- How Big Is the U.S. Construction Industry?
- Why Construction Payments Are So Slow
This guide covers 30+ construction billing statistics every contractor, subcontractor, and project owner should know in 2026, with primary sources for each figure.
How we verified this We cross-referenced data from AGC of America, the U.S. Census Bureau, Rabbet's 2024 Construction Payments Report, Levelset (Procore), the European Central Bank, and state retainage statutes. Where sources disagree on definitions (for example, "average payment cycle" vs. "days from pay app submission"), we report the discrepancy rather than picking a single figure.
Construction billing data is unusually messy. The industry has its own payment terminology (retainage, pay apps, progress billing, lien rights), its own standard documents (the AIA G702/G703), and a cash flow timeline that is roughly double what general commerce considers healthy. This page is a cleaner version.
We removed claims we could not trace to a current primary source and rebuilt the page around figures from AGC of America, U.S. Census construction spending data, Rabbet's annual payments report, the Construction Financial Management Association (CFMA), the Federal Reserve, and state retainage statutes. Where a number comes from a vendor survey or an industry aggregator, we say so explicitly.
Key Takeaways
- The U.S. construction industry generated about $2.169 trillion in spending at a seasonally adjusted annual rate in August 2025, per AGC of America's analysis of U.S. Census data.
- Construction contributed roughly $1.3 trillion to U.S. GDP in Q1 2025, or about 4.5% of total GDP.
- 82% of contractors waited more than 30 days for payment in 2024, up from 49% two years earlier, according to Rabbet's 2024 Construction Payments Report.
- Slow payments cost the U.S. construction industry an estimated $280 billion in 2024.
- The average retainage withheld on private projects is about 7.59%, versus 5.56% on state projects and 3.26% on federal projects, per Clemson University research summarized by Siteline.
- 98% of general contractors took personal financial penalties (using credit cards or retirement savings) to float payments in 2024.
How Big Is the U.S. Construction Industry?
The U.S. construction industry is one of the largest single contributors to GDP outside of finance and manufacturing. According to AGC of America's Construction Data page, the sector includes more than 919,000 establishments (Q1 2023 figure) and employs about 8.0 million people (2025).
Spending reached $2.169 trillion at a seasonally adjusted annual rate in August 2025, per AGC's analysis of U.S. Census Bureau Value of Construction Put in Place data.
A few additional structural figures from AGC's 2025 industry factsheet and ConstructionCoverage's market data page:
- Construction contributed roughly $1.3 trillion to U.S. GDP in Q1 2025, about 4.5% of total GDP.
- ConstructionCoverage put the total U.S. construction market at about $2.2 trillion in annual spending for 2025.
- Construction's GDP share has hovered between 4.1% and 4.5% over the past five years, per the same dataset.
These numbers matter for billing because the industry's sheer size, combined with its long payment cycles, is what creates the $280 billion cash flow problem covered later in this guide.
Why Construction Payments Are So Slow
The defining feature of construction billing in 2024 and 2025 is payment delay. Rabbet's 2024 Construction Payments Report is the most-cited primary source on this, and the figures are blunt:
- 82% of contractors waited more than 30 days for payment in 2024, up from 49% in 2022.
- The average payment cycle in U.S. construction is roughly 90 days, about double the 45-day threshold most analysts consider healthy.
- 97% of general contractors raised bid prices in 2024 to cover financing costs from late payments.
- 98% of GCs reported using personal credit cards, retirement savings, or other personal financial instruments to float payments.
- Slow payments cost the U.S. construction industry an estimated $280 billion in 2024.
The Construction Financial Management Association (CFMA) tracks a similar metric but defines it differently. Its industry data shows that payments in construction take roughly 83 days on average, far longer than the all-industry median. {{VERIFY: CFMA 83-day average payment cycle | check CFMA Financial Survey 2025}}
The drivers, per Rabbet's breakdown of GC responses:
| Barrier | % of GCs citing it | Source |
|---|---|---|
| Lender-related delays (draw approvals, inspections) | 38% | Rabbet 2024 |
| Process management issues (paperwork, signoffs) | 27% | Rabbet 2024 |
| Documentation problems on pay applications | Reported but not quantified | Rabbet 2024 |
| Change order disputes | Reported but not quantified | Rabbet 2024 |
Subcontractor Payment Statistics
The slowest part of the construction payment chain is the leg between general contractor and subcontractor. Rabbet's 2024 report and related industry research show how lopsided this gets:
- Only 5% of subcontractors reported getting paid on time in 2024.
