CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND

CONTRACTOR PERFOMANCE

2.1 INTRODUCTION

In this chapter, the profile of the Zimbabwean Construction industry is presented in

order to assess its structure and performance. Factors affecting the construction

industry performance as per the literature are also reviewed in order to establish the

extent of hyper-inflation on performance. The review thus, addresses the first key

objective of this research which was to critically review literature on contractor

performance to develop an understanding of the factors influencing contractor

performance and the extent of hyper-inflation.

2.2 A PROFILE OF THE ZIMBABWEAN CONSTRUCTION INDUSTRY

The construction industry plays a significant role in contributing to the Gross Domestic

Product (GDP) of the country. The industry contributes up to 4% of the country’s GDP

representing the biggest institution of fixed capital formation (Gombera, 1998). The

construction industry therefore assumes an important role in generating wealth and

improving the quality of life of the citizens of any country.

The ZCIC constitution defines the construction industry as the industry in which

consultants, contractors, suppliers, employers and employees are associated for the

purpose of planning, estimating, designing, erecting, completing, renovating ,repairing,

maintaining, demolishing or altering any structure and/ or its constituent parts. In many

ways, the pace of economic growth of any nation can be measured by the

development of physical infrastructures, such as buildings, roads and bridges (Takim

and Akintoye, 2002).

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

2.2.1 Composition of the construction industry

Pearce 2003 viewed the construction industry in terms of size and structure as being

narrow and broad. The narrow definition focuses attention on the actual on-site

construction activities whilst the broad definition draws in the quarrying of construction

raw materials, manufacture of building materials, the sale of construction products, and

the services provided by the various associated professionals as shown in figure 2.1.

The narrow definition of the construction industry is often the mostly widely used. For

the purpose of this study the narrow definition is adopted.

Quarrying of
construction
materials

Manufacture of
Professional services: construction
‘built environment products, materials,
design’ management and assemblies
THE BUILT
and surveying ENVIRONMENT

Sale of construction
On-site assembly products, materials,
by non-contractors On site assembly:
(buildings and and assemblies
infrastructure
(contractors

Figure 2.1: The Composition of the construction industry

Source: adopted from the Pearce Report 2003

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

2.2.2 The Zimbabwean Construction Industry Structure

The Zimbabwean government has implemented dynamic and rigorous policies within

the construction industry stretching back from the post-independence era (1980), when

a new majority government got into power meant to foster maximum economic growth.

The Zimbabwean construction industry holds a pivotal role in the nation's economy. It

represents the biggest institution of fixed capital and is closely linked to building and

allied industries such as cement, glass, steel, timber, asbestos, bricks and many others

(Gombera and Okoroh, 1998). Figure 2.2 depicts the structure of the construction

industry in Zimbabwe.

Ministry of Finance

Government Government Tender Board Parastatals

Ministries

Ministry of Public Construction and

Contractors National Housing Consultants

ZBCA
Zimbabwe Construction Industry ZILP & S
Council
CIFOZ IQSZ
Joint Practice Committee (JCP)
ZACE
AIZ
Trade Unions
Key Notes
AIZ -Architects’ Institute of Zimbabwe
CIFOZ -Construction Industry Federation of Zimbabwe
IQSZ -Institute of Quantity Surveyors Zimbabwe
ZACE -Zimbabwe Association of Consulting Engineers
ZBCA -Zimbabwe Building Contractors Association
ZILP & S-Zimbabwe Institute of Land Planners and Surveyors working relationships
Figure 2.2 structure of the Zimbabwean construction industry adopted from
Gombera and Okoroh (1998)

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

Table 2.1-CIFOZ and ZBCA membership

CIFOZ MEMBERSHIP ZBCA MEMBERSHIP

General Contractors, Building and Civil Engineering Contractors

Category Number Category Number

A 50 A 42
B 13 B 19
C 16 C 25
D 11 D 25
E 11 E 17

Totals 101 128

Source: CIFOZ and ZBCA secretariat membership lists as at April 2008

The formation of ZBCA was meant to accommodate the indigenous construction

companies who were not able to compete with CIFOZ members. ZBCA members

lobbied the government which came up with the affirmative action policy giving these

contractors a 10% advantage over CIFOZ members who largely are foreign owned

construction companies. These associations are affiliated to the Zimbabwe

Construction Industry council (ZCIC) together with all professional bodies in the

construction industry. In order to regulate the construction industry, efforts were made

to enact the representative body by an Act of Parliament. This development will enable

the construction industry to be properly regulated and bring about reforms in the

construction industry. The proposal is awaiting parliament consent at the time of this

research.

