There are many demands from construction clients who request, among others, quality projects, timely delivery of construction projects and projects that are delivered within budget. The poor performance experienced in the construction industry has attracted the attention of researchers around the world to try and identify the immediate root cause of project delay (Akinsiku & Akinsulire 2012). For example, a study by Faridi and El-Sayegh (2006) using a questionnaire and inputs from professionals associated with the United Arab Emirates construction industry found that project delays in the United Arab Emirates are caused by delays in the preparation and approval of drawings, inadequate early planning of the project and slowness of owners’ decision-making processes. In Saudi Arabia, Assaf and Al-Hejji (2006) discovered that only 30% of construction projects were completed within the scheduled completion dates and the average time overrun was between 10% and 30%. The study was based on field survey which was conducted including 23 contractors, 19 consultants and 15 owners. In another empirical study, Lam and Wong (2009) concluded that all the parties involved in a construction project should be responsible for their respective roles at different stages, from the conceptual stage to the final. A review of these studies showed that contractors who avoid delays in their projects perform better than their counterparts who experience project delays. In spite of efforts exerted on ECs’ performance in South Africa, many suffer from time delays and cost overruns as well as dissatisfied clients (CIDB 2012). ECs are criticised for poor performance and ineffective delivery of desired goals (CIDB 2012; Mbachu & Nkado 2007). According to Thwala and Phaladi (2009), such performance is attributed to the complex and unique nature of projects awarded to ECs. In some cases, ECs are awarded dynamic projects, which require continuous change throughout development and execution processes (Haponava & Al-Jibouri 2010). The effects of project delay include loss of revenue because of slackened production and rentable space (Mukuka, Aigbavboa & Thwala 2013).

There exists a broad range of literature examining the links between the availability of skills and the performance of firms. The widely reported key manpower links that have an impact on the performance of ECs include shortages of skills and knowledge among construction workers, lack of training in the industry, low productivity and poor team relationships (Mbachu 2012). An empirical study by Carstens (2016) found that there is a distinction between skills and knowledge, with skills being the practical ability or competencies a worker gains from applying the knowledge over time in a hands-on work setting. In another study by Mbachu (2012), it was found that knowledge consists of the ideas, wisdom and information workers acquire through experience, theory and practice, the acquisition of which gives them an ability to understand. Accordingly, a skills shortage could relate to contractors’ experience and supervision which have a great impact on project delivery (Mbachu 2012; Otim et al. 2011). A review of Carstens’ (2016) and Mbanchu’s (2012) empirical studies showed that skills and knowledge could be a source of sustainable competitive advantage and lead to better organisational performance. Although emphasis is on the skills and knowledge that ensure successful project delivery, such skills and knowledge could enable the contractor to run a successful business, remain competitive and achieve sustained growth. An empirical study by Van Wyk (2011) also found that productivity is low in South Africa because skills are not developed in the construction industry nor do employment conditions show respect for people utilised. Another empirical study by Atkinson et al. (2012) found that the employment of casual labour has become the norm in the industry, along with reduced wages, working conditions, remuneration, formal skills development or training and poor quality of life.

Access to finance has been cited frequently in the literature as a critical constraint for ECs’ performance (e.g. Agwa-Ejon & Mbohwa 2015; Ali et al. 2010; Nurbani et al. 2011; Otim et al. 2011). In the empirical studies by Agwa-Ejon and Mbohwa (2015) and Thwala and Mvubu (2009), construction firms that have access to bank finances perform better than their competitors who do not have such facilities. These studies showed that funding and guarantees are not easily available from SA banks and this affects the performance of ECs. As a result, lack of access to finance disqualifies ECs from meeting guarantee and performance bond requirements leading to cash flow problems and incomplete work and liquidation. Banks are reluctant to deal with ECs unless exorbitant interest rates are paid and through compulsory management services (Thwala & Mvubu 2009). In other empirical studies by Ligthelm (2011) and Olawale and Garwe (2010), it was shown that small businesses do not have a record of accomplishment to support their bank applications. Even though a study by FinMark (2006) does not directly link access to finance with performance, this study showed 2% of ECs who could not access bank loans, and this agrees with Foxcroft et al. (2002) who confirmed that 75% of applications for bank credit by new ECs in South Africa were rejected. In line with empirical studies by Agwa-Ejon and Mbohwa (2015) and Thwala and Mvubu (2009), it can be deduced that if ECs face collateral discrimination from financial institutions and are without finance, they may not survive or grow.

Cash flow management is one critical issue linked to ECs’ performance as it creates inadequate cash situation for the business. Poor cash flow management results in inadequate working capital and undermines the sustainability of the ECs. If there is a lack of cash to support a business’s day-to-day activities, this could lead to contractors’ failure. In an empirical study by Greyling (2012), weak financial and cash flow management were found to affect ECs’ business ability to work successfully. Poor cash flow management has been cited in some empirical studies as one of the major causes of failure in small businesses (Greyling 2012). There is an agreement with Truong-Van et al. (2008), whose empirical study of the construction industry in Vietnam found that better management of receivable accounts and careful evaluation of the financial capacity of owners were meaningful factors for measuring strategic performance. This signifies the importance of developing a cash flow forecast that indicates the estimated money flowing into and out of the business over a period of time.

