Construction award pay rates are back in the news because of what happens at the other end of them: a collapsed residential builder, questions about how its workforce was engaged, and a lot of subbies and employees left working out what they are actually owed. The reporting is worth reading. The part that matters for you, though, is not the headline. It is that most small builders price labour from a number in their head that has not been checked against the Building and Construction General On-site Award for a year or two, and that gap only ever shows up when money gets tight.
Here is the builder-eye version, and what to do about it before your next quote goes out.
Why construction award pay rates move everything downstream
If you employ anyone on site, the Building and Construction General On-site Award 2020 (MA000020) sets the floor: minimum weekly rates by classification, from CW1 up, plus the allowances that sit on top. Those rates change after the Fair Work Commission's annual wage review each year, and the increase takes effect from the first full pay period on or after 1 July. Fair Work publishes a plain-English pay guide for the award. Check the current figures on the Fair Work Ombudsman's pay guide pages rather than working off a number a mate quoted you at the pub.
Two things follow from that.
The first is that your charge-out rate has to move when the award moves. If you quoted a six-month job in May on last year's labour cost, you are wearing the increase for the back half of it. On a two-chippie job that is not a rounding error.
The second is that the award floor is not your cost. Your cost is the award rate plus superannuation, which is now 12 per cent of ordinary time earnings, plus workers comp, plus public holidays, annual leave and sick leave, plus the allowances. Builders who price off the bare hourly rate are routinely 25 to 35 per cent light before a single hour of unproductive time is counted.
The allowances that quietly break a labour rate
This is where the on-site award differs from almost every other award, and where under-quoting starts. The award carries an industry allowance, a tool allowance for tradespeople, and a follow-the-job loading for daily hire employees. Depending on the work there are also allowances for travel and fares, height, confined spaces, wet work, and living away from home. Casuals carry a loading on top of all of it.
None of those are optional extras you can decide not to pay. They are part of the rate. If you are quoting a job that is 40 minutes each way from the yard, the fares and travel component is a real line in your cost, not goodwill.
The practical fix is to build one loaded hourly cost per classification, once, and use it everywhere. Award rate, plus super, plus leave loading and leave accrual, plus workers comp, plus the allowances that apply to your normal work. Round it to the nearest dollar and put it in your construction estimating software as the labour rate, not in a note on your phone. Then update it once a year in July, in one place, and every future quote picks it up.
What a collapse up the chain does to your money
The other half of this story is subcontractor exposure. When a head contractor goes under, the work you have already done is unsecured. The protection you actually have is procedural, and most of it depends on paperwork you either kept or did not.
Every state and territory has security of payment legislation. The mechanics differ, but the shape is the same: you serve a payment claim, the respondent has a short window to serve a payment schedule, and if they do not respond in time your claim can become due. Those windows are counted in business days and they are unforgiving. A payment claim you cannot prove you served is a payment claim you did not make.
So the admin discipline is not busywork. Dated variations approved in writing. Site diaries with crew, hours and weather. Photos against progress claims. Delivery dockets matched to the job, not to the ute. If a builder above you stops paying, the file you have is the entire argument.
Put the loaded rate into the system, not your head
Most of this is a record-keeping problem wearing a pricing problem's clothes. You need to know what hours went to which job, at which classification, so you can compare the labour you priced against the labour you burned. If you only find that out when the invoice lands, you learn it too late to fix the next quote.
Tracking crew hours against a job, keeping variations and site photos in the one place, and reviewing quoted labour against actual labour is what construction project management software is for. It will not interpret the award for you, and no software should claim to. What it does is make sure that when the award rate changes in July, you know exactly which live jobs are exposed, and by how much.
The builders who come through a bad year are rarely the ones with the best story. They are the ones whose numbers were current and whose paperwork was boring and complete.
If you want somewhere to start, the Built Simple app is free to download on iOS and Android and includes all 45 calculators with no signup, so you can price a take-off from the ute before you get back to the office.
