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Home Home Bulletin Risk of Late Payment in the Malaysian Construction Industry

Risk of Late Payment in the Malaysian Construction Industry

By: Kho Mei Ye, Hamzah Abdul Rahman

Late payment problem is endemic in construction and needs to be explicitly recognized as this problem recurs from project after project. Payments, which implies a major problem as monies, is needed to pay for materials, labour, plant, subcontractors’ account rendered, preliminaries and general overheads expended during the progress of the work [26]. When the flow of money into a business is delayed, the net cash flow will become negative. When this happens, the contractor would require immediate funding to overcome the cash deficit.  Therefore, late payment affects time, cost and quality as good quality construction requires prompt payment, so that progress would not be affected. Some practitioners may think that delays in payment are common place in the Malaysian construction industry. It could be argued that there are core individuals who believe that late payment is acceptable [12].

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