king fahd university of petroleum and minerals department of construction engineering and management...

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.


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.








Statistical Sampling.Statistical Sampling.•• Classification of Contractors.Classification of Contractors.•• Sample size Information.Sample size Information.

Contractor Classification CertificateContractor Classification Certificate


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






















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%


RESULTSRESULTS ٱٱ STATISTICAL METHODS.STATISTICAL METHODS.


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.


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


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.


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.


Q & AQ & A


Thank YouThank You


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