organizational decline and bankruptcy

164 Pages·2007·2.5 MB·English

ORGANIZATIONAL DECLINE AND BANKRUPTCY PREDICTION MODEL
FOR THE TURKISH CONSTRUCTION COMPANIES

A THESIS SUBMITTED TO
THE GRADUATE SCHOOL OF NATURAL AND APPLIED SCIENCES
OF
MIDDLE EAST TECHNICAL UNIVERSITY

BY

NURDAN EĞİLMEZER ŞAPÇI

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR
THE DEGREE OF MASTER OF SCIENCE
IN
CIVIL ENGINEERING

JULY 2007
Approval of this thesis:

ORGANIZATIONAL DECLINE AND BANKRUPTCY PREDICTION
MODEL FOR THE TURKISH CONSTRUCTION COMPANIES

submitted by NURDAN EĞİLMEZER ŞAPÇI in partial fulfillment of the
requirements for the degree of Master of Science in Civil Engineering
Department, Middle East Technical University by,

Prof. Dr. Canan Özgen
Dean, Graduate School of Natural and Applied Sciences

Prof. Dr. Güney Özcebe
Head of Department, Civil Engineering

Prof. Dr. Talat Birgönül
Supervisor, Civil Engineering Dept., METU

Assoc. Prof. Dr. İrem Dikmen Toker
Co-Supervisor, Civil Engineering Dept., METU

Examining Committee Members:

Asst. Prof. Dr. Metin Arıkan
Civil Engineering Dept., METU

Prof. Dr. Talat Birgönül
Civil Engineering Dept., METU

Assoc. Prof. Dr. İrem Dikmen Toker
Civil Engineering Dept., METU

Inst. Dr. Osman Acar
Civil Engineering Dept., METU

Caner Anaç
M.Sc. Civil Engineering, İÇTAŞ INC.

Date: 25.07.2007
I hereby declare that all information in this document has been obtained and
presented in accordance with academic rules and ethical conduct. I also declare
that, as required by these rules and conduct, I have fully cited and referenced
all material and results that are not original to this work.

Name, Last name : Nurdan EĞİLMEZER ŞAPÇI

Signature :
ABSTRACT

ORGANIZATIONAL DECLINE AND BANKRUPTCY PREDICTION
MODEL FOR THE TURKISH CONSTRUCTION COMPANIES

EĞİLMEZER ŞAPÇI, Nurdan
M.S., Department of Civil Engineering
Supervisor : Prof. Dr. Talat Birgönül
Co-Supervisor: Assoc. Prof. Dr. İrem Dikmen Toker

July 2007, 150 pages

Within the scope of this research, factors contributing to the decline and failure in
the Turkish construction industry are examined by the aid of a broad literature
review and a Delphi Study conducted among respondents selected to be civil
engineers who experienced organizational decline and/or bankruptcy throughout
their professional lives. Based on the identified factors and their interrelations,
Analytical Network Process (ANP) is used to quantify the relative importance of
these factors on “Organizational Decline/Bankruptcy of the Turkish Construction
Companies”. Organizational Decline/Bankruptcy evaluation and prediction model
to be used by the construction company managers as a decision support tool is
constructed. As a result of the ANP analysis, importance of management
competency and companies’ intangible resources such as organizational knowledge
and its technical and technological capabilities came out to be the most important
factors effective on the fate of the company to success or bankruptcy whereas
external factors such as economic and political changes; which are effective on all
kind of industries commonly, occurred to be the least effective factors that directly
affect business failure.

Key Words: organizational decline, bankruptcy, Turkish construction industry
iv
ÖZ

TÜRK İNŞAAT ŞİRKETLERİ İÇİN
ORGANİZASYONEL ÇÖKÜŞ VE İFLAS MODELİ

EĞİLMEZER ŞAPÇI, Nurdan
Yüksek Lisans, İnşaat Mühendisliği Bölümü
Tez Yöneticisi : Prof. Dr. Talat Birgönül
Y. Tez Yöneticisi : Doç. Dr. İrem Dikmen Toker

