The cost of floating payments for wages and invoices represents $208 billion in excess cost to the construction industry, a 53% increase from 2021, according to a survey by Rabbet, a provider of construction finance software.
Those costs are passed on to real estate developers and financiers in the form of project delays, added risk, and higher bids from contractors.
Other survey findings include:
- 37% of all respondents report that work has been delayed or stopped due to a delay in payments to crew members
- 62% of general contractors incurred billing charges, financing charges, or other costs when floating payments to others
- There was an 8.5x increase in general contractors using retirement savings to float payments for their business
Though a 53% increase in the cost of slow payments in one year is major, it’s on par when considering the current economic environment, according to a Rabbet news release.
Some contractors said they are boosting their bids 5-10% to help absorb associated costs and are “pickier when selecting bids because of increasing labor and supply prices.”
Related Stories
Hotel Facilities | Sep 22, 2021
Will hotel developers finally embrace modular construction?
Last May, MiTek, a construction software and building services company that’s part of Warren Buffett’s Berkshire Hathaway conglomerate, formed a partnership with Danny Forster & Architecture to promote modular design and construction.
Contractors | Sep 3, 2021
Construction demand continues to outpace the industry’s workforce capacity
Skilled worker shortages are causing project delays, and even cancellations, according to latest AGC-Autodesk survey.
Multifamily Housing | Sep 1, 2021
Top 10 outdoor amenities at multifamily housing developments for 2021
Fire pits, lounge areas, and covered parking are the most common outdoor amenities at multifamily housing developments, according to new research from Multifamily Design+Construction.
Giants 400 | Aug 30, 2021
2021 Giants 400 Report: Ranking the largest architecture, engineering, and construction firms in the U.S.
The 2021 Giants 400 Report includes more than 130 rankings across 25 building sectors and specialty categories.
Laboratories | Aug 30, 2021
Science in the sky: Designing high-rise research labs
Recognizing the inherent socioeconomic and environmental benefits of high-density design, research corporations have boldly embraced high-rise research labs.
Giants 400 | Aug 27, 2021
2021 Healthcare Sector Giants: Top architecture, engineering, and construction firms in the U.S. healthcare facilities sector
HDR, AECOM, Turner Construction, and Brasfield & Gorrie head BD+C's rankings of the nation's largest healthcare facilities sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Giants 400 | Aug 27, 2021
2021 Office Sector Giants: Top architecture, engineering, and construction firms in the U.S. office building sector
Gensler, Jacobs, Turner Construction, and STO Building Group head BD+C's rankings of the nation's largest office building sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.a
Giants 400 | Aug 26, 2021
2021 University Giants: Top architecture, engineering, and construction firms in the higher education sector
Gensler, AECOM, Turner Construction, and CannonDesign head BD+C's rankings of the nation's largest university sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Giants 400 | Aug 26, 2021
2021 Data Center Giants: Top architecture, engineering, and construction firms in the U.S. data center facilities sector
Corgan, Holder Construction, Jacobs, and Whiting-Turner top BD+C's rankings of the nation's largest data center facilities sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Giants 400 | Aug 26, 2021
Top 90 Construction Management + Project Management Firms for 2021
CBRE, Jacobs, Alfa Tech, and VCC head the rankings of the nation's largest construction management (as agent) and program/project management firms for nonresidential and multifamily buildings work, as reported in Building Design+Construction's 2021 Giants 400 Report.
