Study of Small Contractors’ Operational and Financial Risks: Case Study of Government Building Construction in the Central Region

Case Study of Government Building Construction in the Central Region

Abstract

This research is a study of operational and financial risks experienced by small-sized contractors which mainly focus on government building construction projects in the central region of Thailand. To identify these risks, this research evaluated the probability and impact of events that could have negative operational and financial impacts on the contractors and projects based on electronic survey forms. The sample group were 27 representatives ,which is a limitation of this research, consisting of construction project managers, board of directors or managing partners, and project engineers, from different small contractors. Based on the collected data, the five highest financial risks were identified and used in the further analysis to quantitatively evaluate the impacts of these risks on the contractors’ profitability. The results showed that there were totally 76 risks composed of 54 operational risks and 22 financial risks. The five highest financial risks were price increasing of construction materials, price increasing of fuel, price increasing of labor, late installment payments from Government agencies, and using out-of-date price information to estimate prices, respectively. The financial risks that had the greatest impact on the contractors’ profitability were price increasing of construction materials and price increasing of fuel, price increasing of labor, respectively.