Construction Payment Problems: A Critical Review of Payment Problems, Prompt Payment Legislation, and Challenges

The increasing complexity of construction projects combined with the inefficiencies in conventional construction management techniques has led to unnecessarily elongated payment cycles and other payment problems which can adversely affect the performance of projects and involved stakeholders. The rising concerns around construction payment problems have led to the introduction of prompt payment legislation in various jurisdictions worldwide with the common objective of increasing cashflow down the construction pyramid in a fair and reasonable manner. While prompt payment legislation aims to alleviate payment problems, their impacts and challenges remain unclear. In light of this, the main objective of this paper is to investigate construction payment problems, their common root causes, impacts, and potential mitigative options. Moreover, the paper also provides a critical review of prompt payment legislation introduced and implemented in different international jurisdictions for addressing the timeliness of payment in the construction industry. This review was followed by an analysis of the challenges in the implementation of such legislation as well as recommendations for effectively addressing them. Finally, this research can be utilized as a valuable resource for various jurisdictions who wish to address construction payment problems by introducing and effectively implementing prompt payment legislation.