Abstract
M.Ing.(Engineering Management)
A lot have been said and written about how South African Small Micro and Medium Size
Enterprises (SMMEs) in the Construction sector of the economy have failed in the delivery
of their projects and about how they have not measured up in terms of the requirements
needed to be competitive in the global place. Services delivery protests by communities
where SMMEs have either failed to deliver their projects adequately or have out rightly
abandoned projects are common features in our various electronic and print media, and in
many cases these days the most reasons given for this behavior is the total collapse or lack
thereof of proper financial management of the project.
Because of the ease of procedure required to register construction outfits at the
Department of Trade and Industry many have flocked to the opportunity and established
business enterprises with the intention that at least they will be considered for one tender
or the other to carry out some sort of construction work or the other in their various
environments. Others registered such companies because they have links and ties to these
opportunities in the various government establishments responsible for creating these works
in the name of service delivery to their respective communities. Many of the proprietors of
these enterprises, when they eventually get the job, have little or no financial knowledge on
how to successfully manage a construction project and sometimes always based their
financial judgment on the bottom line without considering the various factors that influence
the bottom line profit. Virtual calculations of their financial inputs and relative desired
outputs are done with little or no consideration for cost implications of the individual building
blocks of the project itself. Safe to say, in many instances, the project fail or is abandoned
due to mismanaged funds or the exhaustion of such funds required to carry the project to
the completion stage.
It has been observed in many instances and in interactions with some SMMEs in the
construction sector that not many of the appointed Project Managers and/ or Site Managers
have Project Management skills, and those who do have, in most cases are unable to apply
these skills to their projects. Usually they just result to invoking personal experiences
obtained from their various earlier endeavors in financial projections and decisions involving
the management of their projects. More often than not, these financial projections and
decisions become inaccurate and tend to drive the project into financial losses. This now begs
the question, that if there exits simple mathematical techniques and methods of evaluating
the various costs during the project life cycle, and weighing those daily weekly and monthly
costs against targeted objectives, both in the planning and execution of the projects,
wouldn’t it then be easier to make sensible financial decisions if we are able to control and manage project resource costs so much so that the resultant will always be the desired
financial objectives? The aim therefore, of this dissertation is to examine a simple but
adequately comprehensive method, of managing resources cost as applied to road
construction projects and how, by also weighing the influence of other trade-offs such as
quality and time within the life cycle, the project is kept in good financial status and is
subsequently able to make a profit at the end of the day.
An illustration of the application of this cost control method is highlighted in a case study of
a road construction project in Limpopo undertaken by an emerging South African
construction company.
The financial management style and those factors that govern some of the cost decisions
made during the course of the project are taking into account. The resultant financial
success of the work so far is evidence that the cost control mechanism employed largely
contributes to its present successful state. It can therefore be concluded that if properly
implemented, this method will assist SMMEs in the promotion of proper cost control
practices, and subsequent financial breakthroughs when applied to other similar projects.