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 28, 2021
Building-integrated solar power turns buildings into power plants
Multiple alternatives could replace or complement rack-mounted PV arrays.
Codes and Standards | Apr 27, 2021
Ten real estate groups sign on to New York State’s high-rise decarbonization challenge
Each signee commits to carbon neutrality in one or more high-rise buildings it owns.
Codes and Standards | Apr 26, 2021
Dozens of companies, organizations call for Congress to double Energy Star funding
Despite broad support, program’s budget has steadily declined in recent years.
Codes and Standards | Apr 22, 2021
Alabama fire chiefs oppose proposal to change school building code oversight
Bill would move code compliance control from state to local boards.
Codes and Standards | Apr 21, 2021
After dry winter, California ramps up wildfire prevention efforts
State to spend half a billion dollars on projects including making buildings more fire resistant.
Codes and Standards | Apr 20, 2021
U.S. electric grid is halfway to zero carbon
Other sectors including buildings lag power industry.
Codes and Standards | Apr 19, 2021
Failed landmark preservation effort in Chicago provides lessons for planners
Gentrification fears heightened among Pilsen neighborhood residents doomed ambitious preservation plan.
Codes and Standards | Apr 14, 2021
New Phase 1 Environmental Site Assessment standard debuts in 2021
Will affect 250,000 commercial real estate deals a year.
Codes and Standards | Apr 13, 2021
British Columbia moves to accelerate mass timber construction
Province funds demonstration projects as part of economic recovery.
Codes and Standards | Apr 12, 2021
WoodWorks and Think Wood release first Mass Timber Design Manual
Interactive collection of information on mass timber products, design best practices, taller wood construction and sustainability.