The recent surge in insolvencies in New Zealand (NZ)’s construction industry (CI) has emerged as a pressing concern. These insolvencies stem from various factors, with external factors playing a prominent role. Therefore, this study investigates the critical factors that influence construction company insolvencies in NZ’s CI.
Data were gathered through semi-structured interviews with 26 construction practitioners and 10 insolvency practitioners nationwide using the homogeneous purposive sampling method. This sample size was deemed adequate since data saturation for this sampling method can be achieved through a narrow range of participants. The rich qualitative data from these interviews were then divided into themes using NVivo software and analyzed using thematic content analysis. To ensure the comprehensiveness of the identified factors, the findings were validated by re-engaging all 36 respondents.
The findings revealed that the CI factors affecting insolvencies in NZ are inflation, global pandemics and natural disasters, contractor selection issues, boom and bust cycles, supply chain disruptions, hierarchical contracting chains, fierce competition and legislative changes. After comparing with the past literature, contractor selection issues and supply chain disruptions were identified as distinctive factors.
This study investigates factors affecting construction insolvencies in NZ, beginning with a literature review to categorize insolvency factors into CI factors, organizational factors and project factor’s themes. Given the significant influence of external CI factors on NZ’s construction sector, the study is limited to identifying CI factors unique to NZ.
This research, the first of its kind, examines the impact of CI factors on insolvencies in NZ, making a significant contribution to the field. Despite being in its initial stages, this research provides invaluable insights for cost estimators, construction managers, stakeholders and policymakers. These insights empower them to take proactive measures to mitigate construction insolvencies in NZ. The findings help to enhance their decision-making and contribute to the overall stability and growth of the country’s CI.
This research, the first of its kind, examines the impact of insolvency factors on the NZ CI. Despite being in its initial stages, this research empowers cost estimators, construction managers, stakeholders and policymakers to take proactive measures to mitigate construction insolvencies. The findings help to enhance their decision-making and contribute to the overall stability and growth of the country’s CI.
