“Cowboy contractors” is a word commonly used to characterize contractors who work in an unprofessional manner. These individuals or businesses may take shortcuts, provide poor quality work, or fail to follow legislation and safety norms.
They may also lack proper licensing, insurance, or the expertise required for the work. The term can hold negative implications since it denotes a lack of professionalism and ethics in the building sector.
As a result, homeowners and clients are frequently encouraged to conduct extensive research and due diligence before engaging contractors to prevent falling prey to cowboy contractors. This includes checking references, validating licensing, reviewing reviews, and making sure contracts are clear and precise.
Cowboy contractors’ issues are not new, and they are seen throughout the world. There may be degree differences, but these can be observed in both developing and developed countries.
Similarly, in Ethiopia’s construction sector, the advent of some unqualified contractors has caused serious concerns. They enter the construction profession without the necessary qualifications or expertise, similar to the concept of “cowboy contractors” in other situations. Such contractors frequently do substandard work, resulting in project delays, cost overruns, and lowered safety standards.
These contractors typically become contractors through two primary pathways: Some start their entrepreneurial journey informally, engaging in activities such as collecting and selling waste materials, then transitioning to trading salvaged goods, and eventually establishing small shops selling hardware or clothing before entering the construction sector. Others are graduates from Technical and Vocational Education and Training (TVET) programs organized and financed by the Ethiopian government. While these programs aim to equip individuals with relevant skills, the supply-driven nature of TVET has sometimes resulted in a mismatch between the skills acquired and the actual demands of the construction industry, leaving graduates ill-prepared for complex construction projects.
Both pathways often produce contractors lacking a comprehensive understanding of construction methodologies, proficiency in preparing and interpreting construction documents, effective project scheduling and management skills, awareness of contractual obligations and rights, and knowledge of environmental safeguards and safety regulations. These deficiencies contribute to various challenges within the industry, including project delays, cost overruns, compromised quality, and safety concerns.
A notable and problematic practice among these contractors is the use of signed cheques as guarantees for payments and services. Legally, cheques are instruments payable on demand and cannot be issued with conditions. Once signed and issued, the recipient can cash the cheque immediately. Ethiopian law criminalizes the act of drawing a cheque without sufficient funds, leading to potential legal consequences for the drawer. The misuse of cheques in this manner has resulted in an increased burden on the courts due to cheque-related litigation.
Furthermore, when cheques are used as guarantees in construction transactions, employers miss the opportunity to assess the contractor’s insolvency, default, or financial distress through organized professional financial institutions. Financial institutions conduct thorough evaluations of a contractor’s financial health, including assessments of assets, liabilities, credit history, and overall financial stability. By relying on cheques instead of bank-issued guarantees, suppliers forgo this critical evaluation, potentially exposing themselves to higher financial risks.
Addressing these challenges requires a collaborative approach involving various stakeholders. Materials manufacturers and suppliers should ensure the provision of high-quality construction materials, thereby enhancing the overall quality of construction projects.
Hardware and equipment suppliers can offer modern tools and machinery, improving efficiency and safety on construction sites. Fuel agencies should provide reliable energy sources necessary for operating construction equipment and machinery. Financial institutions can offer tailored financial products and services to support contractors in acquiring necessary resources and managing cash flows.
Universities can contribute by aligning their curricula with industry needs, conducting relevant research, and providing training programs to bridge skill gaps. Professional associations can set industry standards, offer certification programs, and facilitate knowledge sharing among members. Standard institutes can develop and enforce regulations that ensure quality and safety in construction practices.
To further address these issues, it is recommended to establish a National Construction Industry Board comprising all relevant stakeholders, with a dedicated secretariat office for coordination purposes. This board would serve as a central body to oversee and guide the development of the construction industry, ensuring that policies and practices are effectively implemented and that stakeholders are held accountable.
Additionally, limiting construction companies or sole proprietors to certain grades based on their qualifications and track records can help maintain industry standards. Specifically, Cowboy contractors should be restricted to a maximum classification of Grade 5, while only professionals with proven experience, a positive environmental impact, and a clean record concerning labour relations and litigation should be eligible to upgrade their licenses to Grade 1 contractors. This approach ensures that only competent and responsible entities undertake significant projects, thereby enhancing the overall quality and reliability of construction works.
Furthermore, it is proposed that every three years, contractors be required to report on the projects they have executed. For license renewal, they should obtain supporting certificates from environmental authorities based on their performance, endorsements from labour unions and federations confirming respect for labour rights, and approvals from the regional government’s House of Representatives in the regions where they have executed infrastructure projects, ensuring that end-users have no complaints about their work.
It is also imperative to address the misuse of cheques as guarantees in procurement processes. Cheques should not be used as guarantees for the procurement of goods and services. Instead, guarantees should be issued through financial institutions in the form of bank guarantees, letters of credit, or other appropriate instruments. This practice aligns with the Federal Public Procurement Directive, which stipulates that bid securities may be in the form of cash, a cheque certified by a reputable bank, bank guarantee, or letter of credit. Utilizing financial institutions for guarantees allows employers to benefit from the institutions’ assessments of a contractor’s creditworthiness, thereby mitigating financial risks associated with construction projects.
While the Ministry of Urban Development, Construction, and Housing is responsible for issuing competency licenses to contractors, the proposed Construction Industry Board should conduct due diligence to verify that all contractors are delivering proper services to the community and contributing to national infrastructure development. Evaluating contractors based solely on assets, staff, and capital may not accurately reflect their performance capabilities. Instead, metrics such as the number of kilometres of asphalt work completed in the past three years, frequency of completing projects within budget, and adherence to contract timelines should be considered. The board should also have the authority to assess the validity of time extensions granted without substantial justification.
For example, unlike the Cowboy contractor, those who participate in Ethiopia’s corridor development projects have had a tremendous impact on the country’s construction sector because they highlight the necessity of competence and regulation in the Ethiopian construction industry. The projects are concerned with quality, environmental protection, safety requirements, and so on.
Besides, the contractors emphasize quality control and adhere to safety standards and environmental protections, which are likely to build a positive reputation, leading to more opportunities for future projects. This, in turn, allows contractors, by leveraging these strengths, involved in Ethiopia’s corridor development, can contribute significantly to the country’s infrastructure goals and overall economic development.
Therefore, by implementing the aforementioned measures that can avoid cowboy contractors and taking lessons from corridor development projects, Ethiopia can improve the competencies of its contractors, the quality and efficiency of infrastructure projects, protect the environment, and ultimately drive long-term development in the construction industry.
Mekonnen Tsegaw holds a BSc in Civil Engineering, an MSc in Geotechnical (Civil) Engineering, and an LLB in Law, combining technical expertise with legal acumen to address complex challenges in engineering and construction law. Associate Member of Nemad Consulting Architects and Engineers Plc.
BY MEKONNEN TSEGAW
THE ETHIOPIAN HERALD SATURDAY 12 APRIL 2025
