CONTRACTOR’S PAYMENT DELAY AND ITS IMPACT ON GOVERNMENT CONSTRUCTION PROJECTS IN THE CASE OF BOLE SUB CITY CONSTRUCTION OFFICE.

Abstract

Ethiopia has given special attention for the development of government construction projects such as schools, clinics, Hospitals, administration offices etc. in this regards, Bole sub city construction office (BSCCO) has been given the responsibility to design, procure, regulate, and administer construction works and consultancy service. For BSCCO, to competently discharge these responsibility, it is essential that those members of BSCCO responsible for the project management to have a complete understanding of the Technical, Contractual and Financial aspects of the project. As part of these competence and capability, BSCCO is expected to have effective budget allocation and utilization system. However, BSCCO has usually faced difficulty in paying due payments on time to the Contractors and Consultants. As a result of this, the Contractor’s cash flow status have been affected, and, ultimately it results in delay in construction, quality related problems, late interest payment, increase in construction cost, and other cases of Contractor’s claim on a project. This research work, therefore, focuses on identifying the causes and impacts of delay in Contractor’s payment on construction projects administered under BSCCO based on randomly selected 133 contractor’s from 200 total number of contractors in xii which late interest payment has been effected and questionnaire based survey with engineers from BSCCO, Contractor and Consultant and; subsequently, the detailed sources of the delay, potential impacts, and possible remedial measures were identified. Accordingly, it was found that ineffective budget allocation and utilization is the major causes for delay in contractors payment and delay in progress of the physical works, reduced quality in construction works, increase in frequency of workmanship problems, insufficient resources arrangements, inability to comply environmental, Health, Safety and social Management requirements and increase in construction and supervision cost of project were some of impacts of delay in contractors payments. To this respect, as a major outcome of the study, it has been arrived that maximizing the efficiency of design, the actual performance of the contractors, information on past performance of contractors and resources allocated on the project site and capacity of professionals working at planning and program and implementation directorate are very crucial matters to plan and allocate sufficient fiscal year budget by the client so that occurrence of contractors payment delay.