for owners:

• The adjudicator must disregard any part of a payment claim or payment response related to damage, loss or expense not supported by a document showing agreement on quantum, or by a certificate or other document the contract requires (s 17(3)).¹ Liquidated damages deductions and back-charges should therefore be backed by the contractual certificate. See liquidated damages and EOT.
• The adjudicator is not bound by any assessment or certificate that the contract says is final or binding (s 17(5)).¹

Paying the adjudicated amount

The respondent must pay within 7 days after the determination is served, or by the date the adjudicator fixes, whichever is later (s 22(1)). If the claimant is entitled to seek review, payment falls due no earlier than 7 days but within 10 days after service (s 22(2)).¹

Adjudication review

A respondent may seek review if the adjudicated amount exceeds its response amount by at least S$100,000; a claimant may do so if its claimed amount exceeds the adjudicated amount by at least S$100,000 (s 18(1); reg 10(1)). One review adjudicator is appointed for differences under S$1 million, and a panel of three at S$1 million or more (reg 10(3)). The application must be lodged within 7 days after service of the determination, and a respondent must first pay the adjudicated amount to the authorised nominating body (s 18(2), (3)).¹⁶

Costs

Source: SMC Fee Schedule, 10th Edition.⁴ The regulations set the underlying caps of S$600 per application and S$300 per hour or S$2,400 per day before GST (reg 12).⁶ The adjudicator apportions the costs between the parties in the determination.

Default timeline at a glance (Illustrative)

The table uses the statutory defaults (contract silent) and assumes no public holidays in the period; each public holiday pushes a statutory deadline back by a day, because a statutory “day” excludes public holidays (s 2).¹ Contract terms can shorten some periods.

A payment claim can therefore become an enforceable adjudication determination in roughly seven to eight weeks. BCA’s quick guide shows the same structure, with adjudication applications falling in Days 22–28 where a response is disputed or missing.²

Enforcement, suspension and other remedies

If the respondent fails to pay the adjudicated amount, the claimant has four statutory remedies.¹²

Suspension in detail

During a lawful suspension, the claimant is not liable to the respondent, principal or owner for resulting loss, and the suspension period is disregarded in computing contractual time limits; where a time limit is a date, it is adjusted (s 26(2), (7), (8)). The principal and owner may still recover liquidated damages or other remedies from the respondent under their own contracts (s 26(2)(b)). The claimant must resume within 3 days after being paid (s 26(4)).¹

Setting aside

A determination binds the parties until the dispute is finally decided by a court, tribunal or other proceeding, or settled (s 21). A party may apply to court to set aside a determination; the non-exhaustive grounds include a payment claim not served in accordance with s 10, more than one payment claim for the same progress payment, an application not made in accordance with the Act, a breach of natural justice, and fraud or corruption (s 27(6)). A respondent generally cannot rely on a ground whose supporting objection was not in its adjudication response (s 27(7)).¹

What owners must do to protect themselves

SOPA does not prevent an owner from disputing a claim. It requires the owner to dispute it on time, in writing, with reasons.

Where an owner uses a consultant (architect, quantity surveyor or engineer) to certify payments, the contract should make clear whether the consultant’s certificate is the payment response, as PSSCOC does: the Superintending Officer’s payment certificate, issued within 14 days, is deemed the payment response if the employer does not provide its own (clause 32.2).⁸

What contractors must do

SOPA and the rest of the contract

SOPA adjudication gives temporary finality: the money moves now, and the underlying dispute can still be decided later by arbitration or court (s 21). This affects how owners should manage the other contract levers:

• Variations: dispute values in the payment response, item by item. See variation orders and provisional sums.
• Liquidated damages: deduct only with the contractual certificate in place. See LDs and EOT.
• Contractor selection: a contractor with clean documentation and realistic pricing tends to produce fewer payment disputes. See verifying contractor licences and red flags and the cheapest quote vs delay risk.
• Reinstatement and handback: tenants’ reinstatement contracts are construction contracts too. See office reinstatement.

Summary

• SOPA covers written construction and supply contracts for work in Singapore, except residential works not needing Building Control approval and a few other categories. Its current form has applied since 15 December 2019.
• Respondents must send a payment response within the contract period (maximum 21 days) or 14 days, with reasons for every amount withheld. Objections left out are generally lost in adjudication.
• A 7-day dispute settlement period follows; the claimant then has 7 days to apply to the Singapore Mediation Centre.
• Adjudicators decide in 7 or 14 days; respondents pay within 7 days; enforcement, suspension, lien and direct payment follow non-payment.
• Pay-when-paid clauses and attempts to contract out are void.