Temmuz 2007, 150 sayfa

Bu tez kapsamında; Türk İnşaat Şirketleri’nin çöküş mekanizmasında etkili olan
faktörler geniş bir literatür taraması yapılmak suretiyle irdelenmiş ve profesyonel
yaşamlarında “Organizasyonel Çöküş / İflas” yaşamış inşaat mühendislerinden
oluşan katılımcı grubunun tecrübeleri ışığında Delphi Çalışması yapılarak
incelenmiştir. Belirlenen faktörlere ve aralarındaki ilişkilere dayanarak, bu
faktörlerin “Türk İnşaat Şirketlerinin Organizasyonel Çöküş / İflası” üzerinde teşkil
ettikleri önemin birbirlerine göre derecelendirilmesinde Analitik Ağ Prosesi (ANP)
kullanılmıştır. Şirket yöneticilerinin profesyonel yaşamlarında, şirketlerinin
içerisinde bulunduğu durumu değerlendirmek amacıyla karar destek aracı olarak
kullanabilecekleri bir “Organizasyonel Çöküş / İflas” modeli oluşturulmuştur. ANP
analizi sonucunda yönetimin becerisi ile organizasyonel bilgi ve teknik/teknolojik
yeterlilik gibi kaynakların şirketi başarıya ya da çöküş/iflasa götüren en etkili
faktörler oldukları ortaya çıkarken, ekonomik ve politik değişimler gibi tüm
sektörler için geçerli olan dış kaynaklı faktörlerin inşaat şirketlerinin iflasında en az
doğrudan etkiye sahip olan faktörler olduğu belirlenmiştir.

Anahtar Kelimeler: organizasyonel çöküş, iflas, Türk inşaat sektörü
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ACKNOWLEDGEMENTS

Firstly, I would like to thank gratefully to Assoc. Prof. Dr. İrem Dikmen Toker,
who is the most patient person I have ever seen besides being a perfect supervisor;
for her unconditional guidance, support and tolerance which appear at every
sentence of this thesis and to Prof. Dr. Talat Birgönül for his realistic approaches
and invaluable comments especially to shape the scope formation and data
collection stages.

I wish to express my appreciation to Asst. Prof. Dr. Rıfat Sönmez and Mr. Kerem
Tanboğa, Mr. Tezcan Öztürk, Mr. Ergin Oral Demirel for the sound advice and
many good ideas that they provided.

I am grateful to Asst. Beliz Özorhon for her valuable hours she spent to assist me in
understanding ANP Methodology and Superdecisions Software.

I gratefully thank to Mr. A. Kadir Ferahlı for his support in encouraging me
complete my thesis.

I have to designate here my special thanks to my dear mother; Mrs. Sabiha
Eğilmezer, for her endless support and love I feel in every breath of mine, to my
dearest father Mr. Zafer Ziya Eğilmezer for his patience and sacrifice by which I
could become a university graduate and a sound person, to my dearest brothers Mr.
Nural and Mehmet Eğilmezer, who are lifelong pieces of my soul.

Besides all, I thank by my heart to my beloved husband B. Emrah Şapçı who made
me believe that I am that much strong to get over every situation against me, taught
me and loved me.

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To My Family

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TABLE OF CONTENTS

ABSTRACT...........................................................................................................iv

ÖZ............................................................................................................................v

ACKNOWLEDGEMENTS....................................................................................vi

TABLE OF CONTENTS......................................................................................viii

LIST OF TABLES..................................................................................................iv

LIST OF FIGURES..................................................................................................v

LIST OF ABBREVIATIONS.................................................................................vi

CHAPTERS

1 INTRODUCTION.................................................................................................1

2 LITERATURE REVIEW.......................................................................................4
2.1 Definitions of Organizational Decline.............................................................4
2.2 Decline Literature from Construction Industry................................................7

