PARTICIPATION OF LOCAL CONTRACTORS IN MAJOR INFRASTRUCTURE PROJECTS AND CHALLENGES THEY EXPERIENCE IN THE MANAGEMENT OF WORKING CAPITAL (A CASE STUDY OF NCA 1 CONTRACTORS)

ABSTRACT
The construction industry remains one of the main contributors to the Gross Domestic Product (GDP) of the Kenyan economy. It has recorded substantial growth over the years thereby promoting infrastructural development since independence. However, despite recording such growth, the performance of local construction contractors has been a major concern in the industry as major infrastructural projects are still dominated by foreign firms. The low level of participation of local contractors in infrastructural projects has been attributed to, amongst numerous factors, poor management of working capital thus leading to unsuccessful completion of construction projects. For this reason, the growth and development of local contractors has stagnated while others have ended up bankrupt and ultimately exiting the construction industry.
The study aimed at establishing the level of participation of local contractors in major infrastructural projects, identifying the major factors hindering local contractors from managing working capital and assessing the extent to which these factors affect the management of working capital. To realize the objectives of this study, questionnaires were administered to local roads and water works contractors registered under NCA 1 within a sampled population in Nairobi County. The presentation of data was done using pie charts, bar graphs and tables.
The research findings indicated that local contractors recorded a low level of participation in major infrastructural projects. The factors hindering local contractors from effectively managing working capital included the following: undercapitalization, diversion of funds to uses other than the project, retention money, economic recession, poor project planning and control, limited knowledge on the importance of working capital management, sole proprietorship business setbacks, delays in interim payment and settlement of claims and inflation. The study found that poor project planning and control ranked as the most severe problem hindering the management of working capital while diversion of funds ranked the least severe.
The study recommended that local contractors should put more focus on ensuring that good project planning techniques are employed during the implementation of construction projects. Local contractors should also take necessary steps in improving their knowledge on the importance of effective working capital management. It also proposed that the government set up
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institutions that offer credit facilities to local contractors at subsidized rates to enhance their growth and development.

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