UNIVERSITY OF M O R A T U W A 
017 
P R O B L E M S F A C E D 
B Y 
S M A L L SCALE C O N T R A C T O R S 
BY 
ENG. A. P. R. DE SILVA 
SUPERVISED BY 
J A Y A W A R D A N E 
l?3 UNIVERSITY OF M O R A T U W A 
THESES & DISSERTATIONS 
irci /vrmvii^ i wi CIVIL ENGINEERING 
6 9 > 9 3 - UNIVERSITY OF MORATUWA, 
69.003.2 MORATUWA, SRI LANKA. 
UNIVERSITY OF MORATUWA 
PROBLEMS FACED 
BY 
SMALL SCALE CONTRACTORS 
ENG. A. P. R. DE SILVA 
) 
SUPERVISED BY 
bo^ l-S 
DR. A . K. W . J A Y A W A R D A N E 
G a l l . 
DEPARTMENT OF CIVIL ENGINEERING 
UNIVERSITY OF MORATUWA, 
MORATUWA, SRI LANKA. 
60915 
C O N S T R U C T I O N ft STRUCTURAL 
ENGINEERING * l 
MPARTMEMT OF CIVIL ENGINEER,** 
UNIVERS.TY OF MORATUWA 
PROBLEMS FACED BY 
SMALL SCALE CONTRACTORS 
BY 
ENG. A. P. RANJITH DE SILVA 
THE THESIS SUBMITTED IN PARTIAL FULFILMENT 
OF 
THE REQUIREMENT FOR THE DEGREE OF 
MASTER OF ENGINEERING 
IN 
THE F A C U L T Y OF ENGINEERING 
DEPARTMENT OF CIVIL ENGINEERING 
SUPERVISED BY DR. A. K. W . J A Y A W A R D A N E 
W e accept this thesis as conforming to the required standard 
University of Moratuwa 
November 1993 
A C K N O W L E D G E M E N T S 
I would like to take this opportunity to pay my gratitude to Eng.(Dr . ) A . K . W . 
Jayawardane, Senior Lecturer, Department of Civil Engineering for his 
valuable guidance and coorperation throughout the project. I would also like 
to express my sincere thanks to Eng. G . G . M . Wijetilake, Deputy Director 
(Development), I C T A D for his active support by providing necessary 
information. 
It is my duty to remember with gratitude the Course Director Prof. S .R.De S. 
Chandrkeerthi and his academic staff for their valuable contributions given to 
complete Masters Degree programme successfully. 
I must thank all contractors, consultants and other experts for their valuable 
contributions extended to me through questionnaires, interviews and 
discussions which enabled me to make this project a success. 
Finally, I would also like to extend my gratitude to Eng.(Mrs.) Anoma Pannala 
for her help in typing this report within a short period of time. 
A . P. R. de Silva 
Department of Civil Engineering, 
University of Moratuwa. 
Katubedda, Moratuwa, 
Sri Lanka. 
November 1993. 
Summary 
As in other developing countries construction industry in Sri-Lanka is weak. 
Although there are large number of small contractors throughout the country, 
their plight is not satisfactory compared to other grades. Though there are 
criticisms against them such as poor quality, failure to meet completion dates 
etc. there are several difficulties faced by the small scale contractors. 
Under this environment Department of Civil Engineering, University of 
Moratuwa felt the need of carrying out this type of survey to identify the real 
problems and make recommendations to solve their problems by relevant 
parties. Very recently even the I C T A D and A C C S L have identified the 
necessity of such a survey inorder to improve the plight of small scale 
contractors. They have organised some interviews with Road Maintenance 
Contractors and workshops for small scale contractors in few provinces up to 
now. 
Based on these work, author has done a comprehensive survey on small scale 
contractors involved in building industry. Contractors' views on problems they 
face were investigated under major areas such as Technical and Managerial; 
Financial; Construction plant, equipment and vehicles; Basic materials; 
Contract Administration; and finally the Social Aspect. This was done mainly 
through a detailed questionnaire survey supplemented by interviews and 
discussions. Contractors' views on reasons for such problems, their 
suggestions for improvements and support they need from outside parties such 
as I C T A D , A C C S L , CHPB, Govrnment policy making bodies etc. were also 
considered. 
In order to get the real picture, other parties such as clients, consultants, 
experts dealing with the small scale contractors were also interviewed and 
their ideas were incorporated. 
It was found that the most critical problem that the small scale contractors have 
is the payment delays by the client due to various reasons. Other important 
problems are inadequate work throughout the year, difficulties in obtaining 
bonds, guarantees and loans, and non-availability of building materials and 
increasing prices. 
