Eliciting the Financial Challenges Facing Emerging Contractors in Developing Countries Using the Critical Incident Technique: A Case of South African Construction Industry

Abstract

The purpose of this paper was to determine the financial critical incidents that are encountered by emerging contractors in the construction industry in Gauteng, South Africa. The methodology of assessment was based on critical incident technique, a qualitative method which has been considered reliable in tourism and hospitality studies. An interview guide which was evaluated in terms of reliability and validity was used to collect critical incidents from the respondents. Based on the interviews conducted, the respondents highlighted twenty eight financial critical incidents perceived to have an impact or impacts on Emerging Contractors’ performance. The incidents identified were the inability of Emerging Contractors to properly manage cash flow, poor budgetary planning and cash flow, poor financial decision making and lack of collateral. In order to improve Emerging Contractors’ performance, executives are required to plan construction projects in order to guide their execution and control. The limitation of the study was that the perceptions drawn were extracted from 12 respondents who represented emerging contractors in Gauteng Province. Therefore, the results of the study cannot be generalised to the entire South Africa construction industry, however they can be used as part of the solution towards Emerging Contractors’ performance.