Assessment of Factors Determining Textile Project Distress: The case of Else Addis Industrial plc

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Addis Ababa University


This study investigated the determining factors that contribute for project distressed and the measure taken to recover the project from failing. The study aimed at examining factors affecting project performance that related with project distress, investigating the contributed factor from project management and project financer, Identifying rehabilitation mechanisms to reduce the level of distress and enhance project recovery. The study adopted a descriptive research method. The descriptive research design helped in observing the relationship between project management specific factors and prevalence of default on loan recovery ; project financer specific factor and the prevalence of default on loan recovery; external factors and the prevalence of default on loan recovery ; default on loan recovery and project distress. The study utilized the interview to obtain relevant information from Elsi Addis Industrial plc and Development Bank of Ethiopia representatives. The sampling technique used was judgmental sampling technique which endeavors to get an example of components in light of the judgment of the researcher. The data from the interviews were analyzed using a qualitative approach. The study revealed that lack of prudent due diligence assessment , weak project appraisal practice and owners equity requirements, poor communication management , delay on disbursement of the loan , Stringent procedure of the Bank in utilization of loan were from Financer specific whereas the project management specific include factors related with triple constraints connected with cost overrun , schedule delay , scope creep as well as project sponsors ethical issues , and poor communication culture are categorized as project management specific . As external factor Currency fluctuations, Environmental conditions, Customers and Suppliers issues are the most determinant factors for Elsi Addis Industrial project distress. The study concludes that defaulting on loan repayment negatively affects a project successful performance , it is recommended that the management of financer banks should develop strategies to reduce level of default on loan recovery and project distress by performing prudent project sponsors identification on large project credit financing .



Distressed project, Else Addis Industrial Development Plc, Textile industry, Credit financing