Critical shortage of materials in the construction industry has been cited as a major factor in cost overruns (CIDB 2012). Furthermore, while marshalling tools, materials, plant and equipment is a necessary operation, it occupies a large amount of productive working time. An empirical study conducted by Pheng and Chuan (2006) in Singapore showed that contractors who experienced materials shortage had poor performance compared to those who had material and reliable supplies. The results were achieved using a sample of at least 30 projects from both private and public sectors. This study showed that material management factors have a significant impact on labour productivity and construction efficiency. It also showed that worker time could be rendered idle or non-productive if materials and tools are not available at the right time. In many cases, materials are not stored close enough to the work area, leading to double handling. Another empirical study by Sambasivan and Soon (2007) showed that availability and reliability of materials and machinery affect the project implementation in terms of time and cost overrun. The empirical study of Enshassi et al. (2009) found that excessive waste of material during the application process translated into high production costs and that hindered the profitability and growth of the contractors. Another study by Thwala and Mvubu (2009) concluded that ECs do not have good relationships with suppliers. In a functioning relationship, the material supplier provides credit to the contractor (30–90 day term) and the contractor would pay on time. However, in South Africa, ECs are required by suppliers to pay cash upfront before taking delivery of the material. This kind of relationship exists because ECs often fail to pay on time as a result of capacity or performance constraints. Suppliers are reluctant to extend credit facility to ECs because of perceived risks caused by poor history of ECs’ failure to complete projects, systematic contractor payment processing delays, especially for construction works commissioned by the public sector and the potential for material losses because of theft, lack of appropriate storage and mismanagement by ECs.

Value to clients is a very complex and subjective issue (CIDB 2011). Quality of construction is a key component of perceived value to clients. ISO 9000: 2000 standard defines quality as the degree to which a set of inherent characteristics fulfils requirement. This definition is in line with Mallawaarachchi and Senaratne (2015) who define quality as meeting the legal, aesthetic and functional requirements of a project. In a survey conducted by CIDB (2011), it was found that there was a significant breakdown in the quality of completed construction works. The survey highlighted that lack of quality is a result of poor or non-sustainable workmanship that exists in the construction industry. This survey was undertaken largely from a client and public perspective and the results demonstrated that quality had an impact on the performance of contractors.

The preference of awarding contracts to ECs has become a subject of concern and controversy to the SA public in general. The concerns and controversy are based on public perception of the quality of work produced by ECs. However, according to Dludla (2018), contractors who produce poor quality projects would falter while those with good quality thrive. There are negative reports in South Africa that most of the infrastructure contracts awarded to ECs were abandoned and the frequent incidences of collapsed Reconstruction and Development Programme (RDP) houses have cast serious doubt on the ability and integrity of ECs. This view is supported by Brandon (2017), who noted complaints about ECs in general and personal accounts of unhappy relations with ECs as too common. Clients of many types often recount stories of how their various building projects have been fraught with difficulty and have ultimately caused financial and emotional hardship. Brandon further states that within one industry the standards according to which various participants operate are extremely varied. On one hand, there are sustainable and successful enterprises, regardless of the magnitude of projects undertaken, which are skilled, professional and conduct themselves in such a manner that leads to satisfaction on the part of clients and agents alike. According to Brandon (2017), there are innumerable unscrupulous, unskilled and opportunistic operators whose conduct is totally unacceptable.

There are legal and regulatory compliances that ECs are required to observe, which include health and safety factors and environmental factors. Emerging contractors are also required to be registered with the CIDB, a board that manages their development. However, ECs seem to be trapped in the registration process in which most of them (Grades 1–6) do not have financial means to be registered to the higher financial grades (7–9). Currently, registration is not compulsory, hence, ECs perceive the system of grading as an expensive inconvenience with no value (Greyling 2012). The Health and Safety Act (181 of 1993) provides for the health and safety of persons at work in connection with the use of plant and machinery and the protection of persons, and against hazards to health and safety. The objective of a safety programme is to eliminate losses because of poor working practices that could impact workforce well-being (Windapo & Oladapo 2012). Accidents during a project can be detrimental to the project in terms of time, cost and the reputation of the company (Chan & Chan 2004; Sidumedi 2009). In the case of accidents, work may stop in one area of the job, workers’ morale may drop and productivity may decline. The number of people who are getting injured or die in the SA construction industry has remained high (Windapo & Oladapo 2012). These accidents and fatalities have been attributed to non-compliance by contractors with health and safety regulations on construction sites (CIDB 2009; Warwick 2011). The reasons cited in the literature are that some individuals are ignorant of the law or in other cases the contractors take chances (Windapo & Oladapo 2012). However, Smallwood (2002) has attributed this to lack of knowledge and inadequate training of site workers and contractors regarding the cost of complying with regulations as an unnecessary financial burden (Windapo & Oladapo 2012). The discussion shows that ECs who do not comply with legal and regulatory factors would be affected and this would have a negative impact on business performance.

