The execution of the financial management function in small to medium-sized building contractors as a means of promoting business sustainability

• Main Author: Bekker, Jakobus Petrus
• Format: Others
• Language: English
• Published: University of Port Elizabeth 2004
• Subjects: Contractors' operation > Finance; Construction industry > Finance
• Online Access: http://hdl.handle.net/10948/336

The objective of this study was to investigate the extent to which small to medium-sized building contractors beneficially utilise the financial management function in their enterprises to improve and ensure business sustainability. Financial management focuses on the principles of decision-making, which requires action, without perfect knowledge of the outcome. To effectively execute the financial function, using the primary inputs in decision-making, financial management requires the ability to: understand and interpret financial statements and reports; make reasoned and objective decisions in controlling the operations of the enterprise; have a thorough knowledge of the internal functioning of the enterprise; and have a thorough knowledge of current and expected future economic conditions in the external environment. To do this, requires an effectively applied financial management function in the enterprises, which includes the utilisation of the financial management criteria to ensure business sustainability. However, without an appreciation of what financial management is, how important financial management is, and how financial management must be applied in the enterprise, small to medium-sized building contractors will find it difficult to effectively perform the financial management function and its different activities. It was therefore important to determine how well owners and construction managers of the average small to medium-sized building contractor deal with and utilise the financial management function in their enterprises. Consequently, a survey was carried out amongst small to medium-sized building contractors in the Nelson Mandela Metropolitan Municipal (NMMM) area, which revealed information that was used to come to certain conclusions: Firstly, it can be concluded that the financial management function is generally exercised superficially. This is supported by the responses of small to medium-sized building contractors, which implied that more than half the contractors do not fully perform financial management tasks. Secondly, it was concluded that the financial management criteria generally do not play a role in the business sustainability considerations of small to medium-sized building contractors. This is supported by the results, which imply that more than half the contractors do not fully utilise the financial management criteria.