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SUCCESS FACTORS FOR BUMIPUTRA CONTRACTORS IN MALAYSIA:
JOHOR STATE
NOOR IDIRAH BINTI RAHMAT
A project report submitted in partial
fulfillment of the requirement for the award of the
Degree of Master of Civil Engineering
Faculty of Civil and Environmental Engineering
Universiti Tun Hussein Onn Malaysia
AUGUST 2016
iii
This thesis is dedicated to my parents,
Rahmat Bin Ambon and Idiana Binti Ibrahim,
for their love, endless support and encouragement.
iv
ACKNOWLEDGEMENT
Praise to Almighty Allah the God of the Universe who gave me strength to complete
this thesis. This piece of work would not become possible without His bless.
I would like to express my heartfelt gratitude to my supervisor, Professor Dr.
Ismail Bin Abdul Rahman for his kind assistance, advice and suggestions throughout
this project. The supervision that he gave truly helped in progression and smoothness
of my project.
Greatest thanks to all Bumiputra contractors in Johor, who participated in this
questionnaire survey and patient enough to spend their precious time in replying the
questionnaires. Their kind and generous help will always be in my mind.
Great deals appreciated also go to the contribution of my faculty - Faculty of
Civil and Environmental Engineering (FKAAS). Many thanks go to my presentation
panel for their excellent co-operation, inspirations and supports during this Master
Project.
Deepest thanks to my family especially my beloved parents, Rahmat Bin
Ambon and Idiana Binti Ibrahim for their continuing financial and morale supports
throughout my study. Special thanks also to my husband, Muhammad Faris Bin
Hamaludin who always with me along the completion of this thesis.
Finally, I would also like to acknowledge each and every person who has
contributed their effort in this study by whatever means directly or indirectly.
Without the contribution of all those mentioned above, this work would not have
been possible, thank you to all of you.
v
ABSTRACT
Several parties which include client, consultant, contractor, supplier and local
authorities are involved in ensuring the success of a construction project. Among
these parties, contractor plays the most important role in making the project success
within stipulated time, cost and quality. In reality, studies reported that construction
projects often encountered delays or late deliveries, sub-standard workmanship and
materials, poor safety management on sites and cost over-run of construction due to
problems encountered by contractors in executing the project. Since many of these
studies uncovered the contractors‟ problems, thus this study was intended to
determine success factors for contractors focusing on Bumiputra contractors. This is
a quantitative study where data was collected using questionnaire survey and
analysed using descriptive and multivariate approach. Pilot study was carried out to
assess contents validity of the questionnaire on the 33 identified success factors by
10 experienced Bumiputra contractors. After the pilot study, actual survey managed
to secure responses of 100 Bumiputra contractors for the state of Johor. Descriptive
analysis on the collected data has resulted to five most significant success factors for
Bumiputra contractors which are prepare competitive tender pricing for tendering
process, maintain good reputation for better chance of getting new project, filling
correct terms and condition in tender document, manage risk of not having good and
sustainable team of construction workers and manage workers to carry out the given
tasks in systematic manner. PLS-SEM path modelling approach was used to develop
a model showing the graphical relationships of the success factors. Based on the
developed model, it was found that factors in resources group are giving the highest
impact load of 0.299 to the success of Bumiputra contractors. Hopefully, the findings
from this study will be a constructive guide to Bumiputra contractors to improve
their potentials to be successful in the competitive construction business.
vi
ABSTRAK
Beberapa pihak seperti pemaju, perunding, kontraktor, pembekal dan pihak berkuasa
tempatan adalah merupakan pihak-pihak yang terlibat untuk memastikan kejayaan
projek pembinaan. Di antara pihak-pihak yang terlibat, kontraktor merupakan pihak
yang sangat penting untuk menjayakan projek itu mengikut tempoh masa, kos dan
kualiti yang ditetapkan. Hakikatnya, banyak kajian melaporkan kontraktor yang
terlibat dalam projek pembinaan sering menghadapi masalah seperti kelewatan atau
penghantaran lewat, mutu kerja dan bahan yang kurang berkualiti, kelemahan
pengurusan keselamatan di tapak dan lebihan kos pembinaan. Oleh kerana banyak
kajian telah mengenalpasti masalah-masalah yang dihadapi kontraktor maka, kajian
ini bertujuan untuk mengenalpasti faktor-faktor kejayaan bagi kontraktor terutama
kepada kontraktor Bumiputra. Kajian ini merupakan kajian kuantitatif dimana data
dikumpul menggunakan borang kaji selidik dan dianalisis menggunakan pendekatan
deskriptif dan multivariat. Kajian rintis telah dijalankan untuk menilai kandungan
pengesahan kaji selidik daripada 33 faktor-faktor kejayaan yang telah dikenalpasti
melalui 10 kontraktor bumiputera yang berpengalaman. Selepas kajian rintis, kajian
sebenar berjaya mendapatkan maklum balas daripada 100 kontraktor Bumiputra bagi
negeri Johor. Analisis deskriptif mengenai data yang dikumpul telah menunjukkan
lima faktor kejayaan yang paling penting untuk kontraktor Bumiputra di mana faktor
kejayaan itu adalah dalam menyediakan harga tender yang kompetitif dalam proses
pembidaan, mengekalkan reputasi yang baik untuk berpeluang mendapatkan projek
baru, mengisi terma dan keadaan dengan betul dalam dokumen tender, menguruskan
risiko bahan yang sukar didapati dan pasukan pekerja pembinaan yang mampan dan
menguruskan pekerja untuk menjalankan tugas-tugas yang diberikan dengan cara
yang sistematik.
vii
Analisis ini menggunakan pendekatan pemodelan PLS-SEM untuk membangunkan
model dalam mod perwakilan grafik yang menunjukkan hubungan struktur faktor.
