Development of a proactive preventive late payment and underpayment solution model for the construction industry.

Abstract

Payment issues can have a significant impact on construction projects if they are not properly addressed. Proactive preventive measures may help mitigate payment problems and ensure the prompt settlement of interim payment claims. Pursuant to that, a theoretical model called the proactive preventive late payment and underpayment solution (PPPS) model is proposed for the problem of the settlement of payments in the Malaysian construction industry. It comprises three main components for resolving payment problems, namely, the major factors in payment problems, the root causes, and proactive solutions for the settlement of interim payment. Data for the components of the model were gathered through a questionnaire survey and interviews. The PPPS Model, which is based theoretically on the rational choice (RC) model, was validated through an online survey by a group of experts who strongly concurred on its practicality. A qualitative analysis was conducted to derive the main components of this research model, namely, to provide quality staff, develop trust between parties, use appropriate contracts, enhance financial management, benchmark from the outside, and improve payment procedures. It is thus anticipated that this model will assist players in the Malaysian construction industry to have a better understanding of the risks arising from delayed interim payments at an early stage.