An exploration of funds management by emerging contractors

Abstract

Finance is a critical aspect that needs to be closely monitored in a business and during the lifespan of a construction project. Emerging contractors need to develop and run sustainable businesses in the construction industry. The extent of expertise in funds management by emerging contractors directly relates to their development. Therefore, all efforts must be geared towards their expertise, development and sustenance. Emerging contractors need to manage their finances, be competitive, and deliver projects in the required quality, time and within the allocated budget. This study aims at determining challenges faced by emerging contractors, the root causes of challenges of emerging contractors in funds management, the impact of emerging contractor challenges on project delivery time. Further, the study aims to develop a flow chart that will mitigate emerging contractor challenges in funds management. The study was conducted in KwaZulu-Natal, South Africa using a questionnaire. Questionnaires were distributed in two phases and respondents to the study included emerging contractors and industry stakeholders. Random and systematic sampling techniques were employed in the selection of samples. A total of 85 questionnaires were analysed for the study. Inferential statistics was employed for analysis of data. Findings include late payment for completed work which ultimately causes delays; interference with project performance; inadequate planning; unskilled site manpower; late delivery of material; late identification of errors and resolution of drawings, specification errors and omissions; community unrest, militancy and communal crises and interference by political leaders are some of the key factors that negatively affect emerging contractors’ funds management. When adequate attention is given to these factors, it results in project success. In addition, improvement of contractor performance and quality of work; involvement of tribal authorities, provision of finances for project by funders, securing finances and materials credit; successfully managing project finances from inception to completion leads to profits being made and projects are completed successfully and within budget when payment for work done is effected on time. Recommendations include ensuring that sufficient finances are secured, allocated and properly managed from inception to completion of a project; payments are prepared, submitted and paid on time. Planning is improved to combat project delays including ordering materials in advance, identifying design and specification errors early, engaging all project stakeholders to avoid disputes and attending formal training courses to acquire skills that will assist in running projects and managing successful and sustainable businesses. It is also recommended that the new proposed programme and flowchart be adopted to assist the South African construction industry in improving the financial management practices and develop skill of emerging contractors; its adoption will alleviate challenges facing emerging contractors in funds management.