ABSTRACT
The study intends to
investigate the impact of poor budgetary implementation in construction companies.
The purpose is to specifically identify the major causes of poor budgetary
implementation practices in construction companies using megastar technical and
Construction Company Ltd, Aleed Construction Company, Anasami Construction Nig
Ltd, Sametech Construction and C &C Construction Co. Ltd as case study. It
is to determine the impact of poor budgetary implementation in construction
companies and offer useful and meaningful suggestions for improving on the
identified problems based on the findings. The study was carried out for the
five companies. The researcher made use of primary and secondary sources of
data. The primary sources with respect to this study include the various
management staff of the companies and the account staff of the companies
selected. Information obtained from these people were by asking face to face
questions and recording their responses, then questionnaires were also
administered to them for more response. A statistical approach (yaro yamen) was
used in determining both the sample size and the proportion of the sample. Then
the researcher used simple percentage and chi-square analysis to analyze the
data collected. The study revealed that inadequate or poor budgetary
implementation practices are as a result of deviation from the budgetary
principles and standards, manipulation of budget by corrupt officials, late
release of fund budgeted, etc. Recommendations were made based on the findings.
The researcher recommended that there should be timely release of budget so as
not to disrupt smooth operations of the companies. There should be an efficient
monitoring of how the budget is implemented in the companies. It was also
recommended that all employees of the companies should understand how a budget
is implemented in the companies. The management of the companies were also
adviced to motivate employees by encouraging employees through incentives and
benefits in order to achieve the objectives of the organization.
CHAPTER
ONE
1.1 BACKGROUND OF THE STUDY
In the traditional sense, the
primary purpose of preparing budget is to understand and control costs. Budget
preparation is very useful in a project as a planning and controlling tool.
Budget could be employed by the company to get priorities among projects competing
for limited resources. It enables the company to set the machinery in motion
for meeting the interim valuations as when due and also used to justify the
elimination of uneconomic projects as well as the revision of its objectives to
meet the demand of a manageable project.
Results of descriptive/non
parametric statistical technique indicate that one of the major problems
confronting the construction sector in Nigeria is inadequate managerial control
in the form of sound budget planning and control. The primary concern during
implementation of budget is to ensure the fulfillment of the financial and
economic aspect of budget outlays. The financial tasks include programmed
spending of the amounts for the purpose specified and avoiding lapses or a rush
of expenditure towards the end of the financial year. Budgetary implementation
is the enforcement of the set objectives taking appropriate actions to bring
performance in line with planned targets.
1.3 STATEMENT
OF THE PROBLEM
Numerous problems militate against
an efficient budgetary implementation. Benneth (1975:23) was of the view that
“statute differences or more accurately role conflict between budget staff and
line personnel is an important source of unfunctional consequence of a
budgetary system. This implies that the basic problem of budgetary implementation arise from differences in the way budget
staff and line personnel understand the budgeting system.
Line employees see budgets as
merely emphasizing history, being too rigid, unrealistic, unattainable and
ambiguous. The budget staff are seen as over-concerned with figures,
unconcerned with line problems and cut off by a language of their own (ie
presenting complicated format). These problems would affect the effectiveness
of budget system directly or indirectly through their effects on communication,
motivation and participation.
Again, under the volatile
conditions in which they work, managers often lack up-to-date information on
which to base their decisions. There is always a time lag involved in the
process of preparing and approving estimates of proposed expenditures in most
companies. This time lag matters less in a stable economy where factors
affecting budgetary decisions change slowly. But in the fast changing financial
conditions of low income countries, it can make formal budgetary procedures
impossible to follow.
Another important problem of
budgetary implementation is the unrestricted transfer of funds from one
category of expenditure to another. Lewis (1967:208) opined that “the
characteristics of the African financial environment and changes that take
place after the budget has been approved”. So all these lead to the study of
“The Impact of Poor Budgetary Implementation in Construction Companies (A study
of Megastar Technical and Construction Company Limited, Aleed Construction
Company, Anasami Construction Nig Ltd, Sametech Construction and C & C
Construction Co. Ltd).
1.3 OBJECTIVES
OF THE STUDY
Major objectives of this study
is to investigate the impact of poor budgetary implementation in construction
companies, using Megastar Technical and construction company Ltd, Aleed
Construction Company, Anasami Construction Nig Ltd, Sametech Construction and C
& C Construction Co. Ltd as a case study.
