The need for the Nigerian
construction industry to move away from the traditional forms of project procurement
and embrace project management services cannot be over emphasized.
This is as a result of the
importance of capital projects to the development of a young nation.
This study investigated the impact
of project management services on building construction project.
The study is a survey which utilizes
cross-sectional design. In all 46 survey questionnaires were administered to
construction stakeholders randomly selected in the Ibadan metropolis.
Descriptive statistics was used for
the analysis of data for the study. Result of the study revealed that there is
no significant different in the perception of the construction professionals
and other stakeholders about the impact of management services at the
inception, design, tendering, construction and commissioning phases of
construction project development.
Key words: Impact, project management and construction management.
PRESENTATION AND ANALYSIS
This chapter look into the result
collected through the questionnaire for the presentation of data and also
summaries the result of research work in order to achieve the aim of the study.
The data collected were respondents on
the impact of project management services on building construction project. The
presentation of data utilizes the tabular form of presentation.
The survey form of questionnaire
were administered to a randomly selected project stakeholders (i.e. clients,
project mangers, construction project financiers or sponsors, construction
professionals, users of construction products, public authorities and agencies
in Ibadan metropolis). A total number of forty-six (46) questionnaires were
distributed and thirty-three (33) complete questionnaire (representing about
72% responses) were retrieved, hence, the sample size for the study is 33
Table 4.1: Nature of respondents
Urban and regional planner
User of construction product
Source: Researcher’s survey work
Researcher’s survey work
Researcher’s survey work
Year of relevant work experience
21 years and above
From the table 4.1 to 4.4 above, the
results showed that 75% of the respondents are construction professional, 15%
are clients, while the rest are users if construction products, project
financiers/sponsors and public authorities/agencies. All the respondents are
stake holders in the building construction industry whose views and opinions
matter in the study.
The professional qualification
responses from the respondents are MNIQS 21.21%, QRBN 18.18%, COREN 24.24%,
MNIQS 21.21% other 18.18% respectively.
From the table, respondents with OND
12.12%, HND 18.18%, B.sc/B. Tech 24.24%, Msc 12.12% PhD 18.28%, others a15.15%
The year of relevant working experiences able show that 0-5 ears 18-18%, 6-10 years 21.21%, 11-15 years 24.24%, 16-20 years 18.18%, and 21 and above 21.21% respectively.
Class work alone on measurement of building work is not enough to equipped the student with the required knowledge and skill required on the measurement of building work, in accordance with standard procedure laid down by BESMM3 (Building & Engineering Standard Method of Measurement). It is against this background that the introduction of project work was introduce to expose the student to practical and theoretical method of taking off of building work apart from class work so as to increase their skill and knowledge in addition to class work.
The chapter one of this project demonstrate the aims, objectives of this research and the scope and limitation while the chapter two and three represent a literature review on the procedure of measurement of building work in order to have a better understanding of taking off, abstracting and billing processes prepared in chapter four for the proposed four (4) bedroom fully detached duplex.
fulfillment for the requirement of the award of National Diploma (ND) in
Quantity Surveying, student will have to demonstrate what have been taught in
class and outside the class during SIWES.
Thus, this project which is a group
work is aimed at taking off and preparing a Un-Priced Bill of Quantities for
the proposed Four (4) Bedroom Fully Detached Duplex at plot 3003A and 3003B Sanbowlugbe
East Extension Layout Cadastral Zone 07-07 Abuja Nigeria.
This project is also aimed at exposing
us to practical aspect of what were not taught in class and also enable us know
more better about what has already been taught in the class.
1.1 DESCRIPTION OF WORK
The project as it is
fully shown on the building drawing or plan is the construction of a proposed
four (4) Bedroom fully detached, duplex at 3003A and 3003B Sambowlugbe East Extension
layout cadastral Zone 07-07 Abuja, Nigeria, for: Rainbow workstation service
This project work includes the process
of taking off for the building, abstracting and the process of preparing an
un-priced bill of quantities for substructural work only.
1.2 AIMS & OBJECTIVES
The aim of this
project work is to prepared a taking off for quantities completely for four (4)
bedroom fully detached duplex and to prepare an abstract and un-priced bill of
quantities for the sub structural work.
In order to achieve
the aforementioned aims, the following objectives are carried out.
To prepare literature review of some
terms for better understanding of the little of the project.
To prepare a taking off and squaring
quantities for four (4) bedrooms fully detached duplex.
