REVIEW OF LITERATURE

INTRODUCTION

Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in three sub-headings:

Conceptual Framework

Theoretical Framework

Empirical framework

2.1 CONCEPTUAL FRAMEWORK

Small Sized Construction Firms

Small sized construction firms are firms that can be identified by their stratification, annual turnover, number of employees, total amount of wages and salaries, number of machinery and registrations category with the federal board. Firm size can be defined as the level of economic activity and capacity; valuation criteria of a firm are based on two different criteria, qualitative criteria and quantitative criteria (Basmanav, 2001). Qualitative criteria to identify the size of a firm are independent management, working for local market, having a very small part in the sector and having main capital of the firm supplied by the owner of the firm. Quantitative criteria to identify the size of a firm is defined by the number of employees, firm capacity, the total amount of wages and salaries, total amount of firm capital, production amount, total amount of sales, machinery pack size, total of active values, and amount of raw materials used (Olcay, 2010). The number of employee criteria is the most used criteria because it is easily determined. Any of these criteria can be considered to define a firm’s size (Alpugan, 1998). According to the Oxford dictionary, performance is defined as the manner in which or the efficiency with which something fulfils its intended purpose. According to Krishna et al. (1999) countries that have better institutional development, as measured by the efficiency of their judicial system, have larger firms. Also, firm size should be positively correlated with financial development. Large firms can be differentiated from small and medium firms by their extensive structures.

Features Of Small Sized Construction Firms

According to Dinmez (2005), there are different characteristics or features of small sized construction firms and they are management, strategic planning, organization, finance, accountancy, marketing and sales, public relations, human resources, information technologies. In small sized firms, there is a management type which is not professional and is managed by one person’s decision and benefits. According to Olcay (2010), project management techniques are not used and since there is no management in which the decisions are taken by forming strategies in a planned way, the firm will experience a lot of problems. In small sized construction firms, the firm owner has to deal with issues such as financing, organization, marketing and sales, material supply and employment of qualified personnel and workers as well as taking management decisions. In small sized construction firms department of sale, financing and human resources are unavailable. Small construction firms do not have financing departments and a financing expert as that would increase cost and financial alternatives. Generally in small sized construction firms, one person is enough to keep all accounting records. However, because only one person is handling the accounting records, the possibility of a mistake is almost inevitable. In small sized firms, public relations do not work as a separate department. A desk study of road projects data at Roads Authority Malawi showed that outstanding among Small Scale Construction firms’ shortfalls were poor quality of work, failure to complete projects on time, and poor tender preparation and estimation Kulemeka, Kululanga, and Morton (2015). Chilipunde, (2010) highlighted constraints and challenges faced by small, medium and micro enterprise contractors in Malawi emphasized that timely delivery of projects is one of the important needs of clients of the construction industry.

Overview of Indigenous Contracting in Nigeria

The construction industry in Nigeria provides the driving force necessary for sustaining economic buoyancy. It contributes an average of 5 percent to the annual gross domestic product and an average of about one-third of the total fixed capital investment (Omole, 2000). Firms, companies or organizations that carry out construction works are called ‘contractors’. They offer their skills and services and accept the challenge of executing the works in exchange for financial reward.

The concept of indigenous contractors came to limelight with the introduction of the Nigeria Enterprises Promotion decree of February 1972, and since then indigenous contractors have been playing an important role in the construction industry. An indigenous contractor in Nigeria is regarded as a person or private organization established under the Nigeria Enterprises Promotion Decree of February 1972, and has no other base than Nigeria and its capital base and ownership is entirely Nigerian (Owoh,1993). These firms range in size from the self-employed craftsmen known as jobbers who engage mainly in repairs and maintenance of buildings to the very large multi-national or foreign-based construction company. Sadly, the Nigerian indigenous contractor base is largely incompetent and inexperienced (Adams,1997; Ogbebor,2002; Awoyinfa,1991). Akintunde (2003) and Ogunlana (2010) opined that for this reason, the Nigerian government still lacks confidence in its Construction sector.

