Mitigating Inadequate Working Capital Risks in Nigerian Construction Projects

¹Aroh Frankline, ²Nwagbara Augustine and ³Nnadi Ezekiel Ejiofor

¹Quantity Surveying Department, Enugu State University of Science & Technology, Agbani

²Architecture Department, Enugu State University of Science & Technology, Agbani

³ Civil Engineering Department, Kampala International University, Uganda

Corresponding authors Email: nnadiezekiel@kