Slow payments cost the construction industry $208 billion in 2022

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.”

Two innovations—program manager Gafcon’s SharePoint360 project management platform and a new BIM “wall creator” add-on developed by ClarkDietrich Building Systems for use with the Revit BIM platform and construction consultant—show how fabricators and owner’s reps are stepping in to fill the gaps between construction and design that can typically be exposed by working with a 3D model.