Shittu (1997) surmised that the combination of the small and medium sized construction firms make up 90 percent of the total registered contractors in Nigeria. These indigenous contractors are characterized by under-capitalization, under capacity utilization, understaffing, and are generally managerially handicapped.

Over the years, the poor performance of this category of contractors has been a source of concern and worry particularly when compared with their foreign counterparts. Judging by the record of high number of bankruptcies in this group, poor quality work, mismanagement, diversion and embezzlement of project fund, and the general economic depression, the survival and growth of indigenous contractors may be difficult, particularly in view of inflationary trends, high cost of construction materials, high cost of borrowing capital, government policy change in favour of deregulation, and the current wave of global economic meltdown (Husseini, 1991).

Studies have shown that in Nigeria, few large companies control a large percentage of the total workload of the construction industry, while a large number of small and medium sized companies which make up the class of indigenous contractors share a very low percentage of the construction workload.

An insight into indigenous contractors participation in the Nigerian construction industry

According to Ademoroti (1997), the Nigerian Society of Engineers conceived the idea of producing a draft recommendation for the “National Construction Policy” to back-up its long canvassed need for government to take the question of technological development of indigenous capacity more seriously. Later, other interested groups like the Nigerian Institute of Building, the Nigerian Institute of Architects, the Nigerian Institute of Quantity Surveyors etc organized seminars and workshops aimed at encouraging the development of indigenous capacity and participation and ultimately, indigenous control of all facets of the construction industry in Nigeria. The situation however, is still far from encouraging.

Olateju (1991) and Ademoroti (1997) also emphasized, that relative to the volume of work available in Nigeria, the percentage in value of contract handled by the indigenous contractors is still too low compared to those handled by foreign and multi-national companies. This is indeed disheartening because most of the indigenous contractors have not lived up to expectation. Olateju (1991) further lamented that indigenous contractors are faced with several management problems in obtaining jobs, controlling its finance and successfully managing its project to completion within a scheduled time period.

In an attempt to examine how much of the construction projects executed in Nigeria are given to indigenous contractors, their management strategies and the adequacy of these strategies in preparing them for the future challenges of the industry, Olateju (1991) embarked on a study of 1133 projects costing N11.25 billion awarded by the Federal government between 1974 – 1978, a period when construction activities were highest in the country. The results showed that while the indigenous contractors got awarded 77.2 percent of the number of contracts, they only had 6.95 percent of the value of the contracts. The study also showed that the indigenous contractor had created virtually no impact in the areas of heavy infrastructural development such as civil works in refineries, hydro-electric dams, airports etc. In fact, the foreign contractors averaged N40.75million per contract, as against an average of N890, 000 per contract by indigenous contractors. The study attributed this low level of participation to perceived inability of local contractors to effectively manage large projects.

Local contractors are generally seen as holding the greatest potential for increasing construction industry capacity and for general economic development. However, the construction industry in developing countries is dominated by foreign contractors and a few large local contractors (Larcher,1999). Adams (1997) further revealed that foreign construction firms dominate major projects in most developing countries as a result of deficiencies in indigenous construction capacity. Similarly, Chen, Chiu, Orr and Goldstein (2007) buttressed this point by surmising that indigenous construction companies in the African continent do not represent a strong source of competition and are thought to lack financial and technical capacity.

In a similar vein, Oseni (2002) stressed that foreign construction companies dominate the Nigerian construction industry. To corroborate this, Ogbebor (2002) noted that 96% of the Nigerian Construction Industry is still dominated by foreign contractors on the grounds that indigenous contractors cannot be entrusted with complex project. .

Going down memory lane Somolu (2003) revealed that in the early seventies indigenous construction professionals enjoyed some patronage from the Government, but presently, the Nigerian Government has developed so much fondness and huge patronage for foreign companies thereby leaving their own contractors starved of work.

