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King Fahd University of Petroleum and King Fahd University of Petroleum and MineralsMinerals
Department of Construction Engineering and Department of Construction Engineering and ManagementManagement
Presented to:
Dr. Sadi Assaf
CEM 520 Class
Causes of Contractor’s Failures
in Saudi Arabia
By:
Adel Al-Barrak
June 1993
Presented By:
Tariq Al-Wabil
28 December 2003
• • OBJECTIVESOBJECTIVES• RESEARCH METHODOLOGY• RESEARCH METHODOLOGY• RESULTS• RESULTS• CONCLUSION• CONCLUSION• RECOMMENDATION • RECOMMENDATION • Q & A• Q & A
GUIDELINESGUIDELINES
Causes of Contractor’s Failures in Saudi Arabia
OBJECTIVESOBJECTIVES ٱٱ To undertake a comprehensive analysis To undertake a comprehensive analysis
of the most important factors that cause of the most important factors that cause business failure among contractors.business failure among contractors.
To identify and analyze the most severe To identify and analyze the most severe factors causing failure in Saudi Arabia.factors causing failure in Saudi Arabia.
To test the hypothesis that different To test the hypothesis that different grades of contractors, generally agree grades of contractors, generally agree on the severity of failure.on the severity of failure.
Causes of Contractor’s Failures in Saudi Arabia
RESEARCH RESEARCH ٱٱMETHODOLOGYMETHODOLOGY
Questionnaire Design.Questionnaire Design.
Part 1 : Purpose of the survey.Part 1 : Purpose of the survey.
Part 2 : General Information.Part 2 : General Information.
Part 3 : Causes of Failures.Part 3 : Causes of Failures.
Causes of Contractor’s Failures in Saudi Arabia
RESEARCH RESEARCH ٱٱMETHODOLOGYMETHODOLOGY
Questionnaire Design.Questionnaire Design.
Part 1 : Purpose of the survey.Part 1 : Purpose of the survey.
Part 2 : General Information.Part 2 : General Information.
Part 3 : Causes of Failures.Part 3 : Causes of Failures.
Causes of Contractor’s Failures in Saudi Arabia
RESEARCH RESEARCH ٱٱMETHODOLOGYMETHODOLOGY
Questionnaire Design.Questionnaire Design.
Part 1 : Purpose of the survey.Part 1 : Purpose of the survey.
Part 2 : General Information.Part 2 : General Information.
Part 3 : Causes of Failures.Part 3 : Causes of Failures.
Causes of Contractor’s Failures in Saudi Arabia
RESEARCH RESEARCH ٱٱMETHODOLOGYMETHODOLOGY
Questionnaire Design.Questionnaire Design.
Part 1 : Purpose of the survey.Part 1 : Purpose of the survey.
Part 2 : General Information.Part 2 : General Information.
Part 3 : Causes of Failures.Part 3 : Causes of Failures.
Causes of Contractor’s Failures in Saudi Arabia
Statistical Sampling.Statistical Sampling.•• Classification of Contractors.Classification of Contractors.•• Sample size Information.Sample size Information.
Contractor Classification CertificateContractor Classification Certificate
Causes of Contractor’s Failures in Saudi Arabia
Degrees Financial Limits of Saudi Contractor
## FieldField Degree (In Millions Riyal)Degree (In Millions Riyal)
55thth 44thth 33rdrd 22ndnd 11stst
11
22
33
44
55
66
77
88
99
1010
1111
1212
1313
1414
1515
RoadsRoads
Water and sewage worksWater and sewage works
Industrial WorksIndustrial Works
Marine WorksMarine Works
BuildingsBuildings
Electrical WorksElectrical Works
Mechanical WorksMechanical Works
Electronic WorksElectronic Works
DamsDams
LandscapingLandscaping
Slaughter HousesSlaughter Houses
Cities Cleaning & Hauling of garbageCities Cleaning & Hauling of garbage
Parks & recreation grounds MaintenanceParks & recreation grounds Maintenance
Medical Centresb MaintenanceMedical Centresb Maintenance
Wells DrillingWells Drilling
1010
1010
1010
1010
55
55
55
55
55
55
55
33
33
33
0.10.1
3030
3030
3030
3030
1515
1515
1515
1515
1515
1515
1515
1010
1010
1010
0.30.3
100100
100100
100100
100100
5050
5050
5050
5050
5050
5050
5050
3030
3030
3030
22
300300
300300
300300
300300
200200
200200
200200
200200
200200
200200
200200
100100
100100
100100
1010
More than 300More than 300
More than 300More than 300
More than 300More than 300
More than 300More than 300
More than 200More than 200
More than 200More than 200
More than 200More than 200
More than 200More than 200
More than 200More than 200
More than 200More than 200
More than 200More than 200
More than 100More than 100
More than 100More than 100
More than 100More than 100
More than 10More than 10
Causes of Contractor’s Failures in Saudi Arabia
RESEARCH RESEARCH ٱٱMETHODOLOGYMETHODOLOGY
Questionnaire Design.Questionnaire Design.
