ASSESSMENT OF PROJECT PLANNING PRACTICES AND IT'S IMPACT ON CONTRACTORS PROFITABILITY

1.0 Introduction

1.1 Background of the Study

Projects are used in all economic and non-economic fields as mean of organizing the activity, aiming the achievement of desired objectives. There is a direct relationship between projects, projects portfolio, programs and the organizational strategy. Projects, as the main way of creating and dealing with change (Cleland, Gareis, 2006), are used to implement strategies. Meskendahl (2010) refers to projects as the central building block used in implementing strategies, therefore business success is determined by the success of the projects.

A project is an individual or collaborative enterprise, possibly involving research or design that is carefully planned, usually by a project team, to achieve a particular aim New York Time (2009). A project is also temporary because it has a defined beginning, end time, and defined scope and resources (Cathy, 2009). A project is unique because it is not a routine operation, but a specific set of operations designed to accomplish a singular goal. Based on these characteristics, carefully it is imperative to plan to achieve targeted outcome. Thus; Project planning can be defined as a part or branch of project management, which relates to the use of schedules to plan and subsequently report progress within the project environment.

Dubois and Gadde (2002) described the construction industry as decoupled and McKinsey (2017) confirmed that it is still true. The lack of coupling is present both between the construction project and its subcontractors as well as between the project and the parent company and other projects. This hampers the possibility to have a successful coordination of resources on a portfolio level within the contractor, as resources are in many cases utilised from a common resource pool (Engwall and Jerbrant 2003).

The construction industry therefore embraces a wide range of loosely integrated organizations that collectively construct, alter and repair a wide range of different building and civil engineering projects. Individuals, organizations and government need to carry out some form of project planning for building and civil engineering project before embarking on whatever activity they are engaged to do. According to Lock (2002), the principal identifying characteristics of a project is its novelty, it's a step unknown fraught with risk and uncertainty. No two projects are ever exactly alike and even a repeated project will differ from its predecessor in one or more commercial, administrative and physical aspect.

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

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Assessment of Project Planning Practices and It’s Impact on Contractors Profitability.

1.2 Statement of Problems

The performance of Nigerian indigenous construction companies was found by Ibrahim et al (2014) to be hindered by mismanagement, which often result into inefficient planning of construction project. Kirmani (1988) observed that this inefficiency in construction project planning has significantly hinders productivity of the industry to a level lower than that of its multinational counterparts, resulting to major percentage of the total project in Nigeria going to multinational contractors.

According to Aibinu and Jagboro (2002), another major criticism facing the Nigerian construction industry is the growing rate of delays in construction project delivery and other associated problems, which often results into dispute, arbitration, total abandonment and protracted litigation by the parties. These problems, according to Odeyinka and Yusif (1997) are associated with planning and scheduling, they are internal factors in an organization that causes delay in construction project delivery.

According to Inuwa et al (2014), Nigerian indigenous construction companies were found to be using their central administration to plan project operations instead of an identified project manager, in appropriate application of planning techniques and non-adoption of computer applications and ICT in planning of construction projects.

In a research by Oladimeji and Ojo (2012), Nigerian indigenous construction companies were found to lack the ability to efficiently and profitably deliver project due to in adequate planning and budgetary provisions among other factors. The outcome of these inefficiencies have been several report of abandoned or malfunctioned facilities, project executed at higher sums and frequent cases of collapsed structures. The recurrent nature of these traits create dissatisfaction among clients which result into award of major capital intensive project to foreign firms especially were quality and completion period are of utmost demand.

Despite the evidence identified in previous literature that linked inefficient planning to negative project outcomes, these researches were unable to harmonize various aspects of construction planning into a single research. Each of the studies, such as Adebayo (1980) was able to identify problems associated with construction planning and concentrate on some aspects of construction planning such as planning techniques, planning technology and planning manpower. This approach has not provide the necessary solution to the problem of construction planning in Nigeria, and the result has been recurrent experience of same problems through the decades.

The study of Adebayo (1980) select few construction companies and compare the project planning techniques they adopt in planning, this only provide result relating to only planning technique in the selected organizations. But planning is influenced not only by technique but also other aspects of planning such as technology and other external factors. Hence, there is need undertake research in order to study more organizations, more variables relating to construction planning also need to be considered.

Other studies, such as Agbo (2004) and Mohammed (1988) study cost planning relating to construction project, Audu (2001) study how planning techniques affects construction project planning, while Yazid (2009) study the impact of software applications in construction project planning. Each of the researches was able to identify at least an existing problem relating to construction planning but was not able to provide the necessary understanding of the problems collectively, their causes and how to improve planning taking into consideration key variables used in planning of construction projects.

Nigerian indigenous construction companies were shown to be associated with inefficient planning which result into low productivity and growing rate of delay. They were also found to be wrongly adopting methods and procedures of planning which was shown to reduce the profitability of the companies and cause frequent cases of contract abandonment. Inefficiency in construction planning also have a negative impact on the national economy. Researches in construction were able to identify inefficiency in planning but do not provide holistic approach to understanding current methods of planning used by contractors, why those methods are inadequate and provide solution on how to improve construction planning methods.

1.3 Aim and Objectives of the Study

The aim of this study was to assess project planning practices and its impact on contractors' profitability. In achieving this aim, the following specific objectives were laid out as follows:

1. To identify project planning techniques and tools used by contractors in construction project delivery;
2. Determine factors affecting project planning practices of contractors; and
3. To evaluate the impact of proper project planning on contractor's profitability.

1.4 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• What are the project planning techniques and tools used by contractors in construction project delivery?
• What are the factors that affect project planning practices of contractors?
• What is the impact of proper project planning on contractor's profitability?

1.5 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: There is no significant difference between Project Planning Practices and Contractors Profitability
• H1: There is significant difference between Project Planning Practices and Contractors Profitability

1.6 Significance of Study

This study will be of immense benefit to researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.7 Scope of Study

The study focuses on the Assessment of Project Planning Practices and It’s Impact on Contractors Profitability.

1.8 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research material: availability of research material is a major setback to the scope of the study.
3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.9 Definition of Terms

Contract Planning: It is a process of systematically and efficiently managing contract creation, execution and analysis for the purpose of maximizing financial and operational performance and minimizing risk.

Evaluation: According to Farlex Partner, 2012, evaluation is a systematic, objective assessment of relevance, effectiveness and impact of activities in the light of specified objectives. Indeed, it is an assessment, judgment of the worthiness or value of a project, policy, intervention, state of affairs, self.