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ASSESSMENT OF PROJECT PLANNING PRACTICES AND ITS IMPACT ON CONTRACTORS PROFITABILITY

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ABSTRACT

The increased complexity of the society and high level of competition in the construction industry has made it imperative for contractors, project managers and construction companies to carry out serious planning in order to ensure project success and profits. This work examined project planning impact on a contractor’s profitability. The objectives were to identify project planning techniques and tools used by contractors in construction project delivery, determine factors affecting project planning practices of contractors, and to evaluate the impact of proper project planning on contractor’s profitability. The research approach involved survey design using structured questionnaire administered to 50 respondents in Owerri, Imo State, Nigeria. Spearman Ranked Correlation, Chi Square and other descriptive statistical methods were adopted for data analysis. The findings of the study revealed that Gantt chart with a mean score of 4.83 was the most commonly used tool used by contractors in project planning, and project funding not aligning with project plans with a mean score of 4.70 is the most common factor affecting project planning effectiveness. The hypothesis tests between level of use of project planning practices and contractors’ profitability using Spearman Ranked Correlation test indicated significant positive relationship between effective project planning and contractors’ profitability. The study concludes that project planning efforts influences contractor profitability in construction project delivery. The recommendations put forward were that project management teams should expose contractors to the relevance of project planning and its benefits. Clients should properly define their brief and contractor to avoid purchasing materials that won’t be used immediately in cases of installation of lifts that require heavy machinery and store houses.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Projects are used in all economic and non-economic fields as mean of organizing the activity, aiming the achievement of desired objectives. There is a direct relationship between projects, projects portfolio, programs and the organizational strategy. Projects, as the main way of creating and dealing with change (Cleland, Gareis, 2006), are used to implement strategies. Meskendahl (2010) refers to projects as the central building block used in implementing strategies, therefore business success is determined by the success of the projects. A project is an individual or collaborative enterprise, possibly involving research or design that is carefully planned, usually by a project team, to achieve a particular aim New York Time (2009). A project is also temporary because it has a defined beginning, end time, and defined scope and resources (Cathy, 2009). A project is unique because it is not a routine operation, but a specific set of operations designed to accomplish a singular goal. Based on these characteristics, carefully it is imperative to plan to achieve targeted outcome. Thus; Project planning can be defined as a part or branch of project management, which relates to the use of schedules to plan and subsequently report progress within the project environment.

Dubois and Gadde (2002) described the construction industry as decoupled and McKinsey (2017) confirmed that it is still true. The lack of coupling is present both between the construction project and its subcontractors as well as between the project and the parent company and other projects. This hampers the possibility to have a successful coordination of resources on a portfolio level within the contractor, as resources are in many cases utilised from a common resource pool (Engwall and Jerbrant 2003).The construction industry therefore embraces a wide range of loosely integrated organizations that collectively construct, alter and repair a wide range of different building and civil engineering projects. Individuals, organizations and government need to carry out some form of project planning for building and civil engineering project before embarking on whatever activity they are engaged to do. According to Lock (2002), the principal identifying characteristics of a project is its novelty, it’s a step unknown fraught with risk and uncertainty. No two projects are ever exactly alike and even a repeated project will differ from its predecessor in one or more commercial, administrative and physical aspect.

Construction is also characterized by time and cost intensive production processes which make it prone to project risks and failure, mainly in terms of time and cost. In practice, this means, that the performance of construction projects is usually low. In particular, construction projects are very often delayed and over budget. This is not just due to problems faced during project scheduling, but also during related processes.

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