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
| Sep 11, 2013
White paper examines Joint Commission requirements for NFPA codes in healthcare
The healthcare industry has experienced great attention from The Joint Commission concerning fire and life safety issues.
| Sep 11, 2013
San Francisco expected to drop firefighter air tank refilling station rule for skyscrapers
San Francisco is poised to drop a requirement that skyscrapers have refill stations so firefighters can recharge their air tanks during a blaze. The city has required that new high-rises have the air refill systems for about ten years.
| Sep 5, 2013
State legislatures continue to raise the bar on green school construction
Since the beginning of 2013, the USGBC has followed more than 125 bills across 34 states that seek to advance healthy, high-performing schools.
| Sep 5, 2013
Construction industry groups create coalition to respond to new OSHA silica rule
A group of 11 construction trade associations has created the Construction Industry Safety Coalition in response to the Occupational Safety and Health Administration’s (OSHA) proposed rule on silica for the construction industry.
| Sep 5, 2013
Red tape delays California county jail construction projects
California authorized $1.2 billion for jail construction in 2007, but not a single county in the state has completed a jail project since then.
| Sep 5, 2013
New CM-at-risk and design-build options create controversy in Ohio
Some contractors say Ohio's new system puts small and midsize construction companies at a disadvantage.
| Sep 5, 2013
Outdated codes slowed disaster recovery in Tuscaloosa, Ala.
Outdated building codes and lack of a master plan slowed the initial rebuilding stage after a devastating tornado leveled parts of Tuscaloosa, Ala. in 2011, according to the city’s mayor.
| Aug 28, 2013
Building collapse prompts legislation to beef up demolition regulations in Philadelphia
Philadelphia City Council will introduce legislation next month to strengthen the regulation of building demolition practices.
| Aug 28, 2013
Rules requiring contractors to boost hiring of veterans criticized
Some businesses are pushing back against proposed rules requiring federal contractors to step up their hiring of returning military service personnel.
| Aug 28, 2013
OSHA moves to reduced exposure to crystalline silica
Under a proposal from the Occupational Safety and Health Administration, the new permissible exposure limit to crystalline silica per cubic meter of air could be changed from 250 micrograms to 50 micrograms.