A Comparative Analysis of the Performance of Domestic and Foreign Contractors: The Case of Ethiopian Federal Road Construction Projects

A Comparative Analysis of the Performance of Domestic and Foreign Contractors: The Case of Ethiopian Federal Road Construction Projects

Dakito Alemu Kesto, Betelhem Tsega
DOI: 10.4018/IJPMPA.301599
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Abstract

In Ethiopia, infrastructure, particularly road construction, has been the most essential driver of economic growth. Simultaneously, it is widely acknowledged and analyzed that the domestic road construction industry is inefficient, threatening its role as a driver of the country's economic growth. Thus, the objective of the study was to make comparative analysis of domestic and foreign contractors’ performance in Ethiopian road construction in terms of cost, time, and quality. To meet the objective of the study a document review, semi-structured interview, and focused group discussion were used as a data collection tool. Based on analysis, the finding shows that the domestic contractors are far from being competitive in terms of cost overrun, time overrun and quality performance but it is promising progress over time. This necessitates the participation of both the construction industry and the government in improving the sector's competitiveness, Local road construction firms operate in a challenging business climate.
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1. Introduction

One of the most significant contributors to a country's socioeconomic development is the construction industry. According to Bossink and Brouwers (1996), Infrastructure programs funded by the public sector are an economic and social driver for long-term urban growth that benefits residents. Governments intend to invest money on public works programs that will improve a country's social and economic activities. However, one of the most critical barriers to the country's economic and social progress is a lack of or underdeveloped infrastructure. (Frank B, et al,2013). The accomplishment of time, cost, and quality is used to determine whether a project's execution was successful. (Majid, et al, 2006, Sun M, et al, 2013). Delay and cost escalation are two of the most common challenges encountered during the development of infrastructure projects, particularly road and railway constructions. (Mahamid, I, et al, 2012). The triple project constraints are used to assess project performance and success (Cost, time, and quality). The success of a project is determined by its ability to be completed on schedule and within budget. Because there are so many project activities, tasks, and limits in the sector, it necessitates greater budget and cost.

Ethiopia has ambitious construction plans for the next five years. GDP II, the focus seems to be mainly focused on infrastructure and housing initiatives. To foster a competitive construction industry in Ethiopia, Project management itself offers scope for international contractors to enter the Ethiopian market. (Du Y. Kim, et al, 2009). Like many developing nations, road construction is an essential part of infrastructure expansion in Ethiopia providing connectivity to both rural and urban areas. Road Sector Development Program (RSDP) has massively improved the performance of the sector in terms of strengthening Road Agencies and their management, improvement in terms of access and quality of road network, creating favorable condition to the domestic construction industry, introducing a series of other policy measures in the sector. However, the RSDP report shows that there is huge gap in terms of delivery of different projects in time and cost. The attainment of time, money, and quality is used to determine whether or not a project's execution was successful. (Majid, et al, 2006. Sun M, et al, 2013).

However, MoWUD, (2006) the Ministry of Urban Development and Construction stated that the Ethiopian construction industry is unable to meet specified local and international quality requirements, as well as the sector's output expectations. From the beginning to the end of the operation, construction projects have their own procedures and challenges. Time and cost overruns, as well as waste generation, were among the problems (Hussin, et al., 2013). Many issues and problems confront the industry, including time, cost, quality, client satisfaction, productivity, and safety. (Biyadgligh, 2017). In response to the challenge posed by globalization of the world economy, there has been an increase in questions about international competition over the last two decades (Abdul-Aziz,1994; Sillars and Kangari, 1997). International differences in, for example, economic, legal, cultural, technical, managerial, and environmental factors, as well as the uniqueness of construction products and the uncertainties in the construction process, render international construction comparisons difficult, but not impossible, as long as they are taken into account when conducting such study. Contractors in Ethiopia will benefit from comparisons and they can provide ideas or methods that can help them enhance their performance. The vast number of problems must be reduced to manageable numbers so that steps to improve competition can be defined and analyzed. In our growing construction industry, Thus, this research project tried to measure the comparative analysis of performance of domestic and foreign contractors.

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