Impact of Payment delay on all Governmental Organizations‟ Construction Projects. A case of West Shewa Zone, Oromia Region, Ethiopia

Abstract

Infrastructures that carried out by Government budget for public service were constructed by Government Organizations in all areas of the country in rural areas as well as in the towns and cities. The payment process of such like constructions were checked, approved, signed and sealed by many stake holders from its preparation by the contractors up to the finance. This Delay of payment in construction industry has negative impact on construction progress and contractors performance. The practice of efficient and timely payment in construction projects is a major factor that can contribute to the success of a project. The objective of the study is to assess the cause and impact of payment delay on construction industry carried out by Governmental Organizations in West Shewa Zone Oromia Region for solving the challenges observed in public construction projects and to improve reasonable and positive cash flow in financial planning and in implementation. The principal method used for the study was the use of a questionnaire survey based on the questionnaire format prepared. Descriptive research design was used to successfully achieve the research objectives and answer the stated research questions and random sampling technique to select the targeted population consists of clients, contractors, and consultants (construction professionals). Quantitative research approach was systematically used and a predefined set of procedures to answer the question and seeks to understand a given research problem or topic from the perspectives of the local population it involves. In this research a combination of descriptive and explanatory research design was used. The stakeholders included in the study consist of clients, consultant and contractors participating in the construction industry in west Shewa zone, Oromia region, Ethiopia. Questionnaire was distributed to those stake holders (33% to client, 25% to Consultants, 27% to Contractors and 15% to Construction Bureau and Finance) and the data was collected and analyzed using RII and correlation method. The study identifies that the factors such as long line of authority in the project organization, poor estimation of project cost, corruption and lack of knowledge about conditions of contract are the main causes of payment delay while lose of planned budget for the time, increase in construction cost, create financial hard ship on contractor and scheduling of works or program destruction are the main impact of delayed payment.