The Effects of Project Planning Techniques on Contractors’ Profit
Chapter One
RESEARCH OBJECTIVES
- To explore project planning practices applied by Julius Berger at various project levels.
- To assess awareness and usage of formal and informal project planning practices by Julius Berger, Abuja
- To examine the success or failure of the project planning approach used by Julius Berger Contractors on Grand Towers Mall, Abuja (status – Under Const
- To evaluate the impact of the applied project planning approach to the attainment of project profits.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
In this chapter, the researcher will review existing literature generally on project planning and narrow it down to the effects it has on time, cost and the general performance of an organization. Various concepts of project planning, contract management and organizational performance are discussed, and previous and recent researches on project planning and its effect on cost and time are well outlined and stated.
THEORITICAL FRAMEWORK
The contours of contract theory as a field are difficult to define. Many would argue that contract theory is a subset of Game Theory which is defined by the notion that one party to the game (typically called the principal) is given all of the bargaining power and so can make a take-it-or-leave-it offer to the other party or parties (i.e., the agent(s)). In fact, the techniques for screening contracts were largely developed by pure game theorists to study allocation mechanisms and game design. But then again, carefully defined, everything is a subset of game theory.
Others would argue that contract theory is an extension of price theory in the following sense. Price theory studies how actors interact where the actors are allowed to choose prices, wages, quantities, etc. and studies partial or general equilibrium outcomes. Contract theory extends the choice spaces of the actors to include richer strategies (i.e. contracts) rather than simple one-dimensional choice variables. Hence, a firm can offer a nonlinear price menu to its customers (i.e., a screening contract) rather than a simple uniform price and an employer can offer its employee a wage schedule for differing levels of stochastic performance(i.e., an incentives contract) rather than a simple wage.
Finally, one could group contract theory together by the substantive questions it asks. How should contracts be developed between principals and their agents to provide correct incentives for communication of information and actions? Thus, contract theory seeks to understand organizations, institutions, and relationships between productive individuals when there are differences in personal objectives (e.g., effort, information revelation, etc.).
It is this later classification that probably best defines contract theory as a field, although many interesting questions such as the optimal design of auctions and resource allocation do not fit this description very well but comprise an important part of contract theory nonetheless.
THE BASIC THEORY
The Model we now turn to the consideration of moral hazard. The workhorse of this literature is a simple model with one principal who makes a take-it-or-leave-it offer to a single agent with outside reservation utility of U under conditions of symmetric information. If the contract is accepted, the agent then chooses an action, a 2 A, which will have an effect
(Usual stochastic) on an outcome, x 2 X, of which the principal cares about and is typically “informative” about the agent’s action, The principal may observe some additional signals 2 S, which may also be informative about the agent’s action. The simplest version of this model casts x as monetary profits and s = ;; we will focus on this simple model for now ignoring information besides x.
We will assume that x is observable and verifiable. This latter term is used to indicate that enforceable contracts can be written on the variable, x. The nature of the principal’s contract offer will be a wage schedule, w(x), according to which the agent is rewarded.
We will also assume for now that the principal has full commitment and will not alter the contract w(x) later – even if it is Pareto improving.
THE RELATIONAL THEORY
A relational contract theory is a theory based upon a relationship of trust between the parties. The explicit terms of the contract are just an outline as there are implicit terms and understandings which determine the behaviour of the parties.
Relational contract theory was originally developed in the United States by the legal scholars Ian Roderick Macneil and Stewart Macaulay. According to Macneil it offered a response to the so-called “Death of Contract” school’s nihilistic argument that contract was not a fit subject for study as a whole; each different type of contract (e.g., sales, employment, negotiable instruments) could be studied individually, but not “contracts-in-gross”.
Macneil explains that this is only one of a number of possible relational theories of contracts, and accordingly renamed his own version “essential contract theory”.
Relational contract theory is characterized by a view of contracts as relations rather than as discrete transactions (which, Macneil argued, traditional “classical” or “neo-classical contract” theory treats contracts as being). Thus, even a simple transaction can properly be understood as involving a wider social and economic context. For instance, if A purchases a packet of cigarettes from a shop he has never been into before and will never enter again, that seems quite discrete. However, A will almost certainly have a loyalty to a particular brand of cigarettes and expectations about quality about which he would be prepared to complain to the manufacturer, although he has no contractual private with the manufacturer. There is also an understanding that A will pay for the cigarettes, not simply run off with them, and that if he tenders a £10 note in exchange for the cigarettes which are priced at £6, the paper money will be acceptable and change of £4 will be given. None of this is explicitly stated between the parties, whose conversation is likely limited to “20 Marlboro, please” on A’s part and “That’ll be £6, please” on the part of the retailer. Thus, even the simplest transaction has a good deal that is unstated and dependent on a wider web of social and economic relations. How far outwards into that web one needs to investigate will depend on the transaction and on the purpose for which it is being examined.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter describes the research design, population, sampling techniques, method of data collection as well as the method of data analysis used in this research.
