EFFECTS OF PROJECT COST CONTROL MEASURES ON FINANCIAL MANAGEMENT OF CONSTRUCTION COMPANIES IN ABUJA.

Abstract

Improper financial management practices and poor cost control measures have proven to be a main cause of failures in companies in terms of financial difficulty, mismanagements of fund, failure to evaluate project profitability and shortage of long-term funds to meet the operating cost and capital expenditure. The aim of the study was to analyse the relationship between construction companies' project cost control measures and their general financial management practices towards enhancing organizations' financial performance. The population of the study comprised 81 companies registered with the Federal Capital Development Authority (FCDA) Abuja as at October, 2019. The methodology used was a survey design approach. Eighty-one (81) copies of structured questionnaire were thus administered and 75 were retrieved. A psychometric test was also carried out on the questionnaire with an average Cronbach's alpha (α) value of 0.85. Data gathered were analysed using Mean Score, Percentile and Standard deviation while Spearman rank correlation was used to establish relationship between financial management practices and cost control measure variables. The study revealed that the most pervasively used financial management practice in indigenous construction company is the use of financial performance assessment as high level of importance placed on it. More so, there is a positive significant correlation between resource monitoring and financial innovation with a value of 0.866. It was concluded that increase in the positive cost control measures will translate to an improvement in more than one area of financial management practice. Also, there exist a high positive correlation between cost monitoring, budget monitoring and cost estimates as they influence the highest number of financial management practices in construction companies. It was therefore recommended that construction companies should prioritize cost control of measures that influences most their financial management practices, also that Construction companies should increase their financing practices which translate to the growth of their company's profitability, liquidity and cash flow.