Causes of Failure of Small Contractors in Saudi Arabia

Abstract

The construction industry in Saudi Arabia is currently flourishing due to increased earned revenues from the oil industry. Small contractors are finding more opportunities for business. The objective of this paper is to understand the reasons behind failure of small contractors and identify the most important factors contributing to their failure. A questionnaire survey was developed and distributed among 43 small contractors for obtaining their feedback and to assess the most critical reasons behind failure of small contractors in the Saudi market. The research concluded that the most crucial causes of small contractors’ failure are management incompetence, poor accounting systems and records, difficulties in attracting good personnel, dependency on a very limited customer base and lack of effective business plans. Based on the results of the study and the severity of the causes of failure, a series of recommendations were developed that could lessen the failure of small contractors.