RESPONSIBLE CAUSES OF PAYMENT DELAYS IN INDIAN CONSTRUCTION INDUSTRY

Abstract

Introduction

Payment delays are endemic in construction industry all across the world. Several research studies in India and abroad have identified payment delays as a major cause of cost and time overruns and disputes in construction( Abeysekera & Wedawatta, 2008; Latham Report,1993; Abdul-Rehman, 2008; Eugine,2006; Iyer, Chaphalpkar & Joshi, 2008; Iyer, Sawhney, Bali & Rentale, 2011; Pimplikar & Radekar, 2014). Government of India, Ministry of Statistics and Programme Implementation (MOSPI) data of infrastructure projects costing Rs 150 crores and above, of last ten years, available on Government of India website, reflects cost overruns ranging from 10-12% and time overruns from one month to 10 years. Delays in payments has been listed as one major reason for time and cost overruns in Public sector infrastructure projects. Unlike other countries, India lags behind in statistical data and extensive local academic research that reflects the payment situation in the construction industry. Estimates made by Dr P R Swarup, Director General of Construction Industry Development Council state that approximately Rs 3 lakh crores of construction contractors are held up in Indian public sector projects due to delayed payments and disputes. Dr Bibek Debroy, member Niti Aayog, places this figure at Rs 1 lakh crore.(Business Today, 17 July 2016).