Causes of Kuala Lumpur Abandoned Construction Projects Thesis

Introduction

Background of the Study

Abandoned construction projects are characteristic of the Malaysian construction industry because different literatures have documented hundreds of projects abandoned in the city because of a myriad of reasons (Razaka, Mohammed & Tarique, 2015; Tomas, 2013). However, this problem is not unique to the country alone because other developing economies have experienced the same problem (Nigerian Institute of Quantity Surveyors, 2012).

Project delays, cost overruns, environmental issues and legal tussles are some challenges that are associated with this problem (Abidin, 2016). As a result, many major projects, such as the construction of churches, bridges, schools, hospitals and the likes fail to materialize. Although there are many cases of abandoned construction projects in Kuala Lumpur, it is important to point out that the construction industry is a key part of the city’s overall economy (Tomas, 2013).

The Malaysian construction industry is also a pivotal part of the country’s economy. From 2008 to 2012, the industry contributed more than 3% to the country’s gross domestic product (GDP) (Ali, 2017). Statistics from 2012 alone show that the industry contributed RM 34.9 billion (Idris, 2016). Comparatively, the overall GDP for the country is estimated to be RM 937.5 billion (Ali, 2017). The value of the construction industry to Malaysia’s economy stems from the fact that the industry often generates thousands of jobs for its citizens.

According to Rahman, Alashwal, Ayub and Abdullah (2013), about 1.1 million Malaysians work in this industry. This population is estimated to be about 10% of the total workforce in Malaysia (Rahman et al., 2013). Implicitly, this fact means that the construction industry is responsible for about 10% of all jobs in the country. In this regard, it is no surprise that in 2012, it was estimated that the total value of projects awarded in the construction industry was RM 112.5 billion (Ali, 2017). Despite these impressive statistics, it is imperative to point out that not all construction projects undertaken in the country are completed on time (Bolotin & Birjukov, 2013). Indeed, some of them are delayed, while in worst-case scenarios, some are abandoned altogether.

Abandonment could occur at any phase in the construction lifecycle. Although the Malaysian law outlines different criteria for categorizing a project as being abandoned, or not (as highlighted above), it is important to point out that the definitions for abandonment that will be used in this paper will mostly relate to the failure to complete projects. However, generally, researchers say abandonment relates to projects that have been completely neglected, or that have experienced indefinite delays (Bolotin & Birjukov, 2013).

As Rahman et al. (2013) point out, construction project abandonment is not only confined to the Malaysian context alone because other countries are affected by the problem as well. For example, many countries in the Middle East that are undertaking massive construction projects are also experiencing the same problem. The UAE, Saudi Arabia, Qatar, Kuwait and Bahrain are only a few countries within this region that are grappling with this problem as well (Albogamy, Scott, & Dawood, 2012).

In Nigeria, abandoned construction projects have delayed the provision of goods and services to the residents and slowed down the economy (El-Rufai, 2012). In fact, in a study by Doraisamy, Akasha, and Yunus (2015), it was estimated that Nigeria is home to the world’s most abandoned construction projects. This phenomenon has led to the loss of many resources because experts say these abandoned construction projects are worth millions of dollars (Ihuah & Benebo, 2014; Doraisamy et al., 2015).

The figures are staggering because Doraisamy et al. (2015) say that Nigeria has more than 4,000 abandoned construction projects attributed to the Federal government alone. These projects are estimated to take more than 30 years to complete (Ihuah & Benebo, 2014). Some developed countries in the Western world, such as the USA and Spain are also no exception.

Cheong (2012) points out that the problem of abandoned construction projects is at a massive scale in Malaysia, thereby requiring more attention than any other parts of the world. Statistics published by Dahlan and Mariappan (2012) reveal that in the year 2000, more than 500 construction projects were abandoned in the Malaysian housing sector alone. These projects were estimated to be worth R.M 7.5 billion and beyond (Dahlan & Mariappan, 2012).

Since then, there has been a decline in the number of abandoned construction projects, but this fact does not mean a decline in the seriousness of the problem, as observed by the Malaysian Construction Industry Development Board (2015). In 2012 alone, Dahlan and Mariappan (2012) report that there were more than 95 cases of abandoned construction projects in the housing subsector alone. This number affected 37,316 household units (Dahlan & Mariappan, 2012). More than 26,000 homeowners were also affected by the same problem. The table below summarizes the number of abandoned construction projects in the Malaysian housing subsector between the year 2000 and 2012.

In addition to the above statistics, researchers estimate that the number of abandoned construction projects in Malysia is higher because the above statistics only represent those in the housing sector alone. For example, the number of abandoned mixed-use buildings, such as the Plaza Rakyat, which was estimated to cost $1.5 billion adds to the total number of abandoned construction projects in Malaysia (Ali, 2017). Despite the high number of abandoned projects in Malaysia, there is a lack of comprehensive research to get to the root causes of this phenomenon.

According to Ihuah and Benebo (2014), project delays and cost escalations often have a negative domino effect on the construction industry because they affect different tenets of the industry (negatively), thereby portraying a gloomy outlook on the industry. Investor confidence is also affected in the same regard. This is true for the Malaysia construction industry because it is among the eight most important sectors of the economy (CIDB Malaysia, 2013). The others are mining, agriculture, manufacturing, transportation, wholesale and retail trade, finance and insurance and government services (CIDB Malaysia, 2013).

Problem Statement

According to Doraisamy et al. (2015), abandoned construction projects are a significant issue in the global economic space and it comes at a huge cost to all the stakeholders involved. In Kuala Lumpur, the impact of abandoned construction projects has proved to be untenable for the society and the economy as a whole.

Several researchers have pointed out that the high incidence of abandoned construction projects in the city inhibits the ability of the residents to live fulfilling lives. For example, a review by Abdullah, Alashwai, Ayub and Abdullah (2013) on the housing sector shows that abandoned construction projects have led to the dissipation of people’s dreams to own a home. This is despite the high level of government investments directed at the sector. According to the diagram below, more than 17,000 households in Malaysia were affected by the high incidence of construction project abandonment (Rahman et al., 2013). Comparatively, the estimates of families affected by abandoned construction projects are more than 24,000 (Rahman et al., 2013).

Cases of prospective homeowners taking loans to buy houses under construction also exacerbate the situation because they often suffer the burden of paying for houses that they do not occupy when construction is abandoned (Rahman, 2012). In some extreme cases, contractors are unable to be traced and consequently disappear with millions of investor’s money, not to mention having dashed people’s hopes and dreams of being homeowners as well (Razaka et al., 2015). These problems have perennially characterized the city’s construction industry and caused significant financial losses and investor confidence in the same. Researchers have not been able to comprehensively come up with a proper diagnosis of the problem (Shakir, 2012). We explain the gap that exists in this analysis below.

Research Gap

Although some researchers have investigated the causes of abandoned construction projects in Malaysia, few of them have presented localized views of the same issue. Particularly, few research studies have investigated the main causes of abandoned construction projects in Kuala Lumpur. This study seeks to fill this research gap because Kuala Lumpur is growing to be a top-notch investment destination in Asia. Furthermore, its construction industry is at the forefront of attracting both local and international investors (Abdullah & Rahman, 2012).

The Kuala Lumpur construction industry is an important part of the city’s economy because vibrant cities often experience an upswing of construction projects, while struggling often experience an increase of project abandonment in the same sector. Indeed, as Osman (2014) points out, healthy cities are often characterized by an increase in activities within the construction industry. However, in depressed cities that are characterized by political or social unrests, the incidence of project abandonment tends to be high.

Unique social, political, and economic dynamics of Kuala Lumpur often define the kinds of problems faced by contractors and developers in their work (Doraisamy et al., 2015). This dynamic means that the reasons for abandoned construction projects in one region of Malaysia, could not necessary apply to Kuala Lumpur or other cities in the country.

Indeed, as Arizz and Ahmed (2014) point out, for many years, experts have generalized the causes of abandoned construction projects in Malaysia, thereby failing to pay attention to the unique causes of project abandonment in respective cities. This strategy has negatively affected efforts to find workable solutions for addressing the problem. For a clearer understanding of this fact, the graph below shows areas most affected by the high incidence of abandoned construction projects in the past two decades.

The issue of abandoned construction projects is significantly affecting different areas of the country’s economy and as seen from the graph above, Kuala Lumpur is among the most affected areas. Based on these findings, there is a need to investigate this issue more in-depth. Concisely, it is important to fill the research gap that manifests in the lack of information surrounding the main causes of abandoned construction projects in Kuala Lumpur, Malaysia.

This study is qualitatively set up to identify the main causes of abandoned construction projects in the country’s capital. These findings would help to proffer solutions that would help policymakers and other stakeholders in the construction industry to reduce the incidence of abandoned projects in the city. Thus, in this paper, we seek to fill the gap in literature that exists because of a lack of research studies to explain the main causes of project abandonment in Kuala Lumpur.

Research Aim

To identify the causes of abandoned construction projects in Kuala Lumpur, Malaysia

Research Questions

1. What issues surround abandoned construction projects in Kuala Lumpur?
2. Do the causes of project abandonment in Kuala Lumpur differ from those in other parts of Malaysia?
3. Which stakeholders are most affected by project abandonment in Kuala Lumpur?
4. What factors affect the success of construction projects in Kuala Lumpur?
5. What sub-sectors of the Kuala Lumpur construction industry are most affected by abandoned construction projects?
6. Who are the main players involved in the Kuala Lumpur Construction industry and what is their role in creating the problem of project abandonment?
7. What are the possible solutions to the problem of project abandonment in Kuala Lumpur?

Significance of the Study

As highlighted in this study, the abandonment of construction projects in Kuala Lumpur affects all stakeholders in the sector. However, the problem also comes at a steep price to the city’s economy because different players involved in the industry are affected (Abu Bakar, Nurkhuraishah, Yusof, & Pin, 2012). Thus, construction project abandonment has a high cost to the city’s social, economic, and environmental growth (Arizz & Ahmed, 2014).

If we analyze this problem from an economic point of view, we find that the abandonment of construction projects often leads to a wastage of resources, which the city needs to use in developing other aspects of its economy. Indeed, the Kuala Lumpur construction industry has a significant impact on its growth because other subsectors of the economy are tied to it (Abu Bakar et al., 2012). For example, the financial sector is tied to the construction industry because most of the funds used to finance developments in the industry come from this sector (Arizz & Ahmed, 2014).

Furthermore, the construction industry involves many more stakeholders in Kuala Lumpur who are similarly affected by its poor performance. As explained above, these players are linked to other sectors of the economy, thereby explaining the far-reaching impact of project abandonment on the city’s growth. For example, suppliers of construction materials, such as cement manufacturers, steel manufactures and ceramic suppliers are bound to be affected by abandoned construction projects (Abidin, 2016). These stakeholders outline some private participants in the city’s construction industry that are often affected by project abandonment.

Comparatively, the residents of Kuala Lumpur do not directly feel the effects of project abandonment in the public sector because its effects are not easily visible. However, they pay for it indirectly because the government often absorbs the associated losses in subtle ways (usually through the depletion of its financial reserves) (Rahman et al., 2013). Therefore, abandoned public construction projects come at a cost to the taxpayers because they are denied an opportunity to benefit from the services they would have otherwise enjoyed if the projects were completed (Abidin, 2016).

