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Assessment Of The Survival Practices Of Quantity Surveying Firms In A Recessed Economy
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CHAPTER ONE
INTRODUCTION
1.1 Background to the study
The construction industry plays an important role in a nation’s economy and its activities are also vital to the achievement of national socio-economic development goals of providing shelter, infrastructure and employment. According to Aibinu and Jagboro (2002) the construction industry continues to occupy an important position in the nation’s economy even though it contributes less than the manufacturing or other service industries. Ayodele and Alabi (2011) opined that a healthy economy usually experiences an increase in construction activities. Saka and Lowe (2010) stated that the importance of construction to economic growth and development can never be overstressed as construction makes significant contribution to the GDP, capital formation and employment etc. The construction industry as a whole has a significant relationship to the economy, in that a change in economic output of an economy can result in a proportionate change in demand and, as a result, a change in the output of the construction industry (Richardson, Nwankwo, and Richardson (2003). The follow-on effect of this change is that firms within the industry have to dramatically adapt to the changing economic climate (Green, Larsen, and Kao, 2008).
Research have shown that employees in the construction industry form a very large workforce constituting one-half of the gross capital, and three to eight percent of the gross domestic product (GDP) in most countries (Arditi and Mokhtar, 2000; Mee-Edowe and Andawei, 2000). The construction industry is responsible for employing approximately 20% of the Nigeria’s workforce, making it perhaps the largest employer of construction labor in Africa (National Bureau of Statistics, 2006). The industry accounts for about 69% of the nations fixed capital formation which implies that 70% of the net capital investment in the country goes into the construction industry (Business Monitor International (BMI), 2007). The National Bureau of Statistics (NBS) (2014) presentation of preliminary results of the rebased nominal gross domestic product (GDP) estimates for Nigeria 2010 to 2013 reported that the NCI records an average of 3.4% contribution to the GDP within the considered years. This contribution though small yet exerts both direct and indirect impact on the national economy as it stimulates the growth of other sectors through a complex system of linkages (Alabi, 2010).
Nigeria is one of the largest African countries but sadly have been facing decline in economic output. This economic recession has led to so many construction companies adopting several survival practices in order to remain in business. According Musso and Schiavo (2007) to survival practice of any construction company is defined as their ability to run or manage a small business with little resources to keep track of nation and regional, economic indicators that might affect the construction industry and the companies’ operations. This is in line to the findings of Geroski, Mata, and Portugal (2003) which states that for a conation firm to survive in a recessed economy, they must be aggressive and imaginative in operations. this means that the company should innovate ideas to gain market share by taking it away from competitors unable to adjust to shifting market conditions, maintain a strong cash stream throughout the downturn, in contrast to other construction companies that may have liquidity problems, become a leaner, more effective and more efficient operation, better positioned to do well when the market improves. With this constrain, Madhoushi and Ghaedi (2013) was of the opinion that construction firms who survive and even prosper during hard times most be able to look beyond the present to overcome the constraint of tradition to see the firm from a new perspective and to do business differently.
CHAPTER ONE -- [Total Page(s) 4]
Page 1 of 4
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