Over the years, indigenous contractors in Nigeria have recorded a low level of participation and have often been sidelined in large scale construction activities. This has been attributed to, amongst a number of factors, mismanagement of funds and working capital which makes them prone to bankruptcy, with poor project execution and abandonment the likely outcome. The paper thus focused on studying the extent of participation of indigenous contractors in Nigerian construction projects, identifying and examining the most severe factors that hinder effective and efficient working capital management and affect the level or amount of working capital requirement of indigenous contractors. Literature studies, field survey and oral interviews were carried out to determine the major challenges faced by contractors in managing working capital and the extent of indigenous participation in public projects respectively, while a questionnaires were distributed to a selected sample of contractors in Imo state to obtain the severity weight of each factor. Findings revealed that evidently, the common challenges facing Nigerian indigenous contractors in Nigeria in the area of working capital management are low awareness of the need for working capital management, one-man business setbacks, under-capitalization, poor funding and cash flow problems, high cost of construction finance, economic recession, reckless spending and diversion of funds, poor project planning and control. Factors affecting the level of working capital requirements comprises: inflation, delays in interim payments, taxation at source and deduction of retention funds. Indigenous contractors also recorded a low level of participation on major public contracts. Results of the severity ranking exercise indicated that the problems of the one-man business set up is the most severe of the factors hindering proper working capital management, while deduction of retention fund and inflation respectively, ranked highest in factors affecting the level or amount of the contractors’ working capital requirement. It was thus recommended that in order to enable indigenous contractors realize construction projects within pre-planned cost, time and quality, reduce the incidences of project abandonment and improve their overall participation, there is need for concerted efforts on the part of the contractors to take appropriate steps in maximizing their awareness on the gains of proper working management and minimize incidences that will lead to cost escalation of his working capital requirement and on the part of the Government, a focused, political will to devise policies and create the enabling environment for improving indigenous content in the construction industry

Keywords: Challenges, Indigenous Contractors, Management, Nigeria, Participation, Working capital.

Unique Article ID: IJCECEM-101
Article Review Status: Published

Pages: 1-21 (Download PDF)

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