Rabbet, the leading provider of construction finance software, today released the 2023 Construction Payments Report, with insights into the rapidly accelerating costs associated with slow payments in the construction industry.
Key findings include:
- $273 billion is the cost of slow payments to the U.S. construction industry
- 34% of general contractors’ contracts have fallen out due to developers not securing project financing in the last 12 months
- 141% increase in liens filed by subcontractors due to slow payments in the last 12 months
The report demonstrates that nearly 14% of total construction costs can be eliminated with faster, more reliable payments to contractors. While the industry is maintaining health, a contractor’s reputation for timely payments is even more critical today—93% of subcontractors consider payment reputation when deciding project bids. Developers and lenders significantly contribute to slow payments, impacting project feasibility, schedule, costs, and quality. Addressing this issue is crucial for reducing project risks and costs.
To compile the data, Rabbet distributed a survey in August of 2023 to general contractors and subcontractors. This year’s report captures how they managed working capital, bidding decisions, and project risks in the face of slow payments during the last 12 months. The report highlights the critical need for the construction industry to prioritize faster and more reliable payment, ultimately reducing costs, improving project outcomes, and ensuring its long-term sustainability.
Rabbet's CEO and Co-Founder, Will Mitchell notes that, “The ‘survive til 25’ sentiment making the rounds in the industry is indicative of the concerns in the market; but based on the trends captured in the report, the industry is adapting. As always, there are growth opportunities for the developers and owners who best position themselves to evolve during changing conditions. This means shifting product focus, modernizing processes, and embracing technology to not only survive now, but be prepared to thrive in 2025.”
To view the complete 2023 Construction Payments Report, click here.
About Rabbet
Rabbet is transforming the construction finance industry with tailored solutions that provide a complete picture of construction and asset management portfolios. Designed for real-time workflows and comprehensive insights, Rabbet enables real estate developers, construction lenders, and related service providers to lower operational costs, make more informed decisions, and earn trust with other financial stakeholders. Founded in Austin, TX in 2017, Rabbet has improved visibility and efficiency for over $60B in construction and capital expenditure projects. For more information about Rabbet, visit rabbet.com.
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Contacts
Trisha Patel
tpatel@rabbet.com
(833) 474-6759