Berdasarkan kepada model yang terbina, menunjukkan bahawa faktor-faktor dalam
kumpulan sumber-sumber telah memberi kesan beban tertinggi 0.299 kepada
kejayaan kontraktor Bumiputra. Diharapkan, penemuan daripada kajian ini dapat
menjadi panduan yang membina kepada kontraktor Bumiputera untuk meningkatkan
potensi mereka untuk berjaya dalam perniagaan pembinaan yang kompetitif.
viii
CONTENTS
TITLE i
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRACT v
ABSTRAK vi
CONTENTS viii
LIST OF TABLES xii
LIST OF FIGURES xiv
LIST OF SYMBOLS AND ABBREVIATIONS xv
LIST OF APPENDICES xvii
CHAPTER 1 INTRODUCTION 1
1.1 Introduction 1
1.2 Problem Statement 3
1.3 Objective of Study 3
1.4 Scope of Study 4
1.5 Thesis Layout 4
CHAPTER 2 LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Issues in Construction Industry 6
ix
2.3 Contractors 8
2.3.1 Category of Contractor 9
2.3.2 Bumiputra Contractor 10
2.4 Problems Related to Bumiputra Contractors 11
2.5 Groups for Problems 24
2.6 Summary 25
CHAPTER 3 METHODOLOGY 26
3.1 Introduction 26
3.2 Flow of the Research 26
3.3 Literature Review 28
3.4 Questionnaire Design 28
3.5 Pilot Study 29
3.6 Data Collection 30
3.7 Data Analysis 30
3.7.1 Reliability 31
3.7.2 Ranking Analysis 31
3.7.3 Factors Analysis 32
3.7.4 PLS-SEM Model 33
3.7.5 PLS-SEM Model Development 34
3.8 Summary 37
CHAPTER 4 SUCCESS FACTORS FOR BUMIPUTRA CONTRACTOR 38
4.1 Introduction 38
4.2 Factors For Bumiputra Contractors‟ Success 39
4.3 Pilot Study 40
4.3.1 Relevancy of Success Factors 41
4.4 Data Collection 43
4.4.1 Data Reliability test 44
x
4.5 Ranks of Success Factors 45
4.5.1 All respondents 46
4.5.2 Working Experiences 48
4.5.3 Respondent‟s Education 50
4.5.4 Contractors‟ Grade/Class 53
4.5 Conclusion 55
CHAPTER 5 PLS-SEM MODEL OF SUCCESS FACTORS 58
5.1 Introduction 58
5.2 Factor Analysis 58
5.2.1 Conducting Factor Analysis 59
5.3 Development of PLS Model 64
5.3.1 Hypothetical Model 65
5.3.2 Model Construction 66
5.4 Assessment on PLS Measurement Model 69
5.4.1 Model Performance 69
5.4.2 Discriminant Validity 72
5.4.2.1 Analysis of Cross Loading 72
5.4.2.2 Analysis of Average Variance Extracted 74
5.5 Assessment on PLS Structural Model 74
5.5.1 Hypothesis Testing 76
5.5.2 Explanatory Power (R2) 77
5.5.3 Effect Size (f2) 78
5.5.4 Predictive Relevance (Q2) 79
5.6 Conclusion 82
CHAPTER 6 CONCLUSION AND RECOMMENDATION 84
6.1 Introduction 84
6.2 Objective 1 84
xi
6.3 Objective 2 86
6.4 Objective 3 87
6.5 Limitations of the Study 88
6.6 Recommendation for Future Work 88
REFERENCES 89
xii
LIST OF TABLES
2.1 Limit of building/civil/mechanical work cost 9
2.2 Limit of electrical work cost 9
2.3 Newspaper report on Bumiputra contractors‟
problems
11
2.4 Previous researches on Bumiputra contractors‟
problems
13
2.5 Mapping Previous Studies (Problem faced by
Bumiputra contractors)
18
2.6 List of problems faced by Bumiputra
contractors
22
2.7 Various Groups of Problems 24
3.1 Scale‟s level/degree 29
3.2 Parameters for Assessing Level of
Significance
32
3.3 Used of PLS-SEM modelling in construction
research
34
4.1 List of success factors for Bumiputra
contractors
39
4.2 Experts experiences in construction industry 41
4.3 Results of average index (AI) score 42
4.4 Demography of the respondents 44
4.5 Rank factors (all respondents) 46
xiii
4.6 Rank of factors (Respondents‟ working
experience)
48
4.7 Five most significant factors based on working
experiences
49
4.8 Rank of factors (Respondents‟ education) 51
4.9 Five most significant factors based on
respondent‟s education
52
4.10 Rank of factors (Respondents‟ Company‟s
Grade/Class)
53
4.11 Five most significant factors based on
Respondents Company‟s Grade/Class
55
4.12 Five (5) most significant factors based on 4
categories of rankings
56
5.1 Total Variance Explained 61
5.2 Rotated Component Matrix 62
5.3 Categorization of Success factors 63
5.4 Systematic Assessment of Measurement
Model
68
5.5 Systematic Assessment of Structural Model 69
5.6 Loadings of Individual Item Reliability 70
5.7 Convergent Validity of Measurement Model 72
5.8 Cross Loading of Factors 73
5.9 Fornell-Larcker Criterion Analysis 74
5.10 Impact Path Coefficient (β-values) 75
5.11 Results of Hypothesis Test 77
6.1 5 Most significant factors based on 4
categories of rankings
86
6.2 5 Most significant of Bumiputra contractors‟
success factors
87
xiv
LIST OF FIGURES
3.1 Research methodology flowchart 27
3.2 Stepwise to conduct Factor Analysis 33
3.3 Process of developing PLS-SEM Model 36
5.1 Extraction box 59
5.2 Rotation box 60
5.3 Scree Plot 60
5.4 Hypothetical model for this study 66
5.5 Constructed Model 67
5.6 Values Generated from the Simulation Process 68
5.7 Convergent Validity of Risk Group 71
5.8 β-values of Structural Model 75
5.9 t-values from bootstrapping 76
5.10 Model‟s Coefficient of Determination R2
Value
78
5.11 R2 values of dependent variable 79
5.12 Q2 values of cross validated redundancy 80
5.13 Q2 values of dependent variable 81
6.1 Success factors for Bumiputra contractors 85
6.2 PLS-SEM of factors for Bumiputra
contractors‟ success
87
xv
LIST OF SYMBOLS AND ABBREVIATIONS
_
r - Average inter-correlation items
- Cronbach‟s alpha coefficient
AI - Average Index
AVE - Average Variance Extracted
CB-SEM - Covariance-based SEM
CIDB - Construction Industry Development Board
CR - Composite Reliability
CSC - Contractor Services Center
CV Com - cross validated communality
CV Red - cross validated redundancy
CV - Convergent validity
DOSH - Department of Occupational Safety and Health
DV - Dependent Variable
f2
- Effect Size
FIN - Finance
IIR - Individual item reliability
IV - Independent Variable
MAN - Management
MARA - Majlis Amanah Rakyat
MM - Measurement Model
NEP - New Economy Policy
PKK - Pusat Khidmat Kontraktor
PLS-SEM - Partial Least Square-Structural Equation Modelling
PROC - Procurement
xvi
Q2 - Predictive Relevance
q2 - Relative impact of predictive relevance
R2
- Explanatory Power
RES - Resources
RISK - Risk
SEM - Structural Equation Modelling
SM - Structural Model
SPM - Sijil Pelajaran Malaysia
SPSS - Statistical Package for the Social Sciences
USA - United States of America
xvii
LIST OF APPENDICES
A Questionnaire Form 100
B List of Success Factors for Ranking analysis 105
C Kontraktor Bumiputra perlu jadi trend setter 107
D Kontraktor Bumiputra lemah dalam praktikal 108
E Persatuan Kontraktor: Beri Bumiputra lebih
ruang sertai projek Johor
108
F Bumi initiatives must provide solutions to
problems
110
G 10 hingga 15 peratus projek pembinaan gagal
disiapkan ikut jadual
111
H Kontraktor Melayu Johor kecewa kurang
peluang dalam projek mega
112
I Hasil kerja berkualiti tarik keyakinan 113
J Producing competitive Bumiputra contractors 114
CHAPTER 1
INTRODUCTION
1.1 Introduction
Construction industry involves several parties such as client, consultant, contractor,
supplier and local authorities in ensuring the success of the construction projects.
