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MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF A CCOUNTING

AN ASSESSMENT OF PROJECT MANAGEMENT DECISION ON FINANCIAL

PERFORMANCE OF MIDLANDS STATE UNIVERSITY

BY MORGEN MAVHUNGA

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THIS DISSERTATION IS SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS OF THE BACHELOR OF COMMERCE ACCOUNTING

HONOURS DEGREE IN THE DEPARTMENT OF ACCOUNTING AT

MIDLANDS STATE UNIVERSITY

GWERU ZIMBABWE MAY 2014

APPROVAL FORM

The undersigned certify that they have read and recommend to the Midlands State University

for acceptance, a dissertation entitled “An assessment of project management decision on

financial performance of Midlands State University’’ submitted by Morgen Mavhunga in

partial fulfillment of the requirements of the Bachelor of Commerce in Accounting Honours

Degree (HACC).

……………………………… ………………………………

Supervisor Date

……………………………… ………………………………..

Chairperson Date

……………………………….. ………………………………….

External Examiner Date

i

RELEASE FORM

Name of Author: Morgen Mavhunga

Dissertation Title:

An Assessment of Project Management Decision on financial performance of Midlands State

University.

Degree Title:

Bachelor of Commerce Accounting Honours Degree (HACC)

Permission is hereby granted to the Midlands State University Library to produce single

copies of thins dissertation and to lend or sell such copies for private, scholarly or scientific

research purposes only. The author reserve other publication rights neither the dissertation

nor extensive extracts from it may be printed or otherwise reproduced without the authors’

written permission.

....................................... ............................................

Student Date

Contact Address: Contact phone:

3636 Simbi Park +26377 4381 036

Redcliff

Kwekwe

ii

DEDICATIONS

To Jehovah Jireh, God the Provider, Our Father who art in Heaven, Great is thy name, all

angels and man pray and honour thee.

iii

ACKNOWLEDGEMENTS

Advice and support will always remain the key drivers to success. I appreciate many people

who were there at the time of my research, who provided their unwavering support and

assistance leading to the success of my project. My gratitude goes to my family and friends,

Midlands State University Bursars’ Department staff and the Department of Accounting Staff

as well. Special thanks to:

My Supervisor, Ms Nyamwanza for her guidance, support and patience during the research.

Without her patience, I do not think I would have made it through.

My friends P Dhlakama, L Kandiga, T Masikati and T Mutsago for the encouragement and

accessories they contributed towards my research.

My family Mr and Mrs Ngandu, Mr T Mavhunga and Ms J Mavhunga for their strong

support, encouragement as well and financial assistance.

Mr T Marufu, Mr C dokotera and Mrs N Makonya from Midlands State University

Bursars’Department. I thank you all for your support.

To all my classmates thanks for the inspiration and support.

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ABSTRACT

Since the year 2010, when Midlands State University decided to undertake various projects, it

has suffered an increasing rate in the costs resulting in huge amounts of outflows affecting

the organisational performance as a whole. This has resulted in reflections like many

incomplete projects on the ground financed for the commencing and not finished due to the

lack of funding. The organisation undertaking many projects at once has resulted in a difficult

state to manage the costs. The organisation encountered problems in funding as well because

there were no other sources of finance to depend upon hence costs increased as the projects

increased in number. The study therefore sought to assess the project management decisions

thereby evaluating the cost management policy and its impact on the financial performance of

the organisation. The research methodology, Descriptive Research design was used where

questionnaires were distributed and interviews were also conducted so as to gather data and

the data was presented and analysed. Sample was derived by the procedure of non-probability

sampling that includes the convenient sampling technique. The data was presented in form of

graphs, tables and pie charts. Following the presentations an analysis was done and a

conclusion was made. Major findings outlined the ineffectiveness of policy implementation,

risk assessment techniques and cost techniques that are employed by the organization. A

conclusion was reached that the policy exist but it is not documented therefore no guidelines

to implementation. The researcher however made recommendations at the end of the study

upon policy implementation and controls necessary.

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TABLE OF CONTENTS

APPROVAL FORM………………………………………………………………………….. i

RELEASE FORM……………………………………………………………………………. ii

DEDICATIONS……………………………………………………………………………. iii

ACKNOWLEDGEMENTS………………………………………………………………… iv

ABSTRACT v

LIST OF TABLES……………………………………………………………………………. ix

LIST OF FIGURES…………………………………………………………………………... x

LIST OF APPENDICES……………………………………………………………………... xi

CHAPTER ONE INTRODUCTION

1.0 INTRODUCTION 1

1.1 BACKGROUND TO STUDY 1

1.2 PROBLEM STATEMENT 3

1.3 MAIN RESEARCH QUESTION 4

1.4 SUB-RESEARCH QUESTIONS 4

1.5 RESEARCH OBJECTIVES 4

1.6 JUSTIFICATION OF THE STUDY 5

1.7 DELIMITATIONS TO THE STUDY 5

1.8 LIMITATIONS 5

1.9 ASSUMPTIONS 6

1.11 DEFINITION OF TERMS 6

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1.12 SUMMARY 6

CHAPTER TWO: LITERATURE REVIEW

2.0 INTRODUCTION 7

2.1 COST MANAGEMENT POLICY IN PROJECT MANAGEMENT (CMP) 7

2.1.1 EVALUATING COST MANAGEMENT POLICY 7

2.1.2 COST MANAGEMENT POLICY PROCESS 9

2.1.3 PROJECT MANAGEMENT CONSTRAINTS 10

2.1.4 RESULT CONSTRAINT 11

2.1.5 BUDGET CONSTRAINT 12

2.1.6 TIME CONSTRAINT 14

2.1.7 CLIENT ACCEPTANCE 15

2.1.8 VALUE DRIVEN PROJECT MANAGEMENT 15

2.2 EFFECTS OF PROJECT COST MANAGEMENT POLICY ON FINANCIAL

PERFORMANCE

16

2.3 EVALUATING RISK ASSESSMENT TECHNIQUES 17

2.4 OTHER DECISIONS AND CONTROLS APPLICABLE IN PROJECT MANAGEMENT 21

2.5 BEST PRACTICES 25

2.6 SUMMARY 26

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 INTRODUCTION 27

3.1 RESEARCH DESIGN 27

3.1.1 DESCRIPTIVE RESEARCH DESIGN 28

3.2 CASE STUDY 29

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3.3 TARGET POPULATION 30

3.4 SAMPLING 30

3.4.1 SAMPLING PROCEDURES 30

3.5 TYPES OF DATA 33

3.5.1 PRIMARY DATA 33

3.5.2 SECONDARY DATA 34

3.6 RESEARCH INSTRUMENTS 35

3.6.1 QUESTIONNAIRES 36

3.6.2 INTERVIEWS 37

3.7 TYPES OF QUESTIONS 37

3.7.1 CLOSED ENDED QUESTIONS 37

3.8 LIKERT SCALE 38

3.9 RELIABILITY AND VALIDITY 39

3.10 DATA PRESENTATION 39

3.11 DATA ANALYSIS 39

3.12 SUMMARY 39

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.0 INTRODUCTION 40

4.1 RESPONSE RATE 40

4.1.1 RESPONSE RATE OF QUESTIONNAIRES 40

4.3 INTERVIEW RESPONSES 55

4.4 SUMMARY 58

CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS

5.0 INTRODUCTION 59

viii

5.1 SUMMARY OF CHAPTERS 59

5.2 MAJOR FINDINGS 60

5.3 CONCLUSION 62

5.4 RECOMMENDATIONS 62

5.5 SUMMARY 63

REFERENCE LIST

ix

LIST OF FIGURES

FIG 4.1 COST MANAGEMENT POLICY 41

FIG 4.2 POLICY IMPLEMENTATION 44

FIG 4.3 EFFECT OF COST MANAGEMENT POLICY ON FINANCIAL PERFORMANCE 47

FIG 4.4 CONSULTATION BETWEEN FINANCE AND PROJECT COMMITTEE 50

FIG 4.5 RISK ASSESSMENT TECHNIQUES 51

FIG 4.6 CURRENT COST MANAGEMEN POLICY 44 52

FIG 4.7 MSU PROFITABILITY AND LIQUIDITY

POSITION……………………………..

54

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LIST OF TABLES

TABLE 1.1 SUMMARY OF INVESTMENT PROJECTS 1

TABLE 1.2 MSU COMPARATIVE CASH FLOW STATEMENTS 2

TABLE 3.1 SAMPLE SIZE 33 33

TABLE 3.2 LIKERT SCALE ……………………………………..……………............. 38

TABLE 4.1 QUESTIONNAIRE RESPONSE RATE 40

TABLE 4.2 POLICY DOCUMENTATION 43 43

TABLE 4.3 CONTROLS OVER IMPLEMENTATION 45 45

xi

LIST OF APPENDICES

APPENIX A: INTRODUCTORY LETTER…………….……………………………. 53

: QUESTIONNAIRES……………………………………………………. 54

APPENIX C: INTERVIEW GUIDE………………………………………………….. 55

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An Assessment of Project Management decision on financial performance of MSU

CHAPTER ONE

1.0 Introduction

The chapter contained background of the study, problem statement and main topic. It

continued also to outline the sub research questions, research objectives, and significance of

the study, limitations and delimitations, abbreviations, definition of terms and chapter

summary.

1.1 Background to study

The period from 2010 to 2013 MSU has been undertaking the following summarized

projects:

Table1.1 Summary of Investment projects

Year Capital

projects

Projects costs Work in

progress

Completed

projects

2010 3 US$1400000 2 1

2011 5 US$2750000 3 2

2012 7 US$5800000 5 2

2013 Fairly more

than 10

US$10000000 9 3

(Source-business development office MSU)

MSU’s project costs increases from $1 400 000 to $10 000 000 as its projects increase in

number from 3 to 10 during the period .As incomplete projects gives an average number of 4

projects with an average cost of $5 500 000 which the firm fails to manage since 2010 as

income was $3 450 000 on average from operating activities. The bursar highlighted in the

annual general meeting held in December 2012 that the increase of projects have pulled out

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an amount of $8 322 000 against an inflow of $2 735 000, being large amount and yet almost

9 of other projects were still on the ground and therefore the firm has failed to manage over

these costs that a further increase in capital projects in 2013 led to an increased outflow of

$10150000. The year 2010 to 2013 projects increase in number from 3 to fairly more than

10. It is noted that management fails to reduce costs as they increase every year ($1.4m ,

$2.75m, $5.8m ,$10m) and work in progress there increased from (3 to 9) year 2011 to 2013

resulting to more projects being incomplete hence is tying up capital in projects. Following is

Table 1.2 showing a statement of cash flows.

