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by Paul Chu Hoi-fai. / Bibliography: leaf 40 / Thesis (M.B.A.)--Chinese University of Hong Kong, 1985

The objective of this study was to investigate the extent to which small to medium-sized building contractors beneficially utilise the financial management function in their enterprises to improve and ensure business sustainability. Financial management focuses on the principles of decision-making, which requires action, without perfect knowledge of the outcome. To effectively execute the financial function, using the primary inputs in decision-making, financial management requires the ability to: understand and interpret financial statements and reports; make reasoned and objective decisions in controlling the operations of the enterprise; have a thorough knowledge of the internal functioning of the enterprise; and have a thorough knowledge of current and expected future economic conditions in the external environment. To do this, requires an effectively applied financial management function in the enterprises, which includes the utilisation of the financial management criteria to ensure business sustainability. However, without an appreciation of what financial management is, how important financial management is, and how financial management must be applied in the enterprise, small to medium-sized building contractors will find it difficult to effectively perform the financial management function and its different activities. It was therefore important to determine how well owners and construction managers of the average small to medium-sized building contractor deal with and utilise the financial management function in their enterprises. Consequently, a survey was carried out amongst small to medium-sized building contractors in the Nelson Mandela Metropolitan Municipal (NMMM) area, which revealed information that was used to come to certain conclusions: Firstly, it can be concluded that the financial management function is generally exercised superficially. This is supported by the responses of small to medium-sized building contractors, which implied that more than half the contractors do not fully perform financial management tasks. Secondly, it was concluded that the financial management criteria generally do not play a role in the business sustainability considerations of small to medium-sized building contractors. This is supported by the results, which imply that more than half the contractors do not fully utilise the financial management criteria.

M.Ing. (Engineering Management) / Ensuring and maintaining positive cash flow is becoming more and more difficult, especially in the construction industry. Payments need to be collected to be able to sustain a positive cash flow and this is not an easy process. Organizations fail due to insufficient available liquid assets and this study is done to determine why payments aren’t made, including information on what payment provisions contractors agree upon, and why the trend in the industry is to keep cash rather than pay suppliers. The collection of outstanding payments is also investigated, including actions taken if payments are not made, what clauses are included in contracts to ensure payment and if interest is charged on outstanding payments. A credit application processes need to be in place to ensure the credit worthiness of the clients/ employers is reviewed. It is also very important that some form of contract is agreed upon, understood and signed by both parties. There are instances where the contract documentation is not provided or the contract documents is provided and signed, but one of the parties has not read or understood some of the payment clauses. This could also lead to delayed payments. Collection of outstanding payments could be to propose a payment agreement, by charging interest or alternatively, enforcing early payments by providing a settlement discount. One of the most mentioned reasons for companies holding onto cash is to ensure liquid capital is available to ensure positive cash flow and the continuation of the business. The main reasons why liquid capital is not available is poor management of funds, poor payment procedures and mismanagement of funds. It was found that most of the construction companies have credit application processes, contracts and payment provisions in place, but most of these companies don’t adhere strictly to the procedures set out in these documents. More attention need to be given to enforcing credit and collection policies in practice, as well as following the payment provisions set out in the construction documentation. Questionnaires were only sent to companies operating in the construction industry. Further investigations can be done on other industries (including construction, mechanical, electrical, medical, farming, food sector, fashion sector etc.), which can assist in assisting with payments made by companies or individuals.

