--- title: Construction Contracts Amendment Bill 2021 description: asBuilt attended the 2021 NZIQS conference in Rotorua. One of the highlights was Peter Degerholm's presentation on the proposed amendments to the CCA.   image: https://blog.asbuiltdigital.com/hubfs/210616-NZIQS-PayLab%20Thumbnail.jpg --- [![asBuilt Logo-White-Tagline](https://blog.asbuiltdigital.com/hs-fs/hubfs/asBuilt%20Logo-White-Tagline.png?width=390&height=180&name=asBuilt%20Logo-White-Tagline.png "asBuilt Logo-White-Tagline")](https://www.asbuiltdigital.com/) Digital Services - [About](https://www.asbuiltdigital.com/about) - [Our History](https://www.asbuiltdigital.com/our-history) - [Our Team](https://www.asbuiltdigital.com/our-team) - [Our Industries](https://www.asbuiltdigital.com/industries) - [Careers](https://www.asbuiltdigital.com/careers) - [Services](https://www.asbuiltdigital.com/services) - [BIM Management](https://www.asbuiltdigital.com/services) - [Advise](https://www.asbuiltdigital.com/advise) - [Capture](https://www.asbuiltdigital.com/capture) - [Model](https://www.asbuiltdigital.com/model) - [Fabricate](https://www.asbuiltdigital.com/fabricate) - [Manage](https://www.asbuiltdigital.com/manage) - [Communicate](https://www.asbuiltdigital.com/communicate) - [Projects](https://www.asbuiltdigital.com/projects) - [Commercial & Community](https://www.asbuiltdigital.com/projects-commercial) - [Education](https://www.asbuiltdigital.com/projects-education) - [Health](https://www.asbuiltdigital.com/projects-health) - [Residential](https://www.asbuiltdigital.com/projects-residential) - [Stadium](https://www.asbuiltdigital.com/projects-stadium) - [Transport](https://www.asbuiltdigital.com/projects-transport) - [All Projects](https://www.asbuiltdigital.com/projects) - [Blog](https://blog.asbuiltdigital.com/blog) - [Contact](https://www.asbuiltdigital.com/contact) Solutions - [Software](https://www.asbuiltdigital.com/software) - [Vault](http://www.asbuiltvault.com) - [PayLab](http://paylab.asbuiltvault.com) Top [Alex Evans](https://blog.asbuiltdigital.com/blog/author/alex-evans) July 2021 3 min read # Construction Contracts Amendment Bill 2021 [Previous Post](https://blog.asbuiltdigital.com/blog/new-brand-new-website) [Next Post](https://blog.asbuiltdigital.com/blog/three-easy-ways-to-get-your-invoices-paid) ## Construction Contracts Amendment Bill (Retention Money) 2021 & Construction Bonds   asBuilt attended the 2021 NZIQS conference in Rotorua with our two software products, Vault and PayLab, at the start of July. One of the highlights for the PayLab team was a presentation on the proposed amendments to the CCA and connecting with Peter Degerholm's, a leading educator in the field of Construction Legislation. We have been following the legislative process around the CCA amendments since early June, and it looks like it will come into force around the second quarter of 2022. The 2021 bill, which builds upon the previous Construction Contracts Amendment Act 2015, addresses some of its shortcomings and loopholes, following further construction company failures since it came into place. The PayLab team will be developing added functionality to satisfy the new reporting requirements around retentions. Here is a summary of the main changes and how [PayLab](https://paylab.asbuiltvault.com) is equipped to deal with these:  | **Amendments to the Construction Contract** | Updates to PayLab | | --- | --- | | Retentions are trust property, this will happen automatically at the point of deduction. | PayLab is updating its certification output for relaying this information to the payee in the Payment certificate. | | Retentions must be kept in a separate bank account, the name of which must include in words Retention Money Trust Account. | PayLab is updating its retention set up workflow for populating this data in the project record. | | A Payer holding retentions must give detailed quarterly reports to Payees on their retention money. | PayLab already keeps the user updated with the current state of all retentions across all projects and can report on retentions at any time. Automated quarterly reporting or prompting the Payer is further functionality that PayLab will look to add to meet these quarterly reporting requirements. | | If a Payer holding retentions becomes insolvent the Receiver or Liquidator will become the trustee for receiving and distributing retentions