Internal Factors Affecting Contractor's Performance and the Improvement Mechanisms

Abstract

The purpose of this study is to assess the internal factors affecting contractors’ performance in construction projects and indicate the potential improvement mechanisms in the context of the Ethiopian construction industry. Quantitative data was collected through a structured questionnaire. While the internal factors were evaluated and prioritized using the analytical hierarchy process (AHP), the improvement mechanisms were evaluated using the technique for order of preference by similarity to the ideal solution (TOPSIS). The findings indicated that the internal factors affecting contractors’ performance are cash flow problem, payment delay to subcontractors, poor leadership, understaffing, poor equipment condition, lack of coordination, lack of training, improper planning and scheduling, ineffective communication, and lack of motivation. The identified improvement mechanisms are adopting dynamic management approach, hiring the right people, efficient organization structures, effective incentive mechanism, on time payment, well-established communication system, training, and continuous learning, developing knowledge sharing culture, standardization of working procedures and promoting group work. Identifying and evaluating the internal factors would help to take effective management measures by the top management. Contractors’ capacity development is among the agenda of construction industry development in different countries. Hence, identification of the internal factors is important to governments to frame effective intervention strategies.