Nicholas, J; Holt, G D and Edwards, D J (2001) Towards a risk assessment model for evaluating construction contractors' creditworthiness. Journal of Financial Management of Property and Construction, 6(1), pp. 31-40. ISSN 1366-4387
Abstract
A critical review of methods for analysing risk associated with furnishing credit to construction contractors is provided. Specifically, the review reveals flaws in present evaluation procedures and identifies the need for new research into this subject domain. The difference between predicting contractor insolvency and determining a contractor’s credit limit, without exposing the materials supplier to unacceptably high levels of financial risk is highlighted. A conceptual risk assessment model is then provided which takes into account: the dynamic construction business environment; the implications of managers’ perceptions and decision making traits; the amount of credit allowed; and the ’type’ of relationship between creditor and debtor. Given that the subject of assessing contractors’ creditworthiness has received minimal research attention to date, the model provides a framework around which further work could be performed
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | contractor evaluation, creditworthiness, debtors, risk assessment |
| Index terms: | insolvency, manager, decision-making, construction contractor, risk assessment |
| Subjects: | practitioner, financial risk, liability law, decision analysis |
| Topics: | Risk Management, Legal Issues, Cost Management, Roles and Professions |
| Descriptive scope: | 2 PC |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here