Construction payment delays and losses: perceptions of New Zealand

Ramachandra, T
Rotimi, J.O.B.
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Conference Contribution
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Project Management Institute (PMI) New Zealand Chapter

Payment delays and losses are not a new phenomenon in the construction industry. Both of these combine to elevate the operational risks of construction businesses. In spite of new provisions in the Construction Contracts Act (CCA), New Zealand, construction businesses are still not immune to payment delays and losses. This study investigates the extent of the payment problem and possible solutions that could mitigate payment risks on construction projects. An online questionnaire survey was administered to contractors, subcontractors and consultants for their opinions on the issue. The study found that payment delays and losses are experienced by contractors (10-40%) and subcontractors (10-80%) on the total projects undertaken by them since the CCA implementation. Retention sums are very often delayed while final and interim payments are delayed less than often. Contractors and subcontractors indicated that payment bonds, direct payments and the use of trust accounts were preferred solutions to the payment problems experienced by industry.

Payment delays , Losses , Solutions , New Zealand
Proceedings PMI New Zealand Chapter 18th Annual Conference 2012: Concise Paper.
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Copyright © 2012 Thanuja Ramachandra and James Olabode Bamidale Rotimi. The author(s) assign to PMI New Zealand Chapter and educational non-profit institutions, a non-exclusive licence to use this document for personal use and in courses of instruction, provided that the article is used in full and this copyright statement is reproduced. The author(s) also grant a non-exclusive licence to PMI New Zealand Chapter to publish this document on the PMI New Zealand Chapter web site and in other formats for the Proceedings PMI New Zealand Chapter Wellington 2012. Any other use is prohibited without the express permission of the author(s).