To prepare an abstract for substructure
To prepare an un-priced bill of
quantities for substructure work only.
1.3 SCOPE AND LIMITATION
The scope of this work is limited to the processes that are involved in taking off and preparing an un-priced bill of quantities for building work but excluding the abstracting, un-priced bill of quantities and service for super structural work.
2.0 LITERATURE REVIEW
The following reviews of literature
were made on:
2.1 SITE REPORT
2.1.1 TITLE: The proposed four (4) Bedroom fully detached duplex at 3003A and 3003B Sanboluwgbe East Extension layout cadastral zone 07-07 Abuja, Nigeria.
Management is very essential in all establishments whether
private or public. Also, management is very useful in all sector of economy
such as Health, Agriculture, Water resources, Power, Works and Communication as
well as aviation ministries. Unfortunately we would discover that nearly all
our sector of economy failed as a result of lack of proper management despite
the fact that we spent a lot of money on these sectors.
However, this case also affect the
construction industry whereby there are a lot of project abandoned as a result
of bankrupts, insolvency and inadequate planning by contractor before embark on
the project. All these problems can be traced to lack of proper management of
contractor before embark on a project.
As a result of these, this research
centers on how to manage the mass housing construction project with in the
available limited resources (in terms of finance and human resources) and times
to achieve the goals.
STATEMENT OF PROBLEM
Many books have been written in the past on mass housing
project by the professional/development but most of this books tails to apply
the detail of management to answer the questions of how can the mass housing
project be manage in other to meet the demand of both investor and inducers
likewise what are the role that consultant can play toward successful of the
What are the various methods of financing and procuring the
project particularly in Kwara State Ilorin, metropolis.
AIM OF STUDY
To highlight the various method used in managing the mass
housing and determine the appropriate one to meet the demand of both client and
OBJECTIVE OF THE STUDY
– To highlight the various techniques
employ to mass housing construction
– To determine the appropriate method of
managing construction finance and human resources.
– To identify a ways of discouraging and the causes of abandoning the project
SCOPE AND LIMITATION OF THE STUDY
The research is restricted to the principle of managing the
mass housing employ in Kwara State only. It also study the various methods of
financing and procuring the project particular in Ilorin metropolis.
SIGNIFICANT OF THE STUDY
– The client will benefit from this
research interms of having the best from what he invested.
– This research will assist the developer
to have a good return for his investment.
– This research will also help the end
users to meet their needs interms of comfort and functionality of building.
– Contractor will also benefit term of how
he can manage his project to avoid bankruptcy.
– It will also assist the consultant to the mass housing project.
Construction impacts the
quality of life for building facilities and plays a major role in a nation’s economy
and development. Safety, Health and Welfare at Work Act (2005) Section 17(4) basically
sets out that construction work is an activity on structure that
includes building work, civil engineering
or engineering construction work.
Furthermore, the end-products of construction works had been in the centre
of economic development of a nation. According to Farooqui. Mashood and Aziz
(2008) construction sector is globally considered to be a basic industry on
which the development of the country depends. To a great extent, the growth of
a country and its development status is generally determined by the quality of
its infrastructures and construction projects.
project development involves numerous parties, various processes, different
phases and stages of work and a great deal of input from both the public and
private sectors, with the major aim being to bring the project to a successful
conclusion (Takim and Akintoye, 2002). Hence, the success of any construction
project can be expressed in terms of performance. Blismas, Slier and Thorpe
(1999) reckon that project performance is the act of fulfilling the project
goals at the inception by the client and the project team in terms of the
budget, duration, and quality and client satisfaction. According to Egemen and Mohamed (2006), performance evaluation in
construction generally focuses on a limited number of performance elements
related to the product, which are completing the project on time, within budget
and with the required quality.
According to Jackson (2004), quality is contained in the tripod of construction management; it does not only impact appearance and durability but also the performance of a project. In today’s construction climate, public sector owners are finding themselves under increasing pressure to improve project performance, complete projects faster, and reduce the cost of administering their construction programs.
However, Abdul-Rahman, Wang
and Yap (2010) mentioned that clients and customers, both from the public and
private sectors, nowadays place more emphasis on the quality of products rather
than the cost and time which was the major concern in the past. In terms of
quality in construction, Arditi and Gunaydin (1997) opined that ‘high quality
building project depends a great deal on factors such as the
design being easily
understandable and applicable,
conformity of design
with specifications, economics of construction, ease of operation ,ease
of maintenance and energy efficiency.