Table 1.2 MSU comparative cash flow statements

CASH FLOWS FROM OPERATING ACTIVITIES

2010

$000

2011

$000

2012

$000

2013

$000

Operating income 2890 2100 3200 5670

Depreciation expense 65 55 123 879

Increase/decrease in accounts receivable -84 -198 -400 -750

Increase/decrease in accounts payable -97 -233 -366 -434

Net cash flow from operating activities 2774 1724 2557 5365

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of equipment 96 12 178 -

Purchase of equipment -158 -1300 -3500 -3700

Capital investment projects -450 -2800 -5000 -6450

Net cash flow from investing activities -512 -4088 -8322 -10150

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of bond -180 -1300 -4846 -7970

Net cash flow from financing activities -180 -1300 -4846 -7970

Net change in cash 2082 -3664 -2591 -1777

Beginning cash balance 350 2432 -1232 -3823

Ending cash balance 2432 -1232 -3823 -5600

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(Source-business development office MSU)

According to the minutes of the financial meeting held in December 2012 the Bursar

highlighted that “MSU is falling into cash problem to finance day to day activities and

operational activities’’. Investing activities are pulling out huge amounts of cash (-$512 to -

$10 150) as increased by project costs increasing each year ($450 to $6 450) as shown by

Table 1.2. Operating income from year 2010 to 2013 increased from $2 890 to $ 5 670

respectively resulting in a positive balance in the net cash flow of operating activities. As

highlighted by the Bursar ,management fails to manage project costs as they rise to have a

negative increase on investing activities, representing huge outflows of cash to finance capital

projects (-$512 to -$10 150 year 2010 to 2013 respectively). Financing activities reflect out

flows of cash, towards bond repayment. This led to balances at year end to reflect a negative

cash flow position of -$1 232, -$3 823 and -$5 600 year 2011 to 2013 as shown in the cash

flow statement. This has therefore led the researcher to assess the management policy

implemented at the organization.

1.2 Problem statement

As highlighted by the bursar in a meeting December 2012, increase in projects increases

the project costs to manage which are pulling out funds to finance operations. This

shows a cost management problem as project costs increased every year ($1.4m -$10m)

at an increasing cash outflow status of the firm as (-$ 512 to -$10150 ) year 2010 to

2013. This assessment will therefore pave way for the proliferation of recommendations

aimed at ensuring that organizations do not fold but surpass expectations in as far as

their performance is concerned. The researcher therefore proposes to assess the impact

of cost management as an element of project management affecting financial

performance.

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1.3 Main research question

What is the impact of Project cost management on financial performance?

1.4 Sub-research questions

The following sub-research questions arise from the main topic.

i. What is MSU cost management policy in project management and how it is applied?

ii. What are the effects of project cost management policy on financial performance?

iii. How effective are the risk assessment techniques implemented by MSU in Project

cost management.

iv. What other project management decisions and controls are applicable to achieve

project success at MSU?

v. What are the best practices recommended in Zimbabwe University policy formulation

and implementation in order to increase organizational performance?

1.5 Research objectives

The following research objectives arise from sub-research questions.

i. To evaluate MSU cost management policy in project management and assess its

application.

ii. To assess the effects of project cost management policy on performance.

iii. To evaluate the risk assessment techniques implemented by MSU.

iv. To outline other applicable project decisions and controls relevant to achieve project

success.

v. To assess the best practices in University finance policy formulation and

implementation useful in Zimbabwe.

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1.6 Justification of the study

To the student

The research is done in partial fulfilment of the requirements of the Bachelor of Commerce

Honours Degree in Accounting.

To the university

The research will serve as reference material to be used by other different scholars.

To Midlands State University [organisation]

The research gives recommendations for adoption by the organisation.

1.7 Delimitations to the study

The Research study is based on assessing the impact of project management on the financial

performance of MSU in Gweru. It is enclosed to Midlands State University bursars

department and its management from 2010 to 2013.

1.8 Limitations

Time constraint

The time was limited, within which the research was to be concluded. However the

researcher had to maximise weekend and semester break time.

Confidential information not readily available

In some cases the researcher was deterred confidentiality from accessing information.

However secrecy oaths had to be signed by the researcher with the management. Thereafter

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following lines of assurance to information access was allowed with agreement that

information would be used for research only and be held in confidence.

1.9 Assumptions

Information provided is deemed accurate basing on that university policy doesn’t alter

therefore reflects a true and fair view of MSU. Respondents hence provide a reasonable

cooperation level.

1.10 Abbreviations

MSU- Midlands State University

CMP- Cost Management Policy

1.11 Definition of terms

Project Management: According to PMBOK® Guide 2012 (PMI’s A Guide to the Project

Management Body of Knowledge) it is the application of knowledge, skills and techniques to

execute projects effectively and efficiently. It’s a strategic competency for organizations,

enabling them to tie project results to business goals.

Cost management policy – According to Drury (2012; 543) it is defined as a document

containing a set of rules, limitations, standards and guidelines governing the management in

decision making.

1.12 Summary

The chapter covered the introduction, background of the study, problem statement, main

research question, sub-research questions and objectives .Included also is the justification of

study, limitations and delimitations to study, assumptions , abbreviations and definition of

terms .Chapter two (2) is on Literature review.

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CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter reviewed the researches done by other writers. It reviewed what policy the

organization had and have its implementation evaluated the, what literature says about the

viability of project cost management on financial performance, the extent to which risk

associated with project management is considered, other decisions and controls applicable to

achieve project success and the effectiveness of best practices in policy formulation and

implementation. It includes also the chapter summary at the end.

2.1 Cost management policy in project management (CMP)

2.1.1 Evaluating cost management policy

In project cost management an organisation that bases on quality and activity policy as

outlined by Drury (2012; 543) should have a document containing a set of rules, limitations,

standards and guidelines governing the management in decision making. As it is adapted by

management to control costs in project management Bender (2010; 191) suggests when

organisations bases on quality there is involvement of meeting requirements and

specifications on a set of given inputs, conditions or state. The actions are taken by managers

to reduce costs where some of which are taken as first priority on the basis of information

that would have been extracted from the accounting system. Drury (2012) highlighted that

usually managers become unaware of all the approaches that can be implemented to reduce

costs where opportunities can be identified to perform processes more effectively and

efficiently.

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It is suggested by Venkataraman (2010; 238) that organisations may complete good quality

policy, but results in reduced intentions ,where top management according to activities on

ground delegates the implementation to the lower level managers where there is no

prioritisation of projects that is made. There is a gap in the project environment between the

definition of project quality and organisation therefore it is found difficult bridging between

quality expectations since all necessary steps to translate the requirements are not taken and

this results in cost overruns and lower project value.

The policy includes the tools and techniques as outlined by Knapp (2010; 80) which are the

cost benefit analysis and benchmarking but, however mistakes are made consequently and it

is unlikely that the project’s facility will solve the problem or be fit for its purpose.

According to Gray (2011; 127) project estimation is taken as a yardstick for project cost

control. It is suggested that if the yardstick is faulty management can start on the wrong foot,

therefore the policy should not direct management not to underestimate the estimate’’

Guidelines are made for estimates that are needed to support good decisions in project

management. The policy involves also the guideline for the estimation basis where cost, time

and budget are to be the lifeline for control. They are expected to serve as the standard for

comparison of actual and plan throughout the life of the project.

Venkatarum and Pinto (2010; 235) argues that although cost, time and quality are vital to

enhancing value in projects considering other factors which includes the service expected by

customers during or after project a wide broad definition of quality will be warranted.

Focusing on quality drives management is led to ignoring all other factors and techniques

useful to project management. However most organisations including MSU their project

status reports depend on reliable estimates as the major input for measuring variances and

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taking corrective action. It is outlined therefore that as managers recognise time, cost and

resource estimate as guided by policy standard basis, it must be accurate if project planning

and control are to be more effective.

2.1.2 Cost management policy process

According to Kliem (2012; 103) initiating is the first phase of the process where vision and

goals, objectives and scope of the project are given a clear definition up front in the form of a

charter, statement of work or contract. The written down template enables the project

managers to determine an adequate cost budget, monitor and control the instances of

overspending there by keeping the projects and financial plans up to date. Therefore to

deliver projects under a budget it is essential to implement a project cost management process

that helps to identify, monitor and control costs at each phase in the project.

However there is a need for determining the road map for executing the contents of the

charter, statement of work or contract. Gray (2011; 101) argued also and said “We can

control only what we have planned’’.

Maylor (2010) defined the execution processes, which is the second phase, as carrying out the

plans laid down, therefore execution comes after planning to enable control over .Monitoring

and controlling means keeping abreast of how well a project is executing according to plan in

such a way that it is achieving its initial vision .In the last phase of the process, closing is the

process of administratively and contractually concluding a project. It is also when project

managers ensure that all terms and conditions as well as any outstanding obligations have

been met.

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Thomsett (2010; 5), however described project as an exception as projects has different

meanings in each organisation varying from one department to another. Project management

is defined by comparing projects to a routine. It is stated that project goals and deadlines need

to be specific, where the project’s desired result is identified and the project becomes well

defined only when a specific result is known. On his argument there are also operational

constraints associated with projects that are to be considered in the project cost management

process. An argument is raised that priority is also supposed to be given to the constraints

attached to the project process as project activities are related, unlike routines, projects

involve investigation, compilation, arrangement and reporting of findings in some way that

provides value.

2.1.3 Project management constraints

The three constraints triangle is reviewed as the triple constraint. Program Success (May 2;

2011) stated that the major take away that the triple constraint, being in triangular form, one

cannot make adjustments or make changes to one side without in effect altering the other

sides. Therefore the triple constraint by program success includes scope constraint as the

result leading to the same meaning and definition of the project end result and the budget

constraint reviewed as cost also by various authors.

Towey (2013) argued that the triple constraint must be understood in consideration that

scope (result), time, budget (cost) is interrelated. In many cases management may be

somewhat aloof adding scope to a project or accepting a budget cut without an effort to

determine what the consequences of that alteration will be. Denying potential repercussions

of alterations to the scope, time, and cost are leading to the issues of project failure. However

there is lack of triple constraint which needs monitoring to ensure that management dwells on

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top of the key attributes of the triple constraints which will make the likelihood of project

success higher. The constraints are as follows:

2.1.4 Result constraint

According to Wysocki (2011) it is noted that a project is well defined only when the specific

result is known .The work is non-recurring ,therefore that means in every case the demands

of a project is not seen to be easily identified, Schwable (2014) .It is also stated

that ,completion of a specific ,defined task or a series of tasks serves as the primary driving

force behind the projects .Projects are distinguished from recurring tasks that are faced on

departmental level ,however the project is aimed to the idea of a finite one-time result.

Kerzner and Belack (2010; 9) reviews result constraint as scope constraint in the triple

constraints .In a management perspective the preceding feature is the goal of the project

including meeting the result constraint so to facilitate the project success and performance.

This constraint refers to what must be taken into consideration and done to produce the

project’s end result but being overseen in the organisation. However the scope constraint

often has a relation with other constraints in the sense that a tight budget could mean

increased time but reduced scope.

According to Heldman (2011; 119) a constraint is anything that impedes the ability of the

management in performing their project work or specifically dictates the manner in which the

project should be handled. Therefore the result constraint is the third element of the triple

constraint that defines the project deliverables and situations where scope is predefined by

project sponsor. The budget in this case impacts the scope of the project and will require a cut

back on the deliverables originally planned.

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An emphasis on the adherence to initially determined technical specifications was given by

Pinto (2010; 35), who reviewed the result constraint as performance where a policy based on

it fails. The project therefore is supposed to be known what exactly the final product is

supposed to operate .Measuring performance, determining whether the finished product

operates according to specifications commonly found with no specifications met. Internally

this focuses on efficiency and productivity providing a quantifiable measure of personnel

evaluation and allowed accountants to control expenses.

