Financial management skills as enabling factor in project performance of small business in the construction industry in Gauteng Province: theoretical and practical implications

Abstract

The study significantly enhances the current literature by highlighting the importance of financial management skills in the success of MSMEs, especially in the context of small construction firms functioning under unstable and uncertain economic conditions. It offers insights on how effective financial management can alleviate the negative impacts of economic uncertainty, including variable interest rates and regulatory modifications, which were intensified by the COVID-19 pandemic. This study concentrates on BCO Construction in Johannesburg, examining the distinct financial issues encountered by small construction firms and the potential solutions through improved financial management strategies. The research delineates numerous vital financial management competencies needed for project accomplishment. This encompasses the capacity to manage liquidity efficiently, sustain profitability, and utilize financial instruments such as Net Present Value (NPV) and Earned Value (EV) management. It emphasizes the significance of abilities in managing financial leverage, which can facilitate the attainment of project objectives within budgetary and temporal limitations. The findings indicate that the absence of trained financial personnel, ineffective payment systems, and liquidity issues are substantial obstacles for BCO Construction. Consequently, it is advisable to tackle these difficulties through specialized financial literacy and management training to enhance overall project performance. The study employs a quantitative methodology, including standardized questionnaires administered to eighty (80) participants to gather data regarding the problems and competencies required for financial management in building projects. The analysis conducted with SPSS version 29 indicates that enhancing communication channels, integrating strategic financial planning, and implementing thorough training programs are essential for aligning financial objectives with overarching corporate goals. This alignment is essential for optimizing resource allocation, guaranteeing financial stability, and improving competitiveness in the construction sector.  

Keywords: {'name': 'Financial Management'}, {'name': 'Construction Industry'}, {'name': 'Project Performance'}, {'name': 'Small businesses'}, {'name': 'Financial literacy'}

Authors & affiliations

Tinaye Mahohoma
Affiliation not supplied

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