1.2 RESEARCH AIM AND OBJECTIVES
The aim of this study is to
assess the quality culture on building construction works in Kwara State,
Nigeria. To accomplish this aim, a number of research objectives have been
assess the perception of quality in construction industry in Nigeria
2. To evaluate the
factors affecting the implementation of quality culture in construction works
3. To examine the
factors affecting the maintenance of quality culture in construction works in
evaluate the constraints encountered in the implementation of quality culture
in construction works in Nigeria.
1.3 RESEARCH QUESTIONS
is the perception of quality on building construction industry in Nigeria?
2. What are the
factors affecting the implementation of quality culture on building construction
works in Nigeria?
3. What are the
factors affecting the maintenance of quality culture on building construction
works in Nigeria?
4. What are the constraints encountered in the implementation of quality culture on building construction works in Nigeria?
construction industry is so hierarchical and fragmented in nature that some of
the major participants do not consider themselves to be part of the same
industry (Hindle, 2000). This requires
close coordination among a large number of specialized but interdependent organizations
and individual to achieve the cost, time and quality goals of a construction
project (Toole, 2003). Hence, according
to Maqsood, (2004), a major construction process demands heavy exchange of data
and information between project participants on a daily basis.
(2004) has identified, the two vital roles information plays in all
construction projects as the specification of the resulting product (design information)
and the initiation and control of the activities required for constructing the
facility (management information).
Design consultants, (architects, engineers and quantity surveyors),
acting as professional advisers to the client, are largely responsible for the
production and dissemination of both the design and management information
among the various project participants. According to Mohammed & Steward
(2003), the majority of construction process information is heavily based upon
traditional means of communication such as face – to – face meetings and the
exchange of paper documents in the form of technical drawings, specifications
and site instructions. This is why the
construction industry has for many years suffered from difficult – to – access,
out – of –date and incomplete information (Shoesmith, 1995). As the management of construction, like most
other industries, requires accurate information, the need to increase the
efficiency of information management by exchanging massive volumes of
information at high speed and at
relatively low cost has been long recognized by the industry. (Deng, 2001).
to Nkado (2000), the effectiveness of consultants in meeting the needs of
clients in the built environment is influenced by their recognition and
application of context – relevant competencies.
Architectural, engineering and quantity surveying professionals are the
consultants traditionally responsible for the production and management of most
of the project information and documents required by such other project
participants as contractors, subcontractors and suppliers for the execution of
construction projects. The complex and
uncertain nature of construction projects demands the appointment of capable
consultants, to realize the client’s interests in a project (Ng & Chow,
2004). A common competency required of
these, consultants is the ability to manage and communicate project information
and documents. In fact, a core issue in
the driver for increased productivity in the construction industry is the
effective management of information, both in the form of information flows that
permit rapid inter-organizational transaction between project participants, and
in the form of information accumulated, Coded and stored in firm database structures
(Mohammed & Stewart, 2003). Thus
from quantity surveyors, a basic competency in data, information and
information technology is required (RICS, 1998), while from engineers, the
availability of computer facilities in a measure of technical capacity (Ng
& Chow, 2004). In the case of
architects, the effective communication of design information to contractors is
a key performance criterion (Oyedele & Tham, 2005). It has become a tactical necessity for
these consultants and other project
participants to integrate their information systems with each other to improve
the flow of information between them and enhance the effectiveness of decision
–making (Li 2000).the adoption and use of ICT facilitates this much-needed
integration in the construction industry (Li et al., 2000; Liston et a.,, 2000;
Mohammed Stewart, 2003).
however, while there are reports of the use of ICT in the construction
industries of industrialized countries like the US
(Issa et al., 2003; Toole, 2003; Canada
(Rivard, 2000; Rivard et al., 2004); Sweden,
Denmark and Finland (Samuelson, 2002) and New Zealand (Doherty, 1997), among others,
comparatively few (if any) exist for a developing country like Nigeria. Indeed, according to Pamulu & Bhuta
(2004), very few reports exist of research in ICT in developing countries. While It is not surprising that findings are
similar in many respects for these industries countries, the results, according
to Austin (1990), might not be applicable to a developing country (like Nigeria)
due to differences in the cultural, socio-economic and regulatory environments
(Jarvenpaa et al., 1998); Dewan 2000;
Seyal (2000). This study is therefore an attempt to
evaluate the impact of ICT on professional practice in the Nigerian construction
industry in the context of a developing economy to provide the true picture of
the use of ICT in a typical non-industrialized country. This, it is believed, will extend the
frontiers of knowledge on the subject beyond the North American and European experiences. It is against this background that the paper
presents an empirical analysis of the impact of ICT on the practices of 107
professional consulting firms in Nigeria, comprising 29
architectural, 38 engineering and 40 quantity surveying practices.
