Construction Payment Pyramid

The construction payment pyramid (or payment chain/waterfall) is the tiered structure through which money flows on a project: owner and lender at the top, then the general/main contractor, then subcontractors, then sub-subcontractors and material suppliers. Because each tier is paid only after the tier above receives funds, any delay or failure upstream compounds as it travels down — which is why subcontractors at the base bear disproportionate cash-flow and insolvency risk. Most payment reforms (prompt payment timelines, trust accounts) are designed to regulate flows between these tiers.

Connections

• Global Subcontractor Payment Delays — delay compounds down the pyramid, source: 2025
• Pay-When-Paid Clauses — mechanism transmitting risk down tiers, source: 2018