An evaluation of core competence of foreign building contractors in creation of competitive advantage in the construction industry of Tanzania

Abstract

For a long time, foreign contractors have dominated construction business in Tanzania. Foreign contractors who constitute less than 1.28% of all registered building contractors in the country execute about 63.42% of large and medium-sized contracts (CRB, 2015). These foreign contractors come and go depending on the business climate, which dictates work opportunities. According to CRB as of 20th November, 2015 the board had processed a total of 2,800 applications for project registrations. The total value of the registered projects was TZS 3.6 Trillion of which 63.42% by value was carried out by Foreign Contractors and the remaining 36.58% by Local Contractors. Foreign Contractors still dominate the construction market in Tanzania as per the value of projects registered to CRB 94.72% of all registered projects are undertaken by Local Contractors while only 5.28% are undertaken by Foreign Contractors. The Foreign Contractors execute very few projects but the values of such projects are very high and this is an area of contention between local and foreign contractors (CRB, 2015). The main objective of this research was to evaluate the core competence of foreign building contractors as a means of creating competitive advantage and to propose ways on how their core competence can be used as a learning experience to local building contractors in the construction industry of Tanzania. To understand factors attributing to the foreign contractors exceeding in the execution of valued construction projects, this study aims to evaluate the core competence of foreign building contractors that gives them a competitive advantage during bidding and project execution. This viii knowledge gap of core competence has been not well researched in terms of Guanxi (relationship) resources and reputation, project management competences, and financial capabilities in bidding and execution of construction works for foreign contractors in the construction industry of Tanzania. Based on the questionnaire analysis of the specific objectives therefore, it can be concluded that:- The first specific objective was to assess the relationship resource and reputation factors as a means of core competence in creation of competitive advantage to foreign building contractors. For relationship resource factors, the overall analysis for all three respondents (foreign contractors, clients and consultants) based on the ranking of the RII shows that, the highly significant relationship resource factors and the most contributing to core competence for successfully acquisition of construction works in Tanzania as perceived by Foreign Building Contractors, Consultants and Clients are; Relationship between contractors and clients, Relationship between contractors and consultants, and Relationship between contractors and suppliers. ix For reputation resource factors, the overall analysis for all three respondents (foreign contractors, clients and consultants) based on the ranking of the RII shows that, the highly significant reputation resource factors and the most contributing to core competence for successfully acquisition of construction works in Tanzania as perceived by Foreign Building Contractors, Consultants and Clients are; Timely completion of jobs in satisfying manner, Positive manner in resolving problems, Good past experiences, Good relationship with suppliers, and Satisfying customer demands. The second specific objective was to assess the project management competence factors as a means of core competence in creation of competitive advantage to foreign building contractors. The overall analysis for all three respondents (foreign contractors, clients and consultants) based on the ranking of the RII shows that, the highly significant project management competence factors and the most contributing to core competence for successfully acquisition of construction works in Tanzania as perceived by Foreign Building Contractors, Consultants and Clients are; Contract management, Schedule management, Quality management, Quality management, and Procurement management The third specific objective was to assess the financial capability factors as a means of core competence in creation of competitive advantage to foreign building contractors. The overall analysis for all three respondents (foreign contractors, clients and consultants) based on the ranking of the RII shows that, the highly significant financial capability factors and the most contributing to core competence for successfully acquisition of construction works in Tanzania as perceived by Foreign Building Contractors, Consultants and Clients are; Good cash flows, x Adequate accessibility to financial institutions, High construction material inventory/stock, and Good credit facilities.