2.1.5 Budget constraint

High construction costs result from, budget the organisation has failed to estimate. Budget or

cost constraint according to Thomsett (2010; 8) is when management operates with a degree

of independence in terms of control and money, .It is separate from the department’s budget.

There are some questions which management could ask, in defining the project. These

include how much the project is costing matched against the available funds to finance the

projects.

According to Greenhalgh (2013) the aspect of time to cost and quality has also to include the

plan of the amount of expenses involved and how much needs to be set aside for the final

completion of the project is to be considered. If expenses are to be found more than the

budget additional controls should be put into place to avoid further variances. Managers

recognise cost estimates to be accurate if the project planning ,scheduling and controlling are

to be effective .Therefore Maylor (2010) concluded by stating that there is substantial

evidence that suggests that poor estimates are a major contributor to projects that fails.

However efforts should be made to ensure that initial estimates are as accurate as possible

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since the choice of no estimates leaves a great deal to luck and does not seem acceptable to

serious management.

According to Towey (2013; 267) the cost constraint is reviewed as the second key

determinant of project success as limited budget. Projects are expected to meet the budgeted

allowances in order to use resources as efficiently as possible and achieve the desire result

that does not negatively affect the overall financial performance. The author outlined the

relevant dimension of success as project efficiency, which is the meeting of the budget and

schedule expectations. Other dimensions of success mentioned include impact on the

customer that is meeting technical specifications and creating a project that satisfies the

client’s need. Business success also is a relevant dimension of success which is to determine

whether the project achieved significant commercial success. The last dimension is future

potential determining whether the project helped to develop new technology or opened new

markets.

Philips et al (2011) suggests that the triple constraint can be confusing, but it is an important

one to understand and manage early in the planning process. How to plan and manage the

projects relies upon an understanding of the constraints which can be prioritised differently

on any given project. Cost or budget constraint clarifies the appropriate resources demanded

by the planned project and how much the project will cost. In addition, there is a relationship

between triple constraints meaning that as performance factor becomes priority it may require

a sacrifice of another.

Gupta (2009) stated that when a project is having a tight budget yet for which the quality also

important it therefore requires more time to complete so as to motivate performance

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expected. A project with tight time and budget constraints will also require a trade-off from

features or scope or the performance specifications of the project.

2.1.6 Time constraint

The amount of time required to finish a project should be directly related to the amount of

requirements that are part of the scope along with amount of resources allocated to project

costs, Program success (2011; may 2) .According to Jeffery P (2010; 35), time constraint is

one of the key determinants of project success which much be taken into consideration when

planning a project. Projects are constrained by a specific time frame during which they must

be completed. Therefore the first constraint that governs the project management involves the

basic requirement which is the project should come in on or before it’s established scheduled.

Time can also be replaced by schedule according to Heldman (2011) where most projects are

seen operating under a deadline .Taking for example that the stakeholders or perhaps the

project requester have stated that the new Centre should be opened by October 1.Therefore

one works hard on the schedule to come up with a plan that allows for all the activities to be

complete by the deadline. Time constraints which usually involve scheduling can cause some

problems for the project management team. If a project schedule calls for paving crews at a

specific point in the plan but no paying crews are available at the scheduled time, a dilemma

may arise within.

According to Thomsett (2010; 7) a conclusion is drawn that the projects fail purely on the

basis of the triple constraints which are result, budget and time. Projects have specific starting

and ending, however many projects fail since they fail to have such specified time frame

adhered. A well planned project is based on the careful controls over completion phases

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which involve careful use of each team member’s time. There is also the use of deadlines

outlined set for the project completion.

2.1.7 Client acceptance

Turner etal (2010; 40) states that the principle of client acceptance argues that projects are

developed with customers or client’s in mind and their purpose is to satisfy customers’ needs.

If the client acceptance is the key variable, then the completed project should be acceptable to

the people it was intended .An emphasis was given that ,most companies that evaluate the

project success according to the triple constraint may fail to apply the important test of all ,

which is the client’s satisfaction with the completed project. More recently however, the

traditional triple constraint is coming under criticism as a measure of project success .It could

be a failure, but if it has been delivered in time and on budget and satisfies the original

specifications, the project itself could still be declared a success.

2.1.8 Value driven project management

It is not a matter of the triple constraint alone, according to Kerzner (2010; 297), over the

years we came to accept the traditional definition of project success namely to meeting the

triple constraint. However the definition of success has been modified by stating that there

must be a valid business purpose for working on the project .Argument is that success is then

recognised as having the business component and a technical component. The purpose of

working on a project should provide some form of a value to both the client and the parent

organisation. Kerzner (2010) suggests that if there is no project value identified, and then the

project should not be undertaken at all. Value therefore can be defined as what the

stakeholders perceive the project’s deliverables as being worthy. Completing a project in time

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and on budget does not guarantee success if you were working on the wrong project or that

the project will provide value at completion.

2.2 Effects of project cost management policy on financial performance

According to Finnerty (2013; 20) the firm’s internal cash flows with the borrowing capacity

that is unused is the limited financial resource. The resource affects performance by imposing

a significant cost, which management can take advantage of opportunities that would cause

so. Without transparent projects there are no ways they can therefore take advantage of the

opportunities. The policy tends to incorporate no selection of project financing in situations

that entail high costs, thereby reducing the firm’s financial flexibility by exploiting the firm’s

internal financing capacity to fund future projects that have potentially high costs.

Wysock (2011) suggested that project management concept involves the use various tools

and approaches to determine the value in a project undertaken by an organisation. Various

factors are reviewed by authors that are valued for achieving project success in an expected

manner that does not leave an organisation in a dilemma, where the company suggests either

to cease projects to facilitate the operating activities hindered or hinder the core business of

the organisation to achieve a project success.

A project according to Brown and Hyer (2010, 2) it is a temporary endeavour intended to

solve a problem, but if failed it tends to increase the problems to the operational performance

of the organisation, seize and opportunity or respond to a mandate. Therefore project

management policy being implemented is expected to provide a smooth flow of project

activities without losses or increased cost or time that will affect the operations of the

organisation causing a reduced performance

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.According to Brown and Hyer (2010; 7), the project management policy involves a

consideration of factors essential to financial performance. These include clear and shared

purpose and goal meaning that all project participants are supposed to agree on the purpose or

mission of the project in concern and measurable goals, that is what is expected to be

achieved by the project according to what is available as resources. It is suggested that clear,

shared, challenging but realistic goals have a powerful influence on individual and team

performance. Inadequate support and resources when they are needed achieving the goal of

the project will be difficult.

According to a systems approach to planning, schedule and controlling by Kerzner (2013),

project management is useful to institutions or organisations undertaking projects. An

emphasis on the benefits of project management was provided, whereby, he states that it

allows management to accomplish more work in less time with fewer people. Profitability is

expected to rise as well. Having any changes to the scope project management allows a way

for a better control over the changes making the organisation more efficient and effective

through better organisational behavior principles as well.

2.3 Evaluating Risk Assessment Techniques

2.3.1 Project Risk Management

Projects are undertaken in environments full of uncertainties, of what will be achieved and

encountered during and at the completion of the project. The uncertainties arise in various

forms, which include uncertainties in funding and availability of resources necessary.

Therefore having uncertainties, like these, comes the basis for the project risk and the need to

engage in risk management. Risk management is defined by Pinto (2010; 221) as “the art and

science of identifying ,analysing and responding to risk factors throughout the life of a

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project and in the best interests of its objectives. Project risk can be defined as any possible

event that can have a negative effect on the viability of a project. Risk management consists

of estimating at the start of the projects, the situations that are unexpected that may rise

beyond the management control.

According to Kerzner (2009; 423)adding on project risk management he stated that it

includes the process of identifying the possible risks, the assessment of the risks

quantitatively or qualitatively, thereby choosing the appropriate method to handle these

risks ,monitor and document the identified risks. Effective risk management requires that the

management should be proactive so as to demonstrate a willingness to develop contingency

plans. They are expected also to actively monitor the projects and be alert to respond quickly

when a serious risk event occurs. Time and money however, also is required thereof for the

risk management to take place. Risk management is applicable at an organisation through a

process called four stage processes.

2.3.2 Risk identification

According to Lester (2013; 71) in our everyday life we take risks, crossing the street we risk

also being run over. If we go down the stairs, we risk missing a step and tumbling down.

Taking risks is such a common occurrence that we tend to ignore it. Indeed, life would be

unbearable if we constantly worried whether we should or should not carry out a certain task

or take an action, because the risk is, or is not, acceptable. This is described as the process

where the specific risk factors that can be expected to affect the project are determined. It

classifies the likely risks in a classification scheme.

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With projects, however, this luxury of ignoring the risks cannot be permitted. By their very

nature, because projects are inherently unique and often incorporate new techniques and

procedures, they are risk prone, and risk has to be considered right from the start,

Kloppenborg (2011; 319). There is financial risk which refers to the financial exposure a firm

opens when developing a project. It also includes the contractual or legal risk which is often

consistent in which strict terms and conditions are drawn up in advance. Contracted terms

like cost-plus terms, fixed cost, liquidated damages result in a significant degree of project

risk.

2.3.3 Analysis of probability and consequences

“The potential impact of these risk factors, determined by how likely they are to occur and

the effect they would have on the project if they did occur” Pinto (2010; 223). A risk impact

matrix can be constructed showing the identified risks, there hence being prioritised as to the

probability of its occurrence and the potential consequences for the project and management.

Management at MSU involved in project management without analysing the probability to

with which the consequences occur, it is involved in a double process of curing the

consequences like those at the ground where, operations slows .Cash outflows consequence

of MSU as suffered since 2010 can be well overcame by the risk impact process in

management.

Therefore the extent to which risk considerations should be made is to be higher so to ensure

that no consequences to affect performance due to project management failure in assessing

the risks involved in the project. This incorporates even the relations with the stakeholders,

taking for instance if operations fails due lack of funding customers are affected and that

means suppliers suffer late payments or no payments at all. The team identifies risk factors

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and then evaluates their impact using the matrix. Under the dimension of consequences of

failure, the management will be concerned with the issues that will highlight the effects of

project failure. For example MSU highlighting the effects of taking many projects increasing

the costs to manage and making outflows. Probability of failure or likelihood shows that each

project may therefore have a set of issues related to the consequences of failure that should be

clearly be identified.

2.3.4 Risk mitigation strategies

The effectiveness of risk mitigation strategies lies on the possible alternatives an organisation

can adopt in making a decision on how to address risks. Lester (2013; 72) suggested that

these are necessary when the management has accepted that the risk exist in a project that is

having risk awareness. These include accepting the risk, minimise risk, share risk, transfer

risk. Accepting risk is an option when management consider whether the risk is sufficiently

strong that any action towards is warranted. However if the likelihood of the occurrence is so

small or the consequences of their impact are so minor they may be judged acceptable and

ignored.

