Determining the stationary financial cause of contracting firms failure

Abstract

Failure of the contracting firms becomes an essential part of the construction industry. There are many sources that can cause failure of contracting firms and the financial causes are one of these crucial factors. This study aims at determining the stationary financial cause of contracting firms failure. A questionnaire survey comprises 18 financial causes has been conducted with Egyptian engineers from the big-sized contracting firms for appraising their importance degree. Survey results showed that national downturns in the economy, high prices of building materials, poor estimating practice, delayed progress payments from the client, and non-payment of interest on delayed certificate are the main causes behind contracting firms failure. Further, Ginni’s mean difference measure of dispersion revealed that the stationary financial cause of contacting firms failure is contractor firm starting business with a small paid-up capital. Finally, in a comparison with seven developing countries, the stationary financial cause was found to be the most frequent cause of contracting firms failure, influencing 85.71% of the surveyed countries. The findings bridge a gap in knowledge regarding the financial causes of the failure of the big-sized contracting firms in Egypt, to be utilized as variables for failure prediction models in future works.

Keywords:

• Failure causes
• contracting firms failure
• construction industry
• Egyptian economy
• relative importance index
• Ginni’s measure of dispersion

Disclosure statement

No potential conflict of interest was reported by the authors.