Unfair Payment Issues in Construction: Re-thinking Alternative Payment Method for Tier-1 Contractors to Subcontractors

Conference paper


Swai, L., Arewa, A. and Ugulu, R. A. 2020. Unfair Payment Issues in Construction: Re-thinking Alternative Payment Method for Tier-1 Contractors to Subcontractors. International Conference on Civil Infrastructure and Construction (CIC2020). Doha, Qatar 02 - 05 Feb 2020 Qatar University Press. https://doi.org/10.29117/cic.2020.0012
AuthorsSwai, L., Arewa, A. and Ugulu, R. A.
TypeConference paper
Abstract

Recent statistics reveal substantial increase in late payments cases from 18% to 27%; with over £30 billion unpaid invoices to UK contractors. Furthermore, 82% of overdue invoices are monies owed to subcontractor by tier-1 main contractors. Indeed, tier-1 contractors are deemed to be the main elephant in the room despite various contractual, government and private initiatives designed to curb late payment menace. Yet, there is little research concerning use of Alternative Payment Method (APM) to leverage tier-1 contractors paying subcontractors’ invoices promptly. The aim of this study is to assess the use APM to enhance pragmatic and sustainable payment practices between tier-1 contractors and subbies. The research question is: what are the industry specific factors that influences unfair payment practices and how can alternative payment method help to leverage fair payments to subbies? The study adopted sequential exploratory design type of mixed method supported by questionnaire and structured interviews. The study population are drawn from experienced industry stakeholders including clients, contractors, designers, professionals in addition to use of computer simulation to validate proposed APM model. Initial findings reveal an optimism bias tendency of most subcontractors agreeing to lengthened and unfair payments terms induced by Tier 1 contractors. The study identified over five industry and business specific influential factors that encourages tier-1 contractors to clinch to unpropitious late payment practices. In specific terms, there are overwhelming evidences that APM has significant potential to minimize late payment in the UK construction industry if there is political, business and legislative will to implement the model.

Year2020
ConferenceInternational Conference on Civil Infrastructure and Construction (CIC2020)
PublisherQatar University Press
Publisher's version
License
File Access Level
Anyone
Publication dates
OnlineFeb 2020
Publication process dates
Deposited05 May 2021
Journal citationpp. 84-93
Book titleProceedings of the International Conference on Civil Infrastructure and Construction (CIC 2020)
Book editorSirlin, O.
Ebead, U.
Eid, H.
Gunduz, M.
Hussein, M.
ISBN9789927139109
Digital Object Identifier (DOI)https://doi.org/10.29117/cic.2020.0012
Copyright holder© 2020 Licensee QU Press.
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