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Adequacy of project based financial management systems of small and medium construction enterprises in Botswana

The thesis documents findings of a study conducted to develop a project based financial
management system (PBFMS) whose role was viewed as a contributor to the successful
delivery of projects leading to improved financial performance of small and medium
construction enterprise (SMCEs). In particular, the PBFMS was viewed as a facilitator
{function) for the efficient and effective conduction of the strategic management, project
planning and control processes. Thus an adequate PBFMS was seen as one which, facilitates
the efficient and effective delivery of projects with a view to provide enhanced enterprise
performance. In pursuit of this aim, theory and practices relating to the development, operation
and use of a PBFMS were investigated and analysed from both literature and field work
leading to findings being reported in the thesis. In addition, the actual financial management
systems of SMCEs were investigated to determine the extent to which their attributes match
those of the proposed PBFMS model.
The motivation for embarking on the study was brought about by three aspects observed in
Botswana. Firstly, was the frequently documented poor delivery of projects, that is, for a
sustained period of time, projects were being delivered beyond stipulated times, above agreed
cost, and below specified quality. In some worst scenarios, projects were being abandoned at
various stages execution but before completion. Secondly, the investigation was also prompted
by the frequent financial failures of enterprises that were being recorded in the construction
industry. Thirdly, the conduct of the proprietors of the construction enterprises was also
frequently circumspect, particularly in matters relating to financial management.
Thus in pursuing the study, a number of premises were made. Firstly, the financial
management systems of the SMCEs were considered inadequate to fulfil their functions, that
is, they were incapable of facilitating the strategic management, project planning and control
process. It was also speculated that management of SMCEs were not committed to the
PBFMS i.e. they did not participate, get involved and did not comply with the policies
regarding the planning, developing, and operation of financial management systems. As a
result, PBFMS were unable to play their role of facilitating to the successful delivery of
projects for improved contribution to the financial performance of SMCEs. The second
premise was that financial models available are either too generic to guide SMCEs in financial
management matters or the strategic component is not linked to the operational plans to
execute the strategy. For those which are meant for construction enterprises, they normally
prescribe practices for project planning and control without including the strategic element and
vice versa. In essence there is a gap in each of the models available for use by the SMCEs. It is
the closing of this perceived gap in knowledge that the results of the thesis contribute in
finding a solution to the mentioned problem. Thus the study aimed at answering two research
questions: (i) Do SMCEs have adequate PBFMS that facilitate the effective delivery of
projects for enhanced financial performance? and (ii) Is there a relationship between the
adequacy PBFMS and poor performance of SMCEs? To facilitate the answering of these two
question two hypothesis were formulated namely: Hoi: The PBFMS of SMCEs are adequate
to facilitate the delivery of projects; and Ho2: The adequacy of the PBFMS is positively
correlated with the performance of SMCEs. To test the two questions a research process was
planned and executed in several steps.
Firstly, a survey strategy using the questionnaire was selected as the most appropriate method
to provide a snap shot of the existence of attributes of PBFMS and to investigate associated
practices relating to their development and operation. The method was considered more
appropriate and effective in gathering large data in a short space of time in line with the
doctoral time framework. Construction enterprises registered with Public Procurement and
Asset Disposal Board (PPADB) for building and civil work in classes A, B, C and D were
surveyed. The internal quantity surveyor, estimator or accountant were requested to respond
on matters relating PBFMS on behalf of the SMCEs. The sampling frame from which the
SMCEs considered for study were obtained from the two government departments which work
closely with PPADB, the Department of Building and Engineering Services (DBES) and
Department of Roads (DR). The sample sizes for each group category (small and medium)
were determined using Krajcie and Morgan (1970) table. Stratified and systematic random
sampling was used to select the identity of the members to form a sample fro study from the
sampling frame. The second step was to design the questionnaire to probe the three aspects
