The practice of efficient and timely payment in construction projects is a major factor that can contribute to the success of a project. The study identifies causes that contribute payment delay, impacts of delayed payments in the Gondar city public building construction projects, solutions for the problem and develop frame work. In order to obtain reliable data for the study questionnaires and case study were used. Relative Importance Index was used to determine the ranking of the results with Excel and SPSS software’s. From the case study that the researcher did all payments were delayed when we compare with the provisions of PPA and FIDIC condition of contracts. From the questionnaire result budget deficient, employer’s poor financial management, employers withholding payment, poor planning system and procurement problem were identified as top five causes of delay in payment in construction industry. Amongst the studied different impacts of delayed payment cash flow problems, construction delays, creates negative chain impact on other parties, disputes among parties and reduced employment in construction projects were the top five impacts of payment delays. From several potential solutions to mitigate delayed payment suspension of work, setup trust with bank prior to work start to get paid, payment of stipulated interest, better communication and better specifications prior to start work were top solution for the effect of delayed payment.