English abstract
Financing is crucial for the success of construction projects, which require a
steady flow of funds to meet project objectives. Contractors in the construction
industry face unique challenges due to the project-based nature of their work,
significant financial requirements and a complex risk profile. An understanding of
contractors’ financing methods is essential to ensure project success. This study
focuses on the methods used by contractors in Oman to finance construction projects.
Since commercial banks are the most common source used by contractors to obtain
financial services, the study centres on researching the services offered by commercial
banks for contractors and the requirements and difficulties associated with obtaining
these services.
The data collection was carried out using interviews and a questionnaire. A
literature review was conducted to study contractors’ financing requirements, and an
interview was conducted with the National Bank of Oman to identify the financial
services offered to contractors and their related regulations. Then, a questionnaire was
constructed based on the literature review and bank interview to identify contractors’
usage of financial services and the difficulties they face in accessing these services.
The validity of the questionnaire content was evaluated by an academic professor and
two experts in the construction industry. The arbitrators agreed on the same minor
modifications. According to these suggested modifications, the questionnaire was
updated and distributed online, primarily via Google Forms. Overall, 94 responses
were collected and analysed using the SPSS software. Following the data analysis,
three interviews were conducted with construction professionals to gain expert insights
for the interpretation of the findings, understand the implications of the results and
derive informed recommendations.
The findings indicated that owner progress payments are the most commonly
used source to finance construction projects, followed loans and bonds from
commercial banks. It was also discovered that the high interest rates and fees
associated with bank loans are the primary challenges contractors face in obtaining
financial services from banks.
The research findings will contribute to a better understanding of contractor
financing sources, specifically focusing on the services extended by commercial banks
and the obstacles encountered in accessing these facilities in Oman. This study fills a
gap in the current literature concerning construction contractors’ financial practices in
Oman. The thesis offers insights that may be advantageous for contractors and banks
alike. Contractors could enhance their comprehension of banks’ loan assessment
processes and lending policies, thereby bolstering their confidence in obtaining bank
financing and improving their borrowing opportunities. Additionally, this research is
valuable not only for foreign contractors seeking entry into Oman’s construction
market but also for local contractors, particularly smaller enterprises, via enabling
them to navigate the available options and comprehend the criteria governing bank
services. Further, by understanding contractors’ viewpoints on the services provided,
banks may gain key insights into the challenges faced by contractors, setting the stage
for future research on bank services tailored to meet the needs of construction
contractors.
