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
Building Owners | Dec 18, 2018
More-frequent catastrophes are exposing commercial real estate and properties to potentially higher insurance rates
A new report on the property and casualty market foresees modest rate hikes for construction projects.
Building Technology | Dec 18, 2018
Data and analytics are becoming essential for EC firms competing to rebuild America’s infrastructure
A new paper from Deloitte Consulting advises companies to revise their strategies with an eye toward leveraging advanced technologies.
3D Printing | Dec 7, 2018
Additive manufacturing heads to the jobsite
Prototype mobile 3D printing shop aims to identify additive manufacturing applications for construction jobsites.
Contractors | Oct 26, 2018
How three contractors expanded thin profit margins
If there’s one issue that every contractor is familiar with, it’s the challenge of finishing the job on time and on budget.
Contractors | Oct 26, 2018
Three ways construction leaders harness digital transformation
The construction industry is lagging behind others when it comes to digital transformation. Some construction firms “are still using paper-based processes that can only be described as archaic,” according to a 2016 report by PricewaterhouseCoopers LLP’s Strategy1.
Contractors | Oct 24, 2018
How seasoned construction pros handle the cost of scaling up
Here’s how seasoned operators meet the new demand for homes, offices and new locations without drowning in new expenses.
Contractors | Oct 2, 2018
Nonresidential spending reaches new high in August
Total nonresidential spending stood at $762.7 billion in August, an increase of 8.4% compared to one year ago.
Contractors | Oct 2, 2018
Katerra adds a Denver-area GC to its growing stable
Bristlecone Construction brings self-performing expertise in concrete and framing.
Architects | Sep 14, 2018
We’ve entered the golden age of brain science. What does it mean for AEC firms?
New research from the SMPS Foundation explores the known principles and most recent research surrounding the human brain and behavioral science. The goal: to discover connections between the science and the AEC business.
Contractors | Sep 5, 2018
Lean, tech, talent training highlight contractor innovations
From 5D estimating tools to interactive punch lists, the nation’s largest construction and construction management firms continue to push technology to gain an edge.