3 CONCEPTUAL OD&B PREDICTION MODEL................................................17
3.1 Introduction...................................................................................................17
3.2 Factors Effective on OD & B........................................................................18
3.2.1 Factors related with “Value Chain” (VC)...............................................18
3.2.1.1 Lack of Efficiency in Corporate Level Value Chain (LECLVC)......19
3.2.1.1.1 Poor environmental scanning (PES)..........................................19
3.2.1.1.2 Poor value-chain analysis at the corporate level (PVCACL)......21
3.2.1.1.3 Poor strategic planning (PSP)....................................................22
3.2.1.1.4 Poor human resources management (PHRM)............................23
3.2.1.1.5 Poor financial management (PFM)............................................24
3.2.1.1.6 Management incompetency (MI)...............................................25
3.2.1.1.7 Poor communication (PC).........................................................29
3.2.1.2 Lack of efficiency in project level value chain (LEPLVC)...............30
3.2.1.2.1 Poor planning/scheduling (PPS)................................................30
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3.2.1.2.2 Poor organization of resources (POR).......................................31
3.2.1.2.3 Poor leadership (PL).................................................................33
3.2.1.2.4 Poor monitoring and control (PMC)..........................................34
3.2.1.2.5 Poor project risk management (PPRM).....................................34
3.2.1.2.6 Poor change order and claims management (PCOCM)..............36
3.2.1.2.7 Poor selection and management of suppliers and subcontractors
(PSMSS).................................................................................................36
3.2.1.2.8 Poor quality management and control (PQMC).........................37
3.2.2 Factors related with “Resources” (Rs).....................................................39
3.2.2.1 Lack of tangible resources (LTR).....................................................40
3.2.2.1.1 Poor technical / technological capability (PTTC)......................40
3.2.2.1.2 Scarcity of financial resources (SFR)........................................41
3.2.2.2 Lack of intangible resources (LIR)...................................................42
3.2.2.2.1 Poor company image (PCI).......................................................42
3.2.2.2.2 Lack of experience and organizational knowledge (LEOK).......43
3.2.2.2.3 Poor relations with government, politicians and/or clients
(PRGPC).................................................................................................45
3.2.3 Factors related to “Decisions” (Ds).........................................................45
3.2.3.1 Wrong market strategies (WMS)......................................................46
3.2.3.1.1 Excessive expansion (EE).........................................................46
3.2.3.1.2 Wrong level of diversification (WLD).......................................47
3.2.3.1.3 Poor investment decisions (PID)...............................................48
3.2.3.2 Wrong organizational decisions (WOD)..........................................49
3.2.3.2.1 Unsuccessful restructuring / reorganization (URRO).................49
3.2.3.2.2 Saving non-value adding activities (SNVAA)...........................50
3.2.3.3 Wrong project strategies (WPS).......................................................51
3.2.3.3.1 Wrong project selection (WPSl)................................................51
3.2.3.3.2 Wrong project cost estimation (WPCE).....................................52
3.2.4 Factors depicted as “Chance Factors” (CF).............................................53
3.2.4.1 Company specific chance factors (CSCF)........................................53
3.2.4.1.1 Sudden death of the company leader (SDCL)............................53
3.2.4.1.2 Difficulty in collecting money from clients (DCMC)................54
3.2.4.1.3 Sudden change within the workforce / braindrain (SCWB)........55
3.2.4.2 General chance factors (GCF)..........................................................56
3.2.4.2.1 Shrinkage in construction demand (SCD)..................................56
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3.2.4.2.2 Change in economy (CE)..........................................................56
3.2.4.2.3 Change in politics (CP).............................................................57

4 RESEARCH METHODOLOGY.........................................................................59
4.1 The Research Methodology...........................................................................59
4.2 The Steps of ANP in Multivariate Decision Making......................................62
4.3 ANP Applications in Construction Management...........................................66
4.4 Data Collection.............................................................................................66
4.4.1 Introduction............................................................................................66
4.4.2 The Delphi Method................................................................................70
4.4.3 Steps of Data Collection Form................................................................71
4.4.3.1 Data Collection Form Step 1............................................................71
4.4.3.2 Data Collection Form Step 2............................................................74
4.4.3.3 Data Collection Form Step 3............................................................78
4.5 Data Analysis................................................................................................79

5 RESEARCH FINDINGS.....................................................................................85
5.1 Interpretation of the Results...........................................................................85
5.2 Testing of the Prediction Model....................................................................90
5.3 Comparison of the Results with the Previous Literature.................................92

6 SUMMARY AND CONCLUSION.....................................................................95

REFERENCES.....................................................................................................100

APPENDICES:
A (Summary of the OD&B Literature)..................................................................110
B (Questionnaires)................................................................................................112

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