Who Decides If the Builder Gets Paid?
Australia's residential construction payment system creates collective dysfunction despite each participant acting rationally. Independent lender inspections and fragmented decisions compress cash flow and raise insolvency risk.
Why do builders keep missing out on progress payments even when the work is done?
Builders and subcontractors face cash flow gaps and insolvency risk due to misaligned payment systems. Day-to-day: invoices stall, businesses struggle to meet payroll and supplier costs.
Key takeaways
- Lenders use independent inspections to manage risk, but this delays progress payments to builders.
- Each party acts rationally, but the combined system creates cash flow compression across the industry.
- Persistent payment misalignment raises insolvency risk for residential builders and their subbies.
- The broken payment architecture is contributing to constrained housing supply across Australia.
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