Project Management Institute

Reasons for construction business failures in Saudi Arabia

The international recession that occurred in mid-1983 affected the Saudi Arabian construction market. As a result, it has become a frequently observed fact that some contractors have changed their business activities, others have continued to suffer, and many have experienced business failure. Realizing the importance of maintaining a reasonable profit and remaining competitive in the construction industry, this preliminary study identifies major factors that contribute to the failure of construction contractors in the Eastern Province of Saudi Arabia. The factors were ranked according to their importance from the viewpoint of contractors and legal accountants and the Spearman rank correlation coefficient was calculated. Any survivor of Economics 101 knows how vague and mysterious economic models can be. This paper offers a clear, crisp model of the problems of supply and demand in trying to grow an industry (literally) in the desert.
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