– Assessing The Capabilities Of Contractors In Monitoring And Controlling Construction Cash Flow In Nigeria –
ABSTRACT
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 analyzed 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.
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
2.4.1.2 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 Review of Related Studies – – – – – 63
2.10.1 Author’s on cash flow forecasting (CFF) – – – 63
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
3.4.1.1 Literature review – – – – – – – 70
3.5 Data Analysis – – – – – – – 71
CHAPTER 4: DATA PRESENTATION AND DISCURSION 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
4.4.1.1 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 ontribution to Knowledge – – – – – 84
REFERENCES – – – – – – – – 85
INTRODUCTION
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).
REFERENCES
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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.
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