Causes And Effects Of Late Payment And Its Minimization Method In Oromia Public Building Projects

Abstract

Late payment problem is a serious issue worsening the construction industry at large. It affects the time, cost, and quality of a construction project, which ultimately causing dispute, arbitration or litigation, total abandonment and liquidation of a construction firm anywhere in the supply chain. Therefore, this study was conducted with the aim to investigate the causes of late payment and its subsequent effects and also seeking the methods for minimization in public building projects in Oromia region. Accordingly, questionnaire survey together with interview of senior professionals was used to collect the data. The total population for the research was public building projects in Oromia regional level constructed from 2004 to 2008 EC. The respondent groups were the major stakeholders in the project such as; Contractors, consultants and public Employers corresponding to the selected buildings. Hence, the research finding revealed that among all the identified causes examined; Employer related causes become the top serious for late payment to happen. The study also revealed that the effect of late payment is more severe on contractor than other stakeholders of the project. Finally, in order to avoid or minimize the late payment Provision of well defined clauses in the contract related to managing time of payment and introducing construction payment security act/Legislation were found to be the two top methods recognized in this study.