Having studied extensively the construction companies in Africa,I would make the following observations as the top 5 reasons why construction companies in Africa fail.
1) Inadequate accounting
Just like any business construction companies need accountability that adhere to specific countries regulations ranging from providing monthly financial statements on the percentage of completion method. Most importantly, accounting information should be timely, accurate, readily available and constantly monitored.
2) Estimating issues
Contractors should have an established protocol for estimating. Using cloud-based software helps organize this information. Management should carefully evaluate bids, and quotes should be included from several suppliers. Once any contract is awarded, actual costs need to be carefully matched with projected costs to maintain profitability.
3) Lacking good insurance
Being a high-risk industry by nature, things tend to go wrong in construction. Having the right insurance can make or break a construction project. Insurance types ranging from liability to builder’s risk to flood insurance should be considered and carefully evaluated before any project begins.
4) Work environment issues
Anything poor site conditions caused by outstanding issues, weather, or natural disasters can occur on a project. While some of these forces cannot be controlled, they can quickly become a big problem without any notice. Having proper insurance can prevent some of these issues, and site conditions should be evaluated during the bidding process. Overlooking potential issues leads to higher costs and more risk.
5) Shortage of skilled workers
Having a trusted and skilled team is a requirement for successful construction projects. Most companies would prefer to use only workers they trust who they have had a previous relationship with, but this becomes difficult when expansion is required. Finding skilled workers is a challenge, and can be even harder in remote or new project locations.