Research Design
In designing the research, a plan was set to guide the researcher on data collection and analysis phases of the research project; however the research design is descriptive method and percentage representation. The number of respondent that answer each question will be determined. This will allow for easier comparison of responses of all the respondent in other to research logical and constructive conclusion also, the researcher adopted survey as one of the research methods which is meant to investigate, budgeting as an effective tool for planning control and increasing productivity as an instrument of development in private sector as the researcher center of focus.
Area of the Study
Julius Berger Nigeria Plc is a Nigerian construction company, headquartered in Abuja FCT, located at 10 Shettima A. Munguno Crescent | Utako 900 108 | FCT Abuja
Population of the Study
The research population of this study of 100 staff of Julius Berger Nigeria Plc.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Introduction
In this Chapter, all the data collected through the questionnaire administered were presented, analyzed and interpreted using likert rating scale. Out of the 6 questionnaires administered, only 40 were returned representing 63% of the total and this is considered to be adequate.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
This chapter summarizes the literature review as well as the detailed analysis that has been undertaken in this research work and (budgeting as an effective tool for increasing productivity in private sector).
Therefore, based on the findings arrived at recommendation are given and conclusion draw therefore.
Summary
The objective of private sector is basically to improve the effectiveness and providing power service both internally and externally and to reduce cost.
Budgeting as an effective tool, for planning and control is an important aspect of accounting system both in service or manufacturing organization. This is so because with budgeting planning and control no organization can function effectively in terms of product financial planning.
Therefore, budgeting as a tool for planning and control not be under estimated in an organization, budgeting is used a yardstick to evaluate the activities in an organization. And it has helped management to take crucial decision to guide them in their financial decision planning in running the organization.
The write undertook the researcher of the organization to find out whether the company applied budgeting. Planning and control procedures to its operation and in particular. The productivity of the organization, more over. if it had done that, how I done it and to what extent as well as finding out the efficient and effectiveness of the organization.
The company embarked on long term strategic planning and budgeting techniques to maximum its productivity as far back as the early year of its establishment. The strategies plan is described as the policy of even spread is an organization plan designed by the company in order to control productivity as well as creating some operational economics to the company.
In term of controlling he strategic plan of the company proved beyond reasonable doubt that budgeting as a means of planning and control are suitable for increasing productivity. On the other hand the short-term plan budget of the company should be restricted to the continuous aspect of its operation.
Conclusion
For budgeting to serve as an impact for planning and controlling mechanism technique, there has to be a plan upon which budget productivity is based.
Productivity must be planned before it can be controlled operation ahs to be determined and analyzed into expenditure costs so as to know how realistic would be contribution to project goals to make budget without planning.
It is just like putting the cat before the horse and a plan without a complimentary control would be pointless. The private sector has achieved the benefit of long range planning however it has not fully achieved the benefit of short range planning the budgeting fully. Moreover, the company has operated with adherence to the budgets and plans usually made in the areas to which they were applied and has been able to realize targeted goals with only minor deviations from the budgets.
These deviations were due to external factors which cannot be controlled by the company (private sector) efficiency and effectiveness has also been achieved by the company through the use of long range planning which improve or increase productivity.
Recommendations
- The researcher is of the opinion that long range planning of the company should be maintained and pursued fully reached. This is because the company has benefited from it, ranging from creation of economic and minimization e.g. its expenditure.
However, in the area of its operational planning, the company should devise a good specialization policy so that each department within the company should perform specific operation of function.
This will help the company to achieve efficiency and effectiveness in the area of its short term tactical planning and budgeting. This is because for operational performance or goals to be achieved, such operation has to be planned which will go a long way in controlling the productivity of the organization.
- The company should employ competent and intelligent staff which a lot of experience to facilitate the planning which will go a long way in controlling in productivity in the organization.
- Budget plans and control should be reviewed on an operated effective and efficiently as to facilitate the realization of the goal which is the productivity increase in an organization.
- The company corporate planning should have the total support and involvement of top management. It is not a process to be left to technical specialist then assistance and advice can be extremely useful but management involvements are essential.
- The company should avoid excessive detail in corporate planning. I recommend that the corporate planning should provide a curse gained strategic structure for long term future.
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