Identifying factors of risk management for the construction industry

Abstract: Delays and cost overruns are recurrent in construction projects. Risk management (RM) has been developed to curtain risks associated with construction projects. However, there is no consensus of what factors should constitute RM for construction projects. Therefore, this paper scrutinises preceding studies on the theme of RM and establish core risk management factors (RMFs) that are indispensable to make the concept valuable in the construction industry (CI). A literature search related to RM was conducted in order to identify common RMF. It was indicated that there is still misunderstanding and disagreement over the factors that should constitute RM in construction. However, the RMFs of organisational environment, defining objectives, resource requirement, risk measurement, risk identification, risk assessment, risk response and action planning, communication, monitoring, review and continuous improvement dominate the literature. Identifying RMF that can effortlessly be understood and implemented will contribute to ameliorating the current RM status and boosting the body of knowledge

An appraisal of critical risk factors in construction projects in South Africa : perspective of contractors

Abstract: The significant impact of construction projects on a nation has been characterized in literature in terms of infrastructure development and job creation. These projects are nevertheless associated with various risks that need to be managed to ensure successful delivery. Hence, the identification of these risk factors is of utmost importance. Therefore, this study aimed at assessing contractors‘ perception of critical risk factors in construction projects in Gauteng (South Africa). Explorative and questionnaire survey methods were employed to obtain data from literature and construction professionals all practising in Gauteng. Results revealed that supply of faulty materials, poor communication between involved parties, financial failure of the contractor, working at dangerous areas and closure were the five critical risk factors in construction projects. It is obvious from the results that the knowledge of the identified critical risk factors furnishes invaluable information to the construction contractor concerning what risk variables to focus attention on in construction activities. The paper contributes to the identification of critical risk factors in construction projects from an objective point

Evaluating credit accessibility predictors among small and medium contractors in the South African construction industry

The importance of small and medium construction enterprises (SMEs) in the South African economy has been recognised. However, construction SMEs are faced with difficulties in accessing credit from financial institutions. Furthermore, past research has failed to reach consensus on the demographic and socio-economic factors that predict credit accessibility for construction SMEs in South Africa. This study determines the predicting demographic and socio-economic factors for credit accessibility for construction SMEs from financial institutions in South Africa. A quantitative research approach was used and data was collected, using a questionnaire survey from 250 construction SMEs who were conveniently sampled. The demographic and company profile factors predicting credit accessibility were modelled and set as the independent variables with credit accessibility to the construction SMEs as the dependent variable, irrespective of the amount obtained from financial institutions. The data was analysed using the Statistical Package for the Social Sciences (SPSS) version 22. Binary logistic regression analysis was used to analyse the predictors of obtaining credit. In the first model, the results revealed that the credit accessed irrespective of the amount and those who did not receive credit at all, when modelled with the conceptualised predictors suggested, showed no significant predictors of obtaining credit. However, in the second model, when the conceptualised predictors were modelled with full and partial credit, the results established that age group, current position in the organisation, tax number and location were good predictors of obtaining full credit. The findings of this study cannot be generalised across South Africa, as the study was conducted only in the Gauteng province. The value of this study informs owners of SMEs in the construction industry to provide their age and current position in the organisation when applying for credit. They should also provide the tax number and the location of the business in order to improve their chances of obtaining full credit from financial institutions.&nbsp

An exploratory factor analysis of risk management practices: A study among small and medium contractors in Gauteng

Risk management (RM) is acknowledged as a key activity in project management in the pursuit to deliver successful construction projects. However, these projects are associated with various risks, which often jeopardise project performance, especially among small and medium construction enterprises (SMEs). Risk management practices (RMPs) have been developed, in order to curtail project risks. Nevertheless, there is no consensus on the practices that constitute RM for SME projects. Therefore, the main purpose of this research is to determine the RMPs that can be tailored for construction SMEs to manage risk in their projects, in order to achieve project success. An extensive review of relevant literature on RMPs was conducted and used to develop a structured questionnaire posted to construction SMEs who were conveniently sampled in the Gauteng province of South Africa. The empirical findings established nine RMPs that were reliable and valid for managing risk in projects undertaken by construction SMEs, namely organizational environment; defining project objectives; resource requirements; risk measurement; risk identification; risk assessment; communication approach and evaluation; risk response and action planning, as well as monitoring and review. It is important to note that the study was not conducted across South Africa; hence, the findings cannot be generalized. Despite the delimitation, the researchers recommend that these practices are for risk management in construction projects undertaken by SMEs in South Africa

A conceptual model for pricing health & safety on construction projects

Abstract: The competitive nature of the construction industry (CI) has marginalised health and safety (H&S) on construction projects. Most clients in the CI, if not all, award projects based on price and in most cases to the “cheapest bidder” and not the “safer bidder”. Consequently, such practices have compelled contractors to lower their bid price to increase their chances of being awarded projects, whereas in contrast, H&S is marginalised. The study, which was a case study of nine projects of which six were civil engineering projects and three building construction projects, was purposed to conceptualise a model for pricing H&S on construction projects. The findings showed that contractors do price for H&S using an itemised breakdown even though such items are not included as a trade in the Bill of Quantities (BOQs). With regards to expenditure, the actual costs of H&S ranged between 2.9% and 3.98% for projects with a value below R500 million and between 4.08% and 4.90% for projects with a value above R500 million. Health and safety costs were found to be directly proportional to the projects value and indirectly influenced by the client. Previous studies recommended that H&S should be priced as an itemised trade in the BOQs, but such recommendations are yet to be implemented. The lack of a conceptual model for pricing H&S on construction makes accurate and adequate monitoring of H&S costs unlikely. Thus, a standardised pricing model will assist contractors to price adequately for H&S, and clients, to ensure that provision for H&S measures on construction projects is adequate as required by the Construction Regulations (CR) 2014