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

2.2.3 The Nature of the Construction Industry

The construction industry’s ability to deliver is influenced by the unique nature of the

industry. Cox and Goodman in Dubois and Gadde (2002) state that”The physical

substance of a house is a pile of materials assembled from widely scattered sources.

They undergo different kinds and degrees of processing in large numbers of places,

require many types of handling over periods that vary greatly in length, and use the

services of a multitude of people organised into different sorts of business entity”.

These characteristics were succinctly summarised by Ankrah (2007) as follows:

 products have to be delivered at the client’s premises;

 products tend to be physically large & expensive;

 production is exposed to the elements;

 usually there are no prototype models or precedents;

 design is separated from construction;

 there is fragmentation and extensive specialisation;

 there is risk and uncertainty;

 price determination is typically based on a system of bidding; and

 labour is often recruited casually.

The nature of the industry means that the participants on a given project are many and

varied all drawn from different disciplines. The risk and uncertainty associated with this

method of production and price determination also means that margins are thin,

uncertain and easily eroded. An individual project often represents a large proportion of

the turnover of a participant in any year as a result there is inevitably mistrust among

the participants because everyone is struggling to avoid making a loss hence

relationships are often adversarial (Ankrah, 2007).

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

2.3 FACTORS INFLUENCING CONTRACTOR PERFORMANCE

Having analysed the structure of the construction industry, it is apparent that the

performance of contractors is a key determinant for translating the client’s

requirements into a finished product. Xiao and Proverbs, (2003) defined overall

contractor performance as embracing construction cost, construction time, construction

quality and sustainable development of contractors. The philosophy being that the

achievement of one aspect of performance should not be at the expense of another.

Contractor performance is an area of concern in the construction industry world over.

Literature has revealed several papers written on research conducted on contractor

performance among which is one done by Ankrah, (2007) who summarised the factors

influencing contractor performance after studying literature from various writers. He

classified these factors into project-related, organisational, external and industry factors

as shown in table 2.3. Several writers in the past have written on the factors affecting

time, cost, quality and contractor profitability from different perspectives including Chan

and Kumaraswamy, (1996, 1997), Assaf and Al-Hejji (2006), Xiao and Proverbs

(2002a, 2002b), Akintoye and Skitmore, (1991), Kaming et al 1997, Nkado, 1994

among others. In order to evaluate and understand the causes of poor performance;

these factors must be clearly understood and investigated so as to appreciate their

impact on performance outcomes.

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 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

Project Assessed Cost, quality,

performance in terms of time etc

Influence

Project-related factors: Organizational Industry factors: External Factors

Project characteristics factors: Standards Economic
Contracts Firm Permits and environment
Variations characteristics regulations Physical
Design Capacity Industrial environment
Site Conditions Experience relations Legislative
Architect Past performance environment
Client Finance Political
Team-related issues Personnel environment
Procurement route Skills and Social
Process-related issues capability environment
Construction methods Plant and Technological
Supervision equipment progress
Skills and capability Health and safety
Accidents Quality
Weather Specific company
Personnel programmes
Location

Figure 2.3 Factors influencing contractor performance

Source: Ankrah 2007 An investigation into the impact of culture on construction

project performance

2.4 PROCUREMENT METHODS IN ZIMBABWE

In order to satisfy the third objective, it is imperative to examine the procurement routes

and contractual arrangements in Zimbabwe. These have a strong bearing on

contractor performance in that they effectively determine whether the project will meet

its intended objectives of time, cost, and quality performance at a reasonable profit for

the contractor.