According to Akintunde (2003), as foreign contractors carry out more jobs, they gain better expertise on the job while the Nigerian contractors remain inexperienced and therefore are unable to compete with their foreign counterparts. In the view of this, Somolu (2003) surmised that a complex construction job is only an aggregate of many simple tasks and experience can only be acquired by doing and trying ;an opportunity that has not been granted to the indigenous Nigerian contractor.

Nigerian Construction Industry Overview

The construction industry is regarded as one of the most important sectors of every economy in the world. The Nigerian construction market is among the largest construction markets in Africa, (Foci Report 2012). According to forecast by Global Construction Perspectives and Oxford Economics (2010), Nigeria’s construction industry is growing fast and is likely to grow very large over the next decade. The industry is made up of an organised formal sector and an unorganised informal sector. The formal sector comprises foreign and indigenous companies, which are classified into small, medium and large scale according to their level of capitalisation and annual turnover. According to the Foci Report (2012), the Nigerian construction market is dominated by foreign companies, which is similar to most African Countries. A large proportion of these major constructing firms in Nigeria are subsidiaries/affiliates of European, North American and Asian construction firms. However, governments, private clients and individuals award building contracts to local construction companies. The industry also employs a large number of people and therefore it has an effect on the economy of a country during the actual construction process. According to Mafimidiwo and Iyagba (2015), one of the key player in the construction project team is the contractor (Usman, et al. 2012; Idoro, 2011;). Construction contractors are entrepreneurs involved in the management of construction projects (Inuwa et al.2013; Harris and McCaffer, 2005). Firms, companies or organizations that execute construction works are referred to as contractors. They offer their skills and services and accept the challenge of executing the works in exchange for financial reward, (Ugochukwu and Onyekwena, 2014). Odediran et al (2012) opined that like other nations of the world, building contractors in Nigeria could be classified as small, medium and large. In Nigeria, large firms are majorly dominated by the expatriates with very few indigenous that could be categorized as medium while most are categorized as small size firms. Idoro (2011); Idoro and Akande-Subar (2008), Muazu and Bustani (2004) categorized construction contractors by several criteria: scope of operation (local, regional, national and multinational); specialization (building and engineering); size and category of contracts (small, medium and large); and the nationality of owners of the company (foreign and indigenous). It has been reported by researchers (Takim and Akintoye, 2004; Kashwagi, 2004) that most clients are dissatisfied with the outcome of construction projects, especially because their expectations are not met. Ugochukwu and Onyekwena (2014) in their research on the participation of indigenous building contractors in Nigerian public sector construction projects and their challenges in managing working capital found out that the common challenges facing Nigerian indigenous building contractors in Nigeria in the area of working capital management are low awareness of the need for working capital management, one-man business setbacks, under-capitalization, poor funding and cash flow problems, high cost of construction finance, economic recession, reckless spending and diversion of funds, poor project planning and control.

THE STATE OF THE CONSTRUCTION INDUSTRY

The Building and Construction Industry has had a rapid and steady growth over the past two decades and it also has one of the highest rates of expansion in any sector of the Nigerian economy.

The Nigerian Construction Industry is dominated by a few large expatriate firms who carry out about 90% of the work. There are many small Nigerian contracting firms which account for the rest of the work. These are mainly in the area of building construction, though recently one or two are embarking on civil engineering works. Even in the area of small building works and commercial and industrial buildings, only a few are able to compete successfully with expatriate firms. The indigenous contractor is faced with the problems of working capital, poor management and lack of good Organisation.

Finance

Finance is very important in the Building and Construction Industry. The contractor has to invest on plant which is expensive in the case of civil engineering Jobs, and requires cash for payment of workers salaries, purchase of materials, etc. Inadequate finance can severely limit the scope of activities of a contractor.

