In developing countries, large international contractors have undertaken the majority of construction works, or state owned organizations. A few number of large contractors who are able to compete against, or work in joint ventures with the international contractors usually dominate the small contractor. This handful of large contractors works alongside an excess of small construction businesses. In Karongi District of Rwanda, the construction industry is a sector that transforms various resources into constructed physical economic and social infrastructure necessary for development. This study deals with the performance of small local contractors with objectives of investigating the challenges they face, that have eventually led to high failure of getting jobs, assessment of their competence for job market, and assessment of the their capabilities to prepare competitive tender. In this field retrospective study, questionnaires were distributed to chosen local contractors in Karongi District in which they commented or rated on the listed challenges in the questionnaires. Data from the questionnaire were analyzed using descriptive statistics and scale ranking. Effects of those challenges and solutions have been identified. Failure to submit tender, ignorance on the existence of a tender, and corruption during tender process are the major challenges facing local contractors in job competition. Recommended solutions are strict rules and regulations to be put in place for the clients who do not pay on time, avoid dependency on government jobs and increasing self-marketing, adopt joint ventures to get opportunities they could not access alone, limit participation of big companies in small jobs, establishment of financial institution that can offer credit, bonds to contractors, and also the preferential of local firms during tendering.
Keywords: Contractor, Contract, Performance, Capability, Construction industry, Tendering, Job market, Rwanda Public Procurement Authority (RPPA)

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