CHAPTER ONE

1. INTRODUCTION

1.1. Background of the Study

A project is a complex, non-routine, one-time effort limited by time, budget, and resource and
performance specifications designed to meet customer needs (Ofori, 2013). The construction
industry has complexity in its nature because it involves a large number of parties such as
clients, contractors, consultants, and others these parties are not properly managed according to
the contract agreement, and monitoring and evaluation systems its poor (Nyangwara, 2015). A
construction project is expected to be successful through a combination of many events and
interactions, planned or unplanned, over the life of a facility, with changing participants and
processes in a constantly changing environment. From various projects, the infrastructural
support for the country’s economy is provided by the construction industry by way of buildings
(housing, office space, retail space, factories, etc.) roads, railways, irrigation schemes, and water
supply schemes. Ethiopia’s water work construction sectors are among the most rapidly
growing sectors of the country. A large number of irrigation projects have been implemented
to improve productivity and allow stable production throughout the whole year, ensuring food
security (Shumye, 2018).

Most of the project performance in Ethiopia is very poor for different reasons and Irrigation
projects are among those which suffer a lot. The Success of construction projects significantly
depends on how the project has been managed and how driving elements can be controlled.
Irrigation and construction project success factors and performance indicators frequently
change from one project to the next. The main performance elements of irrigation projects are
classified depending on participants, the scope of services, the size of the project, the nature of
the contract, the implications of technology, and a variety of other factors.

The construction of irrigation systems involves converting the engineering solutions. It provides
in the design document a physical reality that enables safe storage or diversion, conveyance,
distribution, and application of water. In this regard, it is essential to select qualified consultants
and contractors, as well as to use appropriate construction materials and follow standard
construction procedures, etc. The primary problems during this implementation phase are
among others inadequate capacity of the client, consultants, and contractors that always lead to

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poor contractual administration, insufficient monitoring and evaluation, frequent design
changes that result in excessive cost, and time overruns (Gebul, 2021).

The study conducted by (Gebul, 2021), on ten large-scale irrigation projects in Ethiopia showed
that 78% of the reasons for project cost overrun were attributed to design, scope, and quality
changes. The average time overrun in irrigation project implementation is about 145%, which
has direct and indirect cost implications. The authors also assessed ten large-scale irrigation
dam projects and found an aggregate average cost overrun and time overrun of 176% and 151%,
respectively. For a poor country such as Ethiopia, such inefficiency in project implementation
has wide-reaching consequences. Reasons for such wasteful resource use were found to be
incomplete design, design change, scope and quality change, poor construction time estimate,
constructors’ low capacity, client inactions, and shortage of material.

The IAG (Eneyew, 2014) also conducted an assessment on the effectiveness of contract
administration on two large-scale irrigation projects (Megech-Seraba and Zarema May-Day in
the Tigray Region in Ethiopia) that are under construction. It was found that the poor
performance of these projects was partly attributable to the weak institutional capacities of
implementing bodies which were characterized by slow decision-making processes, inadequate
monitoring and evaluation, and coordination capacity. Even if such studies have been conducted
at the country level, the performance of small and medium-scale irrigation construction projects
was not part of the assessment yet. Small and medium scale projects do have an impact on the
livelihood of the farmers and contribute a lot to the economy of the country. Huge capital is
allocated both by the government and other donors to construct small and medium-scale
irrigation projects but little attention is given to the construction performance of the projects
and most of them are lagging behind their schedule. This paper will try to assess the factors
affecting the performance of small and medium-scale irrigation construction projects in Eastern
Amhara constructed by Amhara Water Works Construction Enterprise.

1.2. Statement of the Problem

The construction industry plays a major role in the development and achievement of the goals
of society. Mainly irrigation development is key to the sustainable and reliable agricultural
development of nations. Boosting the construction performance of irrigation schemes will
ensure economic sustainability for low-income earners (Nyangwara, 2015). Smallholder
irrigation farming is valuable for improving the welfare of rural communities in Ethiopia.

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Irrigation schemes in Ethiopia perform below average as some have collapsed. Even though the
Irrigation practice is one of the ancient practices of Ethiopians it is confined to a small-scale
level and a fragmented approach. Smaller, medium, and large-scale irrigation infrastructure
must be created to ensure food security for Ethiopia's rapidly growing population at the
household level. Notwithstanding the construction industry's significant contribution to the
economy of developing countries including Ethiopia and the critical role, it plays in those
countries' development, the performance of the industry remains generally low (Eneyew, 2014).