In recent years the problem of finance has become soluble. The commercial banks are under considerable pressure from the Government to assist indigenous companies and any contractor who has demonstrated a good sense of responsibility and shows some creditable construction record should not have much problem in attracting funds from the banks.

Personnel

Nigerian labour is extensively used by both expatriate and indigenous construction companies even though the industry is capital intensive. By European Standards, the Output of labour on building and civil engineering sites is very low. Labour wages are relatively low and for civil engineering projects, the overall labour cost is small in relation to the total Output. One interesting point is that expatriate contractors always get better productivity out of Nigerian workers, this can only be ascribed to better supervision.

Management

The question of Organisation is rather more serious. The most common complaint against Nigerian contractors is that they do-not complete Jobs on schedule. Most of the problems that arise come from bad planning and inefficient Organisation.

It is the efficient Organisation of men and equipment that makes for good results in terms of Job quality, completion time and profit margin. People often assumed that labour is cheap and they put workers on site without proper supervision that ensures productivity. This is wasteful; when one talks of cheap labour, it is in relation to labour costs elsewhere.

The lesson here for the indigenous construction Company is that contracting is not a field in which one-man enterprise can succeed. Contractors should form proper companies with trained technical personnel and managers.

GOVERNMENT POLICY ON CONSTRUCTION

Government policy efforts to encourage Nigerian Contractors have taken several forms. One form was to reserve projects costing to 100,000 or less for only Nigerian Contractors and another was to encourage partnership with expatriate firms. In spite of these efforts, participation of Nigerian Contractors in the construction industry has been relatively small.

The position has improved somewhat during the execution of the Second National Development Plan. By this time, some engineers had entered the Construction Industry as contractors and their record so far has been encouraging. A new innovation is the Government decision to participate in the construction industry by forming Joint construction companies with some expatriate firms. The original intention which presumably is to try to reduce cost, is a good one.

Construction cost has been rising steadily and it has reached a stage where it is difficult or well nigh impossible to estimate the cost of a project accurately. There are two major factors responsible for this. Apart from the rising cost of construction materials and equipment, there is a great deal of work (some would say too much work) available and the contractors do not have the executive capacity to do all the work. Quite often, advertisements calling for tenders are ignored by contractors.

However, in trying to solve one set of problems, one hopes that new ones are not created. A government construction Company that does not compete for government Jobs has a Virtual monopoly will not be an economic proposition nor will it lead to reduction in costs. The idea of sharing in the profits can also prove to be illusory, as any Accountant knows well, profit is a question of definition. A Government Joint venture should also provide its share of Nigerian manpower. A Government construction could be useful if it provides an opportunity for Nigerian Engineers to take part in tne construction industry in the country but this will not be achieved by simply acquiring shares in an expatriate firm and giving the firm a monopoly of government projects.

This is perhaps a convenient point to mention the question of Indigenisation. The Indigenisation Decree puts the Construction Insutry in Schedule II. This means 60 % Nigerian Ownership of Construction Companies and 40 % expatriate. The aims of the Federal Military Government late it are laudable and one should congratulate on a major piece of legislation. The ultimate objective must be that Nigerians run their own affairs either in the construction industry or in other fields of endeavour. However, the nation needs to emphasise and re-define its objectives.

PROBLEMS OF CONSTRUCTION INDUSTRY IN NIGERIA

The most essential objective to be achieved with this policy is a transfer of technology such that in future, Nigerians will be able to build bridges, flyovers and skyscrapers all by themselves. There is a distinction between this and a share in or transfer of profits. What do we mean then when we say that Nigerians must own 6Q % of an industry? Do we mean that Nigerians only take 60 % of the profit or do we mean that Nigerians must also contribute as much as 60 % of the expertise required in carrying out a construction projeet? There is no doubt that we have to aim for a transfer of technology, so as to ensure that we can execute our development projects ourselves but the present acute shortage of manpower makes it unlikely that we can achieve this immediately.