STATEMENT OF PROBLEM
“Insufficient / erratic power supply”
is the important constraint to widespread adoption of ICT and “Fear of ICT
making professionals redundant” is the least important among the 13 constraints
The unassailable number 1 ranking of “Insufficient/erratic power supply” contracts sharply with the results of studies in several developed countries (reported by Doherty, 1977; Rivard, 2000; Samuelson, 2002; and Goh, 2005) which made no mention of electricity and other infrastructure as obstacles. While the supply of electricity is taken for granted in developed countries, in Nigeria it is unreliable. (AfDB & OECD, 2004), leading to high production costs for companies, which are forced to procure and run their own power generating facilities. This adds significantly not only to the cost of using ICT but also to the cost of doing business generally in Nigeria.
Consequences of uncertainty and its
exposure in a project, is risk. In a project context, risk is the
chance of something happening that will have an impact upon objectives. It
includes the possibility of loss or gain, or variation from a desired or planned
outcome, as a consequence of the uncertainty associated with following a particular
course of action. (Deviprasadh, 2007). Risk thus has two elements: the likelihood
or probability of something happening, and the consequences or impacts if it does. Managing risk
is an integral part of good management; it is fundamental to achieving good
business and project outcomes and the effective procurement of goods and services Risk management provides a structured
way of assessing and dealing with
future uncertainly. Project risk management includes the processes concerned with identifying, analyzing, and responding to
project risk. It includes maximizing the
results of positive events and minimizing the consequences of adverse
events.” (Deviprasadh, 2007).
Project Management Institute (2004)
defines project risk as an uncertain event or condition that, if it occurs, has a
positive or a negative effect on at least one project objective, such as time, cost, scope, or quality. A risk may have one or
more causes and, if it occurs, one or
more impacts Construction projects vary in type and nature and a large number of people with professional
skills. The variations are endless, but what all projects have in common is their exposure to risk (Flanagan and
Civil engineering is the
branch of engineering that deals with the creation, improvement,
and protection of the communal environment, providing facilities for living,
industry and transportation, including large buildings, roads, bridges, canals,
and other engineered constructions (Stark, 2008). It is characterized by
its high magnitude, uncertainties and the level of risk involved
(Seeley and Murray, 2001). Civil engineering is a professional
engineering discipline that deals with the design, construction, and
maintenance of the physical and naturally built environment, it is traditionally broken into several sub-disciplines
including environmental engineering, geotechnical
engineering, structural engineering, transportation engineering, municipal or urban engineering, water resources
engineering, materials engineering. Coastal engineering, surveying, and construction
engineering. (Oakes 2001).
Civil engineering takes place
on all levels: in the public sector and in the private sector
from individual homeowners through to international companies (ICE, 2007),
Civil engineering was first introduced as a profession in 1828 and the Royal
charter of the Institute of Civil Engineers (2007) defined civil engineering as
the art of directing the great sources of power in nature for the
use and convenience of man, as applied in the construction of roads,
bridges, aqueducts, canals, river navigation and docks, and in
the construction of ports, harbours, moles, breakwaters and lighthouses, and in the art of navigation
by artificial power for the purposes of commerce, and in the construction and application of machinery, and in
the drainage of cities and towns (ICE,
2007). Construction engineering is a civil engineering sub discipline that involves
planning and execution of the designs from transportation (Wikipedia, 2011). The
modes of transportation as identified by Lam (1999) are roadways, railways, waterways, and airways. A road is a route on land
between two places which typically has been paved or other wise improved to allow travel by some conveyance
Cost overruns and delays are
not unusual in civil engineering works. This pattern of
risk is’ largely influenced by the financial structure of the projects (Lam,
During limes of foreign exchange and interest role
fluctuations, most conventional projects funded by direct capital injection
from the governments may be affected by cost increases in their imported
elements. The use of project finance in privatized projects also means that
lenders rely solely on the prospective income stream for repayment
of their loans. Late completion will erode the financial plan and extra interest
costs on the part of the sponsors. There are also uncertainties as to the level
and stability of income which depends on the market condition of the
product in question. In road project, land acquisition can be a slow
and expensive process especially when a long road has to go through
different municipalities or different provinces having non-standardized land resumption
procedures. Right of way disputes sometimes creep in, as is the likelihood of
treading on archeological mines and former industrial
site with contaminated grounds (Lam, 1999).