Nevertheless, the construction project is greatly dependent on the contractor‟s
involvement which plays the most important parts in realising the success of the
project (Hanif, 2011). In reality, construction project often encounter delays or late
deliveries, sub-standard workmanship and materials, poor safety management on
sites and cost over-run of construction projects that have been seriously discussed by
the public (Koon, 2015). According to Ayub & Eman (2006), quality of contractors
in implementing the projects have often been subjected to questions, criticisms and
underrating.
Contracting business is considered as a very difficult business which needs to
overcome all the inherent difficulties to become competitive and efficient. The
business is fragmented and resources driven in nature which needs proper
management to ensure the success of the project interm of time, budget and also
quality (Koon, 2005).
2
A good teamwork amongst the client, consultant and contractor to complete
construction projects successfully are being experienced and enjoyed in Malaysia
construction industry to transform Malaysia into developed world by 2020 (Abdullah
et. al., 2004).
According to Construction Industry Development Board (CIDB) statistic,
Malaysia is having amongst the highest ratio of contractor in the world with 1
contractor to 614 person and these has caused more failures and bankruptcies in
contracting than in any other business (CIDB, 2015b). Majority of these failures are
related to Bumiputra contractors which has been discussed in local newspaper.
Failure amongst Bumiputra contractors in delivering the project according
specifications has become an issue to the government in elevating the economy of
Bumiputra through New Economy Policy that was introduced since 1969 (Hanif,
2011).
According to Ayub & Eman (2006), there are a lot problems faced by
Bumiputra contractors in delivering the construction project that was awarded to
them which needs to be uncovered and highlighted especially when considering the
fact that certain government projects are restricted for the bumiputera contractors.
Thus, it is very important to address the problems faced by Bumiputra contractors for
achieving the success of construction projects.
Success is defined by Ashley & Jaselskis (1987) as results much better than
expected or normally observed in terms of cost, schedule, quality, safety and
participant satisfaction. The investigation of the success factors of construction
projects has attracted the interest of many reseachers and many studies have been
conducted with the aim of providing contract parties with valuable insight into how
to consistently achieve superior results for their projects. Although, construction
projects are by their repetitive activities, each one has its own characteristics and
circumstances.
According to Hwang & Lim (2013), success factors are used to support and
measure the success of a strategic and tactical approach to project execution with the
intent of ensuring the success of the project delivery system and to support the
appropriate allocation of limited resources. Thus, this study builds based on the past
studies by identified the problems faced by Bumiputra contractors and rephrased into
success factors.
3
1.2 Problem Statement
Issues faced by Bumiputra contractors such as leakages of government‟s construction
projects awarded to Bumiputra contractors, lack of entrepreneurship knowledge
amongst Bumiputra contractors, difficulty of getting building materials at affordable
prices, inability to fully understand the construction process and requirements for
achieving success are often highlighted in newspapers and also in academic articles
(Rosli, 2004; Lim, 2004; Koon, 2005; Ayub & Eman, 2006; Kadir, 2006; Musu,
2008; Rahman, 2009; Zaini et. al., 2010; Othman, 2010; Hanif, 2011; Adam, 2011).
Studies on Bumiputra contractors issues has only managed to identify problems
encountered by Bumiputra contractors however study on the success factors for
Bumiputra contractors was not found. Thus, this study will uncover the factors which
will contribute to the success of Bumiputra contractors either in securing project and
also in completing the awarded projects. With these success factors, Bumiputra
contractors can strategies their company to perform well on the on-going project and
also to bid for new construction project.
1.3 Objective of Study
The aim of this study is to uncover success factors for Bumiputra contractors. To
achieve this aim, the following objectives are carried out as below:
i. Identifying the Bumiputra contractors‟ success factors.
ii. Determining the significant level of Bumiputra contractors success factors.
iii. Developing the Partial Least Squares Structural Equation Modelling (PLS-
SEM) model of Bumiputra contractors success factors.
4
1.4 Scope and Limitation of Study
This study involves quantitative approach using structured questionnaire survey in
identifying the factors for Bumiputra contractors success in construction industry.
However, the scope of this research is limited to the construction companies located
in state of Johor. Targeted respondents for data collection are Bumiputra contractors
who are registered with Construction Industry Board Development Malaysia (CIDB)
and Bahagian Pembangunan Kontraktor dan Usahawan (BPKU).
1.5 Significant of Study
Since the issues of Bumiputra contractor to survive in competitive construction
industry has become national agenda, this study partially address the issues or
problems and provides somekinds of means to assess Bumiputra contractor
competitiveness. By identifying these success factors, Bumiputra contractors will
able to navigate their company successfully in the competitive construction industry.
1.6 Thesis Layout
The thesis layout of this study consists of six chapters as follows:
Chapter 1: describes the introduction and needs of this study. It includes
background of study, problem statement, objectives and scope of this study.
Chapter 2: focuses on review of published research works related to issues
and problem faced by Bumiputra contractors.
Chapter 3: describes the methodology of study adopted for executing this
research. It also contains the explanation about the methods used for data
collection and analysis.
5
Chapter 4: discusses a process to determine the rank of identified factors
based on their average index score of significance in contributing to
Bumiputra contractors success.
