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 | Sep 2, 2020
California releases guide for state water policy
Water Resilience Portfolio is roadmap for meeting water needs as climate changes.
Codes and Standards | Aug 31, 2020
Fenestration alliance updates fenestration sealants guide
First update to 2009 document.
Codes and Standards | Aug 25, 2020
Platform will allow researchers to test energy system integration at scale
The U.S. Department of Energy’s (DOE’s) National Renewable Energy Laboratory (NREL) recently launched the Advanced Research on Integrated Energy Systems (ARIES) platform.
Codes and Standards | Aug 20, 2020
Wariness of elevators may stymie office reopening
Workers could balk at returning to high-rises.
Codes and Standards | Aug 19, 2020
Existing laws may be restricting efforts to cut carbon emissions
Outdated policies favor fossil fuels.
Codes and Standards | Aug 18, 2020
Florida becomes the third state to adopt concrete repair code
Sets minimum requirements for design, construction, repair of concrete structural elements in buildings.
Codes and Standards | Aug 17, 2020
ASCE seeks comments on seismic standard
Pertains to design criteria for nuclear facilities.
Codes and Standards | Aug 13, 2020
COVID-19 reboot guide offers strategies for reopening K-12 schools
Looks at space considerations for reopening at different scales.
Codes and Standards | Aug 12, 2020
Document provides guidance for mass timber construction
Overview of Intl. Building Code requirements included.
Codes and Standards | Aug 11, 2020
Inefficient air conditioning is a key contributor to global warming
More efficient equipment and buildings could make a big difference.