Besides, the construction projects in Ethiopia are dominantly completed within a period longer
than what is agreed upon by the contracting parties and with costs deviating highly from the
contract amount (Meja, 2020). According to previously conducted research (Sammy, 2014),
Ethiopia's irrigation construction projects they are not developed to their full potential and rank
among the lowest in the world. This is attributed to frequent claims, variations, and change
orders occurring in those projects. Given the crucial role that the irrigation sector plays in
Ethiopia and other developing countries, as well as the poor performance of the sector there,
raising the sector's performance should be a top priority. Thus, improving the performance of
the construction of irrigation projects in the country including in Eastern Amhara needs to be
one of the priority considerations for the improvement of the capability of constrictions in
developing countries.

The previous studies (Nyangwara, 2015), also emphasize that project performance and
performance improvements are critical issues for the construction industry. Poor construction
performance of small and medium-scale irrigation projects in the Amhara region became a
common phenomenon and led the region to a crisis in the water development works. The driving
factors affecting the construction performance of irrigation projects in the study area should be
properly identified to find way-outs to improve the construction performance of the projects,
therefore increasing performance increases efficiency, so this research aims to analyze the
performance parameters on small and medium-scale irrigation construction projects in the case
Eastern Amhara

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1.3. The Objective of the Study
1.3.1. General Objectives

The main objective of this research is to identify and evaluate the critical factors that affect the
performance of small and medium-scale irrigation construction projects of Amhara National
Regional State Irrigation and Lowland Areas Development Bureau constructed by Amhara
Water Works Construction Enterprise in Eastern Amhara.

1.3.2. Specific Objective

▪ To assess the current performance of small and medium-scale irrigation project

construction in the case of East Amhara.

▪ To identify significant factors that affect the performance of small and medium-scale
irrigation construction projects in the case of East Amhara.

▪ To evaluate the relationship between project performance and the identified significant
factors of small and medium-scale irrigation construction projects in the case of East
Amhara.

▪ To forward recommendations for enhancing the construction performance of small and

medium-scale irrigation projects in the case of East Amhara.

1.4. Research Questions of the Study

▪ What is the current status of the construction performance of small and medium-scale
irrigation projects in Eastern Amhara?

▪ What are the top driving factors impacting the construction performances of small and
medium-scale irrigation projects in East Amhara?

▪ What is the relationship between key factors and project performance of small and medium-
scale irrigation construction projects under Amhara Water Works & Energy Development
Bureau in East Amhara?

▪ What will be the possible recommendations to enhance small and medium-scale irrigation
projects from their poor construction performance?

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1.5. Significance of the Study

By revealing how risk impacts are managed and minimizing and improving the sector
performance (quality, project completion time, design, finance, resource utilization,
sustainability, and project competitiveness) in a different scenario, this study is expected to
contribute to the irrigation project significantly. Additionally, the study expects to help find
strategies to enhance the successful execution of irrigation projects for policymakers and
decision-makers in the water resource development sector.

1.6. Scope and Limitations of the Study

The study is constrained in both scope and depth as a result of many limitations related to
finances, time, labour, and because of the national problem. Accordingly, the study area is
limited to Selected Amhara Water Works Construction Enterprise small & medium-scale
irrigation construction projects in Eastern Amhara started from the year 2008 E.C. to 2013 EC
(2016 – 2021 GC) Completed. The study is restricted to issues with project performance and
variables that affect project performance. The researcher faced the following problems and
challenges while conducting the study.

1.7. Key Term Operational Definitions

▪ Project: Irrigation construction projects constructed in the last six years from 2008-2013
E.C. under Amhara National Regional State Irrigation and Lowland Areas Development
Bureau.

▪ Construction: means New small- and medium-scale irrigation construction projects are
being built under the under Amhara National Regional State Irrigation and Lowland
Areas Development Bureau.

▪ Owner: a government agency for which the construction project is being carried out.

▪ Contractor: A person, either natural or legal, who has a contract for the construction of
a building with them.

