Delayed payments are costing both general contractors and subcontractors tens of billions annually, according to a new study.
The study was conducted by construction finance platform Rabbet, formerly Contract Simply, in partnership with Procore Technologies. A similar study by Rabbet in 2018 found that slow payments cost subcontractors $40 billion.
This year, the company added general contractors to the study, and found payment delays cost all contractors an estimated $64 billion. More than 60% of subcontractors said they have decided not to bid on certain projects if the owner or general contractor has a reputation for paying late. Some 72% said they would offer a 1% to 5% discount for quicker payments.
Just 39% of subcontractors said that they are able to cover late payments with cash on hand. Slow payments by owners drive up the cost of projects by about 5.3%, according to the study. Owners also risk mechanic’s liens and project shutdowns when they pay late.
Related Stories
Codes and Standards | Apr 17, 2018
Contractor charged with fraud in winning $200 million in federal contracts
Accused of falsely claiming veteran- and minority-owned business status.
Codes and Standards | Apr 16, 2018
Wide variations in adoption of National Electric Code could jeopardize safety
An NFPA report found that code adoption is under heavier political scrutiny, leading to delays and decisions motivated by factors other than safety concerns.
Codes and Standards | Apr 12, 2018
Corruption in New York City construction industry is common
Scale of projects, number of players involved contributes to problem.
Codes and Standards | Apr 11, 2018
Urgent need for government to make communities, infrastructure more resilient
More than 350 people died from extreme weather events in 2017.
Codes and Standards | Apr 10, 2018
Boosting energy efficiency helps reduce health risks
Cleaner air results in fewer heart attacks, respiratory disease, and premature deaths.
Codes and Standards | Apr 9, 2018
U.K. business leaders call for zero-carbon buildings by 2030
Real estate, construction industry executives among those supporting the goal.
Codes and Standards | Apr 5, 2018
In Houston, proposed rules would require building above 500-year flood level
Change would impact 85,739 pieces of property.
Codes and Standards | Apr 4, 2018
New ASTM standard supports stucco use in construction
Provides way to measure tensile strength in vertical applications.
Codes and Standards | Apr 3, 2018
LEED v4.1 O+M for Existing Buildings available for beta testing
Update said to be most inclusive and transparent platform to date.
Codes and Standards | Apr 2, 2018
Experts chosen for ICC, ANCR buildings resilience benchmarks project
Specialists to focus on community preparedness for disasters.