Investigating the factors that limit performance of local construction companies in Uganda

Abstract

Infrastructure is one of the essentials for a growing population in a community. Uganda experiences a rapid population growth at a rate of 3.2% by 2022. Infrastructure development is commonly carried out by construction companies (contractors). These companies’ performance is seemingly not good though from the stakeholders’ perspective, it was found to be good. The study was aimed at investigating the factors that limit performance of construction companies in Uganda. These factors were categorized as managerial, financial, business growth, business environment, political and social factors. Under each category the top or most severe factors in limiting the performance of construction companies and some solutions were established. Under managerial factors, inflation and use of unqualified personnel due to favoritism were found to be the leading causes under this category. From the financial factors, thirteen (13) factors were identified. From the ranking, cash flow mismanagement; dependence on bank loans and paying high interests were identified as the top three factor. Four (4) factors were listed under business growth category. Lack of managerial development as the company grows was identified as the leading factor as opening of regional offices in other parts of the country was found to be the least influential in this category. Eight (8) factors were established for the business environment factors, analyzed and ranked to give: award of contracts to the lowest price; absence of construction regulations like limiting unregistered engineers and accounting and taxation practices were found to the leading factors under this group. Under political factors, high competition from foreign companies; high taxation imposed on companies’ operations and high costs of material ranked as the top three (3) influential factors respectively. For social factors, only three (3) factors were identified with societal class (major and minor) being the dominant while Industrial actions like demonstrations was found to be the least dominant in this setting. Lack of capital was found as the overall most influential factor from the analysis. From the categories, political factors were the most influential followed by financial, managerial, business environment, business growth and social factors respectively. Solutions like government providing tax holidays and incentives to local companies were established.