Effect of conflicts on the contracting business failure in the construction industry

Abstract

The construction industry plays an important role in the economy of countries and provides the necessary services to achieve the needs and welfare of societies. For this, attention should be given to this sector. The research aims to indicate the most important causes of conflicts in construction projects, the most important reasons for the failure of construction contracting companies, and to study the relationship between conflicts and failure of contractors in the construction industry. This study uses the questionnaire method to achieve its objectives. The target participants are contractor of grade 1 and 2 in Palestine. Eighteen (18) conflict factors and 17 influencing factors in contracting failure are identified and tabulated in a questionnaire form. Results show that the main conflict factors include: delaying monthly payments from the project owner, frequent variation orders, the quality of work is poor, rework, and delay in delivering the works according to the schedule. While the main factors of contractors failure are: cash flow problems, conflict between parties, bidding strategy, local political conditions and low profit due to high competitions. The results show a correlation between conflict and contracting business failure. The results of the research would be of great importance to those interested in the construction industry, as they contribute to identifying the causes of major problems in the construction sector and help in its renaissance and development.