2.3.5 Contingency reserves

Contingency reserves being in several forms including managerial and financial, are among

the common methodologies to mitigate risks. They are defined “as the specific provision for

unseen elements of cost within a project scope’’ Allen (2010; 231).They depend upon the

type of project undertaken and the organisation. In construction projects it is seen most

common setting aside between 10% and 15% of the construction price in a contingency fund.

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2.4 Other decisions and controls applicable in project management

2.4.1 Ethics and project management

Ethics according to Kliem (2012; 1) refers to ‘‘a systematic study of the norms and values

that guide how humans should live their lives’’. Ethics revolves around the project

management concept for an organisation valuing the project. An organisation implementing a

project management process should also consider the concept of ethical behaviour as it

affects the process. The process involves the initiating, planning, monitoring and controlling

and closing stages.

2.4.2 Initiating

It is when mission, vision and the goals of an organisation’s project can be defined by a

charter as supported by Kuehn (2009). However sometimes few of the stakeholders will

engage in unethical behaviour with the anticipation of gaining even more advantage once the

project begins. They may as well not bargain in utmost faith, but do some illegal competitive

behaviour or for example indulging in bribery.

2.4.3 Planning, Monitoring and controlling

Acording to Luckey and Phillips (2011 ; 14) it refers to the determination of the road map so

to execute the charter contents .It also opens a gap by providing an opportunity for some

stakeholders to engage in a part of unethical practises. For example they may not provide

reliable estimates or purposely may underperform in working hours so they can receive

overtime pay. Keeping abreast of how successful the project is executing according to

objective and in such a way that it is achieving its initial vision.

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However opportunities are there for unethical situations and transgressions to arise. Timely

submittals on cost and schedule status for fear project termination should be made then. Since

a possibility that deliverables in project may be sabotaged for some reasons, for example

personality conflicts.

2.4.4 Closing

When the management ensures that all terms and conditions as well as any outstanding

obligations have been met, ethical dilemmas may arise. Kliem (2012; 104) emphasised that

these processes do not mean or indicate that dilemmas exist but simply they are said to give

an opportunity to do so. Therefore management need to be aware also of the unethical

dilemmas that could rise in the context and processes of projects. It is also important to

realise that not all ethical dilemmas can be intentional, so people are to be aware of the

occurrences and take any appropriate corrective actions. Categories of ethical dilemmas

include compliance, effectiveness, accurate and timely information, efficiency, and protection

of resources.

2.4.5 Management attitude towards project management

Maylor (2010) most business managers goes for less risk than more risk on a given return.

Therefore, they are risk averse. In general, a manager derives less satisfaction or utility, from

gaining an additional US$15000 than foregoing in losing US$15000. The basis on the

concept of diminishing marginal utility (DMU), as it suggest that an increase in wealthy ,

decline in marginal utility at an increasing rate is noted, that is making a concave for the

utility function for risk averse managers.

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2.4.6 Project portfolio management (PPM)

Following the principle of transparency on projects towards better performance goal,

according to Koster (2010; 43) aims at relating the project management cycles to the strategic

goals, rather than to the political power plays or emotional attachments. Portfolio refers to a

collection of projects that are managed under one umbrella. A project portfolio is defined as a

set of all the projects than an organisation runs. Therefore PPM is the management of the

project portfolio so as to maximise the contribution of the projects to the full welfare and

success of the enterprise.

MSU has been having more than 5 projects a year ,and according to Koster (2010) it is

emphasised that, If an organisation is having many projects in its portfolio, it will make sense

that project portfolio networks for projects with commonalities for instance projects which

cover same geographical region. Project portfolio and networks are cluster. The purpose of

the clusters is to ensure an optimal composition of the projects in the light of the overall

business objectives of the organisation.

According to Pinto (2010; 112) PPM is “the systematic process of selecting, supporting and

managing a firm’s collection of projects’’. Projects here are suggested to be concurrently

made under a single umbrella and therefore may be related or independent of one another. It

is suggested that there is a key to portfolio management which is the realisation that a firm’s

projects are to share a common strategic purpose and the same scarce resources.

Hobbs (2011) also supported by saying that the concept of PPM suggests that the

organisation is not expected to manage its projects as independent entities but, rather to

regard the portfolios as unified assets. The authors review here in agreement that for

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organisations like MSU undertaking such projects, PPM however, poses a constant challenge

among the long-term and short-term strategic goals and constraints.

Smith etal (2010 ;140) emphasised that managers are therefore said to make a number of

questions in management, and these include, the projects the company should fund which is

seen difficult to answer, any reinforce on future strategic goals by the projects, and if the

projects are complementary with others as well. In each of the question the long-term and

short-term strategic implications should be involved and taken together to constitute the basis

for both strategic project management and effective risk management. Portfolio therefore is

expected to entail the factors like decision making, prioritisation. A criterion for prioritising

can be used where it can consider the cost of the projects, opportunity, risk, and desire for

portfolio balance.

The available project alternatives are not evaluated according to the organisation’s

prioritisation scheme. Therefore projects that can be selected for the firm’s portfolio are to be

those that are based on the priorities and they offer maximum return to the organisation,

Bender (2010).

2.4.7 Controls on policy implementation

Pike etal (2009) stated that commitment should be made to devote the time, human resources,

and funding necessary to carry out a management policy, which involves also making a team,

collecting the necessary data, entering it into a spread sheet tool, analysing the information

generated, undertaking various “what if” analyses, and making decisions. A multi-

disciplinary team of staff from key management areas should be formed, that will work

together in conducting the analysis, analysing the various project management options, and

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decision making.Information should be provided to the entire staff about the initiatives being

undertaken and explanations of how important their participation is the process.

2.5 Best practices

Kliem (2012; 151) suggests that project governance is essential where there is identification

and implementation of policies and procedures, tools and techniques for achieving specific

goals and objectives. The policies are often associated with efficiency and effectiveness.

New York: Ford Foundation and Strategic Development Solutions, (2009); Best project

management strategies provide project managers with practical strategies used by many

organizations for controlling investment and project decisions and destinations. There is no

detraction, but enhancement of workflow allowing finding more time in the day.

Continuation in monitoring for compliance and violations is then essential for any practice.

According to Callahan etal (2011), what happens in a major project have a serious impact on

the financial performance of a firm. Therefore good practice of project management strategy

will provide training that works with your schedule, so that your practice can continue to

function while the implementation proceeds. The company should not have to stop to

implement a new practice management. Choose a policy that will maximize returns on

investment on available capital on an agreed risk level. Various organisations in European

countries the policies should be documented, consulted and monitored over time. In addition

investors in Brazil outlined that, they should provide the expertise to help you re-train or

change setup as needed to bring policy requirements up to industry standard.

Following Koster (2010; 43) who emphasised that the organisations has to make assessment

on which projects are conducive to the organisation’s overall business objectives matching

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the availability of funds ,such in a way that there will be none negative impact on the

operational performance in terms of resources and funds for financing.

Koster (2010) added that at no fund base prioritisation and selection might fail the project

considering an organisation having many projects on the ground. Therefore an evaluation

criterion has to be determined given the complexity of strategies; the financial success of the

project although paramount of importance will not suffice. Adding to that the constraints of

the organisation’s resources has to be taken into account with the rightful consideration of

procedures laid down so to avoid the project failing.

2.6 Summary

The chapter focused on cost management policy in project management as reviewed by

various authors of books and journals, its viability towards project success and performance

of an organisation. It also included relevance of risk management, other decisions and

controls relevant and deemed necessary for a better performance in project management. Best

practices as suggested towards management policy in project management rounded up the

chapter.

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CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter focused on the research methodology used by the researcher in this study, that

is, the research design and technique applied in gathering data on the assessment of project

management decisions on financial performance. Included therein is the sample data, target

population, description on how data was collected and the data collecting instruments used. A

lay out on how data was analysed, processed and interpreted is also provided in the chapter.

Enhancement of the acceptability in the research findings and credibility of the research

recommendations is facilitated by the chapter content.

3.1 Research Design

Research design according to Mitchell and Jolley (2012) refers to a tool useful in obtaining

the answers to the questions thereby allowing the evaluation of the information. Hakim

(2012) described it as the point where questions can be raised theoretically or in policy

debates and these are converted into research projects and programs deemed feasible and

provide the answers to the those questions. It primarily deals with aims, purposes, intentions

and plans in the practical constraints of times, location, money and staff availability.

According to Mckenney and Reeves (2013) research design is research genre in which the

iterative development of solutions to complex and practical problems are to give the context

for the empirical investigation that can yields theoretical understanding to inform the work of

others. The goal and methods of it said to be rooted in and not therefore cleansed of the

complex variation of the real world. In the research knowledge is constructed in the form of

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insights among the involved participants and shared with other researchers and practitioners

and these studies tend to be methodologically creative.

Saxena (2009) outlined that it has two types which are explorative and descriptive method.

Therefore this research is carried as a descriptive, as it enables the researcher to make use of

the questionnaires and interviews in the extraction of the relevant information to his study.

3.1.1 Descriptive Research Design

Mathanajan etal (2009; 163) described descriptive research as the fact finding containing

interpretations that are adequate and involving just data gathering. There is form of reflective

thinking also that is involved in the method, where reflective thinking relate the gathered

facts to the objectives and assumptions of the research. There is also simple analysis of data

used and the statistically obtained parameters are to be discussed and as well as interpreted. A

descriptive research also is guided by a hypothesis that the researcher continues to generate

along with data gathering and this is deemed philosophically appropriate for the researcher.

According to Cant C (2009) the method attempts to derive a complete and accurate

description of the situation. It is suggested that it have questions to ask about the size, form,

distribution or the existence of a variable .The different techniques used in the data collection

include personal interview and questionnaire.

Descriptive research is also described by Sharma (2009) as the supplication of an accurate

description for something that is said to be occurring .It is also used to explain monitor and as

well as test hypothesis and can be used to a lesser extent to help in making predictions and for

discovery.

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Jerry etal (2011; 19) emphasised that descriptive research is concerned with the status. The

researcher adopted this method since it has an ability to provide answers to questions like

how, where and why of the study. The need to obtain responses from people is fulfilled often

from a wide range of activity. The method strives to provide a descriptive position

concerning the theme of the research and provide facts where decisions are based on. The

researcher can rephrase questions and by asking the additional ones the responses are

clarified and proper they become to secure the results that are more valid.

Sharma (2009; 44) added that “the descriptive research is more structured and more flexible”.

The design has interviews and questionnaires that strive to secure information about the

present practices, demographic data and conditions. Occasionally these ask for opinions or

the knowledge. Therefore the research is formal as it makes use of interviews and

questionnaires making it easy for the researcher to get the relevant factual information about

MSU. The researcher found it easy to use the design for he was in the area making it easy to

administer and follow the questionnaires and even carry out effective interviews with time.

3.2 Case Study

Joseph (2010) a case study is used by the researcher in the aim to sought the exploration of a

research and provides the researcher the ability to deal with a wide spectrum of guidance. The

researcher used it in the assessment of the impact of project cost management decision on

financial performance of Midlands State University. According to Dominic (2010; 141) case

study is the most valuable when the researcher has an aim to obtain a wealth of information

about the research topic as they provide a tremendous detail. It is useful in gathering

descriptive and exploratory data and suggests why something has occurred. Therefore it

affords the researcher the ability to deal with a wide spectrum of evidence. Case study supply

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and presents the prospects that the researchers could not otherwise have. It proved to be a

good method in challenging a variety of theoretical assumptions.