Chapter 5: explains the development of PLS-SEM path model and the
assessments that are carried out on it to ensure the model is fit for
representation.
Chapter 6: presents the conclusion for the overall study which summarised
the important findings related to the objectives of study.
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
The purpose of this chapter is to provide an overview of issues and problems faced
by Bumiputra contractors in construction industry. This chapter begins with the
general view of construction industry about the issues faced by the construction
industry. Then will be followed by reviewing the issues and problems faced by
Bumiputra contractors.
2.2 Issues in Construction Industry
Construction industry is considered as a locomotive of physical development which
bring substantial and significant impacts to the country‟s economy (Kumaraswamy,
2006). However, it also contributes to negative implications especially to the
environment and social aspect of a country.
7
In addition, the industry is always facing chronic problems such as time overrun, cost
overrun, poor safety and poor quality (Nahmens & Ikuma, 2009).
Achievement in completing construction project on time is a basic
requirement but it seldom completed on time. This has become a worldwide problem
including Malaysia where the construction industry is facing the critical problem of
time overrun (Alaghbari et. al., 2007; Ibrahim et. al., 2010; Sambasivan & Soon,
2007). Abdullah (2010) reported that more than 90% of large Majlis Amanah Rakyat
(MARA) construction projects experienced delay since 1984. Endut et. al., (2009)
studied on time performance of 359 projects (301 new constructions while 58
refurbishment projects) in Malaysia. 359 of these projects, 301 were public projects
and 51 private projects. The study found that only 18.2% of the public sector projects
and 29.45% of private sector projects had 0% time deviation (no delays) while the
average percentage of time overrun for other projects was 49.71%. Time delay can
be due to one or more reasons including problems of financing and payment for
completed works.
Cost is one of the major considerations throughout the lifecycle of a project.
Unfortunately, most of the projects failed to achieve project completion with the
estimated cost. Besides time overrun, cost overrun is also a serious problem in the
constructions industry. This is a major problem both in developed and developing
countries. The trend is more several in developing countries where this overrun
sometimes exceeds 100% of the anticipated cost of the project (Azhar et. al., 2008).
Malaysia construction industry is also facing a lot of challenges in completing the
construction projects within the estimated cost (Ibrahim et. al., 2010; Toh et. al.,
2011) and more than 50% of projects face cost overrun (Endut et. al., 2009).
Another problem faced by construction industry is poor quality. It is very
common and serious problem as the expected quality is not complied in the
construction projects (Kometa & Olomolaiye, 1997). Failure in achieving required
quality has also significant impact of project cost. Koskela (1992) stated that quality
cost (non-conformance) in construction industry in the United States of America
(USA) contributed to 12% of total project cost. Marosszeky et. al., (2002) showed
that quality failures had resulted in rework which incurred extra cost approximately
2% - 12% of project cost and stated that quality rectification problem contributed to
approximately 3.4% - 6.2% of project cost.
8
Finally, the construction industry is notoriously known for its poor safety
record as compared with other industries (Mohamed, 2002). Poor safety resulted to
accidents and fatality which effect significantly on efficiency and cost of the projects.
Accident data prepared by Department of Occupational Safety and Health (DOSH),
Malaysia shows that accident related to fatality rates in the construction industry
much worse than all other industry for many years, the accident related to fatality
rate are 42 cases till September 2015 higher than other industries. According to
Sharif (2015), the causes of accident at construction site are too many, one of it is
caused by contractors‟ attitude, workers and the environment of construction site.
Thus, it can be concluded that construction industry is the most challenging industry
where besides generating the country‟s economy, it also being engulfed with chronic
issues that are difficult to resolve.
2.3 Contractors
Contractor is someone who enters into a binding agreement to perform a certain
service or provide a certain product in exchange for valuable consideration,
monetary, goods, services, even barter arrangements. In the building trades, a
contractor is one who is engaged in the construction or building related services for a
client. The construction site is overseen by a “Prime”, General, or Specialty
contractor, who may perform the work with employees, subcontractors or any
combination (Othman, 2010). According to Act 520, Part 1 (1994), the definition of
contractor is someone who undertakes to carry out and complete any construction
work (CIDB, 2015a).
Zaini et. al., (2010), defines contractors as the most powerful and carry
ultimate responsibility, in both internal and external aspects, for the firm and its
investment capital. In this sense, the contractor is a body consisting of company
director general and commercial manager of private companies.
According to Ayub & Eman (2006), contractors are independent business
organizations and are awarded the projects to produce the required end product as
stipulated in the contract documents. In the case of the owner and the contractor may
disagree on certain things, the achievement of the end product must always be the top
9
priority of both parties. A good relationship between owner and the project
contractor must be maintained so that the contractor‟s expertise, labour and
equipment can be best utilised to achieve the objectives of the project. For this study,
the term of contractors is applied to someone who are legally given responsibilities to
execute the awarded construction project as in the contract.
2.3.1 Category of Contractor
According to Government of Malaysia (2012) started from 15 October 2012, the
limitation of acquisition value for the government work for the building work / civil /
mechanical and electrical are shown in the Table 2.1 and Table 2.2 below:
Table 2.1: Limit of building/civil/mechanical work cost (CIDB, 2015a)
Registration
Grade
Limitation of acquisition
work value (RM)
G1 Less than 200,000.00
G2 200,001.00 to 500,000.00
G3 500,001.00 to 1,000,000.00
G4 1,000,001.00 to 3,000,000.00
G5 3,000,001.00 to 5,000,000.00
G6 5,000,001.00 to 10,000,000.00
G7 More than 10,000,000.00
Table 2.2: Limit of electrical work cost (CIDB, 2015a)
Registration
Grade
Limitation of acquisition
work value (RM)
G1 Until 200,000.00
G2 Until 500,000.00
G3 Until 1,000,000.00
G4 200,001.00 to 3,000,000.00
G5 200,001.00 to 5,000,000.00
G6 200,001.00 to 10,000,000.00
G7 More than 200,001.00
10
2.3.2 Bumiputra Contractor
Constitution of Malaysia (1957a) mentioned that Bumiputra is a term to describe the
Malay race and other indigenous peoples of Malaysia. The concept of a Bumiputra
ethnic group in Malaysia was coined by Tun Abdul Razak to recognise the "special
position" of the Malays provided in the Federal Constitution of Malaysia, in
particular Article 153 (Constitution of Malaysia, 1957b). However, the constitution
does not use the term "Bumiputra"; it defines only "Malay" and "indigenous peoples"
(Article 160 (2)), "natives" of Sarawak (Article 161A (6) (a)) and "natives" of Sabah
(Article 161A (6)) (Constitution of Malaysia, 1957a).
