Critical Causes and Effects of Payment Delays in the Execution of Public Construction Projects in Ghana: Fresh Evidence from the Brong-Ahafo Region

Abstract

The execution of public projects is an indispensable recipe for socio-economic development in any country. However, the successful execution and implementation of public projects in Ghana has been hampered by payment delays. In the contrary little is known about the critical causes and effects of payment delays in the execution of public projects in Ghana. It is against this background the study was conducted to identify and rank the critical causes and effects of payment delay and to be able propose mechanisms and strategies for mitigating its pervasive. The study employed a case study sample survey as a research design within a quantitative research methodological paradigm to investigate the research problem. The random and purposive sampling techniques were employed to select 30 contractors, 10 consultants/experts and 10 clients.  The study therefore identified and ranked 10 causes and 13 effects of payment delays. It was realized that 8 out of the 10 causes of payment delays were considered critical because they all had mean score above the conventional mean 3.5 at 95% confidence on a five-point Likert scale with the top five critical causes of payment delay being; delay in certification (ranked no.1), poor financial management (ranked no.2), with holding of payment by clients (ranked no.3), ambiguous contractual provision (ranked no.4) and conflict among the parties (ranked no.5).   It was also revealed that 11 out of the 13 effects identified including the top five consequences of payment delays included; leads to abandonment of projects (ranked no.1), results in cost overrun (ranked no.2), results in delay in completion of the projects (ranked no.3), leads to bankruptcy/liquidation (ranked no.4)  and results in time overrun (ranked no.5) were considered critical. Based on the findings the study recommended that payment delay could be minimized if Proper payment schedules are been agreed by all the parties before the commencement of the project accompanied by regular communication between parties and prior anticipation cost overrun and time overrun in clear contractual provision.

Keywords: critical causes, effects of payment delays, execution of public projects, fresh evidence, Ghana