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
| Jun 14, 2012
AGC, other business groups oppose hiring rules for disabled
Business groups have asked the U.S. Department of Labor to reconsider a proposed hiring quota aimed at federal contractors pertaining to people with disabilities.
| Jun 5, 2012
HP Labs aims for net-zero energy data centers
Building sustainable data centers is one of the goals of HP Labs, and it believes technology, combined with the right building techniques, could result in the construction of energy-efficient data centers.
| Jun 5, 2012
USGBC delays LEED 2012; renames it LEED v4
In response to concerns by LEED users, the U.S. Green Building Council (USGBC) announced that it will delay the ballot on LEED 2012 until June 1, 2013.
| Jun 5, 2012
Baltimore officials vow to block $1.8 billion urban renewal project
Baltimore officials want to block a $1.8 billion urban renewal project until more neighborhood residents and minority contractors are hired and displaced residents can benefit from the revitalization.
| Jun 5, 2012
OSHA launches campaign to warn of heat dangers in outdoor work
The Occupational Safety and Health Administration has begun a campaign to warn outdoor workers about the dangers of heat exposure.
| Jun 5, 2012
AGC’s Safety and Health Conference focuses on regulations, legislation
More than 150 industry professionals and other attendees will participate in the Associated General Contractors of America’s (AGC’s) safety and health conference July 11-13 in Washington, D.C.
| Jun 1, 2012
New BD+C University Course on Insulated Metal Panels available
By completing this course, you earn 1.0 HSW/SD AIA Learning Units.
| May 31, 2012
Proposed change in Michigan’s building code would hurt innovation, say critics
Legislation pending before the Michigan Senate would change the law that calls for building codes to be updated every three years to require an update only every six years.