There are many examples of non-achievement of time, cost and quality of projects due to the absence of risk management techniques in project management. Therefore, the success parameters of a construction project, namely, the timely completion, staying within the specified budget, and achieving requisite performance would depend upon the capability of each party in risk management. (Perera, 2009).
The project works tends to analyse the environmental impact Assessment of construction works, a case study of the road construction in Oke-Onigbin via Isin LGA of kwara state. Chapter one introduce the topic and the aim and objective, chapter two states the review of related literatures and various effects of construction work and methods fort mitigating the effect, while methodology and the various means of collecting data- through questionnaires and oral interview and analysing is in chapter three. In chapter four the data were analysed using frequency table and chi square method and these are also discussed further, the last chapter (5) talks about conclusion and recommendation in which it is concluded that the community were carried along in the road construction and recommendation were made that the community should be allowed to take part in environmental impact assessment to project abandonment.
Environmental Impact Assessment
Environmental Impact Assessment (EIA) is defined as the process of examining the environmental effects of the development – from consideration of the environmental aspects at design stage, through to the preparation of an Environmental Impact Statement, evaluation of the EIS by a competent authority and the subsequent decision as to whether the development should be permitted to proceed, also encompassing public response to that decision.
Sridhar (2001) define Environment Impact Assessment (EIA) as the
systematic identification and evaluation of the potential impact (effects) of a
proposed project, plans, programme or legislative action relative to the total
The Environmental Impact Statement (EIS) is defined as “a statement of the effects, if any, which
the proposed development, if carried out, would have on the environment”(EnvironmentalProtection Agency, 2002). Certain public and private projects that are
likely to have significanteffects on the environment are subject to EIA
requirements derived from EIA Directive 85/337/EC(as amended by
Directive 97/11/EC). The requirements of Directive 2003/4/EC on public access
toenvironmental information took effect from June 2005. This Directive
further strengthens provisionsfor ensuring public access to
environmental information. Insofar as roads are concerned, the EIADirective
is transposed into law in Ireland through the Roads Act, 1993 (No. 14 of 1993).
environmental impact assessment (EIA) is an assessment of the possible positive
or negative impact that a proposed project may have on the environment,
together consisting of the environmental, social and economic aspects.
The purpose of Environmental Impact
Assessment process is to encourage the consideration of the environment in
planning and decision making and to ultimately arrive at actions which are more
1.1.0 Where does EIA
The EIA process derives from European
law. The European law basis is Directive 85/337, The Assessment of the Effects
of Certain Public and Private Projects on the Environment as amended by EC
Directive 97/11/EC. The Directive is mainly implemented in UK legislation
through the Town and Country Planning (Assessment of Environmental Effects)
Regulations 1999 (SI 1999 No.
293). This is generally known as the EIA Regulations. Important guidance on the
interpretation of the EIA Regulations and on the procedure to be used can be
found in ODPM Circular 2/99 Environmental Impact Assessment.
The Regulations only cover decisions made under Town and
Country Planning legislation. However, the Directive requires that all types of
developments having significant impacts on the environment go through the EIA
process. Therefore there are separate pieces of legislation (and some
non-legislative processes) covering EIA for other types of developments
including highways, power stations, water resources, land drainage, forestry,
pipelines, harbour works and many others. UK regulations have been criticised as
not fully interpreting the spirit of the EIA directive. Individual cases over
major development proposals have led to controversial debates about quality of
EIA. Third parties have complained to the European Commission about the failure
of the UK Government to fully implement the EC directives on EIA.
it came into being in Nigeria
Environmental impact assessment (EIA) came into being in Nigeria with promulgation of the Act establishing three independent EIA systems—the EIA Decree 86 (1992), the Town and Country Planning Decree 88 (1992) and the Petroleum Act (1969). Despite a sound legal basis and comprehensive guidelines, evidence suggests that EIA has not yet evolved satisfactorily in Nigeria, as the current system amounts to duplication of efforts and cost. An evaluation of the EIA system against systematic evaluation criteria, based on interviews with EIA approval authorities, consulting firms and experts, reveals various shortcomings of the EIA system. These mainly include inadequate capacity of EIA approval authorities, deficiencies in screening and scoping, poor EIA quality, inadequate public participation and weak monitoring. Overall, most EIA study rarely meets the objective of being a project planning tool to contribute to achieving sustainable development and mitigate impact from development project. The work concludes on the suggestions to involve in EIA process relevant authorities and to increase the competence of EIA consultants.
