Effect of expedited payments on project delays: Evidence from the QuickPay reform
Vibhuti Dhingra1, Volodymyr Babich2, Harish Krishnan3, Jie Ning4
1York University; 2Georgetown University; 3University of British Columbia; 4Case Western Reserve University
We study how payment delays affect project delays. We develop theories linking the two, and empirically test our hypotheses using the QuickPay reform, which expedited payments to certain projects, as an exogenous shock. Surprisingly, faster payments led to greater project delays. We identify contractor liquidity constraints and aggressive bidding as causes for this increase. We also reveal a spillover effect: some projects are accelerated although their payment timing is unaffected by QuickPay.