▪ Consultant: The person or organization selected by the owner to develop and approve
all budgets, as well as to carry out and oversee the project's necessary cost management.

▪ Performance: the accomplishment of a specific irrigation construction project about the

set costs, time, quality, and productivity standards.

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 ▪ Key performance indicator (KPI): a method of measuring performance that assesses
an organization's effectiveness or the success of a specific task it undertakes.

▪ Time overruns: It is defined as time that recently passed after the planned completion
dates.

▪ Cost overruns: The difference between the project's preliminary and final construction
cost estimates is the time after the intended completion dates.

1.8. Organization of the Study

There will be five chapters in the study. The study's background, a statement of the problem,
the objective of the study, the research question, the significance of the study, the scope and
limitations of the study, Operational definition of key terms are all covered in the first chapter.
The theoretical review, empirical review, research gap, and conceptual framework are covered
in the second chapter. The main factors affecting the performance and key performance
indicators in small and medium irrigation construction projects are identified in this chapter
through a thorough analysis of concepts and definitions. The research methodology and
techniques for this study are described in the third chapter. This chapter demonstrates the
approach employed to accomplish the study's necessary goals and respond to its research
questions. The fourth chapter contains data collected, interpreted, and discussed through
Regression, correlation, frequency, proportion, mean, and standard deviation. The last and the
fifth chapters contain a major finding, conclusion, and suggestion.

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 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

This section provides an overview of previous studies that have been conducted in the area of
building project performance by various academics and contains an analysis of the study's
theoretical underpinnings, conceptual framework, empirical findings, a critique of the literature
already in the field, a summary, and any knowledge gap.

2.1. Theoretical Framework

2.1.1. Construction activities including irrigation

A project is a Short-term effort to deliver a unique good, service, or outcome. All endeavors are
risky, and (Hillson, 2020) lists three reasons why. The first argument is that unpredictability is
a byproduct of all endeavors since they all share certain traits. All projects share a several
characteristics, such as the transition from the present to the future, which is unknown,
assumptions and limits, human engagement, diversity and complexity, and others. The second
factor is that each initiative is initiated with a definite objective. The fourth defense is that the
environment in which a project is carried out impacts it.

In a nutshell, a construction project is the act of humans creating something for a specified
purpose could be a highway, a bridge, a dam, a home, an airport, a retail establishment, a place
of business, etc. Construction is the procurement and application of resources, including cash,
skilled labor, materials, and equipment, on a specific site under plans, specifications, and other
documents stipulated in a contract to meet a client's needs.

(Nyoni, 2017) assert that the construction industry addresses the provision of housing,
infrastructure, and consumer goods, as well as a few of the primary development goals of
generating output, establishing employment, and distributing revenue. Water acquisition,
distribution, and transportation for diverse uses, including building irrigation, are called
irrigation construction projects. If specialists must design and build this irrigation system, the
risk of unfavorable outcomes, such as structural collapse, cost overruns, and disagreements, is
also noted.

2.1.2. Construction in Ethiopia

On the Horn of Africa is the nation of Ethiopia. With a surface size of 1.13 million square
kilometers, it is a sizable nation. Ninety-one million people are living in Ethiopia, making it a

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vast country. An estimate of the average population density per km2 is 80 people. Most of the
Ethiopian population lives in the country's rural areas, and only a few live in the urban areas.
From the above statements, it can be observed that the construction industry is only confined to
a small portion of the country since most construction is undertaken in urban areas. The rural
area, where most of the population lives, is uncivilized, i.e., there are only small traditional
constructions used for the habitation of people and cattle, and in a few places, there are small-
scale school and health center construction.

According to, (Hillson, 2020) the most important thing that can be done is to make sure that
the inherent risk associated with any project is at a level that is acceptable to the company and
is well managed. This statement implies that various organizations accept risk at varying levels,
and Ethiopia or organizations working in the construction sector can only afford to accept low
levels of risk given their limited financial means. It also suggests that several elements should
be looked into, which is essential in developing nations to manage problems with cost, time,
and quality that affect the project's success.