Alternatively, if the government chooses to invest more resources in reviving abandoned projects in Kuala Lumpur, the public would have to shoulder the opportunity costs associated with such a decision, thereby affecting public financial reserves again (Ihuah & Benebo, 2014). Additionally, other projects undertaken by the government would be affected by the same decision because a diversion of resources to complete abandoned projects in the city would mean that other ventures are deprived of the same.

These issues are significant to the social, economic, and political wellbeing of Kuala Lumpur because the city is positioning itself as a global economic and social hub (Ali, 2017). The high number of hyper-modern architecture and vibrant shopping malls in the metropolis demonstrate this fact. This fact is further coupled with the government’s quest to transform the city into a sustainable metropolis by instituting new changes in different facets of the city’s construction industry (including environmental sustainability, quality control, and internationalization) (ITE Build and Interiors, 2015). Based on these assertions, identifying the causes of abandoned construction projects in the city would help to achieve these goals.

Structure of the Report

This thesis is divided into six main chapters. The first chapter is the introduction chapter, which provides a background to the study and sets the stage for the rest of the paper. Key sections of this chapter include the background of the study, the research problem, the research gap, significance of study, research aim, and research goals.

The second chapter is the literature review section, which, as its name suggests, contains a review of existing literatures that have explored the research topic. The main purpose of developing this chapter is to investigate and evaluate what other researchers have said about the causes of abandoned construction projects in Kuala Lumpur and the causes of abandoned construction project in other cities and regions of Malaysia, as well as other parts of the world. This chapter would demonstrate the gap in literature that this paper would be seeking to fill.

The third section of this thesis is the methodology chapter. It outlines the strategies used to collect the data, analyze it and their contribution to answering the main research questions. This chapter would also contain details about the research strategy used, the applicable research design, and ethical considerations made when collecting the data. The purpose of developing this chapter is to provide a platform for interrogating the methods used to develop the findings. Consequently, future researchers can be able to replicate the same when undertaking similar studies. Similarly, by investigating the contents of this chapter, readers can evaluate the strengths or weaknesses of the findings proposed in this study.

The fourth section of the paper is the findings chapter. It outlines the main findings of the interviews and documents reviews, which are our main sources of research data. These findings will be compared with the main research questions to explain how they help to answer them. The next chapter is the analysis section, which contains a review of the findings and explains how they fit within the wider context of fulfilling the research aim and answering the research questions.

The last section of this paper is the conclusion and recommendation section. It appears as chapter six of the study and summarizes the key points of the study. As its name suggests, it also contains recommendations about how stakeholders in the construction industry could eliminate some of the main causes of abandoned construction projects in Kuala Lumpur. It also contains suggestions on what future researchers could do to explore the topic further. However, to understand some of these recommendations, it is pertinent to comprehend what other researchers have written about the research topic in chapter 2 below.

Literature Review

This chapter contains a review of existing research studies, which have investigated the causes of project abandonment in the construction industry. Key tenets of this chapter outline how other researchers have defined the concept of abandonment and presented the problem of project abandonment in different facets of the construction industry. At the end of this chapter, we will find that no studies have explored the causes of construction abandonment in Kuala Lumpur. However, before getting to this point of analysis, the following section provides an overview of the Kuala Lumpur construction industry, which outlines the context of this study.

Kuala Lumpur Construction Industry

The problem of abandoned construction projects is a serious problem for the Kuala Lumpur construction industry because it is currently experiencing a period of rapid growth. According to reports by Ali (2017), the industry is set to grow by about 8% in 2017. Investments of RM 170 billion underpin this growth (Ali, 2017). Most of these investments are expected to finance several mega projects, which are mostly skewed towards improving the country’s public infrastructure.

A growth of 8% is an increase from the previous growth rate registered in 2016, which was 7.4% (Ali, 2017). Similarly, RM 170 billion in investments pumped into this industry is a significant vote of confidence in the sector because 2016 figures reveal that the total investments made in the construction industry amounted to $166.4 billion (Ali, 2017). The Malaysia Construction Industry Development Board, which released the aforementioned statistics reported that most of these investments are set to complete most of the country’s major infrastructure projects, including

“the Refinery and Petrochemical Integrated Development (Rapid) in Pengerang, east coast rail line from Port Klang to Tumpat, high-speed rail from Kuala Lumpur to Singapore, Pan Borneo Highway in Sabah and Sarawak, Damansara-Shah Alam elevated highway, light rail transit from Bandar Utama to Johan Setia, West Coast Expressway from Banting to Taiping and mass rapid transit line 2” (Ali, 2017, p. 4).

In addition to the above investments, Kuala Lumpur is set to witness an upsurge of commercial real estate investments that is expected to increase the supply of such spaces in the city’s metropolitan space. Bandar Malysia and Cyberjaya City Center are a few projects that are expected to meet this demand (Ali, 2017). Based on this momentum, many experts and observers agree that the construction industry is paving the way for the prosperity of the city and the nation at large. However, undermining this prospect, is the risk of project abandonment. Different researchers have used different definitions of the concept to explain this risk.

Definition of Abandonment

Researchers often define the term “abandoned construction project” differently. For example, researchers have often debated the criterion used to define the concept. While some have used financial metrics to do so, others have used time variations to explain the concept (Morckel, 2014). These criteria are used irrespective of whether a construction permit has been issued or not. Nonetheless, according to Yap (2013), there are different criteria for defining a construction project as being abandoned or not. One of them is the lack of activity on the site for more than 6 months (Yap, 2013).

Another criterion for defining abandoned projects is the exceeding of the project time beyond the purchase and selling period. Usually, if this happens, the project is put under the care of the official receiver (Yap, 2013). In Malaysia, different legal statutes govern this process. They include “section 11(1)(c) of the Housing Development (Control and Licensing) Act 1966 (Act 118) (MHLG Official (2011)” (Razaka et al., 2015, p. 815).

The Malaysian Ministry of Housing and Development provides a more thorough criterion for defining abandoned projects by saying projects are abandoned when they are not completed within the period prescribed in the sale and purchase agreements and no subsequent activity goes on in the site for more than six months thereafter (Razaka et al., 2015). Razaka et al. (2015) found that abandonment could also occur in the following ways:

A petition for winding up has been registered in the High Court under Section 218 of the Companies Act 1965 or other related laws, or the licensed housing developer is wound up and placed under Receivership, Liquidator or the Malaysia Department of Insolvency (MDI), or licensed housing developer is notified in writing to the Housing Controller that they are unable to continue further with the development of the project; and lastly if certified by the MHLG under Section 11 (1) (c) of Housing Development (Control and Licensing) 1966 (Act 118) that the project is an abandoned project. (p. 815)

Generally, current research shows that when there are too many problems associated with any given construction project, the possibility of abandonment is high (Morckel, 2014). Many researchers agree that when projects have been started at a specific time and fail to be completed on their due data, because of unclear reasons; they are often deemed “abandoned” (Ogunsumi et al., 2015). As highlighted in this paper, such projects are not only confined to buildings alone; bridges, schools, roads, industrial structures and factories are also other types of projects that could face the same fate.

Implications of Abandoned Construction Projects

According to Razaka et al. (2015), abandoned construction projects have an impact on different stakeholders involved in the construction industry. Many researchers have investigated these effects, but most of them focus on the effects on customers. Others, such as Mortaheb, Amini and Younesian (2013) focus on the economy. For example, Mortaheb et al. (2013) say that abandoned construction projects usually have negative effects on the economy of the affected countries and on the people they are supposed to benefit.

Regardless of the causes of these abandoned construction projects, researchers argue that the outcome is bound to affect the economy of the abandoned construction projects negatively (Nigerian Institute of Quantity Surveyors, 2012). Arizz and Ahmed (2014) take a broad view of this problem and say that project abandonment often leads to resources wastages, which may manifest in terms of loss of capital, wastage of human labor and the wastage of construction materials.

In addition to these negative outcomes, Arizz and Ahmed (2014) also say that project abandonment often attracts unwarranted illegal activities, which affect the safety of the communities that host such projects. However, as highlighted in the first chapter of this paper, abandoned construction projects mainly affects two categories of stakeholders – public and private participants.

Privately funded projects have a significant impact on individuals and firms because investors are often victimized every year when the projects they have funded fail to materialize. Investors who finance projects that are built on leasehold land also suffer the inconvenience of losing some years in their tenancy agreement because project abandonment means underutilized time on the lease agreement (Arizz & Ahmed, 2014).

Most researchers who have investigated the impact of project abandonment from this point of view have done so in the context of understanding segments of the construction industry that are personal in nature. For example, most of their studies have investigated the impact of abandoned construction projects by evaluating its effects on the housing sector. This is the case of Muhwezi, Acai and Otim (2014) who said that abandoned construction projects in the housing market comes at a huge cost to buyers who are the ultimate beneficiaries of such projects.

Homeowners are among the most affected segment of the market because most of them finance such projects through loans. Therefore, if a construction projects is abandoned, they have to continue servicing the loans without necessarily staying in the house they bought. As highlighted by Muhwezi et al. (2014), those who are unable to service their loans are often blacklisted by credit lending agencies, thereby denying them an opportunity to take future loans.

At the same time, they are being denied an opportunity to reap the benefits associated with appreciating property values, especially if the location where the construction was to occur is in a prime place. Similarly, abandoned construction projects deny world-be homeowners an opportunity to get rental income from the houses that they would have otherwise rented to tenants. The same is true for commercial investors who often take huge loans to set up buildings that they plan to rent out to businesses and other commercial ventures.

Arti, Pankaj, and Bhangale (2013) say the tragedy that compounds this problem is the failure by authorities to offer relief to affected people. Consequently, most victims often resort to forming small organizations to negotiate with developers, contractors and the respective authorities when they projects they paid for fail to be completed. Such processes do not often yield the best results or outcomes for them because there have been many cases where such processes take too long and victims pass away before being compensated for their investments (Arti et al., 2013). Furthermore, there are cases where there is a disproportionate reward given to victims, compared to the actual loss they have incurred from project abandonment.

Arti et al. (2013) also say contractors are the most victimized stakeholder group in the construction industry because if a project is abandoned, they could have to face the real possibility of winding up their company. Indeed, it is often difficult to find cases where contractors refuse to complete their assigned jobs if they receive full payment from the developers.

However, if they do and are still unable to complete their work, they would have to face the possibility of winding up their companies because they could be fined and penalized (Woka & Miebaka, 2014). These types of punitive measures could lead to the closure of their businesses. The consequences of such an outcome may further spread to people who are down the supply chain. For example, companies, which have been subcontracted by the main contractor, or employees who have been contracted by the company to work on a project may lose their jobs as well (Woka & Miebaka, 2014).

Developers are another group of stakeholders who are affected by abandoned construction projects because they may suffer a negative reputation if their projects fail to come to fruition. Woka and Miebaka (2014) give a more detailed analysis of this fact by saying that developers who work with private investors may be affected the most because many clients often want to do business with companies that have a good reputation of delivery (Bolotin & Birjukov, 2013).

When developers fail to meet their expectations, developers could suffer irreparable damage because of their inability to deliver what they were paid for. Furthermore, they are bound to suffer significant financial losses from the abandonment of construction projects, especially if they are unable to recover their operation costs.