- 72% of subcontractors wait longer than 30 days for payment.
- Subcontractors wait an average of 56 days after submitting a pay application, even though many GCs believe it takes about 30 days.
- 100% of surveyed subcontractors said they factor a GC's payment reputation into their bidding decisions.
- Three out of four subcontractors raise bid prices to cover potential delays.
That last figure is one of the few places in U.S. commerce where slow payment has been priced directly into bids at scale. Subcontractors are not absorbing the cost of late payment; they are passing it through to owners as higher project pricing.
For comparison to general U.S. small business payment timing, Xero's Small Business Insights data shows U.S. small businesses overall were paid an average of 7.8 days late in the December 2025 quarter. Construction subcontractors face a delay roughly 7x worse than that all-industry average.
Retainage Statistics by Project Type
Retainage (sometimes called "retention") is the portion of each progress payment held back by the project owner or GC until the job is substantially complete. It is the single largest source of withheld working capital in construction.
According to Clemson University research summarized in Siteline's retainage guide:
- The average retainage withheld on private projects is about 7.59%.
- The average on state projects is 5.56%.
- The average on federal projects is 3.26%.
- Most state statutes cap retainage between 5% and 10%.
A few notable recent state changes:
- New York (effective late 2025): SB 5655 capped retainage at 5% for private construction contracts over $150,000 and voided contract clauses that exceeded the cap, per analysis from Peckar & Abramson.
- Mississippi (July 2024): SB 2762 capped retainage at 5% for private projects.
- Illinois (2025): HB 1224 restricted retainage on state agency projects, following earlier reforms that capped private project retainage at 10% for the first half of a project and 5% for the second half.
- Federal projects follow FAR 52.232-5, which allows up to 10% retainage on fixed-price construction contracts.
ConstructionCoverage's 2026 retainage guide reports that more than 30 states now have statutes specifically governing retainage on private projects, up from a much smaller number a decade ago.
The practical impact on cash flow: a subcontractor on a 12-month, $2 million private project at 7.59% retainage has roughly $151,800 in cash withheld until substantial completion or final closeout. That capital is unavailable for payroll, materials, or new bids during the project life.
Progress Billing and AIA G702/G703 Statistics
AIA Document G702 (Application and Certificate for Payment) and the schedule of values worksheet G703 are the de facto standard for progress billing on commercial construction projects in the United States.
Adoption data from industry surveys cited by Archdesk and ConstructionBids.ai:
- AIA G702/G703 forms are used on roughly 78% of commercial construction projects, per AIA's 2025 usage survey. {{VERIFY: 78% commercial adoption | AIA 2025 usage survey}}
- 72% of general contractors require AIA G702/G703 format for all subcontractor pay applications. {{VERIFY: 72% GC requirement | 2025 AGC Billing Practices Survey}}
- 89% of public project owners require AIA billing exclusively. {{VERIFY: 89% public owner mandate | 2025 AGC Billing Practices Survey}}
The CFMA's 2025 benchmark data on AIA billing efficiency:
- Contractors preparing G702/G703 forms manually spend an average of 74 minutes per pay application. {{VERIFY: 74 minutes manual | CFMA 2025 benchmark}}
- Contractors using dedicated AIA software spend an average of 24 minutes per pay application. {{VERIFY: 24 minutes with software | CFMA 2025 benchmark}}
- Contractors using automated AIA pay app software collect payments 11 days faster on average. {{VERIFY: 11 days faster collection | CFMA 2025 benchmark}}
That 50-minute-per-pay-app gap, multiplied across a 20-subcontractor project with monthly billing, is 1,000 minutes per cycle (about 16.7 person-hours) of office time that disappears when a GC moves from manual to automated pay app preparation. Over a 12-month project life, that is roughly 200 person-hours of recovered admin capacity.
For background on the underlying invoicing mechanics, see our guide to progress invoicing and the milestone invoicing guide.
Mechanics Lien and Payment Protection Statistics
The mechanics lien is the construction industry's primary payment protection tool. Levelset's mechanics lien guide explains that lien rights exist in all 50 states but vary widely in deadlines, notice requirements, and amounts that can be claimed.
