Identification of reasons for contractor insolvency in the indian construction industry
By: Patel, Ruta Nilam
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Contributor(s): Trivedi, Rajnikant.
Publisher: USA Springer 2022Edition: Vol.103(1),Mar.Description: 129-138p.Subject(s): Humanities and Applied SciencesOnline resources: Click here
In:
Journal of the institution of engineers (India): Series ASummary: Considering various conceivable outcomes of undesirable circumstances and dangers, the project can be at risk at any stage of its life cycle. At the stage of execution, insolvency is one such risk that can disrupt the project and its outcomes. This risk needs to be identified and controlled at the earliest possible time in any project. Moreover, the causes of the contractor insolvency should be identified for avoidance of unwanted situations that may damage the project and its stakeholders. This paper focuses on identifying and prioritizing top reasons for contractor insolvency through questionnaire survey. The results of survey are analyzed using relative importance index and respective rankings are given. Also, category-wise viewpoints on relevant reasons are discussed. The similarity between the viewpoints of different categories of professionals is established using Spearman’s rank correlation. The results imparted from the analysis give the top reasons that may cause the contractor insolvency which are further validated by case studies of three Indian construction companies that witnessed insolvency. The top 10 reasons include cash flow problems, underbidding, poor business management skills, poor financial control, overtrading, domino effect, diversification, illegal phoenix activity, overwhelming contract claims, and predominance of trade credit.
| Item type | Current location | Call number | Status | Date due | Barcode | Item holds |
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Articles Abstract Database
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School of Engineering & Technology Archieval Section | Not for loan | 2023-0075 |
Considering various conceivable outcomes of undesirable circumstances and dangers, the project can be at risk at any stage of its life cycle. At the stage of execution, insolvency is one such risk that can disrupt the project and its outcomes. This risk needs to be identified and controlled at the earliest possible time in any project. Moreover, the causes of the contractor insolvency should be identified for avoidance of unwanted situations that may damage the project and its stakeholders. This paper focuses on identifying and prioritizing top reasons for contractor insolvency through questionnaire survey. The results of survey are analyzed using relative importance index and respective rankings are given. Also, category-wise viewpoints on relevant reasons are discussed. The similarity between the viewpoints of different categories of professionals is established using Spearman’s rank correlation. The results imparted from the analysis give the top reasons that may cause the contractor insolvency which are further validated by case studies of three Indian construction companies that witnessed insolvency. The top 10 reasons include cash flow problems, underbidding, poor business management skills, poor financial control, overtrading, domino effect, diversification, illegal phoenix activity, overwhelming contract claims, and predominance of trade credit.
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