Financial institutions are also bound to suffer from project abandonment because they are the main lenders in such projects. Associated losses may accrue from bad debts and the loss of significant customers (such as institutional investors). Landowners are also bound to be affected by the same problem because their land could be stranded because of the abandonment of projects. Based on these insights, Ibrahim (2013) says that the government may have to step in and revive some abandoned projects through public land utility.

The government may also need to revive some stalled projects that emerge from disputes by mediating between the aggrieved parties. When such grievances reach a court of law, the concerned parties may suffer huge legal costs associated with their cases. The use of funds in litigation and in other efforts to review stalled projects bears a huge opportunity cost as highlighted earlier.

While individuals and institutional investors may be directly affected by the abandonment of construction projects, another stakeholder group that could be similarly affected by the same is the society, which accommodates such projects and the environment, which supports the ecosystem that these projects thrive on (Bolotin & Birjukov, 2013). If we focus this analysis on the environment alone, we find that construction projects could be breeding grounds for mosquitoes, which cause malaria. The society could be adversely affected through the deterioration of public health.

Abandoned buildings could also be a fodder for creating a social menace of criminals and drug users who often lurk in such structures (Ibrahim, 2013). This scenario shows that abandoned construction projects are a danger to the public. Children are also curious people who like to venture into abandoned building sites, thereby putting themselves in harm’s way when playing with dangerous tools that may be left at the construction sites (Ibrahim, 2013).

Abandoned construction projects could also be an environmental nightmare because some of them act as dumping sites. Furthermore, there are cases where some construction sites have developed undergrowths, which are eyesores and a nuisance to the public. In some countries, the spread of these undergrowths and the eyesores they create have been known to diminish the value of surrounding properties (Adenuga & Dosumu, 2013). The same is true for Spain and some selected European countries (Ibrahim, 2013).

Most of the negative effects associated with abandoned construction projects have been evidenced by different researchers who have sampled the effects of the same on different developing countries. For example, a study by Hanachor (2012) to understand the effects of abandoned construction projects in Nigeria showed that there are three effects associated with abandoned construction projects. The first one is that the users would be disappointed that the project is abandoned and they cannot use it as expected (Hanachor, 2012).

The second one is that abandoned construction projects often lead to a downgrade in the living standards of the financiers and those who are supposed to benefit from the project (Hanachor, 2012). Other effects of abandoned construction projects identified in Nigeria include resource wastage, lower opportunities for employment, a decline of economic activities, a decline in government revenues (from the levies payable in construction activities), and the difficulty in obtaining foreign loans from other friendly governments (Woka & Miebaka, 2014).

This fact was also observed by Daily Trust (2015) which reported a similar finding by pointing out that the effects of abandoned construction projects also lead to a reduction in government revenue, an increase in unemployment numbers, a decline in economic activities, a decline in the standards of living, underutilization or wastage of construction equipment, and an increase construction costs. Although these findings were generally noted in Nigeria, Woka and Miebaka (2014) say they apply to most developing countries as well.

Generally, these effects do not differ much with the effects of abandoned construction projects reported in Malaysia because researchers, such Doraisamy et al. (2015) who have conducted similar studies in these regions say that the users of the abandoned projects always suffer in terms of their inability to use the buildings. Their suffering is further compounded by the fact that they have to experience the agony of paying for buildings that they do not even occupy.

Studies coming from Malaysia also relate with those from other countries because researchers have also shown that project abandonment often leads to the increase of illegal activities and vandalism of buildings or structures, which are still under construction (Doraisamy et al., 2015). The same studies have also shown that project abandonment leads to an increase in the price of raw materials and a heightened vulnerability of the project plan to changes in building codes (Doraisamy et al., 2015). The incidence of non-performing loans and land foreclosures are also part of the effects of project abandonment witnessed in Malaysia (Rahman et al., 2013).

The lack of interest in financial institutions reviving abandoned projects and the unwillingness of new investors to continue what others have failed to do also amounts to significant economic losses that influence the economy of Malaysia (Rahman et al., 2013). Based on these assertions, there is little doubt that abandoned construction projects often affect the economy of Malaysia significantly.

Consequently, many studies sampled in this review show that they could lead to economic decline in developing nations (Rahman et al., 2013). However, most of the studies highlighted in this review do not highlight significant differences in the causes and effects of these construction projects. They also do not show significant differences in the causes and effects of abandoned construction projects in different countries.

Generally, abandoned construction projects are a problem for most of the stakeholders identified in this report. Although it affects each stakeholder in different ways, as described above, it is pertinent to point out that the issues that cause project abandonment could also cause a strain among the players involved (El-Rufai, 2012). Lawsuits, cash flow problems and similar issues are some of the problems stakeholders could face when projects are abandoned. Indeed, as Ewa (2013) points out, there is always a general feeling of anxiety among the stakeholders involved in an abandoned construction project.

Generally, the effects of abandoned construction projects on both private and public investors have a negative effect on the general outlook of an economy. More importantly, they create a negative perception in the eyes of investors. In this regard, there is always a strong need to identify the potential causes of abandoned construction projects to prevent some of these adverse outcomes from happening.

Causes of Abandoned Construction Projects

According to Ihuah and Fortune (2013), many construction projects are often characterized by the involvement of different players. The failure of one of them to deliver what they are supposed to do could have negative implications for the rest of the stakeholders. The literature we sampled revealed few studies that have investigated the causes of abandoned construction projects in Malaysia and around the world. Nonetheless, many researchers have affirmed the significance of understanding the causes of abandoned construction projects because they have demonstrated that different projects, which have a good potential of success, are often abandoned at different stages of their design or project implementation lifecycles.

A study by Gudienea, Banaitisa, Banaitienea, and Lopes (2013) investigated the issue and noted only a few issues as the main causes of construction abandonment. For example, it pointed out that the lack of liquidity in some projects occasioned their abandonment (Gudienea et al., 2013). It also pointed out that inappropriate legal statues and the lack of proper monitoring measures lead to project abandonment (Gudienea et al., 2013). However, these findings were not developed from any survey or interview that would back up the same.

Hanachor (2012) also had a similar reasoning on the causes of project abandonment by saying that project abandonment often occurs because developers use incorrect estimations, contractors use unskilled workers, developers use poor risk management strategies and owners have poor planning strategies (Hanachor, 2012).

Other researchers have pointed out that the misunderstanding of work requirements, poor quality control by regulatory agencies, corruption, and communication breakdowns among the parties involved in the construction process are also some of the causes of abandoned construction projects (Mortaheb et al., 2013). Nonetheless, cost issues and the failure of contractors and developers to meet the expectations of their clients are commonly cited by many researchers as some of the main causes of abandoned construction projects (Hanachor, 2012).

The failure of contractors and developers to prepare adequately for the construction process by getting the right supplies and preparing vital inputs are also other problems commonly cited by experts in this field (Mortaheb et al., 2013). Nonetheless, more in-depth studies have shown that some unforeseen factors also contribute to the same problem. For example, the Asian financial crisis of 1997-1998 significantly increased the cost of construction for developers and contractors alike (Mortaheb et al., 2013).

The increased cost of building materials that arose from the same event further led to an increase in the incidence of abandoned projects in the countries affected because many developers were unable to keep up with the high cost of construction. Some experts have divided opinions about how they should term projects that end because of such incidences because some of them say projects that suffer from such eventualities should be regarded as “abandoned” because they meet the criterion of a stoppage of activities at the construction site, which is loosely used to define abandoned projects (Dahlan & Mariappan, 2012).

Others disagree with this view and say that projects, which stall because of unfavorable economic conditions, are not necessarily abandoned, but suspended (Ihuah & Benebo, 2014). Others who share the same view say that such projects are subject to resuscitation whenever the economic environment improves (Ihuah & Benebo, 2014).

The inability of legal statutes to smoothen the process of construction has been highlighted by some researchers as part of the problem. For example, Dahlan and Mariappan (2012) have said that the lack of a proper legal structure to guide activities in the Malaysian construction industry has inhibited the ability of developers to get the endorsement required to continue with their process. For example, this problem inhibits their ability to get the necessary verification needed to get housing development insurance (Dahlan & Mariappan, 2012).

Similarly, researchers have pointed out the lack of a proper legal structure to regulate loans advanced to developers in the Malaysian construction industry and a poor repayment structure as other problems leading to project abandonment. For example, an article by Razaka et al. (2015) points out that Islamic banks operating in Malaysia have designed complex financial instruments that indemnify themselves from the risk of constructions abandonment and poor repayments, thereby leaving developers exposed to the same risks.

Consequently, purchasers assume most of the liability, thereby making it difficult for them to service their loans, or rebound back to financial success whenever “something unexpected” happens. In this regard, lenders abuse their power, thereby making it difficult for developers to achieve their goals. Researchers have argued that mismanagement and conflicts among people responsible for project completion is another cause of abandoned construction projects. Insufficient coordination between developers and local authorities is also partly responsible for this problem (Affare, 2012).

According to government research in Malaysia, the main causes of abandoned construction projects in the country are financial problems, mismanagement of activities relating to the developers, insufficient technical expertise relating to how projects are undertaken, poor marketing and sales, land ownership issues, contractor-related problems, and political problems caused by illegal squatters (Affare, 2012).

A study by Pakserest and Asgari (2012) to investigate the main causes of construction project abandonment revealed the same findings because it showed that financial issues, poor lack of coordination between government authorities and contractors, abuse of authority by government officials, and mismanagement were some of the main causes of abandoned construction projects in Malaysia (Affare, 2012).

These findings were deduced from the views of different stakeholders in the construction industry, including contractors, government officials, financial experts, and customers. Generally, these findings point out that mismanagement government inefficiencies (in policy implementation) and financial issues are the main causes of abandoned construction projects. The diagram below summarizes these issues.

Although the diagram above highlights some of the main causes of abandoned construction projects in Malaysia, it is important to point out that most of them have been developed from findings that mostly relate to the country’s housing market.

Another cause for project abandonment is the lack of consistent government policies, which makes it difficult to uphold accountability standards when undertaking projects (Bolotin & Birjukov, 2013). Close to this issue is corruption, which has been identified by researchers such as Okwudili (2014) and Doraisamy et al. (2015) as being other causes of project abandonment.

However, the impact of location considerations on understanding the number of abandoned construction projects cannot be ignored because Okwudili (2014) says that different places have unique problems that contribute to project abandonment. For example, the abandonment of construction projects in California is mostly attributed to design flaws, which often force the contractor to make endless changes to the project design, thereby leading to cost escalations and time overruns (Anyanwu, 2013).

These problems in turn contribute to project abandonment in the state. Based on this example Anyanwu (2013) argues that the abandonment of construction projects is not only a phenomenon that occurs in third world countries. Based on the above research, we could categorize the main causes of project abandonment into five main factors as described below.

Procurement-Related Factors

Procurement-related factors are mostly responsible for the inappropriate allocation of risk among stakeholders involved in the construction process, thereby adding to the probability of project abandonment (Nigerian Institute of Quantity Surveyors, 2012). Similarly, inappropriate pricing of building materials falls within this category and equally contributes to the risk of project abandonment (Nigerian Institute of Quantity Surveyors, 2012). However, incorrect pricing is not only limited to building materials; it could also spread to the services offered by contractors and consultants (Nigerian Institute of Quantity Surveyors, 2012).

