Contractor’s Payment Delay and its Impact on Road Projects Administered under Ethiopian Roads Authority
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Date
2017-08
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Addis Ababa University
Abstract
Ethiopia has given special attention for development of the road sector. In this regard, the
Ethiopian Roads Authority (ERA) has been given the responsibility to procure, regulate, and
administer construction works and consultancy services. For ERA, to competently discharge
these responsibility, it is essential that those members of ERA responsible for the project
management to have a complete understanding of the Technical, Contractual and Financial
aspects of the project. As part of these competence and capability, ERA is expected to have
effective budget allocation and utilization system. However, ERA has usually faced difficulty in
paying due payments on time to the Contractors and Consultants. As a result of this, the
Contractor’s cash flow status have been affected, and, ultimately it results in delay in
construction, quality related problems, late interest payment, increase in construction cost, and
other cases of Contractor’s claim on a project.
This research work, therefore, focuses on identifying the causes and impacts of delay in
Contractor’s payment on road projects administered under ERA based on randomly selected six
road projects in which late interest payment has been effected and questionnaire based survey
with engineers from ERA, Contractor and Consultant and; subsequently, the detailed sources of
the delay, potential impacts, and possible remedial measures were identified.
Accordingly, it was found that ineffective budget allocation and utilization is the major cause for
delay in Contractor’s payment and delay in progress of the physical works, reduced quality in
construction works, increase in frequency of workmanship problems, insufficient resource
arrangements, inability to comply Environmental, Health, Safety and Social Management
requirements, and increase in construction and supervision cost of project were some of impacts
of delay in Contractor’s Payment.
To this respect, as a major outcome of the study, it has been arrived that maximizing the efficiency
of design, the actual performance of the Contractors, information on past performance of Contractors and
resource allocated on the project site and capacity of Professionals working at Planning and Program and
Implementation directorate are very critical matters to plan and allocate sufficient fiscal year budget by
the client so that occurrence of Contractor’s payment Delay.
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Keywords
Road Projects