The government has established multiple bodies that work towards planning,
acting, monitoring and controlling the operations of the construction industry in
Malaysia. There are two (2) bodies that play significant roles on behalf of the
Government which is Construction Industry Development Board (CIDB) and
Bahagian Pembangunan Kontraktor dan Usahawan (BPKU). According to Malaysia
(1995), Ministry of Finance will award Bumiputra status to qualified company in
supply and service sector, while BPKU will award Bumiputra status to qualified
contractors.
To acquire a status as Bumiputra Company, one has to meet the following
criteria, imposed by the Malaysia Ministry of Finance (Malaysia, 1995):
At least there are 51% of company‟s shares belong to Bumiputra whereby the
individual shares are more than non-Bumiputra‟s individual shares
At least 51% of Board of Director are owned by Bumiputra
The CEO, Managing Director or General Manager or any other important
roles must be owned by the Bumiputra
At least 51% of the staffs are Bumiputra
Financial Manager post are owned by Bumiputra
The organization chart and its function showed the majority owner by
Bumiputra
11
2.4 Problems Related to Bumiputra Contractors
Since developing and enhancing Bumiputra contractor is part of the government
Bumiputra agenda, there are a lot of discussions on the problems of Bumiputra
contractors in local newspapers. For this research, 9 newspaper reports and other
public sources are referred from 2005 up to 2015 which are deemed relevant to this
study. These reports are presented in Table 2.3.
Table 2.3: Newspaper report on Bumiputra contractors‟ problems
No References Descriptions
1 Koon (2005)
Aliran Montly
Koon Yew Yin pointed out 6 important points to be considered by
bumiputera contractors so that they could understand why they
have failed and what needs to be done by the government to correct
this situation.
Over optimistic assumption in open tender bids produce good
work at the cheapest price.
Experienced contractors will able to anticipate material price
changes/fluctuation
Bumiputra contractors should anticipate the difficulty of new
site and to retain experienced supervisory staff
Bumiputra contractors should have means to finance their
projects with considerations of difficulty to acquire loan from
the bank
Bumiputra contractors should start at apprentice level so as they
are able to learn the trade at the bottom especially becoming
traders of building materials.
Bumiputra contractors are facing difficulty of getting the skilled
worker because of the salary and the availability of skilled
Bumiputra workers
2
Mohamed (2011)
Harian Metro
(refer to appendix C for
further detail)
Datuk Nur Jazlan Mohamed highlighted three causes of leakage in
government awarded project to Bumiputra contractors are due to:
Bumiputra contractors selling the awarded project to third party
Mismanaging procurement by civil servant
Bumiputra contractors are not able to get a competitive price of
materials and equipment as non-Bumiputra contractors
3
Muhammad (2011)
Borneo Post
(refer to appendix D for
further detail)
Datuk Awang Sham Amit identified the weakness in
entrepreneurship skills as a main contributors to the failure faced
by Bumiputra contractors
4
Bernama (2012)
Sinar Harian
(refer to appendix E for
further detail)
Datuk Abd Latif Bandi states that Johor Bumiputra contractors
were given less opportunity to participate in the rapid construction
growth in Iskandar development.
5
Samad (2013)
New Straits Times
(refer to appendix F for
further detail)
PM mentioned about problem faced by Bumiputra contractors in
getting construction materials at affordable price. Datuk Mokhtar
Samad said that the problem was because many of Bumiputra
contractors were new to the supply chain system and have yet to
build a network. He suggested Prime Minister to revive old system
of Pernas trading.
12
No References Descriptions
6
Bernama (2013a)
Berita Harian
(refer to appendix G for
further detail)
Datuk Seri Zainal Rahim Seman suggested Bumiputra contractors
company to collaborate with government agencies at an early stage
in order to reduce the risk of delay in completing the projects.
Common causes of failure faced by Bumiputra contractors
Bad weather
Unexpected soil structure
Improper construction applied
Changes of specifications during construction process
7
Bernama (2013b)
Utusan Borneo
(refer to appendix H for
further detail)
Mahmood Amir stated that Johor Bumiputra contractors
disappointed with less opportunity in mega project. This indicates
that Bumiputra contractors are highly dependent on government
projects.
8
Salian (2015)
Berita Harian
(refer to appendix I for
further detail)
According to Ahmad Kamal Kasani, failure of Bumiputra
contractors to complete the awarded projects are due to 3 common
causes which are:
lack of understanding construction process & requirement,
lack of apprenticeship
lack of skills on necessary aspect of project success
9
Koon (2015)
Malaysiakini
(refer to appendix J for
further detail)
Koon Yew Yin pointed out 7 important points to be considered by
bumiputera contractors so that they could understand why they
have failed and what needs to be done by the government to correct
this situation.
Construction activity is rather a teamwork not an individual
effort
Experienced contractors will able to anticipate material price
changes/fluctuation
Bumiputra contractors should anticipate the difficulty of new
site and to retain experienced supervisory staff
Bumiputra contractors should have means to finance their
projects with considerations of difficulty to acquire loan from
the bank
Bumiputra contractors should start at apprentice level so as they
are able to learn the trade at the bottom especially becoming
traders of building materials.
Bumiputra contractors are facing difficulty of getting the skilled
worker because of the salary and the availability of skilled
Bumiputra workers
Records indicate many of the Bumiputra contractors are facing
bankruptcy due to their incompetence in handling the project,
thus they need to upgrade their knowledge and skills to enhance
their competency in contracting business
Table 2.3 shows the issues and problems faced by Bumiputra contractors according
to the newspaper report. There are 27 problems as displayed in the Table 2.3, from
these problems there are similarity in nature. After going through the similarity
checking, these problems can be categorised into 5 main group of problems which
are related to management, financial, labor/worker, materials and machineries and
also procurement.
In management problems, Bumiputra contractor are seem to lack of
knowledge and skill related to construction project, lack of understanding
13
construction process and requirement, lack of skills on necessary aspect of project
success, improper construction applied, changes of specifications during construction
process and lack of apprenticeship from the bottom level becoming traders of
building materials. While, in term of financial problems, Bumiputra contractors are
facing bankruptcy due to their incompetence in handling the project, thus they need
to upgrade their knowledge and skills to enhance their competency in contracting
business. Bumiputra contractors should have means to finance their projects with
considerations of difficulty to acquire loan from the bank because of lack of fixed
assets (land and buildings) that can be used as collateral.