In some instances, these challenges could emerge as faulty tendering processes (mostly involving projects funded by taxpayers’ money) that could eventually lead to litigation processes. Mirza, Pourzolfaghar and Shahnazari (2013) add to this discussion by demonstrating that the probability of such processes resulting in ambiguities regarding the scope of work could be high. Similarly, they say that the same ambiguities could spread to the drawing or specifications outlined in the construction materials (Mirza et al., 2013).

Procurement-related factors could also contribute to inadequate project feasibility studies, which could later jeopardize the future of such projects (Gomelesio, 2013). When such issues emerge, there needs to be a proper dispute resolution mechanism (mostly involving publicly funded projects) (Mirza et al., 2013). However, such structures are not often present in all countries, thereby dragging the litigation process, or leading to the complete breakdown of discussions that would revive stalled, or abandoned, construction projects.

Lastly, it is important to point out that, unclear lines of responsibility, site acquisition problems, poor contract administration, inappropriate contract arrangements, and inappropriate modes of financing are also other procurement-related factors that could contribute to the problem of project abandonment in the construction industry (Nigerian Institute of Quantity Surveyors, 2012).

Project Management Factors

According to researchers such as Zafar, Tabish, and Jha (2012), project management factors are also responsible for the high incidence of construction project abandonment in many developing countries. They say that inappropriate planning and scheduling are common problems associated with project management that later cause problems in construction, which ultimately lead to the abandonment of the same (Zafar et al., 2012).

The same view is shared by the Construction Industry Development Board (2015), which says poor project managers often bring project control problems, which lead to cost escalations and poor coordination, which ultimately lead to the abandonment of projects. Bureaucracy and red tape, which is often associated with government processes (especially concerning construction projects of a public nature) are also linked to project management factors that lead to project abandonment (Nigerian Institute of Quantity Surveyors, 2012).

Researchers who share this view say that some contractors have to abide by specific policies or requirements in their operations, which are synonymous with complex bureaucratic processes, some of which are detrimental to the future of the associated projects (Zafar et al., 2012). Project management factors are also synonymous with abandoned construction projects because they are partly responsible for poor quality control, which is responsible for some of the failed construction projects in developing countries (Construction Industry Development Board, 2015).

In some instances, contractors do shoddy works that eventually cause authorities to shut down the projects because of public safety concerns (Nigerian Institute of Quantity Surveyors, 2012). This outcome comes at a high cost to the financiers of the project and is immensely detrimental to the contractors because people would assume that their work is always of poor quality. Such negative perceptions are associated with poor safety management on the site, which is partly attributed to some construction accidents and disasters that leave authorities no option, but to shut down the construction project as well (Ihuah & Eaton, 2013).

Poor safety management is also associated with the failure of developers and contractors to adhere to existing laws and policies surrounding safety at the construction site (Ihuah & Benebo, 2014). This oversight ultimately forces authorities to shut down the project, and in some cases, impose fines, which could be prohibitive to those involved.

Problems of poor coordination and communication are also synonymous with project management issues that lead to project abandonment because many researchers have termed these problems as management-oriented (Ihuah & Benebo, 2014; Doraisamy et al., 2015). The lack of proper communication and coordination often leads to cost overruns and the failure of contractors to deliver the project on time (Ihuah & Eaton, 2013). As highlighted in this chapter, such areas of inefficiencies could easily meet the criteria of project abandonment.

Participant-Related Factors

Some researchers have pointed out that participant-related factors have often affected the future of construction projects by inhibiting the ability of major players in the construction project from undertaking their duties effectively (Doraisamy et al., 2015). For example, financial difficulties faced by a contractor or owner of an assigned building have been identified as some of the main participant-related factors attributed to construction project abandonment (Omeife, 2013). These issues often lead to delays in interim payments and unavailability of materials and equipment, which could also significantly affect the future of construction projects (Doraisamy et al., 2015).

Issues related to change or variation orders are also attributed to the same problem because they inhibit the ability of a contractor to undertake his functions effectively. Several researchers have highlighted the involvement of a large number of participants in any one given project as part of the problem because it slows down the decision-making process, thereby making it difficult for the major players to undertake their functions effectively (Dahlan & Mariappan, 2012).

Incompetency is often at the centre of these problems because researchers, such as Babu (2015) and Anyanwu (2013) say that many projects have failed to materialize because of the incompetence of contractors and consultants. Incompetent site workers have also been identified as part of the problem because they often undertake shoddy works, which contribute to our earlier assertion of poor project quality (Anyanwu, 2013).

A shortage of skilled workers is the inverse of the problem because several researchers have pointed out that the lack of these workers leaves contractors unable to offer quality services on time. Babu (2015) adds to this view by saying that having skilled workers on site is not enough because they also need to be motivated to do what they are supposed to.

Poor relationships among project team members has been highlighted as a management problem contributing to abandoned construction projects as well, but researchers such as Babu (2015) and Anyanwu (2013) have also presented them as participant-related factors that affect project outcomes. Inexperienced clients/owners of the buildings and the industrial relationship between the clients and the contractors are also challenges that fall within the participant-related factors that lead to construction abandonment.

External Factors

Different research studies have also highlighted the influence of external factors (factors that are outside the purview of the construction industry) on the abandonment of projects in the construction industry (Construction Industry Development Board, 2015). These factors include both man-made and natural issues that could cause the abandonment of construction projects. For example, Otim, Alinaitwe, Tindiwensi and Kerali (2012) highlight adverse weather and “acts of God,” as some of the main causes of abandoned construction projects.

Twumasi-Ampofo, Osei-Tutu, Decardi-Nelson, and Ofori (2014) add that unexpected location difficulties are other issues that could contribute to the same problem, while Babu (2015) says the negative impact that some projects have on the environment could be a reason for project abandonment, especially in countries where environmental concerns are at the top of the priority list of governments.

The lack of cooperation from local authorities is among legal issues that also affect the future of projects because as Twumasi-Ampofo et al. (2014) point out, it is very easy for authorities to shut a project down for varied reasons. The issuances of approvals, certificates and such like credentials are a few areas where authorities could exploit to shut down a project.

Poor economic conditions has also been highlighted in this paper as a key reason for construction project abandonment and it remains the case for researchers who group it under some of the external factors for project abandonment. Similarly, a change of government policy is also another reason for the abandonment of construction projects because some construction projects take a long time to complete and may overlap into different periods of political regime change, which could introduce legislative changes that would affect the future of the projects.

Studies that have focused on Malaysia have highlighted specific policy areas that have contributed to project abandonment in the country. Most of them have proposed these findings after investigating the reasons for project abandonment in Selangor, which has the highest incidences of abandoned construction projects (Doraisamy et al., 2015; Otim et al., 2012).

In fact, according to Doraisamy et al. (2015), more than 50% of all abandoned construction projects in Malaysia are in one location – Selangor. The studies further point out that the main problem for the high incidence of abandoned construction projects in Selangor is the high land premium imposed on investors by local and state authorities (Doraisamy et al., 2015). This concern was also expressed by Arizz and Ahmed (2014) who said that the high premiums were not only limited to land used for housing projects, but also for agricultural land as well. In some cases, the researchers demonstrated that the premiums had more than doubled, thereby increasing the cost of doing business for the investors (Arizz & Ahmed, 2014).

Other Factors

Other factors, such as cultural clashes among parties involved in a construction project, unwarranted litigation processes, and fraudulent practices and bribes are other issues identified by some researchers that affect the future of construction projects (El-Rufai, 2012; Doraisamy et al., 2015; Otim et al., 2012).

Solutions for Preventing Abandoned Projects

As highlighted in this paper, different studies have highlighted different causes for abandoned construction projects. In some selected studies, researchers have outlined different ways for preventing the occurrence of project abandonment. These suggestions were made as recommendations for helping countries to save the image of their economies and to protect the integrity of their construction industries (Gunduz, Nielsen, & Ozdemir, 2013).

Other researchers made these recommendations with the goal of saving resources from wastage and redirecting them to projects that have a higher possibility of success. For example, Ayodele and Alabi (2014) outlined some suggestions for preventing the occurrence of abandoned construction projects in Nigeria by proposing that all the stakeholders involved in the construction project should be consulted based on three main criteria that include their accountability standards, their willingness to uphold principles of transparency and their commitment to be honest.

Comparatively, Ubani and Ononuju (2013) proposed that construction projects should be borne from their ability to create economic advantages and not necessarily to advance their political interests. These recommendations were outlined with the sole purpose of eliminating or minimizing the possibility of corruption in construction projects. In addition, the same researchers said to curb the incidence of corruption that could potentially cause project abandonment, it is important for stakeholders to ensure there is due process, budget monitoring and government involvement (through crime control agencies)to prevent stakeholders from engaging in malpractice (Ubani & Ononuju, 2013).

Different researchers have also proposed the introduction of national construction agencies that would help to manage situations, which could lead to construction abandonment (Hoe, 2013; Ubani & Ononuju, 2013). For example, Hoe (2013) proposed that a National Construction Industrial bank should be introduced to undertake the duty managing the financing of construction projects.

Again, studies that have focused on preventing the incidence of construction projects in Nigeria and Uganda point out the need to have a proper planning process before commencing construction (Alao & Jagboro, 2017). They also highlight the need to make sure the project design is sound enough to meet the environmental and financial standards associated with a given locality and that there is adequate financing to complete it (Alao & Jagboro, 2017). The researchers also propose that the professionals involved in the construction process should be competent enough to advise their clients accordingly (Alao & Jagboro, 2017).

The commitment of the professionals should also be paramount. For example, architects should be available from the start of the project and to the end to make sure that their design is followed and fits the budget of the clients involved (Gunduz et al., 2013). The quantity surveyor should also be available to control the project cost and ensure there is minimal risk for cost escalations throughout the project lifecycle (Cartlidge, 2013).

Clients are also advised to stick to the original project scope because the failure to do so could lead to cost escalations, which could also further lead to project abandonment (Cartlidge, 2013). Linked to this recommendation is a suggestion by Soleimanzadeh and Mydin (2013), which says that the payment for the contractors should be linked to reports prepared by the quantity surveyor after periodic reviews. The Nigerian Institute of Quantity Surveyors (2012) adds to this debate by saying that governments should also be actively involved in the construction process by imposing restrictions on project abandonment to make sure that there is little opportunity for stakeholders to engage in malpractices that would lead to the same outcome.

In publicly funded projects, Onaikan (2013) says the government should take a proactive effort of employing only those contractors who are properly certified and who have a good record of accomplishment in completing specific tasks. The implementation of these measures would also serve as a measure of protecting the welfare of the public who are often the victims of abandoned construction projects. If these measures are successful, the implication is that millions of dollars would be saved, thereby boosting the impact of the construction industry on affected economies.

Summary

The incidence of abandoned construction projects in the developing world is a cause for concern for many researchers because the construction industry is a significant contributor to economic development for most of these countries and also an indicator of investor confidence in these economies. Although this chapter has highlighted many issues as the main causes of abandoned construction projects, it is important to point out that the most affected people are users or owners of these construction projects.