The construction sector experiences the highest number of bankruptcies compared to any sector of the economy, with many companies failing because of poor cash flow management. This study assessed the capabilities of Nigeria contracting firms in monitoring and controlling of construction cash flow. Quantitative approach was used to administered questionnaire survey to 246 contracting firms involved in building and civil engineering works in Nigeria. A total number of 112 questionnaires were filled and returned and the results were analysed using the arithmetic mean values and ranking of variables in Statistical Package for Social Sciences (SPSS). Essentially, the survey evaluates the extent of usage of some identified construction cash flow monitoring and controlling key practices. The findings show that; the Nigerian construction sector is currently at a low capability level and usage of the key practices in construction cash flow monitoring and controlling, the large size firms have high capability level and usage of the key practices in construction cash flow monitoring and controlling. Medium and small size firms which are the predominant category of firms in the construction sector in Nigeria have low capability level and usage of the key practices in construction cash flow monitoring and controlling and in dire need for improvement. The research work recommends that; for an effective cash flow monitoring and controlling practice, an assessment frame work should be developed by the contractors for use in contract administration, continuous education and training of the entire staff responsible for cash flow management through workshops and seminars in order to improve their skills in cash flow management and Contractors should involve the Quantity Surveyors, who are disciplined as cost managers to be responsible and accountable for cash flow management.
TABLE OF CONTENTS
Contents Pages Cover Page – – – – – – – – – i Tittle Page – – – – – – – – – ii Declaration – – – – – – – – – iii Certification – – – – – – – – – iv Dedication – – – – – – – – – v Acknowledgement – – – – – – – – vi Abstract – – – – – – – – vii Table of Contents – – – – – – – – viii List of Tables – – – – – – – – x List of Figures – – – – – – – – – xi List of Appendices – – – – – – – – xii
CHAPTER 1: INTRODUCTION
1.1 Background to the Study – – – – – 1 1.2 Statement of Research Problem – – – – 4 1.3 Justification for the Study – – – – – 4 1.4 Aim and Objectives – – – – – – 5 1.5 Scope and Limitations – – – – – 6
CHAPTER 2: LITERATURE REVIEW
2.1 Theoretical Framework – – – – – 7 2.2 Cash Flow Management – – – – – 7 2.2.1 The element of cash flow management – – – 9 2.3 Key Best Practices in Cash Flow Management – – 10 2.3.1 Cash flow planning – – – – – – 10 2.3.2 Cash flow forecasting – – – – – 11 2.4 Key Best Practices in Cash Flow Monitoring and Controlling 22 2.4.1 General principles (knowing) – – – – – 23 18.104.22.168 Purposes of organisational cash flow monitoring and controlling – – – – – – – 25 2.5 Practical Application (Doing) – – – – 27 2.5.1 The key best practices in cash flow monitoring and controlling – – – – – – 27 2.6 Practical Considerations (Doing/Advising) – – 50 2.6.1 Items for consideration when analysing cash flow monitoring and controlling – – – – – – 51 2.6.2 General Consideration – – – – – – 52
2.7 Organisational Portfolio of Project Cash Flows – – 55
2.8 Cash Flow and Construction Company Failure – – 55 2.8.1 Causes of construction company failure – – – – 57 2.8.2 The rates of failure – – – – – – 59 2.9 Capability – – – – – – – 60 2.9.1 Business capability – – – – – – 60 2.9.2 Organisational capability – – – – – – 61
2.10.2 Author’s on cash flow management (CFM)- – – 65
CHAPTER 3: RESEARCH METHOD
3.1 Research Design – – – – – – 68 3.2 Study Area – – – – – – 69 3.3 Population Sampling and Sample Technique – – – 69 3.3.1 Population – – – – – – – 69 3.3.2 Sampling size – – – – – – – 69 3.4 Data Collection – – – – – – – 69 3.4.1 Data collection instrument – – – – – 70 22.214.171.124 Literature review – – – – – – – 70 3.5 Data Analysis – – – – – – – 71
CHAPTER 4: DATA PRESENTATION AND DISCUSSION OF RESULTS
4.1 Introduction – – – – – – – 76
4.2 Characteristics of Respondents – – – – 72
4.3 Characteristics of Surveyed Organisations – – – 75
4.4 Assessments of the Results – – – – – 76
4.4.1 Assessment criteria – – – – – – 76
126.96.36.199 The Understanding and Knowledge of CFMC Principles – 77
