King Fahd University of Petroleum and Minerals Department

King Fahd University of Petroleum and Minerals Department of Construction Engineering and Management Causes of Contractor’s Failures in Saudi Arabia By: Presented to: Presented By: Adel Al-Barrak Dr. Sadi Assaf Tariq Al-Wabil June 1993 CEM 520 Class 28 December 2003

GUIDELINES • • • OBJECTIVES RESEARCH METHODOLOGY RESULTS CONCLUSION RECOMMENDATION Q&A Causes of Contractor’s Failures in Saudi Arabia

ٱ OBJECTIVES To undertake a comprehensive analysis of the most important factors that cause business failure among contractors. n To identify and analyze the most severe factors causing failure in Saudi Arabia. n To test the hypothesis that different grades of contractors, generally agree on the severity of failure. n Causes of Contractor’s Failures in Saudi Arabia

ٱ RESEARCH METHODOLOGY n Questionnaire Design. Part 1 : Purpose of the survey. Part 2 : General Information. Part 3 : Causes of Failures. Causes of Contractor’s Failures in Saudi Arabia

ٱ RESEARCH METHODOLOGY n Questionnaire Design. Part 1 : Purpose of the survey. Part 2 : General Information. Part 3 : Causes of Failures. Causes of Contractor’s Failures in Saudi Arabia

ٱ RESEARCH METHODOLOGY n Questionnaire Design. Part 1 : Purpose of the survey. Part 2 : General Information. Part 3 : Causes of Failures. Causes of Contractor’s Failures in Saudi Arabia

ٱ RESEARCH METHODOLOGY n Questionnaire Design. Part 1 : Purpose of the survey. Part 2 : General Information. Part 3 : Causes of Failures. n Statistical Sampling. • Classification of Contractors. • Sample size Information. Causes of Contractor’s Failures in Saudi Arabia

Contractor Classification Certificate Causes of Contractor’s Failures in Saudi Arabia

Degrees Financial Limits of Saudi Contractor # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Field Roads Water and sewage works Industrial Works Marine Works Buildings Electrical Works Mechanical Works Electronic Works Dams Landscaping Slaughter Houses Cities Cleaning & Hauling of garbage Parks & recreation grounds Maintenance Medical Centresb Maintenance Wells Drilling Degree (In Millions Riyal) 5 th 4 th 3 rd 2 nd 1 st 10 10 5 5 5 5 3 3 3 0. 1 30 30 15 15 10 10 10 0. 3 100 100 50 50 30 30 30 2 300 300 200 200 100 10 More than 300 More than 200 More than 200 More than 100 More than 10 Causes of Contractor’s Failures in Saudi Arabia

ٱ RESEARCH METHODOLOGY n Questionnaire Design. Part 1 : Purpose of the survey. Part 2 : General Information. Part 3 : Causes of Failures. n Statistical Sampling. • Classification of Contractors. • Sample size Information. Causes of Contractor’s Failures in Saudi Arabia

ٱ RESEARCH METHODOLOGY Sample Size Information h Strata 1 Group One Strata Population N (h) 85 2 Group Two 160 3 Group Three 207 452 Sample Size Percent of Sample to Population Size Prop. Sample 19 22% 27. 9% 27 22 68 17% 11% 15% 39. 7% 32. 4% 100%

ٱ RESULTS n STATISTICAL METHODS CROSS TABULATION STATISTICAL TECHNIQUES CORRELATION RANKING • Specialty • Mean • Spearman • Grade One & Two • Experience • Standard Deviation • Partial • Grade Three • Volume of Business • Standard Error of • Multiple • Grade Four • Number of Workers Mean • Confidence Interval • Coefficient of Variation Causes of Contractor’s Failures in Saudi Arabia

ٱ RESULTS n MAJOR FINDINGS. Finance Causes 27. 27 % Environmental Causes 23. 7 % Managerial Causes 27. 78 % Expansion Causes 21. 7 % Causes of Contractor’s Failures in Saudi Arabia

ٱ RESULTS 1 - Project cost estimation > The Owner’s budget = Lowest Price. 2 - Comparison Between Contractors. 3 – Early Planning for the Project. 4 – Not Qualified Low Price + Low Quality. Causes of Contractor’s Failures in Saudi Arabia

ٱ RECOMMENDATIONS Qualified Owner n Improvement of estimation. n No. of payment, late payment. n Two committees (organization/cash flow) n Motivating Workers n Long term planning. n Causes of Contractor’s Failures in Saudi Arabia

ٱ CONCLUSION Insufficient Experience. n Poor Estimation. n Anyone could become a contractor. n Cash flow Problem. n Labor productivity & Improvement. n Bad Decisions “One Man Role’ n Neglect. n Managerial Maturity. n Causes of Contractor’s Failures in Saudi Arabia

Q&A Causes of Contractor’s Failures in Saudi Arabia

Thank You Causes of Contractor’s Failures in Saudi Arabia