However, this fact does not negate the understanding that project abandonment also comes at a huge cost to all stakeholders involved in the construction process, including laborers, government agencies, economies, and, by extension, the society. Many researchers have highlighted these problems as characteristic of abandoned construction projects in developing countries, but a broader analysis of the same topic area shows that developed countries, such as America and Spain also experience the same problem (Schram, 2012). In this regard, abandoned construction projects present a global problem for many countries.

Based on the above findings, we find that abandoned construction projects are not only exclusive to Malaysia. Different countries, mostly in the developing world also grapple with this problem, as we have seen in some Middle East countries. The literature review section of this paper was guided by the research aim of the study, which centered on identifying the causes of abandoned construction projects In Kuala Lumpur.

A few probable causes that we have highlighted in this paper could explain the causes of abandoned construction projects in Malaysia, but no study has explored the same causes in Kuala Lumpur. Researchers who have developed their views on this research issue have also not interviewed professionals in the construction industry when making suggestions about how to address the problem of abandoned construction projects. This could explain why most of the studies highlighted in this literature review explain the main causes of abandoned projects in similar ways.

In fact, some of them identify similar ways of solving this problem. However, as we have identified from the same analysis, there is insufficient research related to explaining the main causes of abandoned construction projects in Kuala Lumpur. Implicitly, this gap means that most of the findings highlighted in this review are not sensitive to the context of social, political and economic environment of the places they are based on. More importantly, we find that most of these studies do not address the research problem of this paper based on the contextual factors plaguing contractors and developers in Kuala Lumpur. Based on this gap in literature, there is need for an in-depth research on the research topic. The chapter below shows how we conducted the study.

Methodology

As indicated in the title, this chapter outlines the methodology used to undertake this research. Here, we explain different elements we used to collect data, analyze it and present it as facts. The process involves an explanation of the research approach used, the research design adopted and the ethical issues considered when collecting the research information. First, we explain the research approach.

Research Approach

There are two main research approaches used in academic research. They include the qualitative and quantitative techniques (Killam, 2013). A third approach also exists, which combines different elements of the qualitative and quantitative research methods – mixed methods research. Researchers who analyze subjective issues in their studies usually use the qualitative technique (Killam, 2013). Comparatively, the quantitative research method is mostly used to undertake high-level research studies where the goal is to summarize findings into numbers or figures (Killam, 2013).

We chose to use the qualitative research method because we needed depth and insight to the research issues (this research approach provides this depth and insight). Specific strengths of the qualitative research design were instrumental to this study because they helped to provide a deeper examination to the issues that underlie the research problem (Killam, 2013).

The purpose of this study, which is to identify the causes of abandoned construction projects in Kuala Lumpur could not also be explained by the quantitative research approach because this research approach involves measurable variables, which were not necessarily applicable in this study (Kantrowitz-Gordon & Vandermause, 2016; Skukauskaite, 2012).

Indeed, when analyzing the causes of abandoned construction projects, we are mostly concentrating on subjective issues like disagreements between partners, mismanagement issues, poor quality issues and similar challenges in project implementation that we explained in the literature review section of this paper. Most of these issues are subjective and can best be analyzed using the quantitative research method.

Research Design

According to Creswell (2013) and Holland (2013), there are five main types of qualitative research designs. They include the phenomenological, ethnography, narrative, grounded theory and case study research designs. Different methodology experts in the field including Glaser (2013) and Lenette and Boddy (2013) have affirmed the existence of these research designs. Although these techniques normally share the same type of data collection methods, it is important to point out that the criterion for their use is mostly informed by the purpose of the study (Creswell, 2013). Although the differences between the five types of research designs could be blurry, the section below explains their major differences.

Ethnography: Researchers often say that ethnography is among the most popular research designs used in qualitative research (Kantrowitz-Gordon & Vandermause, 2016). It mostly involves a technique of data collection where the researcher immerses himself or herself in the world of the participants to understand their culture, attitudes and ways of life (Creswell, 2013). This research design traces its origin to cultural anthropology studies and is mostly used by researchers who do not want to get second-hand experiences of their participants; instead, they choose to involve themselves in the lives of their respondents and experience what they do, first-hand (Lenette & Boddy, 2013).

Narrative: The narrative research design is used when researchers piece together different types of information from a collection of participants’ views to create a story that answers a research question (Lenette & Boddy, 2013). In this research design, researchers often collect information using in-depth interviews, document reviews, and thematic analyses (Creswell, 2013). The themes are often used as indicators for the development of the final narrative. The narrative does not need to follow a chronological order, but it needs to contain key highlights that represent the main themes deduced from the interviews or other data collection techniques (Creswell, 2013).

The use of this research design has been associated with the reconciliation of contradictory stories and the development of innovative findings (Lenette & Boddy, 2013). For example, this research design has been widely used in mental health studies where psychologists use it to develop a persona that could be reliably used to conduct verifiable diagnosis, such as a person suffering from multiple schelerosis (Lenette & Boddy, 2013).

Phenomenological Design: This research design is often used to analyze or investigate different events or phenomena (Terry, 2016). It often involves the use of multiple data collection methods such as document reviews, interviews, or observations (Terry, 2016). However, the views of the participants are often regarded as the most important source of data because many researchers believe such views are “pure” (Lenette & Boddy, 2013).

Similar to other qualitative research designs, the use of this technique does not involve the formulation of hypotheses; instead, researchers often develop common themes of analysis that may be as little as five or as many as 25. Bernauer (2012) highlights these numbers as the sufficient quantity of themes that researchers could use to build a sufficient dataset to validate their findings. If we apply the use of the research design to an investigation of online courses, we find that it could be useful in understanding learning in the virtual education environment affects students’ experiences and the quality of education.

Grounded Theory: As its name suggests, the grounded theory is a research design that grounds a research process on a specific theoretical basis (Creswell, 2014). Primarily, researchers who use this technique often prefer interviews and document reviews as the main types of data collection methods (Fluehr-Lobban, 2013). Their data collection processes also commonly involve open and axial coding techniques that are useful in formulating important themes that would be applicable in the process of generating data that would explain the study issue (Bernauer, 2012).

Unlike other types of research designs highlighted in this paper, experts say that the grounded technique often involves the use of larger sample sizes of between 20 -60 respondents (Creswell, 2014). In the context of this study, the grounded theory could be used if there is a theory that explains the main causes of abandoned construction projects in Kuala Lumpur.

Case Study: the case study research design is mostly applicable in research studies that want to investigate a big phenomenon, but use a small albeit replicable sample to do so. Popularized by the Harvard Business School, this research design often involves the use of multiple sources of data to develop the research findings (Farquhar, 2012). However, researchers often use this technique for different purposes, including exploring a social phenomenon, to explain a research issue or to describing a specific event (Buetow, 2013; Yin, 2014). For example, the use of the case study research design in the context of this study would suffice if we investigated one case of an abandoned project and explored the main causes for the abandonment by applying the findings to the entire scope of the research.

Based on the merits and demerits of all the research designs highlighted above, we used the phenomenological technique as the main design in this paper. It emerged as the best choice because the abandonment of construction projects in Kuala Lumpur could be viewed as an event or a phenomenon under investigation. Thus, the research aim of this paper, which is to identify the causes of abandoned construction projects, is an attempt at explaining the causes of the phenomenon.

The other four research designs highlighted in this paper were not appropriate for this study because they failed to capture the essence of the research study, which was to understand the cause of a specific phenomenon in the construction industry. Furthermore, some of them failed to meet the structure of our review, which was mainly exploratory. For example, the grounded theory and the case study research designs failed to meet our criterion for inclusion because they usually involve theories or case studies for correct application.

The ethnography approach was also not selected in this review because it focuses on social and cultural issues, while the content of this research transcends this scope. Thus, the phenomenological research design emerged as the best choice for undertaking this research.

Data Collection

Data collection involves the collection of research data for purposes of understanding a research phenomenon under investigation (Crawford, Kruckenberg, Loubere, & Morgan, 2017). The main sources of data in this paper are document reviews and interviews. We explain these techniques below:

Interviews: We collected data using interviews as one way of obtaining research information. The use of this data collection technique was informed by the need to get first-hand information from professionals in the field of study. Since it was difficult to conduct the interviews face-to-face because of geographical barriers and cost concerns, the interviews were conducted through telephone interviews. The interviews were semi-structured because we wanted the respondents to be free to give whatever type of information they wanted.

This view is supported by Mills and Birks (2014) who say the more unstructured an interview process is, the easier it would be for the researcher to get as much information from the respondents as possible. Conversely, imposing a structure on the interview process could limit the responses of the interviewees (Mills & Birks, 2014). Thus, using the semi-structured interviews, we were able to explore the thinking, attitudes and perceptions of the professionals regarding the causes of abandoned construction projects in Kuala Lumpur.

We also used the interview technique to obtain research information because we wanted to use this platform to get clarification about some ambiguous findings we derived from the document review process. Indeed, according to DFG (2013), this type of data collection method is useful to researchers because it allows them to tailor their questions in ways that make sense to the research focus. Evans-Agnew and Rosemberg (2016) also affirm its usefulness in probing answers more deeply and clarifying specific issues about a research topic.

Malinowski (2013) also shares a similar view when he says that information obtained through unstructured interviews could be useful and unique to the researchers because it contains rich data (better than other data collection methods). Since the interview was semi-structured, questions were posed to the respondents based on an interview protocol that appears in Stanford Education (2017). One limitation associated with the use of the semi-structured interviews lies in the data analysis process because it was difficult to analyze the findings based on unstructured responses. The sample population interviewed is described below.

Sample Population: The interview process involved the collection of research data from a pool of 15 professionals working as consultants in the Malaysian construction industry. All the respondents had more than 15 years of work experience and were versant with the Kuala Lumpur construction industry. The respondents were purposefully selected from consulting companies based in Kuala Lumpur. This strategy was aimed at getting information from respondents who understood the construction problems facing the Kuala Lumpur construction industry. The sampling technique used appears below.

Sampling Technique: According to Yin (2014) and Boblin, Ireland, Kirkpatrick, and Robertson (2013), there are two types of sampling techniques – probability and non-probability sampling techniques. We used the purposeful sampling technique for this paper because we wanted to get information from professionals who understood the problems associated with the Kuala Lumpur construction industry.

This technique aligns with the views of Palinkas et al. (2015) and Shaffer (2013) who say that the purposeful sampling technique is instrumental in cases where researchers want to get rich information from knowledgeable or experienced people who understand a specific professional topic. This sampling strategy is mainly based on understanding the characteristics of a specific population group (Buckley, 2014). As highlighted above, the characteristics we were looking for were a knowledgeable understanding of the causes of abandoned construction projects in the Kuala Lumpur construction industry.

Document Review: The document review process was a complementary data collection procedure, which helped us to clarify some of the main findings of the interviews. This data collection technique helped to evaluate the responses of the interviewees and contextualize their findings within the scope of existing literature. Miles, Huberman and Saldana (2014) affirm its proficiency in the same.

Though this analysis, we were able to find areas of similarities and differences between what the respondents said and what is already known about the main causes of project abandonment in the construction industry. The main documents consulted using this data collection technique were industry publications, government reports, journals and books. The keywords and terms used in the data mining process were “Kuala Lumpur,” “abandonment,” ”project” and “construction industry.”

