Factors influencing the selection of payment systems in construction projects

Construction contracts are fundamental to any project, and the selection of an appropriate payment system is vital given that the ultimate success of any construction project depends on the suitability of the selected payment system to the project’s characteristics and client’s requirements. In this paper we have defined the payment system in terms of four layers as Payment mechanism, Pricing mechanism, Payment chain (who pays who), and Other Cash-flow factors. In order to develop a tool that will help the project team to select an appropriate payment system, a list of factors that influence the selection process was created. The most influential factors were identified using a U.K based nation-wide postal survey. In this questionnaire the opinions of different types of organizations- consultants, contractors and clients were collected and assessed. The results showed that different factors were perceived to influence the selection of each layer linking the payment system. According to the results a total of seventeen factors were found to influence the selection process. This paper presents the work, which is part of an ongoing PhD study.