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 | Oct 7, 2019
New seismic standard to evaluate, retrofit existing structural steel buildings open for review
AISC seeks input through Nov. 4.
Codes and Standards | Sep 27, 2019
Open source tool allows comparison of embodied carbon emissions from construction materials
Enables carbon-smart choices during material specification and procurement.
Codes and Standards | Sep 27, 2019
AIA declaration: Climate change requires ‘holistic approach’
Must address interdependencies among people, buildings, infrastructure, and the environment.
Codes and Standards | Sep 26, 2019
San Jose’s new building energy code is the most stringent among large cities
New regulations aim to make zero-emission electric buildings the norm.
Codes and Standards | Sep 26, 2019
Building support for climate action depends on linking it to health, economic benefits
USGBC report finds most people don’t think environmental problems significant enough to prioritize action.
Codes and Standards | Sep 20, 2019
OSHA has a new chief for its construction directorate
Former Army medical staffer Scott Ketcham has extensive OSHA experience.
Codes and Standards | Sep 20, 2019
American Wood Council updates free Connection Calculator
Tool includes cross-laminated timber connection provisions and post-frame ring shank nails.
Codes and Standards | Sep 19, 2019
Virtual reconnaissance of Bahamas finds some structures performed well during Dorian
Amid devastation, lives likely saved by resilient buildings.
Codes and Standards | Sep 19, 2019
Obama-era Waters of the U.S. rule revoked
New rule expected to define protected waterways more narrowly.
Codes and Standards | Sep 17, 2019
California will enact rent cap bill limiting rent increases to 5% plus inflation
Applies to apartments built at least 15 years ago.
