Abstract

The study aims at identifying and assessing the main causes of contractors’ failure in industrial projects in Saudi Arabia. 24 causes were identified from the literature for assessment by owners, contractors and subcontractors. These causes were classified under five categories, namely managerial causes, financial causes, growth causes, environmental causes and uncontrollable causes. A survey of 36 participants was conducted. Data was collected from 15 owners, 11 contractors and 10 subcontractors. The results indicated that lack of experience in the business field, war, poor project management, poor cost estimation, unavailability of stationed project leader at site, neglect and type of the contract are the most severe causes behind contractor’s failure in construction projects. The rank correlation coefficient indicated that there is a high level of agreement among owners, contractors and subcontractors on the severity of the different failure causes. The research provides a severity of the ranking of the different causes of failure so that mitigation measures could be developed to avoid them or lessen their effects.

Keywords:

Causes of failure, contractor, industrial projects, owner, subcontractor, Saudi Arabia,

References

1. Arditi, D., A. Koksal and S. Kale, 2000. Business failure in the construction industry. Eng. Constr. Archit. Manage., 7(2): 120-132.
   CrossRef    
2. Assaf, S. and S. Al-Hejji, 2006. Causes of delay in large construction projects. Int. J. Proj. Manag., 24(4): 349-357.
   CrossRef    
3. Davidson, R.A. and M.G. Maguire, 2003. Ten most common causes of construction contractor failures. J. Constr. Account. Tax., 13(1): 35-37.
   
4. Dun and Bradstreet Corporation, 1986. Dun’s Census of American Business. Dun and Bradstreet Corporation, New York, USA.
   
5. Enshassi, A., K. Al-Hallaq and S. Mohamed, 2006. Causes of contractor’s business failure in developing countries: The case of Palestine. J. Constr. Dev. Countries, 11(2): 1-14.
   
6. Jannadi, M.O., 1997. Reasons for construction business failure in Saudi Arabia. Proj. Manage. J., 28(2): 32-36.
   
7. Kangari, R., 1988. Business failure in construction industry. J. Constr. Eng. M-ASCE, 114(2): 172-190.
   
8. Kivrak, S. and G. Arslan, 2008. Factors causing construction company failure. Proceeding of the Building Abroad Conference: Procurement of Construction and Reconstruction Projects in the International Context. Monteral, Canada, October 23-25, pp: 297-306.
   
9. Mahamid, I., 2012. Factors affecting contractor’s business failure: Contractors’ perspective. Eng. Constr. Archit. Manage., 19(3): 269-285.
   CrossRef    
10. Project Management Institute, 2008. A Guide to the Project Management Body of Knowledge (PMBOK Guide). 4th Edn., ISBN 978-1-933890-51-7.
    
11. Russell, J.S. and E.J. Jaselskis, 1992. Predicting construction contractor failure prior to contract award. J. Constr. Eng. M-ASCE, 118(4): 791-811.
    
12. Schaufelberger, J.E., 2003. Causes of subcontractor business failure and strategies to prevent failure. Proceeding of the Construction Research Congress: Wind of Change-Integration and Innovation. American Society of Civil Engineers, Honolulu, Hawaii, United States, March 19-21, pp: 7.
    CrossRef    
13. Schleifer, T.C., 1990. Construction Contractor's Survival Guide. Wiley Interscience, USA.
    CrossRef    
14. Strischek, D. and K. McLaughlin, 2008. Why do contractors really go under? A construction industry consultant looked for the real reasons behind contractor failures and found some surprising results. RMA J., 91(2): 68-72.
    
15. Strischek, D. and M. McIntyre, 2008. Red flags & warning signs of contractor failure. RMA J., 90(6): 72-77.
    

Competing interests

The authors have no competing interests.

Open Access Policy

This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.

Copyright

The authors have no competing interests.