Investigation of Factors Affecting Termination of Construction Contracts in Gaza Strip

Abstract

Construction contracts are one of the high risky contracts because of its unique features such as long period, complicated processes, unexpected environment, financial intensity and dynamic organization structures. The major objective of this research was to identify and investigate the factors affecting the construction contracts termination in the Gaza Strip. Also, to check the current situation for construction contracts termination inGazafrom contractor 's respective. This research relied mainly on analytical, descriptive and field study methodologies. And the questionnaire was designed in the light of the literature review and tested by pilot study, and then it is applied on a sample of 73 contracting companies. The collected data is manipulated by Excel and SPSS software using many statistical tools such as, frequencies, percentile values, means and coloration coefficient tests. The results show that most companies have an experience over than ten years exposed to contract termination, which was referred to donors. Most of their employees were satisfied about the administrative level of their companies and directors have the final decision especially to regarding financial issues. The results of analyzing 51 causes of contracts termination showed that the main cause of termination are: closure, lack of resources, contractors bankruptcy or insolvent, increment of material prices, lack of experience in the line of work, wrong cost estimation, lack of capital, working at hot (dangerous) areas, low margin of profit due to competition and difference of local currency exchange with contract currency. 40% of the most important factors affecting the construction contracts termination are related to financial issues while 30% of the most important factors are related to political issues. This study recommended that the contracting companies should estimate cost of project with proper way and should not increase the number of projects over the capacity of the company. Documentation works should be applied widely in the industry, Contractors are recommended to qualify technical staff with appropriate experience of the project. The government must take the risk when the donors delay the debts of the contractors and try to save a new resource or internal fund. The PCU should conduct continuous training programs to contractors in this field (Construction contracts termination).