CHAPTER 5: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of Findings – – – – – – 82 5.2 Conclusion – – – – – – – 82 5.3 Recommendations – – – – – – 83 5.4 Recommended Area for Further Studies – – — 84 5.5 Contribution to Knowledge – – – – – 84
REFERENCES – – – – – – – – 85
1.1 Background to the Study
Cash flow is a series of income and expenditure over the life of an investment or project. The difference between the income (revenue) and expenditure (disbursement) at any point of time is term as net cash flow which could be either positive or negative (Hoseini, Andalib and Gatmiri, 2015). A negative net cash flow means disbursements are exceeding income which is a usual situation on even a highly profitable project during the greater part of its duration (Al-Mohsin, Alnuaimi and Al-Tobi, 2014). A positive cash flow is ultimately needed to generate profits, to pay employees’ salaries and wages, taxes and servicing interest on borrow funds, materials, plant, subcontractors’ accounts rendered and overheads expended during the progress of the contract (Odeyinka, Kaka and Morledge, 2003). The main factors affecting cash flow in a construction project is the widespread practice of delay and underpayment by the clients, inaccurate Cash Flow Forecasts (CFF) and lack of efficiencies in monitoring and controlling of construction cash flow (Hoseini, Andalib and Gatmiri, 2015).
Cash flow management is a general process of planning, forecasting, manipulating and controlling of cash flows either at the project or corporate level (Ross and Williams, 2013). Cash flow monitoring and controlling entails adequate planning of fund utilisations, efficient monitoring of budget implementation and effective evaluation of results (Richter and Cantoria, 2011).
Construction sector recorded high rate of business failure globally with 20.1% and more than 80% of these failure were attributed to lack of financial control (Emidafe, 2015). The Nigerian construction sector which contributes about 70% of the country’s gross domestic product (GDP) is one of the highest employer of labour, labour cost are indeed a huge outlay for the contractors due to volume of manpower required to execute and delivered construction projects. Poor cash flow management can result in; financial improprieties, failure of the projects and business bankruptcy (Chukwudi and Tobechukwu, 2014). Contractors operating in developing countries including Nigeria were hugely affected by unprecedented financial difficulties in the wake of dwindling economy. These difficulties are compounded by the time lag between contractor’s expenses and payment collection, which impact negatively on the contractor’s cash flow and in many cases result in failure of a project and business insolvency (Emidafe, 2015).
In an attempt to mitigate or alleviate the excessive rate of business failure within the construction sector, several researches were carried out to improve cash flow management of construction projects. And some of these researchers are; Mutti and Hughes (2002) explored the cash flow issues associated with company failures. The study revealed how cash flows are managed by various construction firms at the project level in United Kingdom (UK).
Odeyinka, Kaka and Morledge (2003) identified and examined the various approaches in resolving deficit cash flow. The study concluded that the Nigerian construction industry has not embraced the use of developed software to aid cash flow forecasting.
Odeyinka, Lowe and Kaka (2008) identified and assessed the extent of occurrence and impact of risk factors responsible for the variation between the forecast and actual construction cash flow. Aomar and Bashir (2012) investigated the negative cash flow trends, patterns and their impact on construction performance in various contracting organisations in United Arab Emirate (UBE) and the study revealed how contractors can efficiently and effectively plan cash inflows in all phases of projects to ensure a successful and profitable project. Kim and Grobler (2013) produced a prototype demonstrating how automated Cash Flow Forecasting (CFF) is possible based on the information from a Building Information Modelling (BIM) which is useful for business development strategies.
Hoseini, Andalib and Gatmiri (2015) developed a new stochastic simulation-based framework for forecasting construction projects cash flow at the tender stage, considering the effect of late payments from clients. Purnus and Bodea (2015) developed Cash Flow Analysis Model, which can be applied by the contractors at the Project portfolio level to avoid high financial exposure and loses during the construction phase.