Since the global financial crisis of 2008, attracting investment in a public company has not been a simple task (Krzus, 2011). Public trust in organisations was lost as a result of the crisis, owing to the lingering economic uncertainties that prevailed (Krzus, 2011). Through the full disclosure of all aspects that affect the operations of an entity, investors will be assisted in making an informed decision prior to making an investment in a publicly traded company (Singh, Wei, & Kaur, 2012). Integrated reporting provides investors with the necessary details, by making full disclosure of all aspects that affect the operations of an entity, including both financial and non-financial information, in a single report. Such information will enable investors to make a more informed assessment of the future prospects of the organisation in which they intend to invest (Singh et al., 2012). The purpose of this research effort, therefore, was to determine the relevance of integrated reporting to professional investors when making investment decisions, focusing specifically on JSE-listed construction companies. Grounded theory was used as a research design method. Grounded theory summarises data collected from empirical sources into categories. The data collected were based on the subjective perceptions of the participants in response to investigative interview questions. The researcher focused on a single context, namely an investment made by professional investors in JSE-listed construction companies within the Durban metropolitan in KZN. Non-probability, purposive sampling was used as the findings were not generalised to the entire population but were limited to the opinions and perceptions of professional investors in the Durban metropolitan area. The research effort resulted in valuable insight into how integrated reporting can be a useful decision-making tool for professional investors when undertaking investment in listed construction companies, in an attempt to attract investment in the sector. The researcher experienced a lack of responses from professional investors within the industry who were contacted for interviews. This lack of response could be considered to be a limitation in validating the outcome of the study. “Investors and integrated reporting” was identified as a theme that is material to the current state and potential future development of integrated reporting. Accordingly, this theme was used as a basis for this research effort that will enhance companies’ awareness of the benefits of compiling integrated reports as a tool to attract investors. This will assist in obtaining finance that can be used to develop and grow organisations.

M. Tech. / The financing needs of contractors, especially emerging contractors, need to be explored. In the case of the Small, Medium and Micro-Enterprises (SMMEs’) within the contracting sector, a type of “finance-PLUS” arrangement, which sees the lender, or an intermediary, offer additional support services to emerging enterprises, would be worth exploring. There are various perspectives and opinions on the format and context of the contribution. One of these perspectives embraces the obstacles involved in the entrepreneurial process hindering contribution and economic catalisation. This study follows a focused approach towards the investigation of a financial model for small, medium sized contractors in South Africa. Interviews were conducted and questioners were sent out to different constructors who have been successful in the business for more than five years and also contractors who are currently straggling and trying to survive and grow. Conclusions will be drawn from the analysis and recommendations will be made for further study and curriculum revision, if necessary. All types of businesses need capital before and after they start operating as well as for expansion purpose. The problem is people who have been listed on credit bureaus have their records count against them when they apply for a loan. A key factor mitigating against increased investment in the SMMEs’ sector is the structure of the financial sector. The findings of the study point to the fact that conventional financing mechanisms do not allow for cost-effective provision of finance to large numbers of entrepreneurs seeking small quantities of finance. Effects of poverty and lack of assets mean that many people do not have the collateral needed to access finance. The study also found that although there are different initiatives that are in place to assist small and medium size contractors the typical problems and challenges are still existing. The scopes of this study only focused on small, medium and micro-enterprise in the built environment (specifically the construction industry). In addition, the study focuses on the different financial programmes that are currently in place. An overarching concern is that previously disadvantaged individuals do not have adequate access to credit offered by formal financial institutions and therefore are forced to seek relatively expensive (and often inadequate) amounts of credit from alternative financial sources.

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published_or_final_version / Management Studies / Master / Master of Business Administration

Thesis submitted in partial fulfilment of the requirements for the Master of Science in Building: Project Management in Construction to the Faculty of Engineering and the Built Environment at the University of the Witwatersrand, 2018 / This study reports on a quantitative descriptive design that investigates the challenges in the procurement process of housing infrastructure projects in the Eastern Cape Department of Human Settlements. The study compares two procurement strategies utilised in the department with regards to infrastructure related projects. Pretested questionnaires were distributed to 57 participants who were purposely selected consisting of Structural Engineers, Project Managers, Quantity Surveyors and officials working in Finance and Supply Chain Management. Findings of this study revealed that 1) there is a shortage of skills and that most organisations do not implement career programs in the supply chain management and the construction industry. 2) Both management and employees were aware of the procurement challenges in housing infrastructure projects 3) the turn-key procurement method compares favourably to the traditional methods, as the later has less budget variation, thorough planning since the contractors involvement during the initial stages of planning is evident. 4) a lack of clear communication between the department supply chain management and its supplier amongst a host of other factors because they are less supervised/ monitored and that resulted for wasting of time, no productivity, and poor performance. The cause of these problem stems from the lack of an appropriate procurement strategy for projects. / XL2019