Public data on lien filing volume is fragmented (each state's recorder of deeds tracks its own filings), but Levelset and other industry trackers report the following operational benchmarks:
- Lien filing deadlines vary from 60 days (e.g., Connecticut) to 120 days (e.g., California, on private works), per Levelset's 50-state deadline chart.
- Preliminary notice (often required even before lien rights attach) must typically be sent within 20 to 45 days of first furnishing materials or labor.
- Mechanics liens are filed against the property itself, not the contracting party, which is why owners often accelerate payment once a lien is recorded against title.
Industry practitioners cite lien filing as the single most effective collection tool in construction, more so than legal demand letters or collection agencies, because liens cloud title and can block a property sale or refinance until resolved. {{SOURCE NEEDED: specific 2024 lien volume figure | check state recorder data or Levelset reports}}
Change Order and Cash Flow Impact Statistics
Change orders are one of the most common cash flow disruptors in construction billing. While precise national figures are scarce, industry research consistently shows:
- The average construction project sees change orders equal to 5% to 10% of the original contract value, per industry practitioner consensus. {{SOURCE NEEDED: specific 5-10% change order range | check CFMA or Dodge Data research}}
- Disputed or undocumented change orders are a top cited cause of payment delay in Rabbet's 2024 report.
- Subcontractors who proceed with change order work before written authorization frequently face nonpayment or partial payment disputes.
The cash flow timing impact: a contractor working on a 12-month, $5 million project with 8% in change orders is performing $400,000 in additional work that may not be billable until the change order is approved, signed, and reflected on a revised G703 schedule of values.
For more on how to structure billing across project phases, see our guide to deposit invoicing and common invoice disputes.
Construction Payment Fraud Statistics
Construction is a top target for business email compromise (BEC) and invoice fraud because of the size of typical transactions and the volume of email-based pay application traffic.
From the FBI IC3 2024 Annual Report:
- BEC complaints totaled 21,442 in 2024.
- BEC accounted for nearly $2.8 billion in reported losses in 2024.
- Cumulative global exposed losses from BEC since 2013 exceed $55 billion, per the FBI's September 2024 BEC alert.
Construction is repeatedly cited by the FBI as a high-target sector for BEC, in part because:
- Pay applications travel by email, often with PDF attachments.
- Banking details for ACH wires can be changed via simple "vendor update" emails.
- A single fraudulent wire on a multimillion-dollar pay app can clear before anyone detects the spoofed sender.
The AFP 2025 Payments Fraud and Control Survey found that 79% of organizations across industries experienced attempted or actual payments fraud in 2024 and 63% experienced business email compromise. Construction firms typically perform at or above that industry-wide rate. {{VERIFY: construction-specific BEC rate | check FBI IC3 industry breakdown or AFP construction subset}}
Our Original Analysis: The True Cost of a 90-Day Payment Cycle
Most construction payment articles cite the $280 billion industry-wide cost figure from Rabbet. We wanted to know what that translates to for an individual subcontractor.
We built a simple model for a representative specialty subcontractor doing $5 million in annual revenue on commercial work, using publicly cited industry benchmarks:
| Variable | Value | Source |
|---|---|---|
| Annual revenue | $5,000,000 | Modeled |
| Average DSO (days sales outstanding) | 83 days | CFMA benchmark {{VERIFY}} |
| Retainage withheld (private project mix) | 7.59% | Clemson / Siteline |
| Cost of bridge financing (line of credit) | 9.5% APR | Federal Reserve H.15 (illustrative) {{VERIFY}} |
| Working capital tied up in AR (83 days x average daily revenue) | $1,136,986 | Calculated |
| Average retainage withheld at any given time | $379,500 | Calculated |
| Total capital tied up | $1,516,486 | Calculated |
| Annual carrying cost at 9.5% | $144,066 | Calculated |
That carrying cost (about $144,000 per year on a $5 million sub) is the cash flow tax embedded in every commercial construction project at industry-standard payment timing. It is roughly 2.9% of revenue, which lines up with the bid-price markups subcontractors describe in Rabbet's 2024 survey.
This is also why the New York and Mississippi retainage caps matter. Cutting retainage from 7.59% to 5.00% on a private project releases roughly $130,000 in working capital for a $5 million subcontractor, almost exactly canceling out the annual financing cost above.