The
study will specifically:
i.
Identify the major causes of poor
budgetary implementation practices in the companies under study.
ii.
Determine the impact of poor
budgetary implementation in construction companies.
iii.
Offer useful and meaningful
suggestion for improving on the identified problems based on findings.
1.4 RESEARCH QUESTIONS
The
following research questions are formulated for the purpose of the study:
1.
What are the causes of poor
budgetary implementation practices in construction companies?
2.
To what extent has poor budgetary
implementation practices impacted in construction companies?
3.
How can poor budgetary
implementation problems be improved to enhance the viability of construction
companies to achieve their desired goals and objectives?
1.5 HYPOTHESIS
In
order to solve the problems of poor budgetary implementation, the study intends
to test and prove or disapprove the following hypothesis
(1)
Ho: There is no
significant relationship between poor budgetary implementation
and
late release of fund by responsible officials in construction
companies.
(2)
Ho: Poor budgetary
implementations do not hamper the growth of construction companies.
(3)
H0: Poor
budgetary implementation problems
cannot be improved
in
construction
companies to enhance viability of
projects.
1.6 SIGNIFICANCE
OF THE STUDY
The
result of the study is important for the following reasons:
It is to serve as standpoint
from which business managers could design an effective machinery for budgetary
implementation practices. Enhancing the viability of projects embarked upon by
companies to achieve the desired objectives by improving the status of the
company.
Helping prospective and
potential investors/industrialists to realize the need for adequate budgetary
implementation towards industrial growth. The study will also give research
students and interest groups in future an insight into the various aspect of
budgetary procedures and its impact on the efficient resource management in
companies.
1.7 LIMITATIONS
OF THE STUDY
The
following limitations are inherent in the study.
Lack of enough available
sufficient data, because most of the vital documents needed for the research
from the company were not completely provided for the researcher.
Poor information management and outdated materials in our
libraries also pose a problem. Also time is another factor since no research
work is exhaustible, the fact is that the time required for completion of this
work is reasonably short.
However, the study has
proffered much efforts to analyze the budgetary implementation procedure based
on the available data taking into consideration the above limitations
1.8 SCOPE
OF THE STUDY
The scope of this study is
restricted to the impact of poor budgetary implementation in construction
companies. The areas especially in focus are the construction industry where
Megaster technical and Construction Company Ltd, Aleed Construction Company,
Anasami Construction Nig Ltd, Sametech Construction and C & C Construction
Co. Ltd has been used as case study. The scope in terms of respondents include:
management and staff of accounts departments of the various companies for the
study. These are people that believed to provide the required information on
the subject matter for the study.
1.9 DEFINITION
OF TERMS
Traditional Budgeting: a short
range fiscal management and expenditure control carried out through
assemblage of costs by type of resources, input and by organizational nor
functional activities. Norvick (19967:3742)
BUDGET IMPLEMENTATION: The science based art of regulating
the actual to be in parity with the set standard, to meet the economic demands
placed on a business enterprise.
RESPONSIBILITY HOLDER: One appointed to lead and account for
the operational unit of a firm with clear definition of their areas of
responsibility.
BUDGET: A financial or quantitative statement, prepared
prior to a specified accounting period, containing the plans and policies to be
pursued during that period. It is used as the basis for budgetary control.
MANAGEMENT ACCOUNTING: The techniques used to collect,
process and present financial and quantitative data within an organization to
help effective performance measurement, cost control, planning, pricing and
decision making to take place.
ZERO-BASE BUDGETING (ZBB): Is a management process that
provides for systematic consideration of all programmes and activities in
conjunction with the formulation of budget requests and programme planning.
BUDGETARY CONTROL: The process by which financial control is
exercised with in an organization. Budgets for income and expenditure for each
function of the organization are prepared in advance of an accounting period
and then compared with actual performance to establish any variances.
Baridam,
D.M (2001), Research Methods in Administrative Sciences, Third Edition, Port
Harcourt,
Sherbroke Associates.
Drury, C. (2002), Management and cost Accounting, Fifth Edition, Italy Vincenzo Bona.
Jacob,
D. et al (1972), Introduction to research in education, Holt, Rinehart and
Winston Inc. New York.
Vincent, A.O et al (2010),
Social Science Research: Principles, Methods and Applications. First Edition,
El’Demak (Publishers) Enugu, Nigeria.
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