Unveiling the Causes of Business Failure in Ghana's Construction Industry: An Analytical Study

This paper investigates the factors affecting the survival of construction businesses in Ghana, with recommendations for enhancing their continuous industry participation. The paper gauges contractors’ and professionals’ views on factors contributing to Ghana's construction business failure. It adopts a questionnaire survey distributed to contractors and industry professionals in Ghana. With an average response rate of eighty (80)%, the data was organised and analysed using mean scores of the identified variables. Paired samples T-test was also used to assess the significant difference between the two variables. Six common causes of business failure were identified: payment delays, excessive debt incurred, high charges on credit, working in unfamiliar localities, low profit margins and change in type/scope of work. It also emerged that the causes of business failure vary by the different financial classes of construction businesses operating in the industry. The study has practical, academic and policy implications for the survival and growth of construction businesses in Ghana. It is recommended that construction businesses should be strategic in selecting the type of work to undertake, the client group to work for, and the location to undertake projects. Government should expedite processes leading to establishing a Construction Industry Development Authority.