Causes and Solutions for Loss and Bankruptcy for Contracting Companies in Egypt
Mahmoud Hegazy Mohammad Solayman;
Abstract
This Chapter provides a conclusions and summary of this research. Recommendations are also provided, practical recommendations that may prevent or even reduce construction failure, and proposed additional studies in the subject.
6.2 Summary
Based on the provided information in this thesis, the following conclusions can be drawn:
The construction industry has characteristics that sharply distinguish it from other sectors of the economy. It is fragmented, very sensitive to economic cycles, political environment and highly competitive because of the large number of firms and relative ease of entry. It is basically due to these unique characteristics that the rate of construction business failure has become very high.
In this study, understanding the mechanism of failure is based on collecting information about the causes of business failures and then corrective actions may be done to prevent or reverse the a company's collapse. Identification of the severity of causes of failure was a major result of this research.
Concepts of Failure, Loss and Bankruptcy in facilities and companies were identified. Also there was a study for the current situation for the construction sector in Egypt, it showed that construction sector plays an important role of development because of its important role in driving growth, creating more jobs, and trigger economic activity in many industries and other activities associated with it.
This sector suffers from a number of problems that have prevented progress, and increasing his big role in the Egyptian economy. The construction business requires more attention to remedy the weak points. This is what the study investigated.
This study presented a survey carried out among Egyptian contracting companies. The critical factors leading to contracting companies failure have been investigated through this survey.
The main objective of this study is to identify the causes that have the potential to cause failure for contracting companies in Egypt and to determine their level of severity. Twenty six sub factors were considered in this study and were listed under the following four groups: (I) Administrative Causes, (II) Financial Causes, (III) Technical Causes and (IV) General Causes.
List of the ranked sub factors sorted in ascending order according to their impact on causing the failure of contracting companies for each group of them individually.
Respondents have ranked the factors as highly influential. Top Ten critical factors that affects on contracting companies failure were identified and sorted in ascending order according to their impact on causing the failure of contracting companies as shown in Table 4.16.
6.3 Recommendations
Based on provided information and top 10 critical factors in this thesis, the following recommendations could be extracted:
1) Contracting company should calculate and consider political and environmental risks in costing, estimating contracts and time scheduling.
2) A transparent and visible policy in providing tenders.
3) Companies should improve their managerial abilities in order to meet the challenge. Continuous training programs must be done to improve managerial skills.
4) Tenders must be awarded to the best respondent bid and not necessarily to the lowest bidders, and balance between technical specifications and cost should be done.
5) Economic situation for Egyptian market have to be studied, price increase rate must be taken into consideration.
6) Company's vision have to be clear to ensure taking decisions that only serve the company's plan and avoid taking individual decisions.
7) Formulating laws which prevent combining between power and authority and contracting sector.
8) Company should use modern methods and programs for calculating the project costs.
9) Benefit from similar or newly carried out projects have to be taken in pricing process.
10) Applying Principles of projects management techniques has become an urgent necessity. It is not a waste of time or money.
6.4 Recommendations for future research
The following recommendations are proposed with regards to further research. The results of this research suggest the following areas which could be studied in future research:
1) Investigate typical critical factors in accordance with the types of companies, Large, medium and small companies.
2) Setting conditions or specifications to enter the construction sector in Egypt. One of the set procedures is the restriction of owner. The owner of the company should be qualified much as an engineer is.
3) Study the effect of the political situation on the construction sector in Egypt, and measure how to overcome those reasons.
4) Researches about the technology of failure prediction and administrative mechanism for applying this technology to contracting companies in Egypt are needed.
5) Government policies that can be initiated in Egypt to help contractors stay in the business.
6) It is necessary to repeat this research every 5 years to observe the new trends of factors.
7) There is a need to model and modeling applications of the causes of failure that help in failure prediction.
6.2 Summary
Based on the provided information in this thesis, the following conclusions can be drawn:
The construction industry has characteristics that sharply distinguish it from other sectors of the economy. It is fragmented, very sensitive to economic cycles, political environment and highly competitive because of the large number of firms and relative ease of entry. It is basically due to these unique characteristics that the rate of construction business failure has become very high.
In this study, understanding the mechanism of failure is based on collecting information about the causes of business failures and then corrective actions may be done to prevent or reverse the a company's collapse. Identification of the severity of causes of failure was a major result of this research.
Concepts of Failure, Loss and Bankruptcy in facilities and companies were identified. Also there was a study for the current situation for the construction sector in Egypt, it showed that construction sector plays an important role of development because of its important role in driving growth, creating more jobs, and trigger economic activity in many industries and other activities associated with it.
This sector suffers from a number of problems that have prevented progress, and increasing his big role in the Egyptian economy. The construction business requires more attention to remedy the weak points. This is what the study investigated.
This study presented a survey carried out among Egyptian contracting companies. The critical factors leading to contracting companies failure have been investigated through this survey.
The main objective of this study is to identify the causes that have the potential to cause failure for contracting companies in Egypt and to determine their level of severity. Twenty six sub factors were considered in this study and were listed under the following four groups: (I) Administrative Causes, (II) Financial Causes, (III) Technical Causes and (IV) General Causes.
List of the ranked sub factors sorted in ascending order according to their impact on causing the failure of contracting companies for each group of them individually.
Respondents have ranked the factors as highly influential. Top Ten critical factors that affects on contracting companies failure were identified and sorted in ascending order according to their impact on causing the failure of contracting companies as shown in Table 4.16.
6.3 Recommendations
Based on provided information and top 10 critical factors in this thesis, the following recommendations could be extracted:
1) Contracting company should calculate and consider political and environmental risks in costing, estimating contracts and time scheduling.
2) A transparent and visible policy in providing tenders.
3) Companies should improve their managerial abilities in order to meet the challenge. Continuous training programs must be done to improve managerial skills.
4) Tenders must be awarded to the best respondent bid and not necessarily to the lowest bidders, and balance between technical specifications and cost should be done.
5) Economic situation for Egyptian market have to be studied, price increase rate must be taken into consideration.
6) Company's vision have to be clear to ensure taking decisions that only serve the company's plan and avoid taking individual decisions.
7) Formulating laws which prevent combining between power and authority and contracting sector.
8) Company should use modern methods and programs for calculating the project costs.
9) Benefit from similar or newly carried out projects have to be taken in pricing process.
10) Applying Principles of projects management techniques has become an urgent necessity. It is not a waste of time or money.
6.4 Recommendations for future research
The following recommendations are proposed with regards to further research. The results of this research suggest the following areas which could be studied in future research:
1) Investigate typical critical factors in accordance with the types of companies, Large, medium and small companies.
2) Setting conditions or specifications to enter the construction sector in Egypt. One of the set procedures is the restriction of owner. The owner of the company should be qualified much as an engineer is.
3) Study the effect of the political situation on the construction sector in Egypt, and measure how to overcome those reasons.
4) Researches about the technology of failure prediction and administrative mechanism for applying this technology to contracting companies in Egypt are needed.
5) Government policies that can be initiated in Egypt to help contractors stay in the business.
6) It is necessary to repeat this research every 5 years to observe the new trends of factors.
7) There is a need to model and modeling applications of the causes of failure that help in failure prediction.
Other data
| Title | Causes and Solutions for Loss and Bankruptcy for Contracting Companies in Egypt | Other Titles | الأسباب والحلول لمشكلة خسارة وإفلاس شركات المقاولات في مصر | Authors | Mahmoud Hegazy Mohammad Solayman | Issue Date | 2015 |
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