How Payment Delays Can Delay Construction Project Timelines

In the construction industry, cash is king—without it, nothing can get done. Because money is so crucial to the continued progression of construction projects, payments need to be made correctly and on time. Otherwise, a lack of funds can result in time-consuming and costly delays. Below, we explain how payment delays can delay construction project timelines and how you can prevent these delays from happening.

What Constitutes a Payment Delay?

All construction projects need funding to get off the ground. Typically, this funding comes from the owner, stakeholders, or a lender. These entities pay money to the construction company, which uses it to purchase materials and tools and pay workers. A payment delay can happen when the owner, stakeholders, or lender don’t pay the construction company on schedule or when project managers fail to pay suppliers and workers.

How Can Payment Delays Delay Timelines?

Payment delays can delay construction project timelines in various ways:

  • If the project manager doesn’t have the funds to purchase the necessary materials and tools, work will halt once the current inventory runs out.
  • Workers and contractors who aren’t paid fully and on time might lose motivation and work less productively, resulting in slow progress and an uptick in errors. Alternatively, they might stop delivering entirely.
  • When suppliers aren’t paid on time, the construction company won’t get the materials and tools they need on time. But that’s not all—a late payment can lower a supplier’s closing balance and put them in financial hardship. This can strain the business/supplier relationship. Poor business-supplier relationships often result in worse communication, lower-quality products, and lower price concessions for the construction company.

How Do You Prevent Payment Delays?

Disputes about work quality and timeline—commonly called “holdback”— are common causes of payment delays. Another reason payments might be delayed is that the funder or project manager is out of money. This normally happens when the cost of the project exceeds expectations or funds are handled poorly.

But what if we told you that technology can curb poor communication and management and help everyone get paid on time? Using HeadLight’s construction materials management software, you can collect, store, and share data remotely. When everyone involved in a project has access to the same information, you can cut down on communication errors drastically. You can also use our software to track suppliers, allowing you to cut the ones who aren’t efficient to save money and reduce the risk of running low on funds.

Don’t let miscommunication or mismanagement slow down your project. Ask for a demo of our materials software and see the difference it can make.