Determinants of Project Implementation Delay: The Case of Project Financed by Development Bank of Ethiopia

Abstract

Development Bank of Ethiopia (DBE) is a strategic financial institution and policy bank mandated to finance selected priority projects that support the socio economic development of the country. While financing development projects, however, the bank faces different problems through the life cycle of the project. One of these problems is delay in project implementation. So, the objective of this study is to investigate determinants of project implementation delay in the case of projects financed by Development Bank of Ethiopia. The target populations for the study are DBE financed projects specifically at head office and 131 projects are selected as sample for the study purpose. So, to achieve the objectives of the study both descriptive statistics and econometric model were employed. Hence, the researcher employed binary Logit model to identify determinists of project implementation delay as well as Relative Importance Index was computed for all delay factors. Relative Importance Index (RII) results show that, the top ten delay factors contributing to project implementation delay are, Increase in the cost of inputs (material), Inadequate project follow up and supervision, Managerial experience of the promoter, Shortage of construction materials, Foreign exchange rate fluctuation, Underestimation cost of project by the Bank, Inadequate experience of contractor and consultant, Loan diversion by promoter, Design change and Poor planning and scheduling of project. The binary logistic analysis output revealed that Managerial experience of the promoter, Underestimation cost of project by the Bank, Increase in the cost of inputs (material), Delay in material delivery, Inadequate experience of contractor and consultant and Shortage of construction materials were statically significant cause of project implementation delay of DBE’s financed projects. Accordingly, based on the result of the study recommend that the project owners has to hire qualified & experienced project manager, the Bank should be aware on investment cost determination & revise its cost estimation technique. The contractor shall also plan effectively for the delivery of materials as well as the promoter must assign competent and well experienced contractor and consultant. The client should also allocate adequate construction materials and ensure to avoid frequent breakdown.