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
| Apr 13, 2012
CSI webinar: Green Construction Codes Are Here -- Now What?
This seminar will trace the origins of green codes, how they compare and differ from the rating systems that have been used, and examine some of their main features.
| Apr 5, 2012
Retailers, banks among most affected by new ADA rules
On March 15, the most significant changes to the Americans with Disabilities Act (ADA) since it became law in 1991 went into effect.
| Apr 5, 2012
Florida ranks first in hurricane building codes and enforcement
Florida ranks highest among 18 hurricane-region states for building codes and their enforcement, according to the Insurance Institute for Business & Home Safety.
| Apr 5, 2012
New IgCC green building code is a ‘game changer,’ AIA official says
An AIA official calls the new International Green Construction Code (IgCC) a “game changer” for sustainable construction.
| Apr 5, 2012
Model energy codes add thousands to cost of new apartment construction, study says
New energy codes could add thousands of dollars to the construction costs of each individual apartment residence in a multifamily building, according to new research commissioned by the National Multi-Housing Council and the National Apartment Association.
| Apr 5, 2012
LEED 2012 will include new requirements for data centers
The U.S. Green Building Council’s updated LEED 2012 standards will require two systems to be modeled for each project in order to show power utilization effectiveness.
| Mar 30, 2012
CSI webinar: Durable & energy efficient building envelope design, April 24
This seminar will review recent changes in North America energy codes, examples of building enclosure wall assemblies being considered for code compliance, potential moisture management and durability challenges, and design tools that could be used to assess and minimize potential problems.
| Mar 30, 2012
Improved construction that followed seismic codes helped avert loss of life in Mexico temblor
A magnitude-7.4 earthquake that shook Mexico from Mexico City to Acapulco damaged hundreds of homes and sent thousands fleeing from swaying office buildings, yet no one was killed, according to early reports.