Data Analysis

The main data analysis technique used in this paper was the coding and thematic analysis. As highlighted by Da Costa, Hall and Spear (2016), this data analysis method is synonymous with qualitative research studies and is used by many researchers who use the phenomenological research design. It often involves the identification of patterns or themes within the coding process, which are useful in answering the research questions (Von Unger, 2016).

The data analysis method helped to categorize the interviewees’ responses into different thematic areas that were designed to answer the main research questions of this paper. To recap, the research questions concentrated on understanding the issues surrounding abandoned construction projects in Kuala Lumpur, Malaysia, finding out if the causes of project abandonment in Kuala Lumpur differ from those in other parts of Malaysia, investigating which stakeholders are most affected by project abandonment and highlighting the factors affecting the success of construction projects in Kuala Lumpur.

As highlighted in the first chapter of this paper, the research questions also focused on investigating sub-sectors of the Malaysian construction industry affected by abandoned construction projects, finding out the main players involved in the Malaysian construction industry and their role in creating the problem of project abandonment and lastly, examining the possible solutions to the problem. These seven research questions were the main thematic areas we used to categorize the responses given by the interviewees and analyzed the findings of the documents reviewed. Thus, these thematic areas outline the main categories of analysis.

The data analysis process involved six phases that included the familiarization with the respondents’ views and the document review findings as the first stage of analysis. The second phase involved generating initial codes that would represent the main thematic areas described above. The third phase involved the process of investigating the findings among the coded data to categorize them into different themes that would help answer each of the research questions described above.

The fifth process involved defining and naming the themes to ensure they are properly aligned with the characteristics and scope of the research questions. The last phase of the data analysis process involved the production of the final research findings, which appear in the next chapter.

Ethical Considerations

According to Glenda, Stacy and Robinson (2014), the nature of qualitative studies demands that researchers pay a lot of attention to ethical issues that moderate the interactions between the researchers and their respondents. Thus, the formulation of specific ethical guidelines in the study remains a paramount issue to explore. Hoonard and Hamilton (2016) reiterate this fact by emphasizing the need to evaluate ethical issues in qualitative studies because researchers need to negotiate their way with the respondents to collect credible research data.

Indeed, the quality of interactions between the researcher and the respondents may affect the reliability and credibility of the research information collected (Hansjörg, Huschke, & Mattes, 2015; Bazeley & Jackson, 2013). In the current study, we adhered to four critical ethical areas as outlined below.

Confidentiality: To protect the confidentiality of the respondents and the information they gave, we used study codes to refer to the participants. There was also a separate document kept aside to link the codes to specific interviewees for purposes of data analysis. The data obtained from the respondents was also secured in a safe place where only the researcher had access to it. Upon the completion of the current research, the same documents outlining the identity of the respondents would be destroyed as suggested by Hannes and Parylo (2014).

Informed Consent: Securing the consent of researchers is an important process in qualitative research studies (Bell, 2014). Different researchers, such as Sanjari, Bahramnezhad, Fomani, Shoghi and Cheraghi (2014) emphasize this fact. The professionals who participated in this study did so without any coercion or receiving payment. In other words, they chose to take part in the study out of their free will. Similarly, they were free to withdraw from the study at any point, without any repercussions.

No permissions were needed from their respective firms to participate in the study because all of them were free to act independently. In other words, the nature of their work contracts gave them the independence of working independently. These factors were highlighted in an informed consent form signed by all the respondents before participating in the study. It was adapted from the guidelines of New Castle University (2017).

Privacy: Safeguarding the privacy of the respondents is an important ethical consideration in qualitative studies and more so those that use interviews as the main form of data collection (AGEE, 2013; Israel, 2015). In the current study, the privacy of the respondents was safeguarded by ensuring that the names and identities of the respondents were excluded from it (Ruiz-Casares & Thompson, 2016). Instead, the respondents were referred to anonymously. The same is true when referring to the firms, which they work in. In other words, we did not reveal the names of the firms they worked at, or their positions in these firms because it would have been possible to trace the identity of the respondents this way.

Consequently, we made sure that the respondents remained anonymous throughout the study. The main motivation for protecting the privacy of the respondents was to ensure that the interview only captured their views on the research aim, which was to identify the causes of abandoned construction projects in Kuala Lumpur. Before participating in the study, the researcher informed them of this goal. Therefore, they understood that the views they gave were only meant for academic use.

Research Findings

As highlighted in the first chapter of this paper, this section of the study will explain the main findings deduced from the interviews and document review processes. Collectively, the information presented in this paper outlines the views of professionals working as consultants in the Kuala Lumpur construction industry regarding the main causes of abandoned construction projects in the city. Similarly, the findings outlined in this chapter explain complementary information we obtained about the research issue from industry reports, government publications and other secondary research materials. The section below explains the findings of the data analysis process.

Codes and Themes

As highlighted in the third chapter of this paper, we used the thematic and coding method to analyze the data. Based on the review of the research findings, we came up with five themes that helped to answer the research questions and meet the research aims. These themes were financial challenges, government-related factors, economic environment, feasibility issues, and managerial challenges. Each theme was assigned a unique code from 1-5 that represented the main causes of construction project abandonment in Kuala Lumpur. The table below describes the codes assigned to each theme.

Table 1: Emerging themes and codes

Each code was used to analyze the findings and categorize them into unique issues that caused project abandonment in the Kuala Lumpur construction industry. For example, all management-related responses given by the interviewees were assigned code 5. Similarly, all issues relating to the economic environment in Kuala Lumpur were assigned code 3. After assigning all the codes, it was easy to categorize the responses into the three themes that were ultimately used to explain the main causes of construction abandonment in the construction industry. The interview findings appear below.

Interview Findings

As highlighted in chapter three of this study, the current research included interviews as the main data collection technique. Similarly, in the same chapter we explained that there were 15 professionals interviewed. All of them were supposed to give their views regarding the causes of abandoned construction projects in Kuala Lumpur. Broadly, after summarizing their perspectives on the problem, we could generally describe their findings into five main categories, which explain the causes of the abandonment of construction projects in Kuala Lumpur. The five causes are mismanagement, unfavorable government laws, bureaucracies and red tape, uncertain economic conditions, and financial challenges. We explain these responses below.

Mismanagement

All of the respondents interviewed in this study highlighted some form of managerial issue as one of the causes of project abandonment in Kuala Lumpur. Three of them said this problem is not only unique to the nation’s capital, but also reminiscent of the problems affecting other cities in Malaysia as well. Seven of the respondents said mismanagement problems mostly stem from the failure of developers and contractors to undertake proper feasibility studies that would provide them with a sound guideline for undertaking their construction projects.

All the respondents who affirmed this fact lay most of the blame on the inexperience of developers as the main problem exacerbating this issue. Two of the respondents drew our attention to the failure of these developers to undertake proper market research as a reason for project abandonment. One of them said:

“You see, the problem mostly exists in the housing subsector where many developers invest a lot of money in putting up housing units without a proper understanding of the market and whether they would be able to sell most of these units in the first place.”

The respondents also said the same problem is characteristic of investors who put up commercial properties in Kuala Lumpur and expect to get 100% residency when the project is complete. If the project fails to generate the desired interest, some of them lose interest in their investments or even fail to follow up on some issues that could emerge in the course of the project lifecycle, thereby leading to an abandonment of the project.

Some of the respondents sampled in this paper also highlighted the use of unattractive marketing strategies as part of the problem leading to the abandonment of some construction projects in Kuala Lumpur. They said, the failure of the developers to use attractive marketing campaigns often leads to financial problems because it makes it difficult for them to get bridging loans that could help to refinance part of the project costs. They said the poor marketing strategies are often the reason why some developers fail to realize a sales figure of more than 80%.

One of the respondents gave the example of a developer in Kuala Lumpur who received a “stop work” order because of his failure to strengthen a slope in one of his construction site. This activity was excluded from the initial feasibility study. Consequently, it was not transferred to the sales price. The extra cost was so significant to the developer that the project had to be abandoned altogether. Consequently, he had to refund some of the buyers who had paid for the uncompleted units, thereby completely shutting down the project.

One of the respondents also gave another example of a developer who had to abandon his project because his feasibility study did not include the cost of relocating squatters who had occupied the land where the construction was supposed to take place. In other words, the cost that would be incurred to relocate the squatters would have been high enough to warrant the abandonment of the project.

Some of the respondents also highlighted fraud as another problem associated with mismanagement issues that later led to the abandonment of projects. There was a consensus among the sampled respondents who argued that this problem often led to non-payment and cash flow problems that arose from incorrect payments of progress billings.

One of them said contractors, subcontractors and suppliers were the main victims of such practices. This issue commonly led to the abandonment of construction projects or, at best, the late delivery of the same. The incorrect use of purchasers’ funds and the involvement in fraudulent practices by the developers were also other concerns highlighted by some of the respondents who felt that fraud was a significant cause of project abandonment in Kuala Lumpur.

The inability to resolve conflicts among some of the parties involved in these construction projects was also highlighted by 13 respondents who said that collusion between some professionals to issue incorrect reports and their willingness to sabotage the work of other participants was partly attributed to the emergence of this problem. For example, two respondents said they were aware of many cases where contractors colluded with architects to give incorrect assessments of the project progress, thereby “cheating” financiers and developers who after learning of the deceit disapproved of their work, creating tension and mistrust among them.

Another respondent said the possibility of conflicts among the parties involved was mostly common among land proprietors, financiers, contractors and developers.

Lastly, the respondents said that the incompetence of the developers and their inability to present carefully thought out financial reports was part of the mismanagement problem that contributed to the high incidence of project abandonment in Kuala Lumpur. Seven of the respondents shared this view, but they did not provide detailed information or examples to explain the cause.

Unfavorable Government Policies

Most of the respondents sampled in this study also mentioned unfavorable government policies as another cause of abandoned construction projects in Kuala Lumpur. In fact, 13 respondents mentioned this view. All of the respondents blamed the sell-as-you-build system, popularized by the Malaysian government under the leadership of Abdullah Ahmad Badawi, who was the country’s former Prime Minister, as one of the main causes of abandoned construction projects in Kuala Lumpur. Under this system, the government encouraged developers to sell houses that are not built to spur the growth of the construction industry and to reduce the capital requirement from the developer needed to construct buildings.

Although some of the professionals interviewed said this system was successful in some areas, they all agreed that it was also responsible for many failed construction projects in the city. They attribute the increased number of abandoned construction projects that occurred this way to the influx of developers who did not have capital into the construction industry. Since these developers did not have the capital to finance such mega projects, they often relied on their sales numbers to undertake such projects.

Whenever, they failed to reach their sales targets, they ran out of cash and could not continue to build. Similarly, the influx of small developers in the industry also means that in some instances, some of these developers do not have the necessary skills required to undertake the projects they chose to undertake. In some cases, such projects were abandoned. The respondents also said financiers shun the sell-then-build system for the build-then-sell model because they consider the latter to have lesser risks of financing.

Some of the respondents said this preference may have led some financiers to fail to conduct the proper duty of care before lending to developers. Consequently, they had to rely a lot on the input of experts, such as architects, to provide certificates of progress. This strategy allows them to collect money from the owners, even when the projects were abandoned. This system is often prone to developers claiming more money than was previously expected, thereby increasing the risk of project abandonment.

