Management of payment delays in government funded construction projects in Sri Lanka

Abstract

The successful completion of a construction project will depend on the timeliness of the payments made by the employer, which benefits both the project as well as the parties involved in it. If the payments get delayed, the resulting financial burden will go down the supply chain to reach even the subcontractors and suppliers, thereby further complicating the situation. Since payment delays are common in Sri Lankan construction projects as well, especially when the projects are funded by the government, the proper management of payment delays is important. This research was, therefore, conducted to identify how the consequences of payment delays in government funded projects in Sri Lanka could be properly managed. A literature review and sixteen semi-structured expert interviews were carried out to collect the required data, which were subsequently analysed using manual content analysis. The study identified 77 causes of payment delays in government funded projects and 51 strategies that can minimise them. The study recommends the enactment of the Construction Industry Payment Act, enforcement of regulations that make it mandatory to have a sum of money deposited in an independent escrow account, getting the employers to work only within the stipulated budgets, and getting them to provide payment bonds.