Establishing the cost contribution of significant cash flow factors impacting on building projects profitability

Abstract

This paper identifies and explore significant quantifiable cash flow factors influencing building projects profitability in Ghana. A thorough literature was undertaken to unravel the quantifiable cash flow factors which facilitated design of questionnaire. A survey with prime focus on large firms registered with the Association of Building and Civil Engineering Contractors, Ghana was undertaken. A total of 50 questionnaires were received from 63 administered representing 79.36% response rate with a Cronbach Alpha value of 0.895 and Kappa value of 0.743 respectively were attained. One-sample t-test was performed on the rated responses to establish 12 significant factors. Principal component analysis was subsequently employed to reduce factors to the most significant components. Prominent variables selected from rotated and component score matrixes were: wages of labour and staff; progress payment duration; bank interest rate; and replacement of defective works as significant variables. This study was limited to quantifiable cash flow factors and large construction firms hence, recommended further study with focus on qualitative factors, procurement types, broader scope of construction firms and other developing countries. The outcome of this is to aid construction managers effectively manage the significant cash flow factors to maximize profit.