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Elements of Success and Failure of SMEs in Construction

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The industry has been noted to have an annual growth rate of up to 8.7% in most developed countries, including the United Kingdom (UK) (Slack, 2009). The industry actually prides itself as an economic contributor, which also builds other industries. Significantly though, the rate of growth of the industry, which accounts for its important role in world economy and for that matter the economy of UK, cannot be pointed to a few multinational and international companies alone. This is because Ahadzie, Proverbs and Olomolaiye (2008) debated in a study that the rate at which small and medium scale enterprises (SME) are springing up among the construction industry is largely attributable to the collective success and growth of the industry.

Meanwhile, the same source lamented that regardless of their contribution to their parent industry, it is most of these SMEs in construction that have faced the worse forms of business growth. Giving background to the activities of SMEs in construction, Akinsola, Potts and Harris (2007) mentioned that most SMEs are formed as a result of the contributing efforts of contractors in the industry, who put their resources together with the aim of consolidating their value.

This is because in most of the cases, it is very difficult for individual contractors to be competitive in the bidding for contracts due to lack of consolidated value. Formation of SMEs has therefore been seen as a lucrative way of becoming both appealing to project sponsors, and competitive against existing and known companies. Once contractors put their resources together in the formation of SMEs, they are known to minimise cost, especially in terms of production (Baccarini, 2009).

This way, it is easier for them to make profits by minimising expenditure while increasing income. Even though this may be seen as a laudable idea, there continues to be studies and works of research that suggest that it is not always about success for these SMEs, especially when the comes to competition in developed business localities and centres (Slack, 2009). For most of these SMEs, their original ideas have been to maximise their value so as to become competitive but issues with the compromise with quality as a means of making undue profits continue to be suspected against them.

It can therefore be stated in an emphatic manner that the formation of SMEs in construction is not an end in itself but a means to an end, which depends so much on the inputs that owners and

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