CONSULTING SERVICES

The profession of Consulting engineers was rather slow in starting in Nigeria. A few took the plunge in the early 1950's and concentrated on buildings. These firms were invariably one-man Operations and were in no position to cope with major civil engineering projects.

The Federal Ministry of Works actively encouraged participation of Consulting Engineers in the development projects of the 1970-74 Plan. The strategy was to encourage larger combines or association with foreign firms. This has, to a large extent, proved to be a successful experiment. Several firms of Consulting Engineers have sprung up in the last five years and in association with foreign firms have taken part in some of the complex and major development programs. They have also taken up the challenge of modernisation and some have been able to use the new sophisticated tools of Computers, etc. However, the practice of distributing work equally between firms has Ied to fragmentation which could hamper the development of indigenous expertise. Patronage should reflect expertise: well established firms with several competent engineers are likely to perform better than Single individuals. Council of Registered Engineers of Nigeria which has been set up to regulate the practice of engineering profession in Nigeria is now attempting to control the establishment of consultancy firms.

Consulting Engineers profession differs from other business in several respects: it is not, strictly speaking, a business concern, it is service in a specialized ability and the duty of the Consulting Engineer is to seek the best interests of clients at all times. This is why the tradition has been to invite the best Consultant in a field to advise or protect the client1s interest in a particular projeet. There is however, a growing trend among clients particularly State Governments, which request Consultants to quote or tender for a Job. The disadvantages of the procedure however outweigh any apparent economic gains. It is not the cheapest advice that the Client needs but the best and since there is a fixed scale of fees, it is better to select Consultants on the basis of competence.

The shortage of experienced manpower in the Ministries of Works, creates a serious problem in the implementation of projects. This often means that a proper assessment or comment on the Consulting Engineers reports is not possible. The few officials that are available are far too busy to be able to read each report in detail. This means that there are considerable delays in obtaining approval for preliminary projects and in a Military Regime where the emphasis is on achievement, the Consulting Engineer could be blamed for the delay. This Situation also makes it imperative that the best Consultant be retained for a particular job so that even if his advice is implemented, it could not lead to disastrous results.

Challenges On Indigenous Construction Enterprises In Africa

The challenges of infrastructure development in Africa are huge, insufficient infrastructure continues to be a major obstacle towards Africa realizing its full economic potentials. However, the high net-worth construction projects are executed by foreign-registered or foreigner's managed construction enterprises. Indigenous construction enterprises in Africa and Nigeria in particular offer little or no competition to their foreign counterparts. Jaafar and Abdul-Aziz, (2005) described the majority of indigenous construction enterprises in Africa as being largely unregistered, operate in the informal sector of the economy and have very little formal business systems. This assertion was corroborated by Saka and Ajayi (2010) who opined that NICE operates as sole trader-type entrepreneurs with little knowledge of the workings of the construction system. They constitute the largest percentage of total contractors and employ very few permanent staff, usually less than ten employees. They often do not have office premises, equipment or a permanent workforce. Indigenous construction enterprise is either family-owned business or solely owned in which the business dies when the owner is no more. Agwu and Emeti (2014) in their study on issues, challenges, and prospects of SMEs in Nigeria found that poor financing, inadequate social infrastructures, lack of managerial skills and multiple taxations were major challenges confronting SMEs. In a similar study by Fatai (2014), he examines the problems and prospects of small building contractors in Nigeria and identified that financial problems, government unfavorable fiscal policy, poor management practice, poor accounting standards, shortage of manpower, financial indiscipline and corruption were the major challenges of NICE. Adekoya (2016) opined that SMEs have not been able to play the expected vital role expected of them for economic growth and development, this is due to multiple taxation system, high cost of legal documentation, inadequate capacity building, difficulties encountered in obtaining credit facilities, corruption, and unstable government policies. Laryea (2010) investigated the challenges and opportunities being faced by contractors in Ghana and found that difficulties in securing financing for projects and a harsh business environment are the main challenges faced by Ghanaian contractors. In a study on issues facing small Egyptian construction firms, Hassanein and Adly (2008) found that lack of access to suitable sources of finance was a barrier to the growth of small construction firms. Bala, Bello, Kolo, and Bustani (2009) identified unfavourable business environment, weak economy, lack of enabling policies, corruption, and poor government patronage as the bane of the growth of local construction firms in Nigeria. Adams (1995) in his study of the constraints on contractors’ performance and development identified uncertainties in supplies and prices of materials, delayed interim payments, additional works and lack of capital as the major perceived constraints. In a study by Well (1998), it was observed that some of the challenges besetting indigenous construction enterprise in Africa include: the low levels of training of personnel, poor organisation of the construction industry, a large number of small and inefficient firms, lack of planning at all levels of the construction process. Materu (2000) noted that lack of exposure, erosion of capital and eventual loss of confidence has suppressed the growth of the indigenous contractors. He noted that most local contractors lack exposure to modern construction management techniques, experience and confidence in the management of medium to large projects. This results in low patronage which according to Holt (2013) triggers the failure of the construction enterprise.