2.1.3. Critical Chain Project Management Theory

The Theory of Constraints' logistical application for project operations is called the Critical
Chain of Project Management. It is named after the project's longest chain of interdependent
tasks with dependent resources. The approach aims to safeguard the project's duration and date
of completion individual task structure's effects, resource reliance, variance, and uncertainty.
The result is a solid and reliable approach that, most crucially, will enable us to complete
projects on schedule, every single time, and in at most 75% of the existing time for single
projects and substantially less for individual projects inside multi-project settings. The shorter
duration gives us a great chance to stand out in the market from our rivals that use alternative
project management techniques to offer subpar results, and late at that. Additionally, it provides
the chance to complete more projects in the same amount of time and with no increase in
operational costs, thereby drastically raising the net income (Rand, 2000).

2.1.4. The Theory of Performance

The Theory of Performance creates a framework for explaining performance and performance
enhancements by examining and linking six key ideas. To perform is to deliver worthwhile
outcomes. A performer could be an individual or a group of individuals working together. The
performance level represents the journey's destination, the process of developing performance.
The six components that together determine one's current level of performance are the context,

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one's level of knowledge, one's level of skills, one's dimension of identity, one's issues, and
one's fixed elements. Three are present hypotheses for efficient performance enhancements:

▪ Adopting a performer's mindset

▪ Immersing oneself in a stimulating setting

▪ Engaging in reflective practice

Performance improves as it moves through levels where the terms "Level 1," "Level 2," etc.
describe the performance's efficacy. In other words, a Level 3 person or organization performs
better than a Level 2 person or organization. Higher performance results in results that fall into
the following categories: Quality increases, results or products are better at meeting or
exceeding stakeholder expectations, waste decreases, capability increases, the capacity to
handle more challenging performances or projects, knowledge increases, both the depth and
breadth of knowledge increases, skills increase, and the capacity to generate more throughput.

2.2. Empirical Review

2.2.1. Construction Projects and Performance

The main factor determining the success of a construction project is performance success. The
effectiveness of construction projects has been the subject of several studies in the past.
According to (Lee, 2014), the unsuitability of the chosen procurement system has been one of
the main reasons for the construction industry's lackluster performance recognized three critical
structures as essential to comprehending project performance dynamics:

• The method for completing a task

• Effects of feedback on output and work quality

• Outcomes from upstream to downstream stages

The primary performance criteria for construction projects, according to (Akanni, 2015), are
financial stability, work progress, quality standards, health and safety, resources, relationships
with clients and consultants, management skills, ability to handle claims and legal disputes,
relationships with subcontractors, reputation, and degree of subcontracting. Construction time
is becoming more significant, according to (Chan, 2002) , because it frequently acts as a vital
benchmark for evaluating a project's performance and the effectiveness of the project
organization.

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Project performance areas, including people, money, time, quality, safety and health,
environment, client satisfaction, and communication, were identified by, (Akanni, 2015)
concludes that a control system is crucial in identifying factors influencing construction project
efforts. Each project goal requires a project's performance indicator or indicators (PPI). (Pheng,
2006) discovered that human variables significantly influence a project's performance.

According to (Akanni, 2015), early contractor and supplier involvement would reduce
constructability-related performance issues, such as the price of delays, claims, waste, and
rework, among other things. Controlling the quality of the contract document, the quality of the
response to observed variations, and the scope of contract amendments are the most crucial
scope management procedures, (Gebul, 2021). It was advised that international businesses
implement some of the project management techniques mentioned to improve the concert of
their projects in China.

2.2.2. Factors Affecting Project Performance

There have been numerous earlier research on project performance according to cost and time
considerations, and project performance according to cost has been examined since the 1960s.
(Sammy, 2014) stated that research from several nations appears to have greatly expanded the
corpus of information about how building projects function over time. During the construction
process, a variety of unforeseen issues and changes from the initial design appear, which causes
issues with cost and schedule performance It is found that poor site management, unexpected
ground conditions, and sluggish decision-making involving all project teams are the three main
factors causing delays and problems with time performance in local building works. While cost
performance is correlated with project complexity, client attributes, and contractor
characteristics, time performance is significantly influenced by these factors as well as team
experience and communication. The dynamic feedback process controls project schedule and
budget performance, including the re-estimate, re-plan, and re-review.

