Investigating the Effects of Economic Crisis on Construction Projects in Iraq

Civil Engineering Department, University of Baghdad, Baghdad, Iraq

^a g.fadhil1901m@coeng.uobaghdad.edu.iq
^b abbasm.burhan@coeng.uobaghdad.edu.iq

Abstract

Construction is a complex activity performed in an almost uncontrolled environment. Although, in theory, projects can be well planned in advance, there is a possibility that unexpected events and crises will disrupt these plans, which will affect the progress of projects. Construction companies can be easily affected by crises because the initial investment costs are very high in construction projects, which may lead to huge financial damages. One of the most prominent crises that Iraq faced was the financial crisis in 2014, which had a significant impact on various activities and the construction industry. This research aims to explore the most important causes of the economic crises in Iraq in general, investigate the impact of this crisis on the construction industry in Iraq particularly, explore the most important factors that contributed to the aggravation of the crisis in this area. Finally, explore the most important strategies adopted by higher authorities and construction companies during the economic recession that followed the crisis to mitigate its impact. One hundred fifty-one closed questionnaires were distributed for this purpose. The results showed that financial and administrative corruption is one of the most important causes of crises with (RII) 0.93. Also, 82% of the respondents answered that the projects had increased their duration significantly so that it was difficult to set a date for their completion due to the insolvency or inability of the Iraqi state to pay the financial dues to the contractors. This insolvency negatively impacted the construction industry during the crisis with RII (0.832).