Factors Affecting Performance of Small Sized Firms In Nigeria

In the study of small sized construction firms, it is observed that small indigenous firms in Nigeria face similar problems as small firms in other developing countries. There are some problems that have been identified in different literature reviews and they are as follows :lack of finance, delay in the payment of contractors for work done, changes/ variations, low morale and motivation of craftsmen, poor management skills, material and plant related factors like unreliable material base and availability of plants and equipments, poor communication, cost factor, time factor, quality factor. (Ugochukwu and Onyekwena, 2014; Odediran et al, 2012, Mansfield et al. 1994 , Wasi et al, 2001, Eshofonie, 2008; Ibironke et al. 2011 Abdullah, Bilau., and Enegbuma. (2011); Amoah, Ahadzie , and Dansoh (2011).

Poor Managerial Skills

Management has the most significant influence on the continual survival of construction firms in Lagos state (Odediran, et al.,2012). According to Mansfield et al. (1994,) management challenges may occur during a project due to the way contracts are awarded. In most cases projects are awarded to the lowest bidders and some of these low bidders may lack management skills and over all site management and allocation skills. Wasi et al. (2001) noted that deficiency in planning and management skills is said to be the greatest single problem for small-scale contractor but it does not only affect small scaled contractors but also small sized firms. Management is very important to adequately face difficult challenges because without managerial skill it would be impossible to manage workers, materials, resources and the whole construction project successfully.

Financial Management

Financing a project is a very tasking job. All resources need to be controlled: labour productivity, material availability, material waste, good and effective methods, using effective tools, equipment, good project planning and scheduling (Eshofonie, 2008). According to Wasi et al. (2001), sometimes project funds can be used for personal matters which could lead to financial strain in projects. Financial factors such as insufficient profit, heavy operational expenses, insufficient profit, country’s economic conditions, poor estimating and job costing are also identified as causes of failure (Amoah, Ahadzie, and Dansoh 2011). According to Odediran et al. (2012), majority of these firms do not have the capacity to finance a project after from the finance originally contributed by the client and therefore cannot go into long term financing and partnership. Adediran et al. also stated that most of the projects handled by small sized indigenous firms are funded by the clients’ personal funds. These firms most times do not get bank loans to finance the project, and there is also a poor saving culture among the firms

Time factor -Changes/ Variations

This challenge can occur from inadequacy of project planning and management of the design process. It can also be a fault on the part of the architect and structural engineer in their architectural and structural designs respectively. There might be variations in their drawings. The client can also change his mind about a particular design and changes would have to be made. Frequent changes to design can cause workers to lose interest in the project. Examples of other time factors include time needed to rectify defects, site preparation time, percentage of orders delivered late, etc (olcay 2010; Azlan and Ismail 2009.)

