Lennon, Thea (2023) Stressors and Failures of Construction Companies. [USQ Project]
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Abstract
This dissertation develops and analyses the main contributing factors to construction companies declaring bankruptcy. This paper identifies the main stressors businesses face in the construction industry, how they currently are being handled, and the potential for a more robust solution.
The projects’ objectives are to determine the magnitude of the effects within contracts: weather, COVID-19, labour shortages, price increases and small profit margins have on business’s declaring bankruptcy. According to the Australian Bureau of Statistics, the rates of business’s ‘exiting’ the market sector of economy, is increasing. From 2020-2021 to 2021- 2022 there has been an increase in exits by 27,411 (Australian Bureau of Statistics, 2020).
Through this dissertation there are differing mitigating factors which are researched and analysed, as many construction companies will fail due to incorrectly priced jobs, leaving a very small profit margin, if any at all. Companies price jobs based off previous similar projects, data collected, current market prices and risk – if one of these isn’t accounted for correctly, the construction team will need to claw back income that is not there from the start. Many companies will go into liquidation due to negative cash-flows; the main findings are that delays in payments, inadequate financial assistance, cumulatively cause the cash-flow problems in construction projects, ultimately leading to delays, reduced profit margins, and even abandoned projects (Omopariola et al. 2019).
The research has found that there is no ‘one size fits all’ method to aid the problem, however, every issue loops back to risk management. Risk management is often overlooked and undermined, however, it is fundamental to a company’s survival, especially in an industry where risk is often attached to large quantities of money. Risk management is defined in many ways in construction, ultimately the risk of the project, purchase, person, and treat general exposure to potential losses.
This paper will investigate the need for stronger contracts which stipulate clear terms on payment schedules, absorption of cost increases and any costs associated with delays. The project will analyse businesses at a commercial and engineering management level, investigating how many factors which lead to collapse can be mitigated. The issues that can be mitigated need to be proven, as it will ultimately dictate whether businesses had a chance at survival.
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| Item Type: | USQ Project |
|---|---|
| Item Status: | Live Archive |
| Faculty/School / Institute/Centre: | Current – Faculty of Health, Engineering and Sciences - School of Engineering (1 Jan 2022 -) |
| Supervisors: | Goh, Steven |
| Qualification: | Bachelor of Engineering (Honours) (Civil) |
| Date Deposited: | 30 Sep 2025 01:06 |
| Last Modified: | 30 Sep 2025 01:06 |
| Uncontrolled Keywords: | Cash-flow; Payment Schedule; COVID-19; Price Increases; Supply Difficulties; Labour Shortages; Delays; Contract Law; Tenders; Training |
| URI: | https://sear.unisq.edu.au/id/eprint/52966 |
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