On top of concerns about dwindling backlogs and an uncertain economic outlook, slow payment for work already performed is now sapping the strength of many industry firms. Across the industry, executives report pay cycles for general contractors have stretched to an average of 45 to 60 days from 30 days a year ago. Subcontractors report pay cycles in the 90-day range, roughly twice the average from a year ago.
In addition, firms say owners are increasingly holding retainage beyond reasonable time periods, further eroding cash flow and profits. Delays in pay for work already performed are increasing operating costs and causing firms to draw on already tightened lines of credit.