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 27, 2017
Extensive list of plug load efficiency utility incentives available for free download
The Dept. of Energy resource is a state-by-state compilation with hundreds of listings.
Codes and Standards | Apr 26, 2017
Chicago commits to 100% renewable power for all city buildings
In doing so, it becomes largest U.S. city to make such a pledge.
Codes and Standards | Apr 25, 2017
Concerns over increased construction costs following Trump executive orders
‘Buy American’ requirement and revised H-1B visa restrictions could raise prices on supplies, labor.
Codes and Standards | Apr 24, 2017
‘Staggering delays, exorbitant costs’ in New York City library, cultural building construction
Study finds significant problems with how city manages capital projects.
Codes and Standards | Apr 20, 2017
California lawmakers have had little success in attracting sports stadiums
Only one of several attempts has had an impact in recent years.
Codes and Standards | Apr 19, 2017
Dept. of Energy releases updated versions of EnergyPlus and OpenStudio building energy modeling tools
The updated versions include full support for variable speed DX coils, enhanced plant auto-sizing, new fan model, and support for non-rectangular windows.
Codes and Standards | Apr 18, 2017
K-12 school daylighting initiative created to promote best practices
Eneref Institute creates networking group of school administrators for ideas to overcome market obstacles.
Codes and Standards | Apr 17, 2017
OSHA delays enforcing crystalline silica standard in construction industry
Enforcement will begin Sept. 23, three months later than planned.
Codes and Standards | Apr 13, 2017
Former OSHA official publishes safety citations on his own
Under Trump orders, agency had stopped issuing ‘shaming’ press releases on major fines and safety violations.
Codes and Standards | Apr 12, 2017
Trump infrastructure task force suggests arbitration to speed projects
Permitting process could be reduced from 10 years to 2 years under the proposal.