to creditors. | This process becomes easier due to the fact that the details of the trustee and accounts are recorded in the retention details. | | Fines for directors of companies that fail to keep retentions in a separate account (up to $200k), to keep proper accounting records ($50k), or provide quarterly reports ($50k). | PayLab will help you avoid fines and keep you compliant. | | Payment schedules/certificates will need to record the deduction of any retentions, and include details such as bank, account name and number, together with a statement that the Payee may inspect the Payer’s accounts and records. | PayLab is updating its certification output for relaying this information to the payee in the Payment schedule/certificate. | | Payers holding retentions will need **to set up proper accounting and reporting systems**, and set up processes to ensure retentions (being trust money) are not misused and are properly released when due. | PayLab is the perfect tool for retention reporting. | | QS’s and Engineers to Contract will need to include statutory information in payment schedules. | PayLab is updating it Payer approval workflow to include multiple approvals populated with statutory information and reasons for variance. This output data will be reflected in the Payment schedule/certificate for the payee. | #### How Does PayLab Currently Deal with Retentions? PayLab is currently well set up to document and track retentions from both a Payer and Payee point of view. Once set up, retentions are deducted according to the percentage formula and is shown in both the Claim and Certificate summaries.  ![Screen Shot 2021-07-15 at 9.19.17 AM](https://blog.asbuiltdigital.com/hs-fs/hubfs/Screen%20Shot%202021-07-15%20at%209.19.17%20AM.png?width=795&name=Screen%20Shot%202021-07-15%20at%209.19.17%20AM.png)Figure 1: Retention set up when creating a project  ![Screen Shot 2021-07-15 at 9.39.39 AM](https://blog.asbuiltdigital.com/hs-fs/hubfs/Screen%20Shot%202021-07-15%20at%209.39.39%20AM.png?width=569&name=Screen%20Shot%202021-07-15%20at%209.39.39%20AM.png)Figure 2: Certificate Summary above right showing retentions.  ![Screen Shot 2021-07-15 at 10.00.35 AM](https://blog.asbuiltdigital.com/hs-fs/hubfs/Screen%20Shot%202021-07-15%20at%2010.00.35%20AM.png?width=1041&name=Screen%20Shot%202021-07-15%20at%2010.00.35%20AM.png)Figure 3: An overview of total retentions across all projects.    ![Screen Shot 2021-07-15 at 10.09.13 AM](https://blog.asbuiltdigital.com/hs-fs/hubfs/Screen%20Shot%202021-07-15%20at%2010.09.13%20AM.png?width=1312&name=Screen%20Shot%202021-07-15%20at%2010.09.13%20AM.png)Figure 4: An overview of total retentions for a single project.    #### PayLab Future Functionality for CCA Amendments Adherence Going forward PayLab will include increased fields for retention account information to improve reporting around retentions to align with the proposals in the amended bill and have it in place when it becomes an Act.  - Third party trust account details, bank assurance information to be included in the PayLab retention set up. - Quarterly reports generated from the project showing extent of retentions for individual subcontractors. - Retention reminder notifications on both Main Contractor and Subcontractor side for quarterly reports. (PayLab already has retentions notifications in place when it comes to Practical Completion and Defects Liability).   #### The Construction Bond – A Possible Outcome of the New Retention Regime The team at PayLab also anticipates as a result of the proposed new amendments around retentions, that Main Contractors and Subbies will explore other options such as the Retention Bond, also known as a Construction or Performance Bond.  #### How It Works Retention Bonds are way of avoiding problems associated with [retention](https://www.designingbuildings.co.uk/wiki/Retention) recovery. Amounts that would otherwise have been held as [retentions](https://www.designingbuildings.co.uk/wiki/Certification) are instead paid in line with progress, with a [bond](https://www.designingbuildings.co.uk/wiki/Bonds) being provided to secure the amount. Similar to the [retention](https://www.designingbuildings.co.uk/wiki/Subcontractor), the [bond’s](https://www.designingbuildings.co.uk/wiki/Bonds) [value](https://www.designingbuildings.co.uk/wiki/Certificate_of_making_good_defects) will usually reduce after the [certification](https://www.designingbuildings.co.uk/wiki/Cost) of P[ractical Completion](https://www.designingbuildings.co.uk/wiki/Practical_completion) and eventually be cleared of all liability at the finish of the Defects Liability Period – all going well of course. Naturally warranties and guarantees still stand for their duration.  