The survival strategies of Singapore contractors in prolonged recession

Abstract

PurposeContractors adopt various strategies to achieve their firms' objectives of continued existence and further development, and to guide the relationship between the firms and the business environment within which they operate. An economic recession drives firms to undertake unusual steps to survive within an environmental context. The purpose of this paper is to examine the survival strategies of Singapore contractors in the eight years of unprecedented recession in the industry from 1997 to 2005 are examined.Design/methodology/approachIn total, 34 interviews were conducted with senior executives of large and medium‐sized construction firms in Singapore to identify their survival strategies during the recession period.FindingsThree categories of strategies are identified: contracting‐related actions, cost‐control related actions, and financial‐related actions. The results show that most contractors opted to bid for more projects that are within their firms' resources and capabilities in contracting for jobs. To control cost, all contractors implemented stricter site management on material wastage, stricter financial management on firms' cash flow, stricter and procurement procedures. The majority of them froze salaries and stopped hiring. In order to remain solvent, most contractors set aside a sum of money from their reserves for unforeseen circumstances.Practical implicationsContractors should learn how to stay adequately lean in managing their business in order to be flexible and responsive to changes within the business environment. The findings highlight the importance of effective cost, risk, relationship and resource management.Originality/valueThe findings provide valuable lessons to construction firms in preparing for volatile market conditions during a recession.