The respondents also said the unavailability of certain insurance products, such as the home indemnity insurance, was partly responsible for the increase in abandoned construction projects in Malaysia. The contractor, often takes this insurance product on behalf of the owner of the project so that the project can continue to be developed in the event that the developer dies, is incapacitated or goes missing. One of the respondents said the product is popular in Western Australia. It has managed to reduce the incidence of abandoned construction projects in the same area. Such a product is not available in Kuala Lumpur.

Thus, whenever a developer cannot continue to finance a project for whatever reason, the project is automatically abandoned. However, five of the respondents claimed that there are such insurance products being developed in the country to prevent project abandonment. For example, one of them said the Real Estate and Housing Developers Association of Malaysia has collaborated with the government to develop a fund that would be managed by an independent party where both parties contribute less than 10% of the total project cost into a fund that would protect homebuyers from the possibility of project abandonment.

However, before projects are included in the plan, the government has introduced a requirement that they should be rated first. However, when they pass this criterion, they are stamped with a seal that guarantees their completion.

Some of the respondents also claimed that the ineffectiveness of the arbitration and litigation processes were also responsible for the abandonment of construction projects. Three respondents singled out the Tribunal of Homebuyers Claims by saying their limitations inhibited the litigation claims made by developers and homeowners, thereby causing an increase in project abandonment cases. Another respondent said:

“Such a tribunal is supposed to be a reprieve for many homeowners who would have otherwise spent a lot of time and resources seeking recourse in the country’s judicial process. However, the tribunal is unable to fully arbitrate all cases because of legal restraints. Those who feel aggrieved by the process often resort to abandoning the project altogether, thereby increasing the incidence of such cases.”

When this question was posed to another respondent, there were disagreements in explaining the role of the tribunal in influencing litigation claims. Two of the respondents differed with the above view by saying that the tribunal of Homebuyers was effective in solving some of the grievances of would-be homeowners, thereby reducing the likelihood of project abandonment. Therefore, the interviewees who felt this way were convinced that the tribunal helped to reduce the cases of construction project abandonment.

Referring to the role of unfavorable government policies in exacerbating the phenomenon of abandoned construction projects in Kuala Lumpur, six of the respondents drew our attention to the requirement by authorities to build 30% low-cost housing as a government policy. Those who explained this concern said most developers easily abandoned projects that failed to generate enough interest, as opposed to completing them and suffering the agony of looking for clients.

Most of the respondents said the problem with this policy and its contribution to the incidence of abandoned construction projects stems from the fact that low-cost housing is only attractive to people who have are in the same income group. Developers find it difficult to sells such houses to this population group because their projects are sometimes located in locations where low-income people are not there. This problem contributes to project abandonment. Lastly, another respondent said the requirement to build low-cost housing prevents the developers and contractors from transferring the benefits of cross-subsidies from higher-grade housing projects to the low-cost housing projects. In his view, this problem contributed to project abandonment.

Ineffective Public Delivery System

An ineffective public delivery system in Kuala Lumpur was highlighted as a failure by the government to provide goods and services efficiently. Researchers who mentioned this issue as a cause of project abandonment in Kuala Lumpur differed with some of their colleagues who presented unfavorable government policies as the main public policy problem that contributed to project abandonment. Instead, they said that the problem was not unfavorable policies, but an inefficient public delivery system in Kuala Lumpur.

Poor enforcement of control and monitoring standards in the construction industry also emerged as key problems associated with government ineffectiveness that led to project abandonment. Some of the respondents identified the poor standards of licensing for investors as part of the problem. Others said the government is lagging behind in developing an efficient system for identifying abandoned projects and the lack of harsh punishments for defaulters and errand developers as part of the government‘s weaknesses.

The same group of respondents also drew our attention to the failure of the government to decrease the bureaucracy involved in approving construction projects. Nonetheless, some of the respondents acknowledged that the government was trying to take active steps to reduce the number of errand developers by blacklisting those who had contravened existing laws. However, they did not express a lot of confidence regarding whether these measures are working, or not. For example, some of them believed that it was still easy for the same errand developers to register another company and by-pass such measures.

Three of the respondents also believed that there are many cases where developers use proxies to undertake specific construction projects and in case of project abandonment, it is difficult to trace them.

An Uncertain Economic Environment

All the respondents interviewed mentioned the effects of an uncertain economic environment on the future of current and future construction projects. They attributed many of the causes of project abandonment in Kuala Lumpur to this factor. For example, some of them said an uncertain economic environment led to a rise in the price of raw materials and the creation of a selfish financial system. Others said a high interest rate (that discourages people from taking up loans to develop property or buy new ones) and increased competition for new projects that often affect the sales projections of new developers and ultimately their cash flow linked to a bad economic environment.

Financial Issues

Some of the respondents also identified financial problems as part of the reasons for the abandonment of construction projects in Kuala Lumpur. However, it was difficult to separate this cause with the others mentioned above because most of the respondents attributed financial problems to environmental or management issues. For example, all the respondents who identified problems associated with a poor feasibility study and mismanagement mentioned financial issues.

Similarly, respondents who said an unfavorable economic environment contributed to abandoned construction projects also added that the same issue let to financial problems. In this regard, it was difficult to differentiate financial problems with all the others identified in this paper. However, financial issues emerged as a unique cause of project abandonment because financial challenges were at top of the list of causes for project abandonment identified by the respondents, regardless of what caused them.

Factors Affecting the Success of Construction Projects in Kuala Lumpur

When asked to explain their views on the factors affecting the success of construction projects in Kuala Lumpur, most of the respondents’ views oscillated around environmental issues, project-related factors, and management issues. In this regard, there was consistency in their views regarding the main causes of abandonment of construction projects and the main factors affecting the success of construction projects in Kuala Lumpur. For example, environmental issues, as a critical success factor for the construction industry in Kuala Lumpur, reflected their findings about economic conditions and financial challenges as some of the main causes of project abandonment.

Project-related issues, as a critical success factor for project success in the Kuala Lumpur construction industry, also mirrored their views regarding the lack of proper feasibility studies and the building models (such as the sell-before-you-build system) because these causes are project-related factors contributing to the abandonment of construction projects. The same is true for managerial factors as a key success factor because the same respondents highlighted management incompetence as a cause for project abandonment in the Kuala Lumpur construction industry.

Although there were some similarities between the critical success factors and the causes of project abandonment, it is important to note that the respondents often differed on the weight of some of these critical success factors on project success. For example, while some of them felt that management issues were more significant in determining the success of a project, others believed that environmental factors were more significant. In this regard, there was a difference in opinion regarding which critical success factors were weightier than others.

Document Review Findings

Stakeholders Involved in the Construction Process

Although our research revealed several reasons for project abandonment in the Kuala Lumpur construction industry, our document review process showed that different stakeholders were responsible for part of the problem. Developers emerged as the main stakeholder group responsible for project abandonment. Endless speculation by this stakeholder group regarding the market for construction projects was also identified as part of the problem.

The literature pointed out that this issue often led to an oversupply in the housing market (CIDB Malaysia, 2013). Such activities create an imbalance of the housing demand and supply, which later leads to the abandonment of construction projects. This problem was mostly representative of research studies that focused on construction in the housing and commercial buildings sector (Construction Industry Development Board, 2015).

The literature also pointed out that developers were responsible for failing to conduct a proper feasibility study that would help avoid some of the problems that lead to the abandonment of projects. Such problems also lead to weaknesses in planning and control, which also contribute to the high incidence of abandoned construction projects in Kuala Lumpur (Construction Industry Development Board, 2015). Some of the main stakeholders we found to be responsible for project abandonment in Kuala Lumpur appear below.

The Government: The weaknesses of the government through the Ministry of Housing and Local Government emerged as part of the reason for the abandonment of construction projects in Kuala Lumpur. Planning authorities and technical agencies were faulted for failing to implement the law and monitor the activities of those involved in the sector (Dahlan & Mariappan, 2012). Such is the case of the Housing Development (Licensing and Control) Act 1966 (Act 118), which has been disregarded by some developers and contractors in Kuala Lumpur, without any action being taken by the local authorities (Dahlan & Mariappan, 2012).

Inefficient development control processes are also attributed to the government because they create confusion among the stakeholders, thereby contributing to project abandonment. Part of the problem stems from the existence of some Acts and laws that exempt authorities from taking action on errand practitioners. For example, the Street Drainage and Building Act, which is enforceable in Kuala Lumpur prevents some local authorities from undertaking periodic inspections of public construction works (Dahlan & Mariappan, 2012). In fact, such inspections often only happen when a problem has already occurred. Some of these problems are irreparable and may lead to the abandonment of the project altogether.

Contractors: A review of the literature also showed that contractors are significant players in the Kuala Lumpur construction industry. It also showed that the weaknesses of this stakeholder group were responsible for some of the abandoned construction projects in the city (Arizz & Ahmed, 2014). The lack of experience by some of the contractors was partly responsible for this outcome, as was witnessed by the pursuant of the sell-off-the-plan system, which exposed them to cash flow problems, and ultimately the possibility of project abandonment. Some of these weaknesses are responsible for unreliable progress payments from the developers, further increasing the possibility of construction project abandonment.

Financial Institutions: Financiers also emerged as another key player in the Kuala Lumpur construction industry that is partly responsible for the abandonment of construction projects in the city. The literature pointed out that this stakeholder group was sensitive to economic conditions because when there were unfavorable economic conditions, their willingness to lend money to developers significantly declined (Arizz & Ahmed, 2014).

Small and medium-sized developers are mostly affected by the unwillingness of these financial institutions to provide them with funds because they do not have the large capital support that their counterparts who undertake mega projects do. The financial institutions are also likely to revise their interest rates upwards during times of economic hardships, thereby affecting the cash flow projections of the developers in the short-term and medium term. A decrease in this cash flow often leads to a reduction in profits and an increase in the construction costs, which could ultimately affect the future of construction projects (Arizz & Ahmed, 2014).

Based on these findings, we see that financial institutions are a significant stakeholder group in the Kuala Lumpur construction industry because their activities could significantly affect the future of construction projects. The chapter below analyzes the findings we obtained from the document review and the interview findings.

Analysis

In this chapter, we analyze the findings mentioned in chapter four and explain how they link with the seven research questions. The questions strive to explore the issues surrounding abandoned construction projects in Kuala Lumpur, Malaysia, find out if the causes of project abandonment in Kuala Lumpur differ from those in other parts of Malaysia and highlight which stakeholders are most affected by project abandonment. The same questions seek to find out the factors affecting the success of construction projects in Kuala Lumpur, explore sub-sectors of the construction industry that are most affected by abandoned construction projects, investigate who are the main players involved and what is their role in creating the problem of project abandonment.

To reiterate the data collection process, we mostly obtained information from 15 respondents working in different consulting companies within the Kuala Lumpur construction industry. We also obtained information through a document review process that included publications of industry reports on the Kuala Lumpur construction industry, government reports on the same and expert reviews on the challenges and future of the Kuala Lumpur construction industry. In this chapter, we analyze the findings.

Differences between Kuala Lumpur and other Parts of Malaysia

The research aim for this study was to identify the main causes of abandoned construction projects in Kuala Lumpur. Although our interview findings showed that mismanagement, unfavorable government policies, uncertain economic conditions, financial issues and an ineffective public delivery system were the main causes of abandoned construction projects in the city, there were no differences between these causes and those highlighted by other studies. For example, except for the ineffective public delivery system, we found out that all the other causes of project abandonment in Kuala Lumpur, mentioned by the 15 respondents have been highlighted by other studies in the literature review section.