(Chan, 2002) found that to be the best indicator of how public sector projects would fare in
terms of average construction time. Both project managers and clients may find this connection
to be a useful tool for estimating the typical time needed to complete a construction project. It
was discovered that reducing design phase costs was statistically significantly influenced by the
frequency of design team meetings and written reporting of design phase progress., (Shrestha,
2014). A project management-based organizational structure and the usage of project manager

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training were shown to be methods that do not statistically significantly save costs during the
design phase.

(Iyer, 2005) claim that some variables affect cost performance, including top management
support, the project manager's capacity for coordination and leadership, participant monitoring
and feedback, decision-making, coordination among project participants, the owners'
competence, as well as social, economic, and climatic conditions. Coordination between the
participants has the most significant impact on a project's ability to stay under budget.

(Love Peter E. D., 2005) used to investigate the relationships between project time-cost
performance, project range characteristics for 161 construction projects completed in various
Australian States, gross floor area, and the number of floors in a building are crucial indicators
of when a project will be finished. The results also demonstrate how poorly cost predicts
performance in terms of time. Specific administrative and technological strategies were
proposed by (Chan, 2002) to speed up construction and improve construction time performance.
It has been noted that efficient communication, quick information exchange between project
participants, better manager selection and training, and intricate building plans with cutting-
edge software are all factors that can speed up performance.

According to (Ben Mahmoud-Jouini, 2004), Controlling the pace in engineering, procurement,

and construction projects is crucial for innovative businesses to remain competitive. Customers
may view time as a resource, the report claims, and in such cases, they may press a contractor
to complete better work on schedule.

2.2.2.1. Cost factors

The cost management system monitors ongoing obligations and costs while projecting eventual
expenses. According to (Yafiah, 2013), project success is impacted by the procurement
selection criteria of cost, time, quality, project features, and external environmental factors. The
delays, supplemental agreements, hostile relationships among stakeholders, and budget
shortfalls of project owners were the most frequent results of cost overruns, and these effects
serve as a roadmap for future efforts to enhance the performance of the construction sector.
According to (Abdullah, 2010), the most detrimental factors on construction cost performance
are fluctuating material prices, cash flow and financial difficulties faced by contractors, a lack
of site workers, a lack of communication between parties, and improper planning, and
scheduling by contractors. The least significant effects are caused by frequent design
modifications and owner intervention.

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According to research (Baloyi, 2011), the most significant factor contributing to cost overruns
on large-scale and minor projects is increased material costs. Most frequently, clients' ill-
intentioned attempts to assume the responsibilities of their consultants by making decisions and
changes that impact the project's design and price have hampered efforts to accomplish the
intended goals. According to owners, consultants, and contractors, the most critical factors
affecting the performance of construction were the average delay brought on by closures and a
lack of materials, the availability of resources as anticipated throughout the project's duration,
the project manager's leadership skills, the increase in material prices, the availability of
personnel with high experience and qualification, and the quality of the project's equipment and
raw materials.

2.2.2.2. Time factors

Time is money for the facility's owners, developers, and users. The owner may lose money due
to many factors, including poor return on investment, limited cash flow, the possibility of
alienating and losing customers or tenants, increased interest payments, and negative marketing
consequences. Among them were high inflation/increased material prices, owner design
modifications, defective designs, weather conditions, late contract payments, and subpar
construction execution. Late payments were the primary cause of timetable delays for
international projects, whereas design-related problems were the primary cause of delays for
stadium projects. (Baloyi, 2011). The integrity of the construction sector is impacted by several
issues, which have a substantial detrimental impact on project performance.

2.2.2.3. Quality factors

According to (Zhao Xu, 2018), the quality management system tracks and evaluates the
project's construction quality and foresees concerns and problems with it. Examples of standard
quality measures include the following: (i) The frequency, number, and percentage of passes
and fails during quality control tests; non-conformance concerns; change requests; the number
of root causes; the cost of rework; the number of exceptions at turnover; and the cost of quality
(ii) Quality Assurance Cost (Cost of Resources): quality assurance cost, cost of quality, and cost
of quality as a proportion of building cost.

(Lepartobiko, 2012) said that identifying and removing the causes of subpar project
performance may ensure quality. The leading factor affecting project quality was an
inexperienced contractor. (Ling, 2010) found that hiring foreign specialists, having government
inspectors look over the work, and closely monitoring the use of novel building techniques are

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