Causes of Payment Problems for Small Projects in Queensland, Australia

This paper explores the reasons for payment problems for small projects in Queensland, Australia. It analyzes four articles and highlights the main factors affecting payment issues in small projects. The article emphasizes the importance of operating cash flow management and the reasons that lead to its management. The greatest burden lies on the managers of the project. The ability of managers to implement the policies of the project and achieve stated objectives depends on their conceptualization of the project and their ability to operate in the prevailing business conditions. The government plays an important role in regulating the conditions in the business environment through the monetary policies enacted in that particular year.

Small Projects in Australia 1
CAUSES OF PAYMENT PROBLEMS FOR SMALL PROJECTS IN QUEENSLAND,
AUSTRALIA
Name
Professor
University
Location of university
Date

Small Projects in Australia 2
Table of Contents
Description of the topic…………………………………………………………………….3
List of the articles studied…………………………………………………………………4
Analysis of one article………………………………………………………………………5
Appraisal of the analyzed article………………………………………………………….6
Preliminary research questions…………………………………………………………...7
Screenshot of a Turnitin similarity report ………………………………………………8
Personal Reflection………………………………………………………………………..9
References…………………………………………………………………………………10

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Description of the topic
Small businesses are the determined in terms of the number of employees, the revenue
that they generate, their legal structure and other economic characteristics. Small a projects face
a lot of problems when it comes to payment issues mostly in the form of default and late
payments. The Australian Bureau of Statistics recognizes small businesses and projects as those
with 20 or fewer employees, managed by one person or a small group of people (Fulford &
Standing, 2014, p 316). The contribution of these projects is very significant to the Australian
economy thereby making it absolutely necessary to identify and solve the factors that affect
payment issues in small projects. Revenue generation is the main reason behind the start of small
projects and any payment problems in the projects jeopardize their continuity of these enterprises
into the foreseeable future (MacLean & Berends, 2018). This paper explores the reason
highlighted by four articles regarding the reasons for payment problems for small projects in
Queensland, Australia.

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Articles Studied
Article Title Keywords
How late payments are sending small
business to the wall
Late payments
Delayed Payment Problems in Public
Construction Projects: Subcontractors’
Perspectives
Payment problems
Factors that enable and hinder the
implementation of projects in the alcohol and
another drug field
Projects
FACTORS AFFECTING THE
PERFORMANCE OF SMALL
INDIGENOUS CONTRACTORS IN
AUSTRALIA
Small indigenous contractors

Small Projects in Australia 5
Ridley, S. (2018). How late payments are sending small business to the wall. [online]
Intheblack.com. Available at: https://www.intheblack.com/articles/2017/06/01/late-
payments-business-wall
Operating cash flow shortage is the main cause of payment problems for small projects in
Australia (Ridley, 2018). The growth of an enterprise requires a lot of operating cash that keeps
on increasing with additional expenses for the project due to the expansion of the activities that
have already been started and the adoption of new equipment and personnel. Lack of proper
predictive planning for cash flow requirements often leads to late payments and even default in
case some or all of the assets are claimed by debtholders as the project collapses (Nicholls &
Orsmond, 2018). The government should, therefore, regulate the policies for small projects.
Taxation and employment requirements should be lenient for small projects in order to facilitate
their growth and expansion. The finances available for the projects should also be availed at low
rates to help the enterprises to grow without incurring too many long-term liabilities.
According to a report released by Cate Carnell of Australian Small Business and Small
Enterprise Ombudsman, government regulations are unfair to small projects (Ridley, 2018).
Multinational Corporations also affect small enterprises since the terms of operations are similar
for all the businesses regardless of their size. High-interest rates are an additional cost to bear for
small projects (Sherekar, Tatikonda, & Student, 2016). The high cost of borrowing reduces the
disposable income for small projects thereby curtailing the revenue-generating activities of the
projects thereby leading to payment problems since the managers of the enterprises may prefer to
devote the available funds to other operational obligations besides the payment of wages
(Enshassi & Abuhamra, 2015). Poor credit ratings also affect small projects due to a shortage of

Small Projects in Australia 6
collaterals. Small projects are in most cases startups of big projects that rely heavily on the
availability of debt in order for them to expand to the projected levels.
Appraisal of the article
Researchers in the above studies categorized payment problems as those arising
internally and those caused by external factors in the business environment according to all of
the four articles analyzed. Both internal and external factors are important and interdependent
and both have to be properly managed for the continuity and expansion of the projects (Ridley,
2018). Notably, all the articles analyzed emphasize more on the external factors such as high-
interest rates and indiscriminate government policies. Fulford and Standing (2014) noted that the
role of managers in ensuring that the projects reach the target levels is critical. Patanakul (2014),
however, undermined the roles of internal management decisions in influencing the outcome of
the project in question. The other articles, in contrast, echo the fact that it is important for
managers of small projects to be creative in choosing the course of action to follow in the
prevailing conditions in the business environment.
In conclusion, all the articles base the solution to payment problems on managers since
most of the factors in the external environment are hard to regulate and they may take longer to
restore to optimum challenges managers to develop policies that enable the goals of a particular
project amid a certain set of conditions and plan for any dynamism that may occur (Nicholls &
Orsmond, 2018). Maintaining a balance between operational costs and expansion costs should be
the top priority for individuals running small projects (Mok, Shen, & Yang, 2015, p 447). It is
important for small projects to be registered under a union that will be constantly assessing the
environment in which they operate in and recommends necessary changes to the government.

