CAUSES OF PROJECT IMPLEMENTATION DELAY: THE CASE OF PROJECTS FINANCED BY DEVELOPMENT BANK OF ETHIOPIA.

Abstract

Development Bank of Ethiopia was established with the vision and mission of providing financial supports for development projects that are entitled in helping the economic growth of the country. Financing projects involves higher risks due to problems attached with project implementation processes that may result in delays if not properly managed on time. In this paper, the researcher tried to investigate major causes of project implementation delays financed by the Development Bank of Ethiopia. The study mainly focused in areas considered as major contributors in project implementation delays that includes bank related variables, client related variable and external economic variables. The researcher selected 134 project profiles as secondary data source from which 83(62%) profiles show delay and 51(38 %) completed as per the schedule and distributed 60 questionnaires to project implementation staffs from which 51(85%) collected responses were valid responses. Mixed research approach was used by the researcher to analyze the collected data by using econometrics and descriptive statistics. Secondary data collected were analyzed using stata-13 by making use of econometric regression (Logit Model) to explain project delays and questionnaire were descriptively analyzed using mean and standard deviation with SPSS software. The research identifies and analyses whether the significant determinants of project implementation delay are attributed to clients or Banks or whether delay is attributed to some external factors. The finding of this study reveals that Foreign Currency Shortage, Exchange rate fluctuation, Price escalation, Utilization of loan, Appraisal problem, Competency of the promoter, Procurement process and Fulfillment of conditions were statistically significant cause of project implementation delay of DBE’s financed projects.