Case Study: Delayed Owner Payments Disrupt Contractor Cash Flow on Mississippi Levee Project (2016)

Project Overview
• Name: Lower Mississippi Levee System Upgrades
• Location: Vicksburg, Mississippi
• Year: 2016
• Project Size: $250 million
• Scope: Levee expansion and flood protection infrastructure upgrades
• Lead Agencies/Contractors: U.S. Army Corps of Engineers (Owner) /

Category of the Issue, Problem, or Challenge
• Contract Owner
• Payment & Cash Flow Management

Summary of the Issue, Problem, or Challenge
Funding delays and slow invoice processing by the federal owner resulted in major cash flow issues for regional contractors, some of whom were forced to suspend work or reduce labor.

Root Cause Analysis

• Congressional budget approvals delayed release of funds.
• Owner-side administrative backlog in invoice review.
• Lack of interim payment mechanism for small contractors.

Impacts Due to the Issue, Problem, or Challenge

• Work stoppages and demobilization across project segments.
• Contractor layoffs and subcontractor default risks.
• 7-month cumulative delay and $11 million in claim settlements.

Corrective Actions Taken

1. Owner implemented interim payment advance system.
2. Streamlined invoice review and approval process.
3. Created contingency protocols for payment continuity during budget gaps.

Lessons Learned

• Predictable payment schedules are vital to construction continuity.
• Small and mid-sized contractors are especially vulnerable to delays.
• Public owners must plan for fiscal year uncertainties and mitigate risks.

Audit & Prevention: Project Control Questions to Ask on Future Projects to Help Control the Situation

• Are payment terms clearly defined and realistic?
• Does the owner have a process for expedited review and disbursement?
• Are contractors protected against federal or state funding delays?