In Nigeria, Famakin (2010) assessed forecasting techniques used by contractors. The study identified the primary issues in cash flow forecasting process and the most widely used forecasting techniques by Nigerian contractors. Aliyu (2012) investigated the application of cash flow forecasting models by Nigerian construction consultants (clients). The study revealed that the usages of CFF models by the consultants in the sector were on the average and in dire need for improvement. AbdulRazaq, Ibrahim and Ibrahim (2013) investigated cash flow forecasting practices by construction contractors in Nigeria. The study revealed that the practice of cash flow forecasting by contractors in Nigeria was not consistent or not in conformity with existing literature and there is need for improvement. Abdullahi (2014) assessed the capabilities of Nigerian contracting firms in CFF processes. The study revealed that the sector has high capability level in CFF processes but weak in term of advisory and management capabilities.
It is possible to mitigate the rate of failure in construction sector, since, the major causes are known. Cunningham (2013) reported that planning, forecasting, monitoring and controlling cash flow is a vital aspect of operating a successful construction business.
1.2 Statement of the Problem
The capabilities of Nigerian contractors in planning and forecasting construction cash flow have been explored in literature but this is not sufficient enough to understand cash flow. The capabilities of these contractors in monitoring and controlling construction cash flow have not been investigated and should be closely examined to shed more light on the Cash Flow Management (CFM) issues, hence the need for the study.
1.3 Justification for the Study
Contractors operating in developing countries including Nigeria were hugely affected by unprecedented financial difficulties in the wake of the dwindling economy. These difficulties are compounded by the widespread practice of delay and underpayments by the clients which impacts negatively on the Contractors cash flow resulting in CFM issues (Emidafe, 2015; Hoseini et al., 2015).
However, the inability of many construction firms to effectively and efficiently monitor and control cash flow forecasts (Ansah and Agyei, 2012; Tom and Paul, 2013; Abdullahi, 2014; Purnus and Bodea, 2015; Usman, Sani and Tukur, 2016). The capabilities of these contractors in monitoring and controlling construction cash flow need to be closely investigated.
1.4 Aim and Objectives
The aim of this research is to assess and evaluate the cash flow monitoring and controlling capabilities of construction Contractors in Nigeria.
The specific research objectives are to:
i. Identify Cash Flow Monitoring and Controlling (CFMC) best practices in construction.
ii. Assess the knowledge capabilities of contracting firms in CFMC.
Iii Assess the practical capabilities of contracting firms in CFMC.
iv. Assess the advisory capabilities of contracting firms in CFMC.
1.5 Scope and Limitations
The emphasis of this research work is on assessing the capabilities of Nigerian contracting firms in construction cash flow monitoring and controlling. The research work covered contractors operating in Abuja, Kaduna and Niger. Different categories of contractors of small, medium and large size firms as categorised by the Corporate Affairs Commission (CAC) of Nigeria were considered in the study.
Difficulties in accessing some of these contractors due to their tight schedules and attitude of some of their employees. Furthermore, the researcher did not have control over the possible subjectivity of the information supplied by the respondents.
Abdullahi, M. (2014). Assessing Contractors’ Cash Flow Forecasting Process Capabilities in Nigeria (Unpublished Master’s Thesis). Ahmadu Bello University, Zaria.
AbdulRazaq, M., Ibrahim, Y.M., and Ibrahim, A.D. (2013). Investigating the Practice of Cash Flow Forecasting by Contractors in Nigeria. 4th West Africa Built Environment Research (WABER), Conference, 47 – 54.
Ali, H. E.M., Al-Sulaihi, I.A., and Al-Gahtani, K.S. (2013). Indicators for Measuring Performance of Building Construction Companies in Kingdom of Saudi Arabia. Journal of King Saud University – Engineering Sciences, 25(2), 125-134.
Aliyu, F. A. (2012). Investigating the Application of Cash Flow Forecasting Models by Clients in the Construction Industry (Unpublished Bachelor’s Degree Project). Ahmadu Bello University, Zaria.
Aomar, R., Al-Joburi, K.I., and Bahri, M.E. (2012). Analysing the Impact of Negative Cash Flow on Construction Performance in the Dubai Area. Journal of Management in Engineering, 28(4), 1 – 12.
Ansah, S.K., and Agyei, E.B. (2012). Effectiveness of Monitoring Systems for Controlling Cash Flows in the Construction Industry. Department of Building Technology, Cape Cost Polytechnic, Ghana. Construction Papers,85 – 96.