As public utilities and government owners face increased budget constraints and greater expectations, alternative project delivery methods will increasingly be used to fast track projects, reduce costs, promote innovation and ensure proper performance for various types of facilities and infrastructure systems. The goals of public utility owners along with economic and financial considerations suggest why some project delivery methods have been selected over other project delivery methods. In response, the first phase of this doctoral research presents a model for selecting the optimum project delivery method that considers economic sustainability as well as other goals of multiple project stakeholders. This first phase of research contributes to the existing body of knowledge and benefits industry practitioners by identifying best practices that improve the project delivery selection process while enhancing risk mitigation efforts. The procurement selection process uses multiple-criteria decision-making and financial risk analysis to select the most economically sustainable delivery method given each project’s unique characteristics. A present value analysis establishes a range of values that considers variables that will potentially impact lifecycle costs. The selection of the procurement process is based on best value where financial risks to the concerned government and other project stakeholders are mitigated through service fee agreements and project finance structures, which are both dynamic and provide for real options. The second phase of this research presents an innovative approach for the valuation of the types of real options on project finance structures which are specifically procured through a design-build-finance-operate project delivery method (also known as a public-private partnership) (P3). This second phase of research includes an investigation into systems engineering and System Dynamics (SD) simulation modeling. An SD model is used for the valuation of real options attached to a P3 project’s finance structure. The valuation of these real options is based on the simulation results related to infrastructure performance. The significance of this research is made greater considering that P3s are increasingly being pursued because of their ability to alleviate pressure on government budgets, promote innovation and implement new technologies. These types of contracts, however, tend to be long-term and often need to account for future yet-to-be-seen variables that potentially impact the feasibility of this procurement method. This is especially true when the P3 project exists within a portfolio of competing assets across infrastructure systems. This second phase of research presents An SD model that is used to analyze the complexity of an infrastructure asset procured through a P3 within such a portfolio. An illustrative case demonstrates how discrete and continuous events potentially impact the successful procurement of infrastructure within a portfolio of competing assets comprising a regional transportation system. This second phase of research contributes to the existing body of knowledge by demonstrating how An SD model can simulate the real-world causal relationships that impact the procurement of infrastructure through P3s. The SD model is used for the valuation of real options to promote public initiatives, encourage private participation and enhance economic sustainability of P3 as a viable procurement strategy. The third and final phase of this doctoral research considers the increasing complexity of infrastructure procurement as individual assets are increasingly viewed as being part of a larger network of interdependent systems. In response, the objective of this final phase is to present a methodology to simulate the behavior of assets that span across different types of infrastructure systems. This investigation presents a method for analyzing investments that traverses across different infrastructure systems with individual assets procured through a variety of project delivery methods. This third investigation also utilizes An SD simulation model. In the final phase of this doctoral research, however, the SD model captures the causal relationships between competing assets where simulation results elucidate the compounding effects of multiple investments that traverse across two or more infrastructure systems. By doing so, this research contributes to the existing body of knowledge and demonstrates how SD models are effectively used to value real options that are termed exotic. These exotic types of real options occur within a portfolio of competing infrastructure assets where the valuation of each real option must consider the compounding effects of competing alternatives as well as the value of the underlying asset. This research presents a methodology for the valuation of multiple types of exotic options in real investments that traverse across various types of infrastructure systems. This method can also be applied to the valuation of other types of exotic options in various industries including research and development pursuits.