Factors Affecting Performance of Local Contractors on Building Construction Projects: The Case of Selected Grade One Local Building Contractors in Addis Ababa
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Date
2022-06
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Addis Ababa University
Abstract
The purpose of the study was to investigate into the factors that influence the performance of local contractors in Addis Ababa’s grade one contractors in building construction. Factors influencing local contractors were used as the independent variables, and contractor performance was used as the dependent variable, to establish the conceptual framework. In order to meet the objectives three research questions and five hypotheses were created. In conjunction with descriptive and a causal or explanatory research design, a quantitative research approach was applied. Relative importance index, Pearson Correlation and multiple regression analyses were conducted to investigate the suggested hypothesis and test the direct relationships among variables. The data were obtained by structured closed-ended questionnaires consisted of thirty-two statements identified and merged under five groups. These groups are cost related factors, time related factors, quality related factors, client satisfaction related factors, and people related factors with a five-point Likert scale. The data were collected from a total target population of 240, grade one consultant, grade one contractor, and project owner that are registered in Ministry of Urban Development and Construction and a sample of 150 respondents, out of which 130(86.78%) were returned from selected grade one consultant, contractor, project owner in Addis Ababa. SPSS was used to examine the data (version 24). Simple random sampling technique was applied to draw the respondents and both descriptive and inferential statistics were used to analyze the data and interpret results. The findings indicated that the Cost factor, time factor, quality factor, and people factor have a positive and significant relationship with performance of local contractor, and client satisfaction have positive and insignificant relationship with performance of local building contractors. Escalation of material cost, cash flow of projects, differentiation of currency price, material and equipment cost, and information coordination between owner and project manager were the five major critical factors that affect contractors’ performance. Recommendations towards improvement of the current performance for local building contractors were forwarded: Contractors must pay proper attention to material escalation during preparation of cost breakdown analysis for bid price. A material price escalation clause will properly consider and handle on time by the consultants, owners of projects, and the regulatory bodies. Clients must do payments on time for contractors, and facilitate credit facilities. The Government and all concerned bodies must give proper attention to regulate change in currency prices.
Keywords: Cost factor, Time factor, Quality factor, Client Satisfaction factor, people factor, and performance of contractors.