The nature of payment problems in the new zealand construction industy.pdf

Construction category number in each category

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Construction category Number in each category Percentage % Amount Owed (NZ$) Frequency Percentage % General Construction Companies 27 42 Above 1,000,000 4 15 500,000 1,000,000 5 18 100,000 500,000 10 37 Below 100,000 8 30 Property Developers 22 34 Above 200,000 2 9 100,000 200,000 4 18 50,000 100,000 1 4 10,000 50,000 3 14 Below 10,000 12 55 Construction Trade Services 16 24 Above 200,000 3 19 100,000 200,000 4 25 Below 100,000 9 56 Totals 65 100 Table 1 Amount owed by construction companies in liquidation From the Table 1, it is observed that the value of the amount owed to trade creditors by general construction companies is the largest of the three categories. This is obvious considering that this group includes small to fairly medium scale construction firms with a higher level of turnover than the other two categories. The largest percentage (37%) of companies in the general construction business owed their trade creditors between $100,000 and $500,000 when they went into liquidation. Followed by another 30% owing less than $100,000. Further examin ation of the liquidators’ reports reveal that on average the amount owed to trade creditors by this category of construction companies were about 78% of the total sum owed to unsecured creditors.This value is indicative of the negative impact that liquidation of this category of construction companies can have on other parties in the chain. On the other hand, property developers that went into liquidation largely (55%) owed their creditors less than $10,000 during the period. Comparatively the value owed is less than general construction companies because these property developers were mostly involved in residential construction works. Further analyses reveal that of the property developers that owed less than $10,000, 60% owed between S1,000 and $,5000. On overage the amount
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Australasian Journal of Construction Economics and Building Ramachandra, T and Rotimi, J O (2011 ) ‘ The nature of payment problems in the New Zealand construction industry , Australasian Journal of Construction Economics and Building, 11 (2) 22-33 27 owed to trade creditors by this category of construction company is 20% of the total owed to their unsecured credtiors. Compared to other construction categories this amount seem insignificant. Finally Table 1 presents information on the amount owed to trade creditors by companies in the construction trade services category. The breakdown shows that the amount owed ranges from below $100,000 to above $200,000. The largest percentage (56%) of companies owed less than $100,000. A further analysis of the 56% that owed below $100,000 shows that 67% owed between $50,000 to $100,000. Upon further examination of the reports, it was observed that on average, the amount owed to trade creditors were 70% of amount owed to total unsecured creditors by this category. This is considerably significant, although lower when compared to companies in general construction.
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  • Fall '19
  • The Land, Australasian Journal of Construction Economics and Building

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