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Contractor Financial Capability Assessments

Ng, Thomas S. & Skitmore, Martin (1999) Contractor Financial Capability Assessments. The Australian Institute of Building Papers, 9, pp. 75-87.

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Abstract

The insolvency rate of construction companies is much higher than that of other types of companies. In order to survive, many contractors may try to submit suicidally low bids and/or obtain work that is beyond their financial capability. The employment of financially incapable contractors not only affects the success of projects, but may also result in unrecoverable second order costs once they become insolvent. It is necessary therefore for clients to have a contractor's financial position assessed before appointment. In this paper, the various methods available for assessing contractor's financial capabilities are identified and described. The potential for methodological nomism is also examined empirically but no one best method was found. The paper concludes with a proposal for a new approach that combines both the objective and subjective aspects into a single, reliable and yet practical assessment method to satisfy the clients needs and requirements.

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ID Code: 4431
Item Type: Journal Article
Additional Information: Access to the author-version is currently restricted pending permission from the publisher. For more information, please refer to the journal’s website (see link) or contact the author. Author contact details: rm.skitmore@qut.edu.au
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Keywords: Financial assessment, contractor pre, selection, prequalification
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Quantity Surveying (120203)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 1999 Australian Institute of Building
Deposited On: 09 Jun 2006
Last Modified: 09 Jun 2010 22:32

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