Indeed, we find that mismanagement, unfavorable government policies, uncertain economic conditions, and financial challenges have been mentioned by other researchers, as the leading causes of project abandonment in many developing countries. For example, we find out that these four causes have been prominently explored by researchers, such as Babu (2015) and Anyanwu (2013) who investigated the causes of project abandonment in the Nigerian construction industry.

We also affirm the same findings in a study by Albogamy et al. (2012), which showed that the same causes were responsible for abandoned construction projects in the Middle East. Based on these assertions, we see that the findings of this study are consistent with the findings of other researchers who have explored the same research issue in other parts of the world.

Issues in the Kuala Lumpur Construction Industry

Understanding the main issues affecting the Kuala Lumpur construction industry was a key research question in this study. Based on a review of our research findings, we deduce that the main issues affecting the sector are financial, managerial, environmental, and legal. These factors span across the public and private sectors of the Kuala Lumpur construction industry and have the ability to create a complete stalemate in the sector.

The same issues highlight key areas in the construction industry where stakeholders experience problems that lead to the abandonment of construction projects altogether. For example, the promotion of the sell-before-you-build system, which has been promoted by the Malaysian government, stems from the legal issues affecting the Kuala Lumpur construction industry. Similarly, the lack of an effective tribunal to solve some of the grievances that stakeholders in the sector have also stems from the legal issues characterizing the construction industry. Thus, understanding these issues is an effective strategy for comprehending the causes of construction abandonment in the city because eliminating these causes depends on a complete analysis of the issues affecting the sector.

This understanding stems from the fact that the causes of project abandonment in Kuala Lumpur exist within a wider ecosystem of issues affecting different players in the sector. Comprehending the interrelationships between these issues and the web that causes the associated construction challenges would be a positive first step in minimizing their impact on the sector. For example, based on the findings highlighted in this study, we cannot deny the interrelationship between financial issues and the economic environment.

More importantly, it is difficult to deny the fact that economic factors often cause financial challenges in the Kuala Lumpur construction industry. Based on this relationship, it is important to point out the relevance of understanding these issues in the context of formulating recommendations, which will appear in the next chapter.

The Causes of Abandoned Construction projects in Kuala Lumpur are the same as those in other Parts of Malaysia

More importantly, based on the same findings, we also find that the challenges facing the Kuala Lumpur construction industry are also the same challenges facing stakeholders in other parts of Malaysia. Understandably, this finding could stem from the fact that all metropolitan areas of Malaysia are subject to the same economic conditions, if we were to analyze unfavorable economic conditions as a cause of project abandonment in Kuala Lumpur.

The same is true for financial challenges as a cause of project abandonment in Malaysia because most developers and contractors in Kuala Lumpur and the wider Malaysia seek financing from institutions that often operate in all parts of the country. Furthermore, their standards for lending and the criteria used to analyze possible beneficiaries are the same countrywide. Concisely, if a lending institution raises interest rates for a construction project in Kuala Lumpur, the same revision would also apply to a different contractor operating in Selangor, or any other part of the country.

The same analogy also applies to unfavorable government policies as a cause of abandoned construction projects in Kuala Lumpur because the government of Malaysia is one and does not have selective application of laws or policies for different parts of the country. Therefore, the same unfavorable policies that could cause project abandonment in Kuala Lumpur could also cause project abandonment in any other part of Malaysia.

Stakeholders in the Construction Industry

Based on the findings we deduced from this research, we found that the main stakeholders in the Kuala Lumpur construction industry are contractors, developers, the government and the financial institutions. This finding stemmed from the document review process. Again, we find that these findings are consistent with the literature review findings because other studies have also highlighted the same stakeholder groups as the main actors in the construction industry (Albogamy et al., 2012). This outcome could possibly stem from the standardization of the structures of the construction industry in different parts of the world.

However, in our findings, we could easily draw a link between these stakeholders and the causes of construction project abandonment in the Kuala Lumpur construction industry. For example, we identify the role of financial institutions in creating financial challenges as a cause of project abandonment in the Kuala Lumpur construction industry. The failure of these institutions to perform proper due diligence and their occasional revision of interest rates often inconvenience many developers who suffer diminished profit margins and an inability to finance all aspects of their construction projects, thereby increasing the likelihood of project abandonment.

Similarly, we could draw a link between the lack of a proper feasibility test, as a cause of construction project abandonment identified by the 15 respondents, with the developers, as the main stakeholder group in the Kuala Lumpur construction industry. Indeed, it is the responsibility of the developers to conduct proper feasibility studies before embarking on any construction project. As highlighted in chapter four of this paper, some developers fail to conduct proper feasibility studies and consequently suffer significant problems in their business.

The respondents drew our attention to the lack of proper generation of sales as a significant issue contributing to the abandonment of construction projects in Malaysia’s capital. This problem stems from poor feasibility studies and is directly attributed to the role of the developers as the main stakeholder group in the industry.

The Housing Subsector is Most Affected by Project Abandonment

Based on the findings highlighted in this report, we find that the housing sector is the most affected subsector of the Kuala Lumpur construction industry from project abandonment. This finding stems from the fact that this market is commonly associated with the sell-before-you-build system, which allows developers to sell unconstructed units to the public without having built the houses in the first place. This policy increases the risk of litigation and project abandonment because the developer’s cash flow is mostly tied to sales numbers.

Thus, as highlighted in this paper, the failure to generate enough sales could mean the abandonment of a project. The housing sector is also affected by project abandonment because it involves more stakeholders, as opposed to other types of construction projects in the city. Particularly, the addition of homeowners in the construction equation presents a challenge to developers and contractors because this is one more interested group to consider when undertaking a project. Additionally, it is one more party affected by the abandonment of the project. Indeed, the housing market is unlike any other because most homeowners often have to seek financial support from relatives or their banks to be able to purchase homes off-plan.

When a project is abandoned, the same people have to pay for such loans for a long time (without occupying the houses they paid for), thereby increasing the impact of such an outcome on their wellbeing. This situation is unlike publicly funded infrastructure projects where the main stakeholder is the government. If the project is abandoned, the impact is not as dire as it is for the housing market clients. In fact, such an outcome would mostly have a financial implication and not necessarily, an emotional implication, as would be the case for a homeowner who paid millions of shillings for a house that they would not be able to occupy.

The same is true for commercial office buildings in Kuala Lumpur because the developers often do not often solicit money from would-be tenants to finance the projects. Therefore, this market is not exposed to the risk of the sell-before-you-build system. Collectively, these factors show that the housing subsector remains the most affected tenet of the Kuala Lumpur construction industry that suffers most from project abandonment.

Conclusion and Recommendations

At the onset of this paper, we conducted this research with one aim, which was to identify the causes of abandoned construction projects in Kuala Lumpur. Our study was characterized by seven research questions. The questions strived to explore the issues surrounding abandoned construction projects in Kuala Lumpur, Malaysia, find out if the causes of project abandonment in Kuala Lumpur differ from those in other parts of Malaysia and highlight which stakeholders are most affected by project abandonment.

The same questions sought to find out the factors affecting the success of construction projects in Kuala Lumpur, explore sub-sectors of the construction industry that are most affected by abandoned construction projects, investigate who are the main players involved and what is their role in creating the problem of project abandonment.

To reiterate the data collection process, we mostly obtained information from 15 respondents working in different consulting companies within the Kuala Lumpur construction industry. We also obtained information through a document review process that included publications of industry reports on the Kuala Lumpur construction industry, government reports on the same and expert reviews on the challenges and future of the Kuala Lumpur construction industry.

The methodology notwithstanding, we established that abandoned construction projects are characteristic of the Malaysian construction industry because different literatures have documented hundreds of projects abandoned in the city because of a myriad of reasons. However, this problem is not unique to the country alone because other developing economies have experienced the same problem.

Project delays, cost overruns, environmental issues and legal tussles are some challenges that we have seen in this paper that are associated with this problem. As a result, many major projects, such as the construction of churches, bridges, schools, hospitals and the likes fail to materialize in the city. Although there are many cases of abandoned construction projects in Kuala Lumpur, we have seen that the construction industry is a key part of the city’s overall economy. Indeed, as seen in the literature review, it is an indicator of the health of national economies and a predictor of foreign investment flow into most developing economies.

In Kuala Lumpur, the construction industry plays the same role. However, this city has reported among the highest incidences of project abandonment because of several social, political and economic factors. Based on the findings of a document review process and an interview of 15 professionals who work in the sector, we have established that the main causes of abandoned construction projects in the city are mismanagement, poor economic conditions, unfavorable government policies, lack of proper feasibility studies and financial issues. These challenges are not only unique to Kuala Lumpur because we have established that other cities in Malaysia also suffer from the same problems.

Similarly, we have established that the same causes have been highlighted by researchers who have explored the causes of abandoned construction projects in other parts of the world. In this regard, the findings of this study are consistent with existing literature. However, stakeholders in the sector need to dedicate a lot of time fixing some of these problems because, as highlighted in chapter five of this paper, they exist within a wider web of issues that affect the Kuala Lumpur construction industry.

Stopping the promotion of the sell-before-you-build concept by the Malaysian government should be the first place to make such changes because it promotes a risky system that exposes developers to cash flow problems that increase the risk of project abandonment. Instead, the government should promote the build-then-sell system because it protects homeowners from the same risk.

The promotion of insurance products should be undertaken alongside this strategy because there have been signs of similar ingenuity in the Kuala Lumpur construction industry that protect against the risk of project abandonment. By its very nature, this recommendation is not designed to decrease the incidence of project abandonment, but to protect stakeholders from the possibility of the same. Most of these recommendations highlight the need for the same stakeholders to undertake proper feasibility studies before embarking on starting the construction projects.

Indeed, as Doloi, Sawhney, Iyer and Rentala (2012) point out, to avoid project abandonment, there needs to be proper planning. More importantly, since financial issues are among the top reasons for project abandonment, it is important to put a lot of emphasis on financial planning as a key factor in the prevention of project abandonment. Making sure stakeholders evaluate the impact of planning in the execution of project plans would ensure that the construction projects meet their intended goals as envisioned by the developers. Indeed, developers often intend to bestow new and beneficial products to the community. Mitigating the main causes of project abandonment in this case could significantly help these developers to meet these goals.

Although this paper has highlighted the main causes of project abandonment in the Kuala Lumpur construction industry, it is important to point out that the reasons mentioned here apply to all sectors of the industry. However, we have noted differences in the factors affecting the demand and supply of the construction projects in different subsectors. For example, through the literature review, we have shown that most research studies have focused on the housing submarket.

In this paper, we have stretched the analysis further to show how public sector and private sector projects are affected by the aforementioned causes. Future research studies should undertake a sector-wide analysis of the causes of abandoned construction projects in Kuala Lumpur because different social and economic drivers affect the demand and supply of construction projects in different sectors of the industry. More importantly, future researchers should focus on understanding the main causes of construction project abandonment of publicly funded projects in the Kuala Lumpur construction industry because this segment of the industry remains relatively understudied.

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