Responsible Causes of Payment Delays in Indian Construction Industry

Abstract

Payment delays are endemic in construction projects across the world. Research has shown that payment delays are leading causes of time and cost overruns, disputes, and bankruptcy. Payment delays also have significant economic consequences for companies, jobs, and growth. While adequate research has been conducted in India on causes of delays in construction projects, there has been almost nil research on why payments delays occur and what are the most feasible solutions for reducing payment delays. This research analyses responses of comprehensive questionnaire survey based on literature review and in consultation with industry experts and academia in India and abroad. The survey was administered to select group of approximately equal numbers of major categories of stakeholders directly involved in construction projects. Statistical analysis of the results eventually reflected major implementable points in terms of capacity building, dispute resolution mechanisms, and contract formulation for achieving major impacts in reducing payment delays.

An Investigation into the Causes of Payment Delays and Deliberate Delay Tactics in Public Construction Projects in Saudi Arabia

“…Accrediting incorrect planning, administration problems, difficulties in financing, lack of experienced staff, and poor communication are common causes of payment delays, which have been highlighted as causes of payment delays [1]. Two remarkable causes, deliberate underpayment and deliberate delays for their own financial advantage, were highlighted by Kathpalia and Deepika [50].…”

“…This insight underscores the need for a more streamlined and standardised approach to classifying these causes of payment delays to avoid redundancy, as shown in Table 1. Delay in solving technical problems Shortage of resources of current year's project The use of pay when paid clause in subcontractors' payment Local culture or altitude Peng and Lu, 2020 [48] Multiple levels of review and excessive paperwork Chadee et al, 2023 and Peng and Lu, 2020 [19,48] Complex bureaucratic procedures and lengthy approval processes within government agencies Spalazzi et al, 2021 [49] Inefficiency Corruption Mismanagement Kathpalia and Deepika, 2022 [50] Deliberate underpayment by the client Deliberate delays by clients for their financial advantage…”