ISSN: 2277-3754 ISO 9001:2008 Certified International Journal of Engineering and Innovative Technology (IJEIT) Volume 2, Issue 11, May 2013 90 Abstract— Insolvency maybe broadly defined as an inability of business entity to meet pending financial commitments. For a construction firm, such a situation creates conditions whereby a business entity is unable to fulfill its contractual obligations with regard to work in progress or credit owing. There are indications to suggest that during times of adverse conditions, the occurrences of insolvencies are mutually exclusive and remain a subject of debate. The occurrences of these financial facilities seem to have adversely affected business operations within the civil engineering construction Industry. in South Africa, figures released by the South African Federation of Civil Engineering Contractors (SAFCEC) in 1992 were suggesting an expected general decline in work load handling by this sector. This was a result of scaling down of heavy Infrastructure projects because of government shifting focus to housing and other related projects mainly towards meeting the needs of the previously disadvantaged communities. During that period large contractors suffered financially and some went through insolvency. The South African government had also put emphasis to transform the sector to allow participation of emerging and small contractors but this was not properly regulated as most of these contractors did not have the experience and skills to operate sustainable construction firms. The Construction Industry Development Board (CIDB) was established in 2000 as a statutory body to provide leadership to stakeholders and to stimulate sustainable growth, reform and improvement of the construction sector for effective delivery and the industry’s enhanced role in the country’s economy. Construction Industry Development Board (CIDB’s) regulations were implemented after 2003 and are continuously improving the sector’s growth. This research seeks to evaluate the findings of an investigation regarding challenges facing Civil Engineering Contractors in KwaZulu- Natal, South Africa. The research reports on the basis of the hypothesis that “the prominent factors associated with civil engineering contractor’s insolvencies are related to operational and strategic issues”. The analysis of the findings from the questionnaires and liquidators reports supports the hypothesis that operational management and strategic factors attribute to high failure rate amongst civil engineering contractors. From the findings, a number of recommendations are made to develop strategies to promote growth and sustainability in the civil construction industry especially amongst emerging contractors. This paper focuses on the questionnaire feedback from construction firm owners and will discuss the findings of the survey. I. INTRODUCTION Two forms of insolvency exist as recognized by law, namely commercial and factual insolvency. Commercial insolvency occurs where a business entity is unable to service its debts even though its assets may exceed its liabilities, whereas factual insolvency is where a firm’s liabilities exceed its assets. The terms bankruptcy and insolvency are often deemed to be interchangeable, although they may represent the same situation, their application differs. Reference [1] refers to bankruptcy as a term pertaining to individuals, whereas insolvency is a broader term incorporating liquidation, receiverships and administration of the company by bankers, or others with a financial stake. Liquidation is referred to also as winding up and involves a process whereby the life of the company is brought to an end when it is unable to pay its debts. Receivership involves an appointment of a receiver liquidator whose main role is to protect the assets of the insolvent company, on behalf of the secured creditors [2]. Incumbent upon his or her appointment, the liquidator may continue running the affairs of the insolvent firm for a while to sell off its assets or streamline its operations for it to be profitable again and sell the company as a going concern. However, given the uncertainty of recovery from loss by the firm, the process of winding up the firm usually follows. The process of winding up can be decreed by the courts of law or may be voluntarily initiated by the members of the firm or creditors [3]. II. LITERATURE REVIEW During the early 1990’s in South Africa, there was a general decline in workload handled by the construction sector. This was as a result of the scale down of heavy infrastructure projects because of the government shifting focus to housing and other related projects mainly towards meeting the needs of the previously disadvantaged communities. This trend was confirmed by [4] in the Western Cape Province where the value of tenders awarded dropped from R 518 million (1994) to R120 million (1995) during the January to May period. In October 1995, three well-established civil engineering contractors in Western Cape went insolvent. In the survey and studies conducted by [5]; [6], insolvency causal factors associated with insolvencies in general construction firms were identified. These factors could be broadly classified into categories of operational management, environmental, strategic, personal, cost overruns and technological factors. Economic factors are worth to note, but may be perceived as being external to firms operations, failure by firms to recognize that their efforts may lead to the termination of a firm’s operations. [7]–[10] identified that the construction industry has distinct Capacity Challenges Facing Civil Engineering Contractors in Kwazulu - Natal, South Africa Bonga Ntuli, Prof Dhiren Allopi Royal HaskoningDHV, South Africa, Department of Civil Engineering & Surveying, Durban University of Technology, South Africa