Perceptions of small business executives on determinants of performance in the construction industry in Gauteng, South Africa

Abstract

Orientation: The South African (SA) government expects emerging contractors (ECs) to become the main players in economic transformation and growth, job creation and income generation. However, ECs fail to live up to the expectations as some are characterised by low performance levels and are at risk of business closure.Research purpose: The purpose of this research was to examine the perceptions of small business executives (SBEs) on determinants of ECs’ performance so that a performance model that could guide ECs in the construction industry is developed.Motivation for the study: Despite the significance of ECs to the SA economy, researchers have constantly omitted to identify and examine the role played by the perceptions of SBEs on the determinants of performance and this gap in the body of knowledge would be closed by this study.Research design, approach and method: A mixed approach was used to examine the perceptions of SBEs on determinants of performance by applying both qualitative and quantitative research approaches. Data were obtained from 433 urban based ECs registered with the Construction Industry Development Board (CIDB) in the construction industry in Gauteng Province. A structured questionnaire and an interview guide were administered as the data collection instruments. Content analysis, regression analysis and multiple linear regressions were performed.Main findings: The analysis of qualitative data demonstrated the perceptions of SBEs that financial factors, manpower, materials, machinery and equipment, project implementation, quality of work, legal and environmental factors and strategic planning were the determinants of ECs’ performance. Multiple linear regressions carried out based on the perceptions of SBEs identified strategic planning, project implementation and project performance as the most statistically significant factors in predicting the performance of ECs in Gauteng Province.Contribution and value add: Based on perceptual analysis of the ECs and multivariate results, a performance prediction model was developed. Furthermore, a new set of significant determinants of performance as perceived by SBEs in South Africa’s (Gauteng Province) construction industry was established.

Correlation analysis between risk measurement and project success of small and medium contractors in Gauteng, South Africa

“…Risk management often commences with the identification of potential risks which is then followed by the RM phase, where the potential impact of risk is assessed, and risk responses are formulated. Al-Ajmi and Makinde (2018) clarified in their study that when conducted, RM helps quantify and place risks in some order of priority and highlights decisions to be made early, hence increases the likelihood of PS. They added that the effectiveness of subsequent stages of risk management usually depends on the evaluation of the likelihood and magnitude of risk.…”

“…As a result, SMEs need to practise risk management much more than large enterprises (Zoghi, 2017) and consider risk management as an integral part of the business management to keep the firms viable and productive (Naji & Ali, 2017). However, in order to attain a competitive edge and increase the rate of success of their business, SMEs need to make risky decisions and participate in risky activities so that they can protect the innovativeness of delivering projects (Hove & Banjo, 2018). Albasara et al (2018) explained that construction professionals' inadequate level of knowledge in risk identification, risk analysis, risk response strategies, and communication affected the implementation of risk management.…”

“…This is also compounded by the absence of a holistic approach for risk management in standards and professional bodies which makes both understanding and implementation of risk management more complicated (Oduoza et al, 2017). Conversely, Szymansk (2018) argued that all enterprises, including SMEs, need to adopt risk management in order to identify, evaluate risk, and respond to potential threats. Fernando et al (2018) believe that risk management would be an impossible task if risks cannot be measured; that without measuring risk, it will be almost impossible for an organisation to ascertain what actions to take to enhance opportunities and limit threats and the related consequences of risks, should they eventuate.…”

“…Knowing that realistically risk often cannot be curtailed to zero, acceptable risks may help set realistic targets for risk management. However, Al-Ajmi and Makinde (2018) found that management may be uncertain about defining their acceptable level of risk owing to a lack of knowledge of the process underlining threats which can negatively affect project objectives.…”

“…Various classifications have been suggested in the literature. Al-Ajmi and Makinde (2018) outlined a list of risk factors emanated from various sources: financial risks, construction risks, and design risks. In another view, the source of risks was used as a basis for their categorisation as physical risks, personal risk, technical risk, safety risks, design risks, political and regulatory risks, financial risks, and contractual risks (Nawaz et al, 2019).…”