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
Giants 400 | Aug 6, 2015
GIANTS 300 REPORT: Top 75 Construction Management Firms
Jacobs, AECOM, and Hill International head Building Design+Construction's 2015 ranking of the largest construction management and project management firms in the United States.
Giants 400 | Aug 6, 2015
GIANTS 300 REPORT: Top 100 Contractors
Turner Construction and Whiting-Turner Contracting top Building Design+Construction's 2015 ranking of the largest contractors in the United States.
Giants 400 | Aug 5, 2015
CONSTRUCTION GIANTS: Economists hedge their bets on prospects for nonresidential construction
Leading economists expect spending for nonresidential construction to rise in 2015 by somewhere in the 6.4–7.7% range, and remain strong in 2016, according to BD+C's 2015 Giants 300 report.
Giants 400 | Aug 5, 2015
GIANTS 300 REPORT: Top 85 Office Sector Construction Firms
Turner, Structure Tone, and Gilbane top BD+C's ranking of the nation's largest office sector contractors and construction management firms.
Giants 400 | Aug 5, 2015
OFFICE SECTOR GIANTS: Today’s workplace design must appeal to Millennials’ ‘activity-based’ lifestyle
Office market AEC Giants discuss the latest trends workplace design, and the state of the office construction sector.
Contractors | Jul 31, 2015
Nonresidential fixed investment falls in second quarter
In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year, said Associated Builders and Contractors Chief Economist Anirban Basu.
Sports and Recreational Facilities | Jul 29, 2015
Milwaukee Bucks arena deal approved by Wisconsin state assembly
Created by Milwaukee firm Eppstein Uhen Architects and global firm Populous, the venue will be built in downtown Milwaukee. Its design draws inspiration from both Lake Michigan, which borders Milwaukee, and from aspects of basketball, like high-arcing free throws.
Contractors | Jul 29, 2015
Consensus Construction Forecast: Double-digit growth expected for commercial sector in 2015, 2016
Despite the adverse weather conditions that curtailed design and construction activity in the first quarter of the year, the overall construction market has performed extremely well to date, according to AIA's latest Consensus Construction Forecast.
Multifamily Housing | Jul 27, 2015
Miami developers are designing luxury housing to cater to out-of-town buyers and renters
The Miami Herald reports on several new multifamily projects, including the Paramount Miami Worldcenter, whose homes include maid’s rooms, larger terraces, boutique-size closets, and guest suites.
Green | Jul 23, 2015
NASA: U.S. headed for worst droughts in a millennium
Data from NASA shows carbon emissions could be the driving force behind devastating water shortages and record droughts in the western U.S.