Finally the recommendations were developed based on the questionnaire 
survey, interviews with selected contractors, clients, consultants and experts 
in this field. 
It must be pointed out that the development assistance to small scale 
contractors, and the resulting benefits entirely depends on the success of 
implementation of results of this type of surveys. 
LIST OF T A B L E S 
Table 4.1 - Details of the number of questionnaires posted and responded 
Table 5.1 - Details of management and supervisory staff 
Table 5.2 - Difficulties in recruiting and retaining necessary staff 
Table 5.3 - Contractors suggestion to improve the staff performance 
Table 5.4 - Difficulties in implementing above suggestions given in Table 
5.3 
Table 5.5 - Technical assistance/training expected from Government, 
I C T A D , IESL and A C C S L 
Table 5.6 - Difficulties in understanding technical matters 
Table 5.7 - Problems face when dealing with client/consultant 
Table 5.8 - Types of advances received 
Table 5.9 - Capability of obtaining bonds, guarantees, bank loans and 
overdrafts etc. 
Table 5.10 - Relative ability to provide collateral or guarantees 
Table 5.11 - Reasons for payment delays 
Table 5.12 - Difficulties due to payment delays 
Table 5.13 - Contactors' suggestions to reduce or eliminate delays 
Table 5.14 - Sufficiency of working capital to execute the project without 
interruption due to financial problems 
Table 5.15.- Details of acquiring plant/equipment/vehicles 
Table 5.16 - Preferred mode of acquiring plant/equipment/vehicles 
Table 5.17 - Difficulties in acquiring plant/equipment/vehicles 
Table 5.18 - Constraints encountered in procuring basic materials or 
components 
Table 5.19 - Materials on credit facility from client/supplier 
Table 5.20 - Assistance expected for material purchase from client /supplier 
/Government 
Table 5.21 - Cost variation payments 
Table 5.22 - Material for which cost variation is paid 
- IV -
Table 5.23 - Contractors opinion on the ability to overcome those problems 
mentioned above 
Table 5.24 - Methods of obtaining contracts and preference 
Table 5.25 - Contractors views over I C T A D grading system 
Table 5.26 - Contractors ability to understand contractual matters 
Table 5.27 - Availability of work throughout the year 
Table 5.28 - Parties involved in preparing and submitting claims 
Table 5.29 - Status of control of contractor on contract administration 
Table 5.30 - Contractors' views on distribution of work among them in 
construction industry 
- v -
C O N T E N T S 
Page 
Acknowledgements i 
Summary ii 
List of tables iv 
Abbreviations viii 
Chapter 1 -Introduction 1 
1.1 Background 1 
1.2 Objectives 1 
1.3 Methodology 2 
Chapter 2 -Role of small scale contractors 3 
2.1 As income generators 3 
2.1 As employment generators 3 
2.3 As sub-contractors 4 
Chapter 3 -Development of investigation programme 5 
3.1 Introduction 5 
3.2 Scope of the study 5 
3.3 Formulation of the questionnaire 5 
3.4 Identification of target group 6 
3.5 Interviews and discussions 7 
3.6 Literature survey 7 
3.7 Summary 8 
- vi -
Chapter 4 -Data collection 
4.1 Questionnaire survey 
4.2 Interviews and discussions 
4.3 Information from literature survey 
Chapter 5 -Data analysis 
5.1 Introduction 
5.2 Objectives of data analysis 
5.3 Analysis of survey data 
5.4 Discussion 
5.5 Summary 
Chapter 6 -Conclusions, Recommendations and Further work 
6.1 Introduction 
6.2 Conclusions 
6.3 Recommendations 
6.4 Further work 
References 
Appendices 
Appendix A - Questionnaire 
Page 
9 
9 
10 
11 
12 
12 
12 
12 
54 
59 
60 
60 
61 
64 
67 
68 
69 
- vii -
List of Abbreviations 
A C C S L -Association of Construction Contractors of Sri Lanka 
I C T A D -Institute for Construction Training and development 
C H P B -Centre for Housing Planning and Building 
EA -Engineering Assistant 
T O -Technical Officer 
T A -Technical Assistant 
IESL -Institution of Engineers, Sri Lanka 
M E C A -Mahaweli Engineering and Construction Agency 
CECB -Central Engineering and Consultancy Bureau 
SEC -State Engineering Corporation 
B M C -Building Materials Corporation 
I L O -International Labour Organisation 
R M C -Road Maintenance Contractor 
- viii -