Small Projects in Australia 7
Having separate government regulations for giant corporations and small projects will protect the
upcoming enterprises from problems such as overburdening in taxation.
Preliminary research questions
1. What are the main reasons for cash flow shortages for small projects?
2. How can one prevent a small project from experiencing cash flow problems?
3. What measures should the government take in order to prevent small projects from
collapsing?

Small Projects in Australia 8
Personal Reflection
The above article emphasizes the importance of operating cash flow management and the
reasons that lead to its management. The greatest burden according to the article lies on the
managers of the project. The ability of managers to implement the policies of the project and
achieve stated objectives depends on their conceptualization of the project and their ability to
operate in the prevailing business conditions (Denscombe, 2014). The conditions include the cost
of borrowing and the government regulations regarding the enterprises. All the above articles
acknowledge the fact that the government plays an important role in regulating the conditions in
the business environment through the monetary policies enacted in that particular year.
The choice of debt and equity mix is also a very important consideration that managers
of small projects should consider. Equity reduces the chances of the collapse of a project but at
the same time reduces the share of assets owned by managers (Rose-Ackerman & Palifka, 2016).
The use of debt, on the other hand, maintains ownership to the pioneers of the project but the
assets claimed as collateral by holders of debt becomes high thereby increasing the chances of
the collapse of a project (Sanders, 2018). Managers should, therefore, choose an optimal mix that
ensures that the project has enough funds for operations and the business risk is maintained at
manageable levels (Fulford & Standing, 2014, p 320). Human resources are very crucial to all
organization regardless of their sizes. Managers should, therefore, be prudent enough to pay their
employees in good time and to offer them good wages and have a good reward system. Retaining
workers for a long time allows them to gather a lot of experience that boost the growth of the
project.

Small Projects in Australia 9
References
Denscombe, M., 2014. The good research guide: for small-scale social research projects.
McGraw-Hill Education (UK).
Enshassi, A., & Abuhamra, L. 2015. Delayed Payment Problems in Public Construction Projects:
Subcontractors’ Perspectives. ICCREM 2015. doi:10.1061/9780784479377.065
Epress.lib.uts.edu.au. 2018. FACTORS AFFECTING THE PERFORMANCE OF SMALL
INDIGENOUS CONTRACTORS IN AUSTRALIA. [Online] Available at
http://epress.lib.uts.edu.au/journals/index.php/AJCEB/article/viewFile/2282/2406
Fulford, R. and Standing, C., 2014. Construction industry productivity and the potential for
collaborative practice. International Journal of Project Management, 32(2), pp.315-326.
MacLean, S. and Berends, L. 2018. Factors that enable and hinder the implementation of projects
in the alcohol and another drug field. [online] Onlinelibrary.wiley.com. Available at:
https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1753-6405.2011.00804.
Mok, K.Y., Shen, G.Q. and Yang, J., 2015. Stakeholder management studies in mega
construction projects: A review and future directions. International Journal of Project
Management, 33(2), pp.446-457.
Nicholls, S. and Orsmond, D. 2018. The Economic Trends, Challenges, and Behaviour of Small
Businesses in Australia | Conference – 2015 | RBA. [online] Reserve Bank of Australia.
Available at: https://www.rba.gov.au/publications/confs/2015/nicholls-orsmond.html

Small Projects in Australia 10
Patanakul, P., 2014. Managing large-scale IS/IT projects in the public sector: Problems and
causes leading to poor performance. The Journal of High Technology Management
Research, 25(1), pp.21-35.
Ridley, S. 2018. How late payments are sending small business to the wall. [online]
Intheblack.com. Available at: https://www.intheblack.com/articles/2017/06/01/late-payments-
business-wall
Rose-Ackerman, S. and Palifka, B.J., 2016. Corruption and government: Causes, consequences,
and reform. Cambridge university press.
Sanders, W., 2018. Unemployment payments, the activity test and Indigenous Australians:
Understanding breach rates. Canberra, ACT: Centre for Aboriginal Economic Policy Research,
Research School of Social Sciences, College of Arts & Social Sciences, The Australian National
University.
Sherekar, V., Tatikonda, M. and Student, M., 2016. Impact of factor affecting on labour
productivity in construction projects by AHP method. Int. J. Eng. Sci. Comput, 6(6).