3.3 Target population

According to Johnson and Christesen (2010; 257) target population refers to the population to

whom the study results are to be generalised. Babin and Zikmud (2010; 321) also stressed

that target population or frame is a list of elements or individual members of the overall

population from which the sample is drawn, where population is that group which the

researcher is interested in gaining information and drawing conclusions from. Target

population constitutes Midlands State University non-academic staff.

3.4 Sampling

Sampling as defined by Lohr (2010; 3) refers to the selection of individuals included in the

population and make a list of them, that is they become a sampling unit. Thompson (2012; 1)

also added that sampling involves the selection of some part of the population to observe so

that someone may estimate something about the population as whole.

3.4.1 Sampling procedures

This refers to ways in which issues of interest concerning the population are to be selected.

Thompson (2012) outline that there are two types of sampling which are probability sampling

and non-probability sampling. The researcher therefore used Non-probability Sampling.

3.4.2 Non-probability sampling

According to Babbie (2013; 199) non-probability sampling is the technique whereby samples

are selected in some way that is not suggested by theory, that is, reliance on the available as

well as purposive or judgemental sampling. Denscombe (2010) ,non-probability sampling

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involves an element of discretion or choice on the part of the researcher and at some point in

the selection process there is still a retainment of the aim of generating a representative

sample. Using this approach elements are selected by judgment or convenience. Using this

approach implies that samples can be judgmentally controlled to provide a representative

cross section of the population. Non probability sampling techniques used by the researcher

were the convenience and judgmental sampling.

Sekeram and Bougie (2010; 280) highlighted that with non-probability sampling the most

easily accessible members are chosen as subjects. The method is deemed accurate since the

researcher targeted a specific group, the answers can be similar to what the rest of the

population will also provide as answers. It can be effective upon trying to generate ideas and

getting feedback, the results cannot be generalized by the researcher to the entire population

having a high level of confidence. Also it is more convenient and less costly method of

sampling.

Non-probability sampling is used because it is cheaper and faster compared to probability

sampling Denscombe (2010) also suggested that in the interest of saving costs the selection of

sample involves an element of expediency and established better practices than strict

adherence to the principles of the random sampling. It can also be used where there is an aim

of explorative sample than representative cross section of the population. In these cases it is

useful because people or items involved are chosen to the sample basing on their expertise,

experience or the fact that they might be different from a norm or might be unusual, therefore

their selection is taken not as only as pure chance matter.

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3.4.3 Convenience Sampling

According to Wild and Diggines (2009; 200) ,convenience sampling is when there is a

population that is readily accessible and available only to the researcher the same time at the

same place and a sample is selected from them. These will stand a chance to be selected for

the interviews. Therefore in this case the sample is not respectable of the population and there

is no generalizations reached reliably

As the sample is selected because they are convenient since not every person in this volatile

environment characterized by hyperinflation is found all ready to respond to any

questionnaire nor interview for example a person like the general manager is very important

to the research under study but it is very unlikely that he will find the right time to respond to

the questionnaire and therefore it renders in this case convenient sampling relevant.

According to Sekaram and Bougie (2010) therefore it is quick, convenient, less experience

and the most easily defined accessible members are to be chosen as subjects. The

convenience sample therefore assists the researcher to gather valid data and information that

would not have been possibly obtained using probability sampling techniques.

3.4.4 Sample Frame

According to Denscombe M (2010) a sampling frame is a complete list that contains all the

information about the research population in focus, from which the sample to be selected.

The frame consists of the administration workers that are the Bursars, clerks and

administrators.

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3.4.5 Sample size

A sample size refers to a selected subgroup that represents the research population. Cargon

(2010; 236) a sample size is dependent on a defined population, and it is necessary to

determine what size is appropriate for the study. Kotler et al (2009) reviewed sample as a

segment of the population selected for a research to represent population as a whole. These

are to enhance the researcher in making the proper estimates of the thoughts and behavior the

population at large. Table 3.1 below shows aggregate distribution of sample unit from the

chosen population.

Table 3.1 Sample size

Target population Population sample Percentage sampled

Bursar 1 1 100%

Deputy Bursars 3 3 100%

Assistant Bursars 7 7 100%

Accounts clerk 10 10 100%

Administrators 5 5 100%

3.5 Types of data

3.5.1 Primary data

According to Strydom etal (2009) primary data refers to data that is specifically collected for

the research problem that is at hand. Also according to Dominic and Wimmer (2010),

primary data is information collected for the specific purpose at hand. Johnson and chrestesen

(2010), refers to primary data as a new data specifically collected through field research for

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the project. Specifically it generates information for the project in hand. Any original

research performed by individual researchers or organizations to meet specific objectives.

The research used first-hand information obtained from the study. This data was collected

through on site research of target population through personnel interviews and self-

administered questionnaires. In addition Strydom sight the following as the advantages and

shortcomings of primary data. The author employed both face to face interviews and self-

administered questionnaires as primary source data gathering techniques.

Primary data is closely more connected to the field and is not collected through a process of

filtering that is used in secondary sources, (Sreedharan 2010; 11).Therefore primary data is

original and relevant to the research requirements and therefore it increases the degree of

accuracy of the information provided. A large population is included and a wide geographical

coverage. Moreover primary data is current and it gives the researcher a realistic view on the

problem statement. Also the reliability on the primary data very high since these are collected

by the concerned and reliable party since it is collected from source.

3.5.2 Secondary data

Thompson K (2012) suggests that secondary data is viable alternative source which provides

comparative and contextual information results in other discoveries. Usually data which had

been collected for other purposes might be relevant to a particular study. It is said to have

been collected by someone other than the researcher himself for purposes other than the

solution of the problem at hand but, is utilized by the latter. Secondary data also can be

viewed as information that is already gathered and is readily available. Internal and external

sources of secondary data were used by the researcher. Internal sources were in the form of

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reports and memorandums. External sources include the academic journals by various

educational institutions and text books by various authorities in relation to accounting

information systems. The secondary data was also gathered through the desk research

technique.

According to Sindhu (2012; 4) secondary data provides a framework by which direction on

how the specific research should be taken by the researcher. This data was readily available

and summarized therefore researcher saved time and costs .A better starting point is provided

for research and often helps define the problem and research objectives, that is, acted as a

guide and benchmark for the research .An opportunity to examine the data from theoretical

perspective is granted to the researcher as well. Adding more secondary data is faster to

access and a way to access the work of other scholars all over the world is provided too.

3.6 Research Instruments

According to David J (2009) research instruments are defined as a model that logically guides

in the process of collecting data, analysing and interpreting it. The questionnaires and

interviews that follow were used.

3.6.1 Questionnaires

Matharajan etal (2009; 164) point out that “a questionnaire is a self-report where the

respondent is expected to write her/his answer in response to questions on a questionnaire

printed document”. Aakere’tal (2009) also emphasised that a questionnaire can be refered to

as a vehicle of communication between those seeking insight (the survey sponsor) and those

from whom insight is sought (the respondents).

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Jerry R etal (2011; 19) also supported the use of questionnaire by emphasising that they

usually strive to achieve the secured information about the present practises, conditions and

demographic data, that is , occasionally a questionnaire is to ask for opinions or knowledge

deemed useful during the study. The responses to be obtained from people are often from a

wide section of activity. The responses are gathered in a formal standardised way that is

being more of objective. There is low cost of conducting the questionnaires and there is also

much saving of time. Chances of bias between researcher and respondent are also eliminated

where it can be administered to many people and can anonymously be completed. A written

record of what was asked is provided

The researcher used questionnaires since they make it very possible for the researcher where

various aspects of the research are quantified, that is those being studied. They were issued

and the respondents were expected to fill at their own time and were collected at a later as

agreed. The structure of the questionnaire was in a way that allowed respondents to make

quick responses since the clearly laid question are simple.

3.6.2 Interviews

An interview according to Babin (2010) refers to a discussion that is purposeful between two

or more people. Personal interviews were used in this study. The interviews are oral verbal

and the responses are also oral verbal therefore quick instant and honest responses are

obtained in a limited time scheduled for the interviews.

The researcher used the personal interviews where there is much of personal ingenuity and

greatly a deal of flexibility in stimulating management staff so as to reveal more of their

motives and attitude. Time is not much consumed as well. There is positive response in all

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questions since there is ready assistance available. A monitoring of body language during the

interview on sensitive questions is also noted.

3.7 Types of Questions

3.7.1 Closed ended questions

According to Babbie E (2012; 255) closed ended questions are the survey questions in which

a respondent select an answer from among the list that the researcher provides. They are

constructed when guided by structural requirements which includes that the first response that

is provided should be exhaustive and they are expected to contain all the possible responses

which are expected. The questions therefore rely on the structuring of responses by the

researcher. Having clearly relative answers to the questions however there is no problem.

Also they can be in a scale format, whereby the respondent is to decide on rating the situation

along the scale continuum provided, fairly similar to the Likert questions. The researcher

used closed questionnaires for his research.

Popularly recognised in research since they are to provide a greater uniformity of the

responses and they are easily processed as exclaimed by Babbie (2011). Closed questions

demands minimum motivation and answering them is also less threatening to the participants,

therefore it provides respondents with a guide. They provide ready-made categories whereby

respondents are to reply to the questions asked by researcher, this help to ensure that the

information to the researcher is obtained and the data is easy to analyse.

3.8 Likert scale

The likert scale according to Purcell and Purcell (2009; 124) it is called a 7 point scale that is

known to provide more variability and wider range of response choices. The choices are

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suggested not to be more than nine. The scale is psychometric and it is mostly involved in

researches that adhere to questionnaires. The common responses involved in the scale include

strongly agree, disagree, neither agree nor disagree, agree and strongly disagree. The range

captures the intensity of the respondent’s feelings over a given item. Over the full range of

the scale, there can be created a simple sum questionnaire response. In so doing, Likert

scaling assumes that distances on each item are equal. Items are importantly considered to be

parallel instruments or they are assumed to be replications of each other. The following is an

illustration of the scale used by the research showing the available

Table 3.2 Likert scale

Item Strongly agree agree uncertain Disagree Strongly disagree

points 5 4 3 2 1

3.9 Reliability and Validity

According to Rubin and Babbie (2010) reliability is to describe the consistency of the

indicators that the researcher has applied in the research and generally being expressed as a

correlation value in between them .It is the extent to which the measures are free from error.

Validity refers to the extent the correspondence concept is affected by a certain measure.

Validity and reliability are taken as the indicators that are essential for quality in a relatively

large research community. Therefore the researcher made use of simple and precise questions

without calculations so as to ensure validity and reliability.

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3.10 Data Presentation

The illustrative methods which include pie charts, bar graphs and tables are used in data

presentation. The researcher is using these presentation methods because they are easy to

understand and they are also very clear in providing depiction of trends and summary of

information that is gathered.