Problems faced by Bumiputra contractor related to materials and equipments
are they are not able to get a competitive price of materials and equipments as non-
Bumiputra contractors and they also unable to anticipate material price
changes/fluctuation. Besides, Bumiputra contractor also encounter a problems on
labour/worker issues. These problems are shortage of technical personnel (skilled
labour), high cost of labor and also difficulty of getting the skilled worker because of
the salary and the availability of skilled Bumiputra workers. Table 2.3 also
mentioned about procurement problems such as over optimistic assumption in open
tender bids produce good work at the cheapest price, mismanaging procurement by
civil servant and also insufficient understanding of the contract documentation and
the preparation and submission of tenders.
Beside the newspaper reports, the problem of Bumiputra contractor are also
been studied at the university level. Literature found 10 research studies related to
Bumiputra contractor were carried out from 2004 up to 2011. These research studies
are summarized in Table 2.4.
Table 2.4: Previous researches on Bumiputra contractors‟ problems
No References Descriptions
1
Rosli (2004)
A study in Sabah which involved 52 respondents has identified 4
main problems faced by Bumiputra contractors which are:
Lack of construction material due to supplier not able to provide
sufficient materials and raise the prices without control
Insufficient cash flow/capital to carry out a construction project
Lack of managing workers with systematic approach/method
Lack of understanding construction process & requirement
14
No References Descriptions
2
Lim (2004)
A study conducted in Samarahan, Sarawak which involved 30
respondents has found 9 problems faced by Bumiputra contractors
in executing their contractual obligations such as:
Lack of leadership ability and knowledge necessary to make the
business work.
Lack of managerial and technical expertise in construction
project
Poor financial control that cause the company to go bankrupt
and resulting poor images to the contractors
Lack of inventory control on building materials
Problems in Acquiring of Building Materials
Lack of systematic planning and scheduling due to the
contractor not have qualification and rely mainly on experience
Shortage and difficulties in obtaining manpower resources will
definitely affect the productivity of a construction company
Problems with government departments and agencies is due to
poor relationship between two parties
Complaints and actions which are unexpected will be taken by
the local residents which may result in the construction project
being postponed
3 Ayub & Eman (2006)
A study conducted in Pulau Pinang which involved 20 respondents
pointed out 16 main reasons considered to be the reasons for
project failures in the public university which are:
Insufficient instruction and information in the contract
specification, drawing and design
Lack of construction materials and machineries
Inefficient and ineffective planning and management by the
owner, contractor and designer
Lack of staff and labours
Inexperienced labours
Lack of technical knowledge background among the contractor
and the owner
Changed Conditions/Differing Site Conditions
Communication problems
Insufficient Funds/Financial Difficulties
Wrong focus of project management system
Improper or inaccurate project estimation
Too much too early of the utilisation of new or latest techniques
Overcrowding of staff/Too many staff
Lack of awareness on project goals
Changes of needs, requirements and specifications by the owner
Incompetent Project Manager/Project Management team
4
Kadir (2006)
A survey conducted among 35 Bumiputra contractors in Johor has
identified 11 risks normally faced by contractors during
construction process which are:
Unable to anticipate risks due to bad weather on their project
Unable to anticipate the difficulty of getting material and worker
Unable to anticipate risks due to construction site condition
Unable to anticipate the risks of equipment / machinery damage
Unable to anticipate the risk of accidents and injuries at
construction site
Unable to anticipate the risk from quality of work
Risk of delays in completion of construction work
Risk due to financial problems
Risk due to management problems
Unable to anticipate risks due to economy conditions
15
No References Descriptions
Unable to anticipate risks due to political influence
5
Musu (2008)
A survey conducted among 30 contractors in Johor has identified 5
common problems faced by Bumiputra contractor which are:
Lack of construction materials due to materials waste that occur
at every project stages and delay in delivery building materials.
Lack of managing workers with systematic approach/method
Lack of expertise due to only possess in general knowledge of
construction project
Insufficient cash flow/capital to carry out a construction project
Difficulty in obtaining construction project because the
increasing number of contractors and lack of provided contract
offer
6 Rahman (2009)
A survey on Klang Valley among 62 respondents found the
common problems faced by Bumiputra contractors and group into
five aspect such as:
Problem in General Aspect
Problem in Quality Aspect
Problem in Design Aspect
Problem in Financial Aspect
Problem in Time Aspect
7 Othman (2010)
A study conducted among 30 contractors pointed out 5 problems
faced by Bumiputra contractors in contruction industry at Pahang
which are:
Raw materials problems
Manpower problems
Lack of expertise
Machinery problems
Financial problems
8 Zaini et al,. (2010)
A survey conducted in Kuala Lumpur among 59 respondents was
carried out to determine the types of risk involve during
construction phase in Malaysia such as:
Force Majeure (flood, inclement weather, riot, etc.)
Financial (Cash flow, bank loan, price fluctuation, etc.)
Political (Regulation by government, permit and approval, etc.)
Social (Public Complaint, etc.)
Technical/Functional (Availability of material, equipment,
labour, changes of design, etc.)
9 Hanif (2011)
A study conducted among 60 respondents pointed out 6 problems
faced by Bumiputra contractors in construction industry at Wilayah
Persekutuan Kuala Lumpur which are:
Bumiputra contractors are not able to secure affordable price of
contract offered.
Delay in interim or progress payment because the cost of capital
of Bumiputra contractors is very limited.
Lack of knowledge and expertise on construction project
Lack of communication/communication breakdown
Unfair evaluation of work progress
Unfair surcharges in term of Non-Compliance Report, Non-
Compliance Performance and etc.
10 Adam (2011)
A survey conducted among 38 Bumiputra contractors in Jeli, Tanah
Merah and Machang found 3 factors that causes contractor more
interested with government contract compare to private contract
which are:
16
No References Descriptions
Difficulty in getting private contract due to only choose
qualified contractor and have expertise in implementing
construction projects
Inadequate capital to carry out a construction project
Comfortable with the construction project that they have
Table 2.4 shows the problems faced by Bumiputra contractor according to the
studied at the university level. There are 69 problems as displayed in the Table 2.4,
from these problems there are similarity in nature. After going through the similarity
checking, these problems can be categorised into 5 main group of problems which
are related to financial, management, resources, risk and also procurement.
