Capacity challenges facing civil engineering contractors in Kwazulu-Natal, South Africa

Abstract

Insolvency maybe broadly defined as an inability of business entity to meet pending financial commitments. For a construction firm, such a situation creates conditions whereby a business entity is unable to fulfill its contractual obligations with regard to work in progress or credit owing. There are indications to suggest that during times of adverse conditions, the occurrences of insolvencies are mutually exclusive and remain a subject of debate. The occurrences of these financial facilities seem to have adversely affected business operations within the civil engineering construction Industry. in South Africa, figures released by the South African Federation of Civil Engineering Contractors (SAFCEC) in 1992 were suggesting an expected general decline in work load handling by this sector. This was a result of scaling down of heavy Infrastructure projects because of government shifting focus to housing and other related projects mainly towards meeting the needs of the previously disadvantaged communities. During that period large contractors suffered financially and some went through insolvency. The South African government had also put emphasis to transform the sector to allow participation of emerging and small contractors but this was not properly regulated as most of these contractors did not have the experience and skills to operate sustainable construction firms. The Construction Industry Development Board (CIDB) was established in 2000 as a statutory body to provide leadership to stakeholders and to stimulate sustainable growth, reform and improvement of the construction sector for effective delivery and the industry’s enhanced role in the country’s economy. Construction Industry Development Board (CIDB’s) regulations were implemented after 2003 and are continuously improving the sector’s growth. This research seeks to evaluate the findings of an investigation regarding challenges facing Civil Engineering Contractors in KwaZulu- Natal, South Africa. The research reports on the basis of the hypothesis that “the prominent factors associated with civil engineering contractor’s insolvencies are related to operational and strategic issues”. The analysis of the findings from the questionnaires and liquidators reports supports the hypothesis that operational management and strategic factors attribute to high failure rate amongst civil engineering contractors. From the findings, a number of recommendations are made to develop strategies to promote growth and sustainability in the civil construction industry especially amongst emerging contractors. This paper focuses on the questionnaire feedback from construction firm owners and will discuss the findings of the survey.