Cost factor -Material and equipment cost

Material and equipment cost is one of the project cost components that affects owners liquidity and project budget. Most heavy equipment run by diesel fuel and the price of diesel fuel has increased significantly (Eshofonie, 2008). Also unreliable material base and unavailability of plants and equipments can affect a project. In order to meet certain production targets and carry out projects on time, it is necessary to introduce mechanical plants and equipment to improve man power. Other cost factors include cash flow of project, project design cost, overhead percentage of project, profit rate of project, waste rate of materials etc (Chilipunde, 2010;Free library, 2009)

Quality Factors

Due to the nature of small sized firms, most firms lack the availability of competent staff as hiring a well-qualified staff with experience can be too expensive for the firm. Thus there may be challenges during a project like workers or contractors not following the right procedures or working in accordance to specifications given. There may also be the challenge of using substandard raw material in the vein of saving cost. This can reduce the life span of the building, risk the lives of occupants, increase maintenance work and even cause the collapse of a building. Other examples of quality factors include quality assessment system in organisation, quality training/meeting, etc (Ugochukwu and Onyekwena, 2014;Free library, 2009).

Delay in the Payment of Contractors for Work Done

Paying contractors on time can be a good source of motivation for them to work more and even worker harder. According to Edmonds and Miles (1984) chronic delay in the payment of contractors is a factor that could affect performance in a project. Delay in payment affects the contractor’s cash flow and because of the need for cash, he might begin to work on other small projects in other to generate money. By so doing, he does not pay full attention to the main project and this can lead to performance failure. (Ugochukwu and Onyekwena, 2014)

Low Morale and Motivation of Craftsmen

Motivation is a means of encouraging people to do something. It is a way of getting things done willingly from others. If workers are not motivated to work, their morale will decrease and their performance would also decrease. According to Ibironke et al. (2011) implementing a well formulated motivation policy triggers the innate qualities of labourers by enhancing their productivity. Workers who are inadequately motivated become care free or even resentful of their work Ng et al (2004) cited in Ibironke et al (2011). Material unavailability can also demotivate workers.

Poor Communication

Poor communication skill in construction can be a major problem. Wasi et al. (2001) stated that in developing countries, communication between workers on site and the contractor’s office is very limited. Therefore urgent site problems cannot be solved immediately due to lack of communication between site workers and managers (Abdullah, Bilau, and Enegbuma 2011).