Referring to Table 2.4, it shows that Bumiputra contractor seem to have a
problems regarding the financial issues such as insufficient cash flow/capital to carry
out the construction project, poor financial control that cause the company to go
bankrupt and resulting poor images to the contractors and delay in interim or
progress payment because the cost of capital of Bumiputra contractors is very
limited.
In management issues, Bumiputra contractors have faced a problems on lack
of managing workers with systematic approach/method, lack of understanding
construction process & requirement, lack of leadership ability and knowledge
necessary to make the business work, lack of managerial and technical expertise in
construction project, lack of systematic planning and scheduling due to the contractor
not have qualification and rely mainly on experience and lack of communication/
communication breakdown. Most of the researchers in Table 2.4 mentioned that
management is one of the problems faced by Bumiputra contractors in construction
industry.
According to related resources issues that have been faced by Bumiputra
contractor such as lack of construction material due to supplier not able to provide
sufficient materials and raise the prices without control, lack of materials and
machineries, shortage and difficulties in obtaining manpower resources will
definitely affect the productivity of a construction company, lack of construction
materials due to materials waste that occur at every project stages and delay in
delivery building materials and overcrowding of staff/too many staff .
17
While, in procurement issues such as lack of tendering skill in tender pricing,
improper or inaccurate project estimation, difficulty in obtaining construction project
because the increasing number of contractors and lack of provided contract offer,
unable to secure affordable price of contract offered and also difficulty in getting
private contract due to only choose qualified contractor and have expertise in
implementing construction projects are the problems encountered by Bumiputra
contractors.
Problems from Tables 2.3 and Table 2.4 were sorted out and left with only 33
problems. The sorting involved identification of duplications and also rephrasing and
generalising the problems. From these 33 problems faced by Bumiputra contractors,
the frequency analysis based on 19 research articles are as in Table 2.5.
18
Table 2.5: Mapping Previous Studies (Problem faced by Bumiputra contractors)
No Problem faced by Bumiputra
contractors
Mo
ham
ed
(20
11
)
Mu
ham
mad
(20
11
)
Ber
nam
a
(20
12
)
Sam
ad
(20
13
)
Ber
nam
a
(20
13
a)
Ber
nam
a
(20
13
b)
Sal
ian
(20
15
)
Ko
on
(2
013
)
Ro
sli
(20
04
)
Lim
(2
00
4)
Ko
on
(2
005
)
Ay
ub
&
Em
an(2
00
6)
Kad
ir (
200
6)
Mu
su (
200
8)
Rah
man
(20
09
)
Zai
ni
et.
al.
,
(20
10
)
Oth
man
(20
10
)
Han
if (
201
1)
Ad
am
(20
11
)
Fre
qu
ency
1
Difficulty to purchase
construction material at
competitive price lead to extra
cost
√ √ √ √ √ 5
2
Lack of entrepreneurial skills in
managing construction projects
leads to time and cost overruns √ √ 2
3
Less opportunity to participate in
construction project causing less
chance of getting new project √ √ 2
4
Unfavourable site conditions (bad
weather/unexpected soil
structure) lead to delay √ √ √ √ √ √ 6
5
Many changes of requirements
and specifications during
construction process lead to major
problems
√ √ 2
6
Lack of knowledge and
experience on construction leads
to project failure √ √ √ √ √ √ √ 7
7
Lack of teamwork amongst
parties involved which could
leads to project failure √ 1
8
Fluctuation of construction
material cost affecting estimated
cost of the project √ √ 2
19
No Problem faced by Bumiputra
contractors
Mo
ham
ed
(20
11
)
Mu
ham
mad
(20
11
)
Ber
nam
a
(20
12
)
Sam
ad (
201
3)
Ber
nam
a
(20
13
a)
Ber
nam
a
(20
13
b)
Sal
ian
(2
01
5)
Ko
on
(2
013
)
Ro
sli
(20
04
)
Lim
(2
00
4)
Ko
on
(2
005
)
Ay
ub
&
Em
an(2
00
6)
Kad
ir (
200
6)
Mu
su (
200
8)
Rah
man
(20
09
)
Zai
ni
et.
al.
,
(20
10
)
Oth
man
(20
10
)
Han
if (
201
1)
Ad
am (
201
1)
Fre
qu
ency
9
Difficult to retain skilled
supervisory staff due to financial
constrain √ √ 2
10 Insufficient cash flow to run the
construction project √ √ √ √ √ √ √ √ √ √ √ 11
11 Lack of apprenticeship to resolve
problems at trade level √ √ 2
12
Lack and difficulty of getting
skilled workers at an affordable
wage √ √ √ 3
13 Lack of tendering skill in tender
pricing √ √ 2
14
Lack of networking to enhance
information of project
procurement √ 1
15 Too dependent on government
allocated projects √ √ 2
16 Lack of good reputation based on
the record of the previous works √ 1
17 Lack of financial management
resulted to bankruptcy √ √ √ √ √ √ 6
18
Difficulty in securing bank loan
due to unable to comply stringent
terms and condition such as
inability to get
guarantor/collateral fixed
√ √ √ √ √ √ 6
19
Insufficient instruction and
information in the contract
specification, drawing and design √ √ 2
20
No Problem faced by Bumiputra
contractors
Mo
ham
ed
(20
11
)
Mu
ham
mad
(20
11
)
Ber
nam
a
(20
12
)
Sam
ad
(20
13
)
Ber
nam
a
(20
13
a)
Ber
nam
a
(20
13
b)
Sal
ian
(20
15
)
Ko
on
(2
013
)
Ro
sli
(20
04
)
Lim
(2
00
4)
Ko
on
(2
005
)
Ay
ub
&
Em
an(2
00
6)
Kad
ir (
200
6)
Mu
su (
200
8)
Rah
man
(20
09
)
Zai
ni
et.
al.