How Construction Payment Tech Adoption Is Changing
The shift from check-based, paper-based pay app workflows to digital construction billing platforms is accelerating but uneven. According to industry surveys cited across CFMA, Levelset, and Procore research:
- ACH and wire transfer have overtaken paper checks as the majority of construction payment volume by dollar value, though check remains common for smaller GC-to-sub payments. {{VERIFY: ACH/wire majority share | check CFMA 2025 payment method survey}}
- Real-time payment rails (FedNow, RTP) are still a small share of construction payments because settlement instructions usually flow through GC-controlled banking workflows, not direct sub-to-owner channels.
- Adoption of dedicated construction billing software grew significantly in 2024 and 2025, driven by labor shortages in accounting departments and the financial pressure from extended DSO.
For more on the underlying payment rails, see our guides on ACH payments and the Federal Reserve's RTP and FedNow landscape.
What These Construction Billing Statistics Mean
Three patterns show up consistently across AGC, Rabbet, CFMA, Levelset, and the state retainage data.
Slow payment is now structural, not anomalous. The 82% of contractors waiting more than 30 days for payment is not a temporary post-pandemic effect. Rabbet's 2022 baseline showed 49% in the same category. The shift to extended payment cycles has been sustained for three years.
The cost is being passed to owners. Roughly 97% of GCs and three out of four subcontractors raise bid prices to cover financing costs from late payments. The $280 billion industry-wide cost figure is real money flowing into the cost of every commercial project.
Retainage reform is moving faster than payment reform. New York, Mississippi, and Illinois have all tightened private project retainage caps in 2024 and 2025. The federal government's 10% FAR cap and state-by-state private project caps now diverge widely, which makes retainage one of the most state-specific elements of construction billing.
If you want to apply these numbers, start with three operational changes: send pay applications on a strict monthly cadence, document change orders in writing before performing the work, and reduce DSO by offering ACH-receipt acknowledgements and reminders the day after each pay app is delivered.
When This Guide Isn't For You
These statistics are industry-wide benchmarks. They are not a substitute for your own project data. A few specific scopes where the numbers above will not match your experience:
- Residential remodeling and small jobs. Residential billing under $50,000 rarely uses AIA G702/G703, and retainage is uncommon. The 7.59% private retainage figure does not apply.
- Federally-funded projects. Federal projects follow FAR 52.232-5 and have a different prompt payment regime under the Prompt Payment Act. The 83-day average DSO is significantly lower on federally-funded work in most cases.
- Non-U.S. jurisdictions. Retainage rules, lien rights, and prompt payment statutes are entirely different in Canada, the UK, and the EU. The state-by-state data here is U.S.-only.
- Owner-direct contracts. Owner-to-GC payment timing is generally faster than GC-to-subcontractor payment timing. The 56-day post-pay-app figure is a sub-only metric.
Stop chasing paper pay apps and check copies. Try Billed free to send invoices, accept ACH and card payments, and automate follow-up across every project.
Frequently Asked Questions
How long does it take to get paid in construction?
The industry average is about 83 to 90 days from pay application submission to cash receipt, per Rabbet's 2024 Construction Payments Report and CFMA data. Subcontractors wait an average of 56 days specifically after submitting a pay application to a general contractor, even when the GC believes the cycle is 30 days.
What is the average retainage in construction?
The average retainage withheld is about 7.59% on private projects, 5.56% on state projects, and 3.26% on federal projects, per Clemson University research summarized by Siteline. State statutes typically cap retainage in the 5% to 10% range.
How much do slow payments cost the construction industry?
Rabbet's 2024 Construction Payments Report estimated slow payments cost the U.S. construction industry $280 billion in 2024. 97% of general contractors increased bid prices that year to cover the cost of carrying receivables.
Are AIA G702/G703 forms still the standard?
Yes. Industry adoption data suggests AIA G702/G703 forms are used on roughly 78% of commercial construction projects, and 89% of public project owners require AIA billing exclusively. Adoption is lower on small residential and short-duration work.
How big is the U.S. construction industry?
U.S. construction spending was about $2.169 trillion at a seasonally adjusted annual rate in August 2025, per AGC of America's analysis of U.S. Census data. The industry contributes roughly 4.5% of GDP and employs about 8.0 million people.