Abstract: The ubiquitous payment problems within construction
industry of China are notoriously hard to be resolved, thus lead to a
series of impacts to the industry chain. Among of them, the most direct
result is affecting the normal operation of contractors negatively. A
wealth of research has already discussed reasons of the payment
problems by introducing a number of possible improvement strategies.
But the causalities of these problems are still far from harsh reality. In
this paper, the authors propose a model for cash flow system of
construction projects by introducing System Dynamics techniques to
explore causal facets of the payment problem. The effects of payment
arrears on both cash flow and profitability of project are simulated into
four scenarios by using data from real projects. Simulating results
show visible clues to help contractors quantitatively determining the
consequences for the construction project that arise from payment
delay.
Abstract: The purpose of this study is to identify the underlying
causes of late payment from the contractors- perspective in the
Malaysian construction industry and to recommend effective solutions
to mitigate late payment problems. The target groups of respondents in
this study were Grades G3, G5, G6 and G7 contractors with
specialization in building works and civil engineering works registered
with the Construction Industry Development Board (CIDB) in
Malaysia. Results from this study were analyzed with Statistical
Package for the Social Science (SPSS 15.0). From this study, it was
found that respondents have highest ranked five significant variables
out of a total of forty-one variables which can caused late payment
problems: a) cash flow problems due to deficiencies in client-s
management capacity (mean = 3.96); b) client-s ineffective utilization
of funds (mean = 3.88); c) scarcity of capital to finance the project
(mean = 3.81); d) clients failure to generate income from bank when
sales of houses do not hit the targeted amount (mean=3.72); and e)
poor cash flow because of lack of proper process implementation,
delay in releasing of the retention monies to contractor and delay in the
evaluation and certification of interim and final payment (mean =
3.66).