,
(20
10
)
Oth
man
(20
10
)
Han
if (
201
1)
Ad
am
(20
11
)
Fre
qu
ency
20 Lack of construction materials
and machineries √ √ √ √ √ √ √ 7
21 Inefficient and ineffective
planning and management √ √ √ 3
22 Lack of communication which
leads to dispute in all levels √ √ √ 3
23 Improper or inaccurate project
estimation √ 1
24
Lack of knowledge and skill on
new construction technology
approach √ 1
25
Lack of handling workers using
systematic approach leads to
project failure √ √ √ √ √ √ 6
26
Conflicts between contractor and
other parties causing project
failure √ √ √ 3
27 Lack of risks management √ 1
28 Late of progress payment √ √ 2
29 Certain materials are not available
locally √ 1
30
Mismanagement of cash flow (not
able to differentiate between
personal and company money) √ √ 2
21
No Problem faced by Bumiputra
contractors
Mo
ham
ed
(20
11
)
Mu
ham
mad
(20
11
)
Ber
nam
a
(20
12
)
Sam
ad
(20
13
)
Ber
nam
a
(20
13
a)
Ber
nam
a
(20
13
b)
Sal
ian
(20
15
)
Ko
on
(2
013
)
Ro
sli
(20
04
)
Lim
(2
00
4)
Ko
on
(2
005
)
Ay
ub
&
Em
an(2
00
6)
Kad
ir (
200
6)
Mu
su (
200
8)
Rah
man
(20
09
)
Zai
ni
et.
al.
,
(20
10
)
Oth
man
(20
10
)
Han
if (
201
1)
Ad
am
(20
11
)
Fre
qu
ency
31 Lack of financial capital to start
new project √ √ 2
32 Difficulty to hire equipment at
affordable price √ √ √ √ √ √ 6
33
Lack of local construction
workers to form a strong and
sustainable construction team √ √ √ √ √ √ √ √ 8
22
Table 2.5 indicates the problems faced by Bumiputra contractors were extracted from
19 sources of references from the previous studies. From Table 2.5, it shows 10 of 33
problems faced by Bumiputra contractors are having frequency more than 5
researchers. The problems are difficulty to purchase construction material at
competitive price lead to extra cost, unfavourable site conditions (bad
weather/unexpected soil structure) lead to delay, lack of knowledge and experience
on construction leads to project failure, insufficient cash flow to run the construction
project, lack of financial management resulted to bankruptcy, difficulty in securing
bank loan due to unable to comply stringent terms and condition such as inability to
get guarantor/collateral fixed, lack of construction materials and machineries, lack of
handling workers using systematic approach leads to project failure, difficulty to hire
equipment at affordable price and lastly is lack of local construction workers to form
a strong and sustainable construction team. Majority of the problems faced by
Bumiputra contractors are from resources issues. It due to the difficulties to get the
construction materials, skilled workers, machineries and equiptments at competitive
price.
The identified 33 problems faced by Bumiputra contractors as in Table 2.5 from the
literature review are then compiled as in Table 2.6.
Table 2.6: List of problems faced by Bumiputra contractors
Nos Problems
1 Less opportunity to participate in construction project causing less chance of getting new
project
2 Difficult to retain skilled supervisory staff due to financial constrain
3 Difficulty to hire equipment at affordable price
4 Lack of financial management resulted to bankruptcy
5 Lack of entrepreneurial skills in managing construction projects leads to time and cost
overruns
6 Lack of financial capital to start new project
7 Insufficient cash flow to run the construction project
8 Mismanagement of cash flow (not able to differentiate between personal and company
money)
9 Difficulty in securing bank loan due to unable to comply stringent terms and condition such
as inability to get guarantor/collateral fixed
10 Late of progress payment
11 Lack of teamwork amongst parties involved which could leads to project failure
23
Nos Problems
12 Lack of communication which leads to dispute in all levels
13 Many changes of requirements and specifications during construction process lead to major
problems
14 Lack of knowledge and experience on construction leads to project failure
15 Inefficient and ineffective planning and management
16 Lack of handling workers using systematic approach leads to project failure
17 Lack of risks management
18 Difficulty to purchase construction material at competitive price lead to extra cost
19 Lack of tendering skill in tender pricing
20 Lack of networking to enhance information of project procurement
21 Too dependent on government allocated projects
22 Lack of good reputation based on the record of the previous works
23 Improper or inaccurate project estimation
24 Insufficient instruction and information in the contract specification, drawing and design
25 Certain materials are not available locally
26 Fluctuation of construction material cost affecting estimated cost of the project
27 Lack of construction materials and machineries
28 Lack of knowledge and skill on new construction technology approach
29 Lack and difficulty of getting skilled workers at an affordable wage
30 Unfavourable site conditions (bad weather/unexpected soil structure) lead to delay
31 Conflicts between contractor and other parties causing project failure
32 Lack of apprenticeship to resolve problems at trade level
33 Lack of local construction workers to form a strong and sustainable construction team
Table 2.6 shows the list of problems faced by Bumiputra contractors from 19
researches in Malaysia construction industry. If all these problems in Table 2.6 are
resolved, then logically the contractors can be considered succeed in their contracting
work (securing project or completing the awarded project). Therefore, this study used
these problems as a basis to determine success factors for Bumiputra contractors by
converting and rephrasing these problems into success factors as Chapter 4.
24
2.5 Groups for Problems
Problems faced by Bumiputra contractors which had been identified in the section
2.4 were extracted from several sources of references. The previous researchers
assigned these problems in groups according to their understanding. Thus, this
section presents names of groups related to the problems as given by the previous
researchers in Table 2.6.
Table 2.6: Various Groups of Problems
Researchers Groups No of
groups
Rosli (2004) Financial, Management, Labour/worker,
Machinery/Equipment, Materials, Safety 6
Lim (2004) Management, Financial, Building material, Manpower,
Political and Social 6
Kadir (2006) Management, Risk and Financial 3
Rahman (2009)
Problem in General Aspect, Problem in Quality Aspect,
Problem in Design Aspect, Problem in Financial Aspect,
Problem in Time Aspect
5
Othman (2010) Financing, Raw Material, Manpower, Machinery and
General or Other 5
Zaini et. al., (2010) Force Majeure, Financial, Political, Social and
Technical/Functional 5
Adam (2011) Finance, Resources, Procurement 3
Table 2.6 indicates the names of groups that being used by the previous researchers
in their studies to categorise problems. Numbers of groups vary from 3 to 6 where
some of the groups are having similar name. Based on that, this study sensibly
adopted 5 groups namely Financial group, Management group, Risk group,
Resources group and Procurement Group.
In financial group, most of the contractors are lacking in financial stability
and they will suffer once there are late receive the progress payment on time. Poor
financial control will cause the company to go bankrupt and resulting poor images to
the contractors.
Besides financial group, a good management become a responsibility of a
contractor in the construction industry. The contractor must be good in handling
people i.e. the workers, in order to get the job done smoothly. Most of the contractors
are poor in managing their financial resources like manpower, materials, plants and
equipments and etc.
89
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