Good People in Construction Deserve A Better Payment?Reality

My grandfather was a general contractor, and my dad relays his memories of the days when a payment came through. The family went downtown and had beignets at Cafe Du Monde. Even back then, some fifty years ago, getting a construction payment was a long time coming.

It’s a journey to get money from Point A to Point B in construction, but as challenging as it may be, it’s super important to the millions of people who depend on those pay days to put food on their table; to pay for their daughter’s wedding; to pay bonuses to the team; to pass on the family business to the next generation.

Construction is a huge industry across the globe. It’s full of great people doing great work. Do the good people in construction have the payment reality they deserve?

All Of The Rules Just Making Things Worse?

They certainly have regulations to deal with:

• Prompt payment laws
• Retainage restrictions
• Lien, Bond, Notice, & Waiver rules
• Pay-if-paid and pay-when-paid legal constraints
• Prevailing wages
• And on and on and on

You may have heard that California just added another regulation to the pile. General contractors are now directly liable for wages unpaid by subcontractors.

Another regulation.

Do you ever feel like it’s harder than ever to do business?

Construction has always been a high risk / low margin business, but it’s getting worse. Profitability is sinking. Retainage practices are more aggressive than ever. And, famously, it takes longer to get paid in construction than in any other industry on the planet.

Worse, perhaps, is that no one trusts one another. To “fix” a payment inequity we demand a new aggressive contract provision, or lobby the legislature to conjure up some other “protection.”

Globally People Are Fed Up

Are you fed up? You’re not alone.

In the United States, governments are chasing down the problem. These days it’s trendy for legislatures to debate prompt pay regulations, retainage restrictions, and lien waiver rules.

In the United Kingdom, there is a “Fair Payment Charter” being passed around, and a campaign to achieve “Zero Retainage.”

In Australia, there’s new life in the Security and Payments Act. Prompt payment regulations are underway in South Africa, and being strongly advocated in different Canadian Providences.

Do you really think the politicians are going to fix this mess?

Are these regulations going to be better than the thousands already on the books?

So, How Can Construction Payment Be Better?

Most people who start working on or supplying to a construction job have good intentions. They want things to go well. They don’t want to cause cash problems for others. They don’t want a dispute.

Is more legislation the answer? Longer contracts? “Technology”?

There’s a ton of room for a better construction payment process. Good people in the construction industry want better, and they deserve better.

So, how can it be better? What do you think?