3.11 Data analysis

Yin (2011) describes this as a type of data analysis that is special and involving attempts to

building explanations while collecting data and analysing than a predicted explanation

testing. The most significant observations emerged from all the data gathered in the field,

while reducing the volume of data through the screening process. This process involves

systematically the application of mode statistical technique to describe and illustrate, recap,

condense and evaluate data.

3.12 Summary

The chapter provided a report on what has happened during the research process by the

researcher. The research design, sampling, types of data, research instruments, types of

questions are highlighted in the chapter. The likert scale and presentation of data and analysis

in the research study is conducted. Research methodology presented, is supported to be the

most effective and minimization of research errors can be noted thereby making the study

better representative.

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CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 Introduction

Following the methodology used by the researcher to collect data in the previous chapter, this

chapter therefore provides the presentation and analysis of data gathered from questionnaires

administered and interviews that were carried by the researcher.

4.1 Response Rate

This study had a population of 25 respondents

4.1.1 Response Rate of Questionnaires

Table 4.1 Questionnaire Response Rate

Number Percentage (%)

Questionnaire distributed 25 100

Questionnaire returned 23 92

Questionnaire not returned 2 8

According to table above 23 of the questionnaire distributed were returned therefore giving a

percentage response of 92% and only 2 (8%) of the questionnaire was not returned. This

shows that the response was 92% successful. According Lohr (2010) Response rate of at least

50% is to be considered adequate for an analysis and even reporting, whereby 60% is good

and 70% and above is very good. Marsden and Wright (2010) also outlined that working with

a poor response rate is known to destroy the all careful work that would have been made

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through an appropriate sample design. He added that it makes no sense attempting to estimate

the population parameters from a sample statistics when the response rate is just below 85%.

It is therefore important to make efforts in achieving a high response rate as possible most

commonly for samples.

4.2.1 The firm has a cost management policy (CMP) on project management decisions

The question seeks to establish the existence of a cost management policy that serves as a

standard in project management towards decision making at the firm.

Fig 4.1 Cost Management Policy

Strongly agree

Agree Uncertain Disagree Strongly disagree

0

5

10

15

20

25

30

35

40

45

Cost Management Policy

Strength

Perc

enta

ge (%

)

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Data presentation above shows that 43.5% (10/23) strongly agree, 34.8% (8/23) agree, 13%

(3/23) are uncertain and 8.7% (2/23) disagree that the policy do exists. In overall 78.3%

(18/23) agree and 13% (3/23) disagree. The interview responses 4/4 (100%) also reflected

that there is a cost management policy on the institution. The respondents are found more to

agree than disagree since most of them and those interviewed are also included in the

management team and on annual basis the policy is said to be reviewed by them. Those 13%

found disagreeing argued that policy existence is proven by documentation. At the

commencing of each project reference is made to what the policy stipulates hence that serves

as evidence for the existing policy and the basis provided to the team for the quality making

of the projects. Respondents suggested that for costs to be managed a policy is put on the

ground to follow and be in line with objectives. Brent (2010) emphasised that if a company

have no formal policy the management and project team are supposed to draft one so as to get

the reliable guideline on projects leading to success. This serves as a standard to the team

working towards the objectives of the organisation. The responses therefore are showing that

the cost management policy towards capital project does exist though they are not mentioned

to have been documented and adhered to, but from the objectives laid for the projects ,the

management based them on the achievement of a good quality of project resulting.

4.2.2 The CMP is documented.

The question sought to establish the documentation of the cost management policy for an

easy access of guidelines to facilitate project success by managing cost. Table 4.2 shows the

responses given by respondents towards the documentation of the policy.

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Table 4.2 Policy documentation

Strength Response Respondents %

Strongly agree 1 4.4

Agree 7 30.4

Uncertain 3 13.0

Disagree 11 47.8

Strongly disagree 1 4.4

Total 23 100

Responses highlight that 1/23 (4.4%) strongly agree, 7/23 (30.4%) agree, 3/23 (13%) are

uncertain, 11/23 (47.8%) disagree and 1/23 (4.4%) strongly disagree that the policy is

documented. In total 12/23 (52.2%) disagree whilst 8/23 (34.8%) agree. The respondents

argued that during the project process, there are no set of rules guiding the projects provided

to the project managers as a guideline towards the implementation hence this shows that no

document circulated to the team serving as a policy though discussed in the meetings and it

ends with the management There is no information provided stipulating project priorities that

is knowing which project to fund and not to at a limited capacity of funds, all projects are

taken , causing costs to increase. Considering the responses given it is concluded that the cost

management policy is not documented. Mittal (2011) outlined importance of policy

documentation by stating that it enables the examination of activity funding and allows easy

analysis of data based on guidelines on the note.

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4.2.3 Policy implementation in line with documented procedure

Fig 4.2 Policy implementation

Strongly agree Agree Uncertain Disagree Strongly disagree

0

10

20

30

40

50

60

70

4.4

21.713

60.9

0

% of respondents

The presentation in fig 4.2 shows that 1/23 (4.4%) strongly agree, 5/23 (21.7%) agree, 3/23

(13%) are uncertain, 14/23 (60.9%) disagree. Collectively 6/23 (26.1%) agree and 14/23

(60.9%) disagree. Since there is no documentation of the policy at the organisation most of

the respondents, 60.9% are found not in agreement that implementation is in line with

documentation. What is being done in the process has no written evidence laid down for the

team as lines to follow, so what is practised is not found producing what is expected. Projects

are undertaken at the expense of company’s operational performance. According to Drury

(2012) a policy has to be a document with a set of rules and guidelines and has to be known

by the employees so that what has to be done is focused on objectives. According to the

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undesirable results of high costs and more outflows in conclusion the responses show that the

implementation of the policy and documentation are not inline.

4.2.4 The following are the controls over policy implementation

Table 4.3 Accountability, Monitoring, Transparency and Compliance

Strength Accountability Monitoring Transparency Compliance

Response % Response % Response % Response %

Strongly

agree

4 17.4 2 8.7 4 17.4 0 0

agree 8 34.8 6 26.1 6 26.1 2 8.7

Uncertain 4 17.4 0 0 0 0 0 0

Disagree 7 30.4 5 21.7 10 43.5 15 65.2

Strongly

disagree

0 0 10 43.5 3 13 6 26.1

Total 23 100 23 100 23 100 23 100

According to table4.4, 17.4% (4/23) strongly agree and 34.8% (8/23) agree that there is

accountability whilst 4/23 (17.4%) were uncertain and 7/23 (30.4%). In overall 12/23

(52.2%) agree and 7/23 (30.4%) disagree. 4/4 (100%) interviews response agreed on

accountability. The respondents in overall agreed on accountability basing on the knowledge

of understanding what the projects are aiming for to the organisation without the

consequences caused of cost management failure, they are said to be understandable but in

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parallel to what the policy is expected to provide Accountability should be practised directed

to policy guidelines and rules, however the organisation has no documented policy.

On monitoring 2/23 (8.7%) strongly agree and 6/23 (26.1%) where 5/23 (21.7%) disagree

with 10/23 (43.5%) who strongly disagree. In total 8/23 (34.8%) agree whilst 15/23 (65.2%)

disagree. According to interviews 3/4 (75%) disagree that monitoring is there. Respondents

argued that monitoring is routine and if practised effectively the projects are to be achieved at

a better state of performance in finance and will not result in cost increases since it will be

aiming at cost minimisation but however in this case the firm is running out of funds due to

projects showing lack of effective monitoring. Thomsett (2010) suggested that projects

should be practised with project constraints in mind which shall incorporate much of

monitoring and if it lacks the firm is hindered from achieving the good results and can even

spend more time to complete the projects than expected. In conclusion the responses show

that monitoring is of much lacking.

On transparency 4/23 (17.4%) strongly agree, 6/23 (26.1%) agree, 10/23 (43.5%) disagree

and 3/23 (13%) strongly disagree. In overall 10/23 (43.5%) agree and 13/23 (56.5%)

disagree. Responses show that most of the employees are not that much aware of what

exactly is the direction to which the projects should be undertaken. Therefore response

reflects that there is no transparency over the policy since the document is also not circulated

through to the relevant sections responsible for projects. According to Finnert (2013) the

resource affects performance by imposing a significant cost, which management can take

advantage of opportunities that would cause so. Without transparent projects there are no

ways they take advantage of the opportunities.

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The responses on compliance shows that 2/23 (8.7%) agree whilst 15/23 (65.2%) disagree

with 6/23 (26.1%) strongly disagreeing that compliance is upon policy implementation.

Summing up, 21/23 (91.3%) disagree and 2/23 (8.7%) agree. The organisation has nowhere

to refer what is implemented and test for compliance for the team is working at no guideline

but acting only towards quality achievement , which may be achieved but in a wrong and

unexpected costly way, Kliem (2012). Interview responses also shows that 3/4 (75%)

disagrees that there is compliance and transparency on the policy implementation because

most members of the team were not aware of what the guidelines of the policy should be

since they were not documented. Drawing up the conclusion, there is no compliance upon the

policy implementation.

4.2.5 Current Cost Management Policy (CMP) affects financial performance of MSU.

Fig 4.3 Effect of CMP on Financial performance

Strongly agree

Agree

Uncertain

Disagree

Strongly disagree

0 10 20 30 40 50 60 70

21.7

65.2

4.4

8.7

0

% of Respondents

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The question aims on the establishment of the impact of CMP on financial performance. A

conclusion therefore can be drawn that CMP has an impact.

According to data provided in table 4.5 and fig4.4, there are responses showing that 5/23

(21.7%) strongly agree and 15/23 (65.2%) agree whereas only 1/23 (4.4%) is uncertain and

2/23 (8.7%) disagree that CMP affects financial performance. As a whole 20/23 (86.9%)

agree and 2/23 (8.7%) disagree. Interviews responses were 4/4 (100%) who agreed and the

respondents highlighted the outflows noted as a result of high project costs increasing each

and every year, and these were failed by the management on the policy implemented. This

was stated by Finnert (2013) who outlined that it is affected by reducing the firm’s financial

flexibility by exploiting the firm’s internal financing capacity to fund future projects that

have potentially high costs. Once the funds at the firm are diverted, it shows that what is

being implemented is effective enough to achieve the goal. Operating activities of the firm

are also found slowing down as a cause of the funding procedures, where by the priority in

terms of funding is now given to the projects already on the ground. This leaves a gap as to

what then shall be the source of finance for operational activities.Therefore a conclusion

based on the responses is drawn for Cost management Policy as having an impact on the

performance as it is seen decreasing at an increasing rate against expectation.

4.2.6 There are policy reviews in the organisation

The objective of the question is to assess how often the Cost Management Policy is reviewed

in each year.

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Table 4.4 Policy reviews

Quarterly Bi-annually Annually Total

Response 4 1 18 23

%Response 17.4 4.4 78.3 100

The responses show that 18/23 (78.3%) the reviews on the whole are done annually.

Following also interview responses 3/4 states that reviews are done every year but an issue of

in effective strategies or lack of strategies that can be put in place to protect what has been

reviewed upon the policy. According to the University of Antioch it is suggested that for an

organisation to ensure relevance of guidelines, objectives and financial status policy reviews

must be made.