identified as constituting the PBFMS namely the strategic management; project planning and
control; and management commitment. Essentially the questionnaire sought to investigate the knowledge, tools, techniques, practices, opinions and attitudes of those who design, develop,
operate and use the PBFMS in the SMCEs. To ensure a high quality design, the questionnaire
was given to experts in the subject area to provide some comments on its suitability and was
also piloted on four enterprises. Data collected was analysed using mainly the SPSS software
and involved application of various statistical techniques including cross-tabs, ratio analysis, ttests
and correlational tests.
A total of 101 completed questionnaires were received, made up of 55% and 46% small and
medium enterprises, respectively. The demographic profile of SMCEs confirmed some of the
expected results, for example, majority (59%) of the respondents were owner/managers
confirming the dominance of the owner in SMCEs. Majority of SMCEs (59%) were more than
9 years old, with medium enterprises being more mature (60% older than 9 years) than the
small sized enterprises (49% older than 9 years). Majority (56%) of SMCEs had 10 or more
employees, with medium sized enterprises having more employees (75% with 10 or more)
than the small sized enterprises (42% with 10 or more). SMCEs performed more of building
work alone (48%) than both building and civil work (48%) or maintenance (11%) and no
enterprise performed civil work (0%) alone. Majority of SMCEs (65%) acted as main
contractors as opposed to sub-contractors, though as expected sub-contracting was seen more
in small (20%) than medium (10%) enterprises. Lastly, the public sector (central and local
authorities) provided majority (65%) of the SMCEs jobs. However, if parastatals which are
wholly owned by government were added, the public sector job market adds up to 73%
(65%+8%).
The testing of the major two major hypothesis resulted in the following conclusion. The
results indicated that the first hypothesis was supported, that is, in a majority of SMCEs
operating in Botswana the PBFMS were found to be adequate in facilitating the delivery
of projects. The results were therefore not in agreement with the basic premise made at the
commencement of the study. In view of the finding, it suggests that SMCEs in Botswana have
adequate systems that support the efficient and effective project planning and control.
Secondly, management is committed to the 'welfare' of the PBFMS in terms of complying
and supporting their development and operation. However, like any human endeavour, there are weaknesses in the PBFMS, for example, they were found inadequate in facilitating the
strategic management process, including lack of linking the process to the operational process
in order to execute the strategy. They were also found weak in one of the most crucial process
of project management; that of project control.
The second major investigation showed a weak link between the adequacy of a PBFMS
and performance. Secondly, the results also indicated that the SMCEs which had
adequate PBFMS performed better than their counterparts. The first results were not
surprising since the cause of poor performance were shown as three pillars (business
environment, client/representatives and enterprise factors). However, the second results
emphasise that SMCEs with adequate PBFMS posted better performance than their
counterparts with inadequate systems. In this way the role of PBFMS in contributing to better
performance was illustrated by the results.
Some recommendations are proposed resulting from the findings and how to achieve a deeper
understanding of the subject. Firstly, SMCEs should pay more attention to matters pertaining
to strategic management to ensure a long-term view of their enterprises. Secondly, when a
strategic plan is developed, it must be implemented through operational plans as a means of
executing the strategy. Thirdly, concerted effort should made in ensuring that the projects are
controlled as it is the only way to achieve sustained profitability and satisfied customers.
Fourthly, as a way of providing a deeper understanding of the subject, it is suggested a
longitudinal study could be undertaken to yield a more encompassing investigation than a
cross sectional study which captured only one business cycle of the industry (down turn).
Lastly, the study could be replicated in another industry with a similar profile like the
construction industry in Botswana, for example, Namibia or/and the study could include large
enterprises to provide means of comparing the different profiles of enterprises. / Business Management / D. B. L.

Identiferoai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:unisa/oai:umkn-dsp01.int.unisa.ac.za:10500/3105
Date10 1900
CreatorsSsegawa-Kaggwa, Joseph
ContributorsRwelamila, P.D. (Prof.)
Source SetsSouth African National ETD Portal
LanguageEnglish
Detected LanguageEnglish
TypeThesis
Format1 online resource (iv, 373 leaves : ill.)

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