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

According to the JCT contract practice note (2008), procurement is a generic term

embracing all those activities undertaken by a client seeking to bring about the

construction or refurbishment of a building. Procurement is initiated by devising a

project strategy, which entails weighing up the benefits, risks and financial constraints

which attend the project and which eventually will be reflected in the choice of

contractual arrangements. In every project the concerns of the client will focus on time,

cost, and performance or quality, in relation both to design and to construction of the

building.

Gombera and Okoroh (1998) identified the most popular procurement strategies

utilised in Zimbabwe to be the traditional (conventional), integrated System (design and

build), construction management, private finance initiative (PFI) and labour-based

methods. However, in reality, the conventional/traditional route is the most frequently

used. The traditional approach has been frequently criticised for its adversarial nature.

To quote from Coggan’s report, (2001): “the use of traditional forms of contract have

frequently led to confrontation between client, consultant and contractor where due, to

many reasons, projects have incurred serious cost overruns and delays”.

The other procurement routes namely construction management, management

contracting and Design and build have been sparsely used by private clients in

Zimbabwe. Design and build has been used for housing developments by central

government agencies or corporations such as the National Security Authority (NASA),

a workers' society for national benefits while the other routes were used by African Sun

hotels and Mimosa Mining

Nilson Biton
 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

2.5 CONTRACTUAL ARRANGEMENTS

According to Will Hughes(2008), contractual relationships in the UK construction

industry are widely held to be the major cause of inefficiency and of customer

dissatisfaction. The same applies to the Zimbabwean construction industry. The

contracting strategy adopted by clients in their quest to procure the services of a

contractor has a bearing on the degree of risk the contractor can take in. Generally, the

contract document allocates risks between parties in an attempt to control the

consequence of risky events.

The form and clarity of contracts, the quality of documentation, and the method of

payment significantly impacts on contractor performance. At their best, current

standard-form contracts provide a range of contracts that generally deal with most

construction situations (Will Hughes, 2008). However as pointed our by Latham,1994

that endlessly refining existing conditions of contract will not solve adversarial problems

but a set of basic principles is required on which modern contracts can be based. Good

standard-form contracts, therefore, are not available.

In order to deal with the inadequacy of the building contract, ZCIC introduced the

National Joint Practice Committee (NJPC 2000) so as to cater for the inflationary

environment. This standard form of contract in many ways reflects the JCT standard

form of contract in the UK. Although inadequate, the recent form of contract has seen

revisions dealing particularly with how contractors can recoup their costs in the current

inflationary environment.

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 CHAPTER 2: THE ZIMBABWEAN CONSTRUCTION INDUSTRY AND
CONTRACTOR PERFOMANCE

Payment clauses in construction contracts remain a problem as contractors are

exposed particularly under these forms of contract. For example, clause 22 of the

building contract gives the Architect seven (7) days within which to produce a

certificate once the contractor submits an application for payment. The client has

fourteen (14) days within which to release payment. This invariably means that the

contractors’ payment will be made after 21 days. The contractor recovers money

injected in the project after 40 days and surely under the current hyperinflationary

environment, the contractor’s performance is hindered.

Will Hughes, 2008 points that the purpose of a written contract is to record accurately

the terms of a business agreement. This always involves two opposing tensions: first,

there is a need for contracts to be fair and flexible and second, they need to be

unequivocal. Unfortunately, these two requirements are irreconcilable. For example,

apart from the long time frame to pay amounts due to the contractor, part of clause 22

(a) states that in the event of the Employer failing to pay within the period named he

shall be liable to the contractor for any legitimate claim subsequently submitted by the

Contractor (Agreement and Schedule of conditions of building contract 1990 Edition).

Clearly this state of affairs is not workable and contractors are under immense

pressure as they are unable to fully recover their lost value. Outstanding debts in

Zimbabwe are subject to the induplum rule which states that a creditor can claim

interest only to the value of the debt. With the government conditions of contract

governing public sector work, the prescribed rate of interest of 30% is used in these

circumstances.

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