Analysis of determinants of revolving credit for small and medium construction enterprises : a case of Gauteng province

Abstract: Small and medium construction enterprises (SMEs) are an important vehicle to drive the economic growth globally. However, this enterprise sector has been constrained by different factors that stifle their full participation in the main stream economy specially credit accessibility. There is paucity of research to verify the determinants that predict revolving credit accessibility from financial institutions in South Africa. The data was obtained using questionnaire survey. 179 small and medium contractors responded from conveniently sampled respondents in Gauteng province in South Africa. The data was analysed using Statistical Package for the Social Sciences (SPSS) version 22. The study found that the dependant variable i.e. revolving credit was not predicted by the independent variables suggested i.e. gender, age group, current position, organization ownership, tax number, location and collateral. The finding informs bank managers they should not force clients to submit collateral before awarding credit to the SMEs. The suggested model that was tested attained the Hosmer and Lemeshow Test goodness of fit hence the results were credible. However, a further study is proposed for the entire country as the researchers acknowledge limitation on the chosen location of study

Assessment of credit accessibility to construction SMEs in the South African construction industry using binary logistic regression

Abstract: Unavailability of credit, especially trade credit, is one of the primary reasons for high failure rate of construction SMEs. This paper empirically investigates the determinants of trade credit to construction small and medium enterprises (SMEs) in the Gauteng Province of South Africa. The data were obtained through questionnaire survey from 179 small and medium contractors who were conveniently sampled in the Gauteng province. Data analysis was done using Statistical Package for the Social Sciences (SPSS) version 22 software. Results indicated that managerial competency, the availability of business plan, relationship with financial institutions, location of the firm, firm size, firm tax number and incorporation are significant determinants of credit accessibility in South Africa. These findings could be useful to construction SMEs in identifying and accessing trade credit from financial institutions

Determinants predicting credit accessibity within small and medium-sized enterprises in the South African Construction Industry

Abstract: The contribution of Small and Medium-sized Enterprise (SME) sector in economic development, job creation and income generation has been recognized worldwide. These contributions are effectively articulated in South Africa construction industry discourse. However, the main problem limiting the SMEs sector to contribute fully in the mainstream economy is the shortage of finance. This study examines the impact of firm characteristics in access to credit by the South African SMEs in the construction industry. A deductive methodological approach was used to examine this problem. This paper utilises a combination of primary data emanating from structured survey questionnaires supplemented by secondary source of data from an extensive literature review, in order to present insightful commentary about credit accessibility within SMEs in South Africa. The structured survey questionnaire was administered to 179 construction small and medium organizations to elicit relevant data about their credit accessibility. Binary logistic regression was applied to determine the influence of demographic variables on credit accessibility. The equation specified access to credit as dependent variable while firm and personnel characteristics as independent variable. The statistical package for social science version 22 was used. The results indicate that firm characteristics influence access to finance. The study recommends that South Africa SME contractors should maintain attractive firm attributes to stimulate lenders to extend finance to their investments

Determinants of bridging loan among small and medium-sized enterprises in the South African Construction Industry

Abstract: Small and medium construction enterprise (SMEs) has become the significant clout of sustained, instantaneous and bracing growth of South Africa economy. Moreover, SMEs has performed an unparalleled role in advancing the South Africa economic growth, and serve as a breeding ground for entrepreneurs and a provider of solutions to address the problems of unemployment in all consuming labours and promoting marketing growth. An opportunity for the healthy advancement of small and medium-sized enterprises (SMEs) in South Africa was in relation to the transformation and expansion policy due to the brisk evolution of the global economy. But with the global economic integration, the small and medium-sized enterprises operating environment is facing tremendous changes and more intense competition. The data was obtained using questionnaire survey. 179 small and medium contractors responded from conveniently sampled respondents in Gauteng province in South Africa. The data was analysed using Statistical Package for the Social Sciences (SPSS) version 22..

Analysis of credit rationing among construction enterprises SMEs within financial institutions : a case of Gauteng Province in South Africa

Abstract: Economic diversification is a key policy goal for the Government of South Africa. SMEs offer a feasible option towards the actualization of this goal. The expansion of construction SMEs in South Africa, however is constrained by lack of access to bank credit. This constrained access to credit is argued in the literature to be due to the credit rationing behavior of banks emanating from asymmetric information in credit markets. Constrained access to credit stifles the growth potential of this vibrant sector which is increasingly generating employment opportunities especially for young enterprises. Department of Trade and Industry (DTI, 2007). This study therefore investigated the factors that influence the credit rationing behavior of banks towards SMEs. A deductive methodological approach was used to examine this problem. The structured survey questionnaire was administered to 179 construction small and medium organizations to elicit relevant data about their credit rationing. Binary logistic regression was applied to determine the influence of demographic variables on credit rationing. The statistical package for social science version 22 was used.The study findings suggest that the experience of SMEs reduces their probability of being credit rationed by banks. From the bank perspective the experience of SMEs is determined from their ability to keep proper financial statements, the performance of their bank accounts with the banks, and their ability to make profits. This calls for capacity building of SMEs in areas of business management (including financial record keeping) if they are to be rated as credit worthy borrowers by the banks. From the SMEs perspective, there is need for banks to improve their efficiency in terms of reduction of loan processing time and cost of borrowing (i.e. interest rate). This will improve access to bank credit by the construction SMEs and promote their growth thereby stimulating economic diversification, employment creation opportunities, and poverty reduction in line with South African Vision 202