Effect of Cash Flow on Contractors’ Performance in Building Construction Projects in Niger State.

Abstract

Cash flow is the lifeblood of the construction industry; cash is the most important resource for a construction company, because more companies become financially ruined due to lack of fund for supporting their day-to-day activities. However, securing sufficient cash flow at all phases of construction project execution are the most challenging and chronic issues facing contractors. This implies that a study of the effect of cash flow on contractors’ performance is still a gap which needs to be filled in order to link cash flow management with contractor’ performance. Primary data were obtained from the Niger State Ministry of Works, Niger State Housing Corporation and Physical Planning and Development Unit, Federal University of Technology, Minna through a well-structured questionnaire distributed to 58 respondents with a response rate of 89.66%. Relative Importance Index (RII) and Mean Item Score (MIS) were employed for the analysis of data. The study found that improper planning and management is the most important factor affecting contractors’ cash flow (RII = 0.91). Contractor experience was found to be the most important factor affecting contractors’ performance (RII = 0.95). Timely completion of projects was discovered as the most significant effect of cash flow on contractors’ performance (MIS = 4.83). Having appropriate planning was found to be the most effective strategy for improving contractors’ performance. It was thus recommended that contractors’ should always have appropriate plan and understand people’s requirements and needs which will help and go a long way to improve their performance.