Part 1 : Purpose of the survey.Part 1 : Purpose of the survey.
Part 2 : General Information.Part 2 : General Information.
Part 3 : Causes of Failures.Part 3 : Causes of Failures.
Causes of Contractor’s Failures in Saudi Arabia
Statistical Sampling.Statistical Sampling.•• Classification of Contractors.Classification of Contractors.•• Sample size Information.Sample size Information.
Sample Size InformationSample Size Information
hh StrataStrata StrataStrata
Population Population N (h)N (h)
Sample Sample SizeSize
Percent Percent of of
Sample Sample to to
PopulatioPopulation Sizen Size
Prop. Prop. SampleSample
11 Group Group OneOne
8585 1919 22%22% 27.9%27.9%
22 Group Group TwoTwo
160160 2727 17%17% 39.7%39.7%
33 Group Group ThreeThree
207207 2222 11%11% 32.4%32.4%
452452 6868 15%15% 100%100%
RESEARCH RESEARCH ٱٱMETHODOLOGYMETHODOLOGY
RESULTSRESULTS ٱٱ STATISTICAL METHODS.STATISTICAL METHODS.
Causes of Contractor’s Failures in Saudi Arabia
STATISTICAL METHODS
CROSS TABULATIO
N
STATISTICAL
TECHNIQUES
CORRELATION
RANKING
• Specialty
• Experience
• Volume of Business
• Number of Workers
• Mean
• Standard Deviation
• Standard Error of
Mean
• Confidence Interval
• Coefficient of
Variation
• Spearman
• Partial
• Multiple
• Grade One & Two
• Grade Three
• Grade Four
RESULTSRESULTS ٱٱ
MAJOR FINDINGS.MAJOR FINDINGS.
Causes of Contractor’s Failures in Saudi Arabia
1
2
3
4
Finance Causes 27.27 %
Environmental Causes 23.7 %
Managerial Causes 27.78 %
Expansion Causes 21.7 %
RESULTSRESULTS ٱٱ
1 - Project cost estimation > The 1 - Project cost estimation > The Owner’s budget = Lowest Price.Owner’s budget = Lowest Price.
2 - Comparison Between Contractors.2 - Comparison Between Contractors.
3 – Early Planning for the Project.3 – Early Planning for the Project.
4 – Not Qualified4 – Not Qualified
Causes of Contractor’s Failures in Saudi Arabia
Low Price + Low Quality.Low Price + Low Quality.
RECOMMENDATIONSRECOMMENDATIONS ٱٱ Qualified OwnerQualified Owner Improvement of estimation.Improvement of estimation. No. of payment, late payment.No. of payment, late payment. Two committees (organization/cash Two committees (organization/cash
flow)flow) Motivating WorkersMotivating Workers Long term planning.Long term planning.
Causes of Contractor’s Failures in Saudi Arabia
CONCLUSIONCONCLUSION ٱٱ Insufficient Experience.Insufficient Experience. Poor Estimation.Poor Estimation. Anyone could become a contractor.Anyone could become a contractor. Cash flow Problem.Cash flow Problem. Labor productivity & Improvement.Labor productivity & Improvement. Bad Decisions “One Man Role’Bad Decisions “One Man Role’ Neglect.Neglect. Managerial Maturity.Managerial Maturity.
Causes of Contractor’s Failures in Saudi Arabia
Q & AQ & A
Causes of Contractor’s Failures in Saudi Arabia
Thank YouThank You
Causes of Contractor’s Failures in Saudi Arabia
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