Delayed Payment Problems in Public Construction Projects: Subcontractors’ Perspectives

Abstract

The problem of the contractors and sub-contractors cash flow is mainly due to delayed payment and nonpayment which can severely affect the implementation and performance of any project. The objectives of this study are to identify the causes of delayed payment and nonpayment issues in construction projects in Gaza Strip from subcontractors’ perspective; to study the reaction of subcontractors towards payment problems; and to study the subcontractors’ opinion on effective remedies to delayed payments. A questionnaire survey was adopted to elicit the perception of subcontractors concerning payment problems. The findings of this study indicated that most subcontractors encountered delayed payment and nonpayment from the main contractors. Delayed variation orders payment was found as the most frequently problem faced by subcontractors which has led to disputes. The results revealed that most disputes were resolved through negotiation. The average time that was taken to resolve the disputes was less than 3 months. The findings showed that the inclusion of the arbitration clause in the contract is the most important effective remedy to solve the payment and dispute issues in construction projects in Gaza Strip. The findings from this study would be valuable for all construction professionals.