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Insolvency of small civil engineering firms: Critical strategic factors

Alaka, Hafiz A.; Oyedele, Lukumon O.; Owolabi, Hakeem A.; Bilal, Muhammad; Ajayi, Saheed O.; Akinade, Olugbenga O.

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Authors

Hafiz A. Alaka

Lukumon Oyedele L.Oyedele@uwe.ac.uk
Professor in Enterprise & Project Management

Hakeem Owolabi Hakeem.Owolabi@uwe.ac.uk
Associate Professor - Project Analytics and Digital Enterprise

Muhammad Bilal Muhammad.Bilal@uwe.ac.uk
Associate Professor - Big Data Application

Saheed O. Ajayi

Olugbenga Akinade Olugbenga.Akinade@uwe.ac.uk
Associate Professor - AR/VR Development with Artificial Intelligence



Abstract

© 2016 American Society of Civil Engineers. Construction industry insolvency studies have failed to stem the industry's high insolvency tide because many focus on big civil engineering firms (CEF) when over 90% of firms in the industry are small or micro (S&M). This study thus set out to uncover insolvency criteria of S&M CEFs and the underlying factors using mixed methods. Using convenience sampling, the storytelling method was used to execute interviews of 16 respondents from insolvent firms. Narrative and thematic analysis were used to extract 17 criteria under 2 groups. Criteria were used to formulate a questionnaire, of which 81 completed copies were received and analyzed using Cronbach's alpha coefficient and relevance index score for reliability and ranking, respectively. The five most relevant criteria were economic recession, immigration, too many new firms springing up, collecting receivables, and burden of sustainable construction. The four underlying factors established through factor analysis were market forces, competence-based management, operations efficiency and other management issues, and information management. The factors were in line with Mintzberg's and Porter's strategy theories. The results demonstrate that insolvency factors affecting big and small CEF can be quite different and, sometimes, even opposite. This research will provide a unique resource on the factors that should make potential owners of S&M CEF cautious. The criteria are potential variables for insolvency prediction models for S&M CEFs.

Citation

Alaka, H. A., Oyedele, L. O., Owolabi, H. A., Bilal, M., Ajayi, S. O., & Akinade, O. O. (2017). Insolvency of small civil engineering firms: Critical strategic factors. Journal of Professional Issues in Engineering Education and Practice, 143(3), 04016026. https://doi.org/10.1061/%28ASCE%29EI.1943-5541.0000321

Journal Article Type Article
Acceptance Date Sep 26, 2016
Online Publication Date Nov 30, 2016
Publication Date Jul 1, 2017
Deposit Date Apr 6, 2017
Publicly Available Date Mar 29, 2024
Journal Journal of Professional Issues in Engineering Education and Practice
Print ISSN 1052-3928
Publisher American Society of Civil Engineers
Peer Reviewed Peer Reviewed
Volume 143
Issue 3
Pages 04016026
DOI https://doi.org/10.1061/%28ASCE%29EI.1943-5541.0000321
Keywords civil engineering firms, construction industry, small and micro firms, insolvency, mixed method
Public URL https://uwe-repository.worktribe.com/output/884769
Publisher URL http://dx.doi.org/10.1061/(ASCE)EI.1943-5541.0000321

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