Larson and Gray (2011) also outlined that when we control what we have planned it is

necessary to take review as one of the controls over what is implemented and value

communication so to make everyone aware of what is expected. The policy is reviewed by

the top management and there is lack of communication among the management and those in

the operations to guide them on how changes are effected upon their operations. Therefore it

leaves the firm resistant to change even though policy reviews are done, that is, if only

management knows it remains with superiors and have no effect upon implementation. It is

suggested that on reviews, it is better to do them as much in a year and effectively

communicate, to keep the firm updated even to economic changes. However, there is an

agreement that policy review is conducted by the firm and suggestions from interviewees

state that it should frequently be reviewed in a year and be tested for effectiveness.

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4.2.7 Consultation occurs between finance and project committee

The question aims at establishing consultation between the finance committee and project

committee.

Fig 4.4 Consultation between finance and project committee


0

5

10

15

20

25

30

35

40

45

50

0

43.5

4.4

21.7

30.4

% of respondents

The presentation above shows that 10/23 (43.5%) agree, 1/23 (4.4%) is uncertain, 5/23

(21.7%) disagree and 7/23 (30.4%) strongly disagree. As a whole, 12/23 (52.1%) disagree

that there is consultation between the committees and 10/23 (43.5%) therefore agree. Due to

the financial problems faced towards the projects it terms of funding that is insufficient funds

and fund misuse it is argued that finance has no communication with the project team. The

responses 52.1% supported by disagreeing since it is expected that before the project

commences the committees must meet to discuss. The discussions thereof are focused on

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what project is worthy a success matching to how much funds are available to finance as

emphasised by Pinto (2010). The project team must addresses the projects to be done and the

finance team outlines the possibilities of either all to be undertaken or not since this will have

an impact on operational performance as a whole. In conclusion the responses show that there

is no consultation between the finance and project committee.

4.2.8 Risk assessment techniques are implemented towards project decisions.

Fig 4.5 Risk assessment techniques

Strongly agree

Agree

Uncertain

Disagree

Strongly disagree

0 10 20 30 40 50 60

21.7

52.2

13

13

0

% of Respondents

The responses towards risk assessment techniques show that 5/23 (21.7%) strongly agree,

12/23 (52.2%) agree whilst 3/23 (13%) were uncertain and 3/23 (13%) disagree. In total

17/23 (73.9%) agree and 3/23 (13%) disagree. Respondents from interviews 3/4 (75%) agree

that the techniques are there but argued that they are ineffective since the firm is still exposed

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to the financial risks. It is shown that as most respondents agree on risk indicators, the

company still suffers from financial risks associated with more outflows and high project

costs. Bender (2010) however added that when monitoring, review and communication lacks

among the project committees most likely all techniques implemented towards successful

results will find no value. This reflects that monitoring, review and communication lacked

within the project towards risk minimization and made the techniques ineffective. Therefore

in overall there are risks assessment techniques implemented at the organisation and found

ineffective due to lack of monitoring and review upon the implementation.

4.2.9 Should MSU continue using the Current Cost Management Policy (CMP)?

The question sought to derive opinion of respondents towards the current policy on whether

to continue using it or not.

Fig 4.6 follows showing the responses given by the respondents expressed as in percentages.

Fig 4.6 Current CMP

22%

17%

39%

22%

AgreeUncertainDisagreeStrongly disagree

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The chart shows that 22% (5/23) agree that the firm can continue using the current policy

whilst 17% (4/23) are uncertain probably because of the unawareness of the policy and

different operational functions some are not exposed close to such section. 39% (9/23)

disagree with an additional 22% (5/23) who strongly disagree. In total 22% (5/23) agree and

61% (14/23) disagree. 50% (2/4) of the interview respondents outlined that the policy should

be changed. Most respondents disagreed on the organisation continuing with the policy since

it is seen that it is affecting performance directing organisation towards poor liquidity and

low profitability. It is found ineffective to implement the policy that is producing the

unexpected results when other controls are put in place. Koster (2010) emphasised that

policies that seek to accommodate project costing are found lacking transparency of project

management portfolio which aligns projects to strategic goals. He suggested that it is better

for an organisation to have such a one when it needs to undertake a large number of projects

as it seek to maximise contribution of projects to the overall welfare and success of the

enterprise In conclusion the responses highlights that MSU should not continue with the

current Cost Management Policy for is noted that it has failed to meet the stated objectives of

the firm mainly focused on the cost minimisation.

4.2.10 Rank of MSU regarding Profitability, Project Management and Liquidity

The question seeks to establish the position of MSU on profitability, project management

and liquidity through opinions provided by the respondents. The responses regard the

variables as excellent, good, average or poor. Following is Fig 4.7 showing the ranking

thereof MSU as suggested by the respondents:

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Fig 4.7 MSU Profitability, Project management and Liquidity position.

Profitability Project Management Liquidity0

20

40

60

80

100

120

26.1

0 0

43.5

21.7

69.6

34.8

78.3

30.4

Good Average Poor

Findings show that 6/23 (26.1%) of the respondents indicated that profitability is good whilst

10/23 (43.5%) says it is average with 8/23 (34.8%) who indicated that it is poor. In terms of

operational activities responses shows that profitability has been average only to be affected

by project management which sought to divert the funds thereby limiting the operations of

the organisation and undesirable levels of profitability therefore are achieved.

On project management, responses shows that only 5/23 (21.7%) says it is average whilst the

rest 18/23 (78.3) indicated that project management is poor. The respondents relied on the

results that are on the ground so far In terms of the projects. Increase in costs causing the

organisation to run out of funds is because of the unlimited projects undertaken. There is no

efficient fund allocating method based on priority so as to reduce the increase in costs and

54 R103045E


achieve a better performance. Finnerty (2012) stated that it is easy for the organisation to

collapse if its profitability level and liquidity position is poor and findings here also indicate

that 16/23 (69.6%) respondents highlighted that liquidity is on average whilst the other 7/23

(30.4%) outlined that it is poor. Therefore in conclusion of the findings the responses show

that profitability and liquidity position of MSU is average and project management is poor.

The conclusions are supported by the increasing costs noted in the projects which the

management has therefore failed to manage.

4.3 Interview Responses

The researcher in his sample targeted 4 individuals from various sections so that he can

interview and had 6 questions for each person. According to Babbie (2011) interview

response are more reliable, it is a matter of first-hand information provided mostly as asked

by the researcher. The number of interviews conducted was 4 and therefore interviews were

100% successful.

4.3.1 Cost management policy technique used in project management decisions.

The question sought to assess the existence of a cost management policy being implemented

by the organisation. 4/4 (100%) were interviewed and all of them stated that MSU has a cost

management policy that serves as a guideline towards the project management. MSU value

the quality of the project to be achieved and there bases their policy. The other response upon

the question stated that there is much uncertainty on the documentation of the policy since

transparency over implementation is not there. The final response given by the last

interviewee was that the policy is ineffective towards projects, with which it seem not state

the limitations in terms of the number of projects the firm should undertake in order not to

exploit the funds available. Therefore findings show that MSU has a cost management policy.

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4.3.2 The extent to which MSU financial performance is affected by the policy.

The question establishes the extent to which the cost management policy is affecting financial

performance as given by the interviewees. The interviewees, all outlined that the policy is

affecting the financial performance giving a response rate of 4/4 (100%) all agreeing to the

policy affecting. It is stated in that costs are increasing at an increasing rate due to projects,

which are now limiting funds to operations, more outflows are noted. Therefore interviews

over the question show that the policy has an impact on financial performance. The

performance of the organization is giving a status that is difficult to boost funds as they are

all directed towards projects. Creditors needed to be paid as the company was withholding

the processing of their papers, delaying payments due to lack of funds, one of the creditors

clerk responded.

4.3.3 There are reviews done over the cost management policy.

The question aimed at assessing the reviews of the policy at the organisation as a control over

policy implementation.3/4 (75%) responded that the reviews over implementation are there.

They sated that, reviews are done each and every year so to keep the guidelines updated and

effective for decision making whilst 1/4 (25%) was uncertain to how often the organisation

does the reviews and suggested that they should be done three times yearly to get maximum

updates upon the standards. Findings hence show that the reviews are there and are stated to

be done annually at the organisation.

4.3.4 Challenges faced by the organisation through the implementation of the policy.

On this question 3/4 (75%) said that the firm has a challenge of cost management and the

firm is also resistant to change since the policy has never been change to try other policies

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since the beginning of projects at the organisation. These therefore suggested that the policy

is worthy a change, so as to try another one that can assist the firm by cost minimisation for

the firm to perform as expected. One of the interviewees a rate of 25% was unaware of the

challenges in the implementation, he stated to have no much knowledge over policy

implementation. In conclusion the findings show that the firm fails to manage cost as

supported by 75% of the respondents who suggested also that the organisation should not

continue with the current policy. Mainly from the creditors section as the assistant bursar

exclaimed, it is found that the organization struggles to pay its creditors, further more making

the battle worse word was already done and it was completed.

4.3.5 Evaluation of the risk assessment techniques as applied by MSU

The question sought to evaluate the strength of the risk assessment techniques implemented

by MSU. The interviewees, 4/4 (100%) accepted that risk assessment techniques exist at the

organisation but argued that, they are not effective since they are failing to mitigate the risks

or to minimise the risks. It is added that the objectives are not even met as expected and this

serves as evidence of improper or ineffective implementation. The firm is increasing its

exposure to many financial risks. One of the respondents suggested that more effective

techniques should be put in place so as to mitigate these risks. In overall 4/4 (100%)

suggested that the risk assessment techniques are not effective and better means should be

applied in terms of planning and monitoring to counter risks. It is evidenced by the losses or

increased levels with which the outflows were experienced and since 2010 the organization

has been facing increased costs thereby increasing outflows.

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4.3.6 There are strategies implemented to ensure that the policy is up to date with

economic changes.

The responses from the interview shows that there are no any other strategies implemented

towards the policy when considering the economic changes since they all mentioned

resistance to change , where organisation struggles to change due to lack of these strategies to

be up to date with economic changes. It is suggested that management engage into

consideration of these external factors also affecting the organisation apart from the reviews

which are done. In conclusion there are no other strategies implemented except policy

reviews.

4.4 Summary

The chapter focused on the analysis of data gathered by the researcher through questionnaire

administering and interviews carried out. The total of 25 questionnaires was administered and

there was a response rate of 92%. Interviews conducted were 4 giving rise to the achievement

of 100% response rate.

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CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

5.0 Introduction

The chapter serves as the final chapter of the study whereby the researcher summaries and

makes conclusions, remarks and recommendations as well as providing suggestions of areas

for further studies. Reference to chapter one research objectives and findings as presented in

the previous chapter is made.

5.1 Summary of chapters

The research began with the background to study on which the researcher assesses the impact

of project management decisions on financial performance. The policy resulted in a failure to

manage project costs, which led to unexpected increase in outflows. There is also statement

of the problem, sub research questions, main research question and research objectives. The

chapter also consists of the significance to study, assumption, delimitations, limitations,

abbreviations and definition of terms, all these were discussed.