2.3 EMPIRICAL REVIEW

Ayodeji et al(2016), examined the factors affecting the competencies and project delivery of small-sized indigenous construction firms in Lagos state. The study focused on determining the likely factors affecting the competencies and project delivery of small-sized construction firms in Lagos. 60 questionnaires were designed and administered to professionals (15-Architects, 15- Builders, 15-Engineers, and 15-Quantity Surveyors) working in the construction companies in Lagos State and 48 questionnaires were retrieved. These questionnaires were analysed with SPSS and several findings were derived from this analysis. The various factors affecting the performance and project delivery at varying degrees are: high cost of plants, equipment, materials and labour, lack of skilled craftsmen, unavailability of funds, poor managerial skills, lack of government patronage, and poor communication among stakeholders. The study found out that the most prominent factors are poor managerial skills, lack of project planning and unavailability of funds. The main factors affecting the performance of small sized indigenous construction firms are based on three key elements namely time, quality and cost. These three elements when properly harnessed will increase the performance of small sized indigenous firms. The study recommended that the use of ICT would help improve performance by making work flow more easily. Access to bank loans and more machinery on site and sufficient government patronage would improve performance. It concluded that better management and project planning would go a long way in improving competencies and project delivery of small sized construction firms. Kulemeka et.al,(2013) noted that, studies carried out in Nigeria revealed the following constraints; poor contract management, financing and payment of completed works, changes in site conditions, shortages of materials, imported materials and plant items. Other problems identified includes design changes, subcontractors, nominated suppliers, contractor’s financial difficulties, client’s cash flow problem, architect’s incomplete drawing, subcontractor’s slow mobilization, equipment breakdown and maintenance. In addition, there are issues of suppliers’ late delivery of ordered materials, incomplete structural drawings, contractors planning and scheduling problems, price escalation and subcontractor’s financial difficulties. Furthermore, there are difficulties in receiving payments from public agencies, inadequate public agencies’ budgets, improper payment to contractor for completed work, unrealistic time estimation, frequent changes in material and design, and noncompliance with the contract conditions. Furthermore, Mafimidiwo and Iyangba(2016) in their comparative studies of problems afflicting the performance of small building contractors in Nigeria and South Africa. In addition, Ofori [2015] highlighted that, the construction industry worldwide face problems and challenges, however in developing countries these difficulties and challenges are present alongside a general situation of socio-economic stress, chronic resource shortages, institutional weaknesses and a general inability to deal with the problems on how to improve the viability and competitiveness’ of the local construction enterprises. Small-scale construction firms in Nigeria exhibit low commitment to production resulting from poor performance in both physical and service delivery. However, majority have the potential of developing into a technically better business given the needed support, since they have dedicated leadership with great commitment towards better delivery of product and services, as they have concern for continuous performance improvement in order for them to gain competitive advantage. Abu-Bakr et.al, [2015] in their studies of Malaysian construction companies identified factors that are important to companies’ growth that includes joint venture, market specialization, diversify expertise, skilled workers, maintaining high quality of products and good company management. Other factors of importance includes, use of new technology and automation, technical expertise, availability of capital, internal efficiency, good cash flow management, effective organization structure, sufficient knowledge and experience good team members. In addition good site management, innovation, research and development, upgrading and educating members, safety, security, commitment to customers’ satisfaction, good relations with customers and competitive prices of products/services are important. Furthermore, technological edge, availability of bank loans and other credit, open economic policy of the government, political stability, peaceful environment and government assistance/tax incentives further help construction firms to grow.

Agwu and Emeti (2014) in their study on issues, challenges, and prospects of SMEs in Nigeria found that poor financing, inadequate social infrastructures, lack of managerial skills and multiple taxations were major challenges confronting SMEs. In a similar study by Fatai (2014), he examines the problems and prospects of small building contractors in Nigeria and identified that financial problems, government unfavorable fiscal policy, poor management practice, poor accounting standards, shortage of manpower, financial indiscipline and corruption were the major challenges of NICE. Adekoya (2016) opined that SMEs have not been able to play the expected vital role expected of them for economic growth and development, this is due to multiple taxation system, high cost of legal documentation, inadequate capacity building, difficulties encountered in obtaining credit facilities, corruption, and unstable government policies. Laryea (2010) investigated the challenges and opportunities being faced by contractors in Ghana and found that difficulties in securing financing for projects and a harsh business environment are the main challenges faced by Ghanaian contractors. In a study on issues facing small Egyptian construction firms, Hassanein and Adly (2008) found that lack of access to suitable sources of finance was a barrier to the growth of small construction firms. Bala, Bello, Kolo, and Bustani (2009) identified unfavourable business environment, weak economy, lack of enabling policies, corruption, and poor government patronage as the bane of the growth of local construction firms in Nigeria. Adams (1995) in his study of the constraints on contractors’ performance and development identified uncertainties in supplies and prices of materials, delayed interim payments, additional works and lack of capital as the major perceived constraints. In a study by Well (1998), it was observed that some of the challenges besetting indigenous construction enterprise in Africa include: the low levels of training of personnel, poor organisation of the construction industry, a large number of small and inefficient firms, lack of planning at all levels of the construction process. Materu (2000) noted that lack of exposure, erosion of capital and eventual loss of confidence has suppressed the growth of the indigenous contractors. He noted that most local contractors lack exposure to modern construction management techniques, experience and confidence in the management of medium to large projects. This results in low patronage which according to Holt (2013) triggers the failure of the construction enterprise.