Construction payment delays and losses: perceptions of New Zealand
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.