Literature review by various authorities then followed linking the literature to the study by

the researcher. What the authors proclaim and argue about the cost management in project

decisions was assessed by the researcher in the study. Drury (2012) suggested that an

organisation should have a document containing a set of rules, limitations, standards and a

guideline governing the management in decision making that is the policy and its vital

purpose in project management. Brown and Hyer (2010) also emphasised that the project

management involves a consideration of factors essential to financial performance and

suggests the documentation of the policy when implementing cost management policy.

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Paladino (2010) stated that if the trends focus on one scenario communication is necessary to

be made so as to get needed financial and operational results performance since significant

costs can be imposed by the limited financial resource.

Research methodology is covered by the third chapter and the researcher used descriptive

research design to assess the impact of project cost management decision on financial

performance. According to Mathanajan et al (2009) described descriptive research as an

accurate fact finding containing interpretations that are adequate and involving just data

gathering. The sampling method, non-probability sampling was used in the determination of

the population and the sample size. Sekeram and Bougie (2010; 280) emphasised that with

non-probability sampling the most easily accessible members are chosen as subjects. The

sample was made up of the Midlands State University non-academic staff. The researcher

administered the questionnaires and conducted some interviews so as to collect the primary

data and secondary data was therefore obtained from company articles and reports.

The research study findings were presented, analysed and interpreted in the fourth chapter. A

successful response rate of 92% was achieved from questionnaires administered and a 100%

rate from interviews conducted. Basing on the question by question the findings were

therefore presented with the use of pie charts, graphs and tables. The percentages were used

by the researcher in analysing the research findings.

5.2 Major findings

The university has an established cost management policy. However according to the

research the existing policy is found not documented.

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The project committee and finance committee was not having adequate time to plan

and work towards what the projects need, hence the management was failing to

effectively implement the policy.

Management does not conduct workshops or committees to educate employees on

project issues and policy guidelines which led to the absence of guidelines written to

support the implementation process. Therefore the policy failed because there were no

standards to align with the policy implementation.

The controls over the policy were also seen to be existing but were not adequate

enough to make implementation a success and these include monitoring and

transparency. The study shows that there was no monitoring enough of the projects

when the policy was implemented and hence led to lack of compliance as well.

Transparency is also lagging behind.

Risk assessment techniques were found there but also not effective enough to mitigate

the risks associated with the project management. The firm is also lacking in

implementing other strategies apart from reviews that will make the best practises on

the policy implementation and keeping the policy up to date with the economic

changes.

Therefore findings rounded up that the firm is resistant to change due to lack of interaction in

the management who make decisions and it is a major challenge being faced by the

institution. It is concluded in the research findings that the profitability level and liquidity

position of the firm is average and the project management is poor.

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5.3 Conclusion

It can be concluded that the research was successful since all the research questions were

addressed. Following the findings it was concluded that cost management policy employed

on project management decisions has an impact on financial performance. The performance

of the university is therefore affected as a whole.

5.4 Recommendations

The organisation should document the Cost Management Policy and its Statement

which must serve as guideline towards the project management decisions. The

institution should clearly outline the projects to be undertaken as well as the personnel

or effective committees that will be responsible for activities.

Workshops and regular consultation between finance and project committees is

required to equip employees on project cost techniques, making them understand the

policy as capabilities improve to implement the policy efficiently. Philips etal (2011)

advised that it is not simple to establish and implement the cost management policies

and as such all employees should be fully aware of both the positive and negative

effects of the cost management policies.

Management to establish a framework that assists in adjusting to market, reflecting

the policy effectiveness and improving controls and risk assessment techniques. On a

more regular basis management should review controls so as to ensure that they are

still adequate and meet the objectives. This is supported by Drury (2012) who

emphasised that cost management policies with the related controls are not said to be

permanent but they are worthy a revision on a more frequent basis.

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5.5 Summary

The chapter has covered only the chapter summaries, major findings and recommendation to

the study by the researcher.

REFERENCE LIST

Books

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Babbie, E., 2011. The basics of social research. Belmout: Wardsworth Inc

Babin, J. and Zikmund, W., 2010. Essentials of marketing research. South Western: Cengage

learning.

Belack, C. and Kerzner, H., 2010. Managing complex projects. New York: Institute for

learning.

Bender, B., 2010. A manager’s guide to project management. New York: Pearson education.

Bothwell, F. etal., 2011. The project management scorecard. New York: Routledge.

Brent, K., 2010. Project Notebook. New York: Project Excellence centre.

Brown, K. and Hyer, N., 2010. Managing Projects: A Team Based Approach. New York:

McGraw Hill.

Callahan, K. and Gary, S., 2011. Project Management Accounting. Lynne: M Brooks.

Cant, C. Strydom, W. and Jostec, C.,2009. Marketing management.: Juta and company.

Cargon, L., 2010. Doing sound research. New York: Rowney and Littlefield.

Denscombe, M., 2010. The good research guide. New York: McGraw Hill.

Dominic, J. and Wimmer, R., 2010. Mass Media Research. New York: Wardsworth

Drury, C., 2012. Management and Cost Accounting. Boston: Canagage Learning.

Finnerty, J., 2013. Project Finance Asset-Based Financial Engineering. New Jersey: John

Wiley and Sons

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Greenhalgh, B., 2013. Introduction to Estimating for Construction. New York: Routeledge

Gupta, K., 2009. Cost Management ,Measuring, Monitoring and Motivating Performance.

New Delhi: Global India Publications.

Haire, J. etal., 2011. Essentials of business research methods. New York: Sharpe Inc.

Hakim, C., 2012. Research design successful designs for social and economic research. New

York: Routledge.

Heldman, K., 2011. Project management just straight. 3rd ed. Canada: Wiley.

Hobbs, B. and Aubry, M., 2011. Fresh outlook at the contribution to organisational

performance. New York: McGraw Hill.

Jerry, R. et al., 2011. Research methods in physical activity. New York: Thompson share.

Johnson, P. and Christesen, L., 2010. Educational research, qualitative, quantitative and

mixed approaches. New York: Sage.

Joseph, D., 2010. Mass Media Research. Boston: Cangage Learning.

Kerzner, H., 2013. A system approach to Planning, Scheduling and Controlling. 11th ed.

Hoboken: John Wishey and Sons.

Kliem, R., 2012. Ethics and Project Management. Broca Raton: Taylor and Francis group.

Kloppenborg, T., 2009. Project Management. A Contemporary Approach. Canada: Cangage

Learning.

Knapp, B., 2010. A Project Management’s Guide. New York: Project Excellence Centre.

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Koster, K., 2010. International Project Management. London: Sage.

Kotler, P. etal., 2009. Marketing management. China: Pearson Prentice Hall.

Lohr, S., 2010. Sampling, design and analysis. Boston: Brooks’ Cole

Mark, M. and Jolley, J., 2012. Research design explained. New York: Hayne

Marsden, P. and Wright, J., 2010. Handbook of Survey Research.2nd ed. Bringley: Emarald

Group.

Matharajan, M. Lyer, A. Krishasneny., 2009. Management research methodology,

intergration of methods and techniques.

Maylor, H., 2010. Project Management. England: Pearson Education.

McKenney, S. and Reeves, T., 2013. Conducting educational research design. New York:

Routledge.

Mittal, V., 2011. High Performance Polymers and Engineering Plastics. New jersey: John

Wiley and Sons.

Morris, P. and Pinto, K., 2010. Project management. New York: Pearson education.

Phillips, J. and Luckey, T.,2011. Software Project Management. Hoboken: Wiley

Purcell, S. and Purcell, B., 2009. Research essentials, Designing and implementing research

studies. San Francisco: John Wiley and Sons.

Rubin, A. and Babbie, E., 2011. Research Methods for Social Work. Belmont: Cangage.

Saxena, R., 2009. Marketing management. New Dehli: McGraw Hill.

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Schwable, K.,2014. Information Technology Project Management. Boston: Canagage

Learning.

Sekaram, U. and Bougie, R., 2010. Research methods for Business. Singapore: John Wiley

and Sons.

Sharman, K., 2009. Marketing management. New Dehli: Global India.

Thompson, K., 2012. Sampling. New Jersey: John Wiley and Sons.

Thomsett, M., 2010. The Little Black Book of Project Management. New York: American

Management Association.

Towey, D., 2013. Cost Management of Construction. New Jersey: John Wiley and Sons.

Turner, J. and Muller, R., 2010. Project-Oriented Leardership, Advances in Project

management. Burlington: Gower.

Venkatarama, J. and Pinto, K., 2010. Cost and value management in projects. New Jersey:

John Wiley and Sons.

Wild, J. and Diggines, C., 2009. Marketing Research. Capetown: Juta and Company.

Wysocki, R., 2011. Effective Project Management. San Francisco: John Wiley.

Yin, R., 2011. Qualitative Research from Start to Finish. New York: Gullford Press.

Journals

New York Ford Foundation and Strategic Development Solutions 2009.

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PMBOK, A Guide to the Project Management Body of Knowledge 2012, New York: Project

Management Institute.

Program Success 2011 (May 02).

APPENDIX A

COVER LETTER

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Midlands State University

P Bag 9055

Gweru

To whom it may concern:

RE: APPLICATION FOR RESEARCH ASSISTANCE

I am a fourth year student at the above-mentioned institution and I am carrying out a research

on “Assess the impact of project management decisions on financial performance”. The

research is being carried out in partial fulfillment of the Bachelor of Commerce Honours

Degree in Accounting that I am currently undertaking.

I kindly ask you to assist me by completing the questionnaire attached to this letter. The

information that you provide on this questionnaire will be highly confidential and used

strictly for academic purposes only.

Your cooperation is greatly appreciated

Yours faithfully

Mavhunga Morgen

R103045E

RESEARCH PROJECT QUESTIONNAIRE

Questionnaire for Management and Employees

Assess the impact of project management decisions on financial performance of MSU.

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Instructions

a) Do not write your name on the questionnaire’

b) Show response by ticking the respective answer box for close ended questions.

1. The firm has a cost management policy on capital project decision making


2. The cost management policy is documented


3. Policy implementation is in line with the documented procedures?


4. The following controls are in place over policy implementation.

Controls Strongly agree Agree Uncertain Disagree Strongly disagree

Accountability

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Monitoring

Transparency

Compliance

5. The current cost management policy used affects the financial performance of the MSU


6. Policy reviews are conducted in the organization.

Quarterly Bi-annually Annually

7. Consultation occurs between finance and project committee


8. There are risk assessment techniques implemented towards project decisions


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9. Should MSU continue using the current cost management policy?


10. How can you rank MSU with regard to the following?

Variable Excellen

t

Goo

d

Averag

e

Poor Very Poor Don’t

Know

profitability

Project

management

Liquidity

APPENDIX B

INTERVIEW GUIDE QUESTIONS

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1. Which cost management policy technique is being used currently by the university in

carrying out their project decisions?

2. To what extent are these policies effective in overall operational performance of the

university?

3. What challenges are being faced by the university in implementing effective cost

management policy to make quality project decisions?

4. What reviews are done on the controls of the cost management policy?

5. How best can u evaluate the assessment risk techniques as applied by the

management?

6. What strategies are being implemented to ensure that the cost management policy is

up to date with economic changes?

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aaaaafinal draft- abetterhope 2014- morgen

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