The cost of floating payments for wages and invoices represents $208 billion in excess cost to the construction industry, a 53% increase from 2021, according to a survey by Rabbet, a provider of construction finance software.
Those costs are passed on to real estate developers and financiers in the form of project delays, added risk, and higher bids from contractors.
Other survey findings include:
- 37% of all respondents report that work has been delayed or stopped due to a delay in payments to crew members
- 62% of general contractors incurred billing charges, financing charges, or other costs when floating payments to others
- There was an 8.5x increase in general contractors using retirement savings to float payments for their business
Though a 53% increase in the cost of slow payments in one year is major, it’s on par when considering the current economic environment, according to a Rabbet news release.
Some contractors said they are boosting their bids 5-10% to help absorb associated costs and are “pickier when selecting bids because of increasing labor and supply prices.”
Related Stories
Sponsored | BD+C University Course | Apr 1, 2022
Video surveillance systems for multifamily housing projects
This introductory course provides detailed technical information and advice from security expert Michael Silva, CPP, on designing a video surveillance system for multifamily housing communities – apartments, condominiums, townhouses, or senior living communities. Technical advice on choosing the right type of cameras and optimizing the exterior lighting for their use is offered.
K-12 Schools | Apr 1, 2022
Charleston County’s award-winning career and technical education high school
BD+C Executive Editor Rob Cassidy talks with the team behind the award-winning Cooper River Center for Advanced Studies, a Career|Technical Education high school in Charleston County, S.C.
Modular Building | Mar 31, 2022
Rick Murdock’s dream multifamily housing factory
Modular housing leader Rick Murdock had a vision: Why not use robotic systems to automate the production of affordable modular housing? Now that vision is a reality.
Multifamily Housing | Mar 29, 2022
Here’s why the U.S. needs more ‘TOD’ housing
Transit-oriented developments help address the housing affordability issue that many cities and suburbs are facing.
Contractors | Mar 28, 2022
Amid supply chain woes, building teams employ extreme procurement measures
Project teams are looking to eliminate much of the guesswork around product availability and price inflation by employing early bulk-purchasing measures for entire building projects.
Reconstruction & Renovation | Mar 28, 2022
Is your firm a reconstruction sector giant?
Is your firm active in the U.S. building reconstruction, renovation, historic preservation, and adaptive reuse markets? We invite you to participate in BD+C's inaugural Reconstruction Market Research Report.
Legislation | Mar 28, 2022
LEED Platinum office tower faces millions in fines due to New York’s Local Law 97
One Bryant Park, also known as the Bank of America Tower, in Manhattan faces an estimated $2.4 million in annual fines when New York City’s York’s Local Law 97 goes into effect.
Healthcare Facilities | Mar 25, 2022
Health group converts bank building to drive-thru clinic
Edward-Elmhurst Health and JTS Architects had to get creative when turning an American Chartered Bank into a drive-thru clinic for outpatient testing and vaccinations.
Higher Education | Mar 24, 2022
Higher education sector sees 19 percent reduction in facilities investments
Colleges and universities face a growing backlog of capital needs and funding shortfalls, according to Gordian’s 2022 State of Facilities in Higher Education report.
Contractors | Mar 23, 2022
Hiring Construction Workers in a Frantic Post-Covid Job Market
McCarthy Building Companies' Director of Talent Acquisition, Ben Craigs, discusses the construction giant's recruitment and training strategies in a hyper-competitive market. Craigs sits down with BD+C Senior Editor John Caulfield.