Ingram (2017) defines strategic planning as the act of creating short-term and long-term plans to guide an organisation to continue and increase its success. Even though data are far from conclusive in establishing the relationship of strategic planning and overall performance of companies, an examination of some published empirical data shows that there is a relative relationship between strategic planning and a company’s overall performance. For example, Aldehayyat and Twaissi (2011) studied strategic planning system characteristics in Jordanian small firms and examined its relationship with corporate performance. The empirical research was co-ordinated via a survey of small Jordanian firms. The key findings of this study provided empirical evidence about the involvement of top and line management in planning, the use of strategy tools and techniques. Consequently, the study found a strong positive relationship between strategic planning and company performance. Another empirical study by Jenster and Soilen (2013) examined the relationship between strategic planning and company performance in China and found that better planning had a positive effect on a number of key business performance measures. The study further established that there were differences between different planning activities and company performance. These studies have provided new empirical evidence about the value of strategic planning to company performance from the context of Middle East and China and the evidence could be utilised for the benefit of SA companies.

Despite the importance of strategic planning as confirmed by Aldehayyat and Twaissi (2011) and Jenster and Soilen (2013), ECs have been accused of being ‘strategically myopic’ and lacking the long-term vision as to where their companies are headed (Thwala & Phaladi 2009). The concern is that by neglecting strategic planning, ECs may not achieve full performance and growth potentials and survival could be placed at risk. Strategic plans are often formulated on the basis of changes that can be foreseen, which involve selecting business mission and goals, analysing business’s external competitive environment to identify opportunities and threats, analysing the internal environment to select strategies that build on the identified strengths and correct weaknesses in order to take advantage of external opportunities and counter external threats.

The determinants of ECs’ performance as identified from the literature have been presented. These determinants were used as a tool in finding the suitable setting for small businesses that could be used to predict performance. The following assumptions were made:

The interview guide had seven open-ended questions that were administered and the variables were taken from reviewed literature. The guide was structured in a manner that critical incidents would be collected. SBEs were requested to identify incidents that led to high or low performance in construction; however, as the interviews were verbal reports only, the key informants’ responses were subject to common problems of bias, poor recall and poor or inaccurate articulation.

Based on the qualitative results, a questionnaire was developed to evaluate the perceptions of SBEs at a large scale. The questionnaire comprised of six sections. In Section A, the demographic characteristics of respondents were requested and the information gathered consisted of gender, age group, ethnicity, construction experience, disability status and level of education. In Section B, data on the business profile, including location, age of business, CIDB grading, manpower size, business ownership, service provided and construction projects undertaken, were collected. Section C requested data about SBEs’ perceptions on determinants of business performance in the construction industry. Section D requested information about the perception regarding overall business performance over the previous 3 years, while Section E measured the perception on project performance. The last section, F, asked the respondents to highlight their perceptions on how to improve the performance of SA ECs. All the variables tested were found from the literature reviewed. The validity and reliability of the questionnaire were tested and the results showed that the items in the instrument were relevant for the study. The primary data were collected from the CEOs, chief financial officers, managing directors, contract directors and marketing directors as representatives of selected ECs.

As long as access to finance remains a challenge to ECs, their performance in terms of growth, profitability, job creation and economic growth, among other performance indicators, will remain weak and they would not be able to adequately plan. It is therefore important for executives to be innovative and raise finance for their businesses.

The implication on delayed payments is that projects would not be completed on time when late payments persist; hence, the efforts by government in promoting ECs would be a waste of time and energy. Therefore, clients need to guarantee adequate funding before commencement of projects.

The results show that lack of skills and restrictive labour regulations have a negative effect on the performance of ECs in terms of productivity and job creation. Thus, if skills are not improved, labour productivity would remain low, and if labour laws are not relaxed, job creation would be reduced or rather existing jobs would be lost.

The results demonstrated that SBEs place great emphasis on project implementation at the expense of organisation. They put little effort into business planning, but much into project implementation. The implication is that the growth and profitability of ECs would remain low if there were no link between projects and business activities. Emerging contractors are concentrating on project implementation because there is immediate project income to be realised. They must connect projects to business planning and through long-term business planning the sustainability of the business would be realised.

There are quality challenges that emerged, especially in the literature relating to the performance of ECs. The poor performance in quality for client, consultants and community satisfaction impacts heavily on ECs’ reputation in the industry.

Emerging contractors lack commitment to a culture that promotes commitment to comply with health and safety requirements in the construction industry. If this culture is not corrected, increased costs to the business in terms of rework, lost time, disruption, productivity loss and loss of much needed skills would be on the increase.

Small business executives need to understand the practice of strategic planning in a manner that would lead to higher ECs’ performance. In the absence of a proper and comprehensive construction plan, parties to the business cannot be informed or held accountable for the timing and duration of their planned activities.