Only if P[ractical Completion](https://www.designingbuildings.co.uk/wiki/Retention_monies) is not achieved by the S[ubcontractor](https://www.designingbuildings.co.uk/wiki/Subcontractor) or if they prevent a C[ertificate of Making Good Defects](https://www.designingbuildings.co.uk/wiki/Defects) from being issued will the Retention Bond take effect. The C[ontractor](https://www.designingbuildings.co.uk/wiki/Defects) is then able to ‘call’ on the Retention Bond.  A S[ubcontractor](https://www.designingbuildings.co.uk/wiki/Subcontractor) is usually allowed a fixed period of time to [rectify](https://www.designingbuildings.co.uk/wiki/Subcontractor) any [defects](https://www.designingbuildings.co.uk/wiki/Retention), and this is stipulated by the Retention Bond. Should they fail to [rectify](https://www.designingbuildings.co.uk/wiki/Rectify) the [defect](https://www.designingbuildings.co.uk/wiki/Works), the Retention Bond can be called on by the C[ontractor](https://www.designingbuildings.co.uk/wiki/Contractors) and the [surety](https://www.designingbuildings.co.uk/wiki/Subcontractor) must cover the [remedial](https://www.designingbuildings.co.uk/wiki/Contractors) [costs](https://www.designingbuildings.co.uk/wiki/Cost), before then pursuing the S[ubcontractor](https://www.designingbuildings.co.uk/wiki/Retention).  Whilst S[ubcontractors](https://www.designingbuildings.co.uk/wiki/Remedial) must pay the [surety’s](https://www.designingbuildings.co.uk/wiki/Surety) premiums, the benefit to them is that they do not have to chase [retention monies](https://www.designingbuildings.co.uk/wiki/Main_contractor) post-[completion](https://www.designingbuildings.co.uk/wiki/Completion), and no [retention monies](https://www.designingbuildings.co.uk/wiki/Value) will be withheld. This [cash flow](https://www.designingbuildings.co.uk/wiki/Subcontractor) [security](https://www.designingbuildings.co.uk/wiki/Security) is often seen as worth the [cost](https://www.designingbuildings.co.uk/wiki/Retention) of the premium. Similarly, Retention Bonds are advantageous to C[ontractors](https://www.designingbuildings.co.uk/wiki/Contractors) in **improving the** [**cash flow**](https://www.designingbuildings.co.uk/wiki/Cash_flow) and financial stability of the S[ubcontractor](https://www.designingbuildings.co.uk/wiki/Retention_monies), making them less likely to [default](https://www.designingbuildings.co.uk/wiki/Default) on the [works](https://www.designingbuildings.co.uk/wiki/Rectify).  Retention Bonds include a fixed expiry date, making it clear when the S[ubcontractor](https://www.designingbuildings.co.uk/wiki/Cash_flow) is released from its [obligations](https://www.designingbuildings.co.uk/wiki/Obligation).  Retention Bonds may also be used as an alternative to [retention](https://www.designingbuildings.co.uk/wiki/Practical_completion) between the [employer](https://www.designingbuildings.co.uk/wiki/Employer) and the M[ain Contractor](https://www.designingbuildings.co.uk/wiki/Surety).  PayLab will look to include the recording of Retention Bond details as an option in future updates, as part of the Project workflow setup. To learn more about how PayLab can help simplify and streamline your Claiming and Certifying process head over to our [website](https://paylab.asbuiltvault.com) Until next time - happy claiming and certifying!  If you want to read more of our adventures as we attempt to create **A Smarter World, Digitally** then subscribe below and follow us on [asBuilt - Linkedin](https://www.linkedin.com/company/asbuilt/) and [PayLab - Linkedin](https://www.linkedin.com/company/mypaylab). #### COMMENTS ## Subscribe. #### Keep up with interesting advances in 3D spatial intelligence and digital twin technologies, with blog notifications and our monthly email newsletter 'A Smarter World, Digitally'. ## [August 2021 12 min read Three Easy Ways To Get Your Invoices Paid Here's how to stay on top of your cashflow and get your invoices paid on time. The Construction Contracts Act was created in ... 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