Article,
Determinants of Closure of Local Construction Companies in Rwanda
International Journal of Innovative Science and Modern Engineering (IJISME), 5 (12): 31-36 (June 2019)
Abstract
The objectives of Construction Companies are to be successful in their business by surviving in competitive Business Environment. However, the construction industry has unique characteristics making it different from others development sectors. The sector is fragmented, very sensitive to many determinants which results to high rate of Business Closure. Business failure, Collapse and Bankruptcy are common terms defines the status of the company closure. The ease in Entering the Construction market with limited financing resources results to many companies competing on limited market and exposing many to Business closure, Rwanda is no exception. The objectives of the research study aimed at identifying the determinants of business closure of Local construction companies in Rwanda and Investigating their severity. The severity was ranked in Likert scale and was assessed in respect to the view points of the contractors in both construction sectors and consultants’ firms. And the study also looked at salvage measures to be taken in avoidance of failures. Benching marking the research, the literature review provided a framework in understanding the finding resulting to closure of the companies and some suitable determinants was grouped based on their relevancy in a group of sectors. Basing on those determinants, research instruments were developed and used in Data Collections within several firm’s managers and other important stakeholders like Engineers and architectures. Subsequently, data was analyzed using descriptive method and identify their Severity index, rank correlations analysis and one sample test was applied to proof the relevance of the determinants identified. The Descriptive statistics and test of hypotheses confirmed the variables which were found in the literature. The adverse impact of closure of the company has great consequence on the Government GDP since the sector employee a good number of workers as it mostly affects individual income. The study was important for both Government Institutions, NGO’s, Universities, Research Institutions and other stakeholders. The study results revealed that contract administration, finances, design variation and technology significantly influence closure of construction projects in Rwanda. Based on the study findings, the creation of effective and efficient construction management structures was necessary. The study suggests that when sourcing for a contractor to undertake a project, it is of paramount importance to vet them and confirm that they have capacity to undertake the project in question. The contractor should also show proof of competent and well-educated staff who have handled such projects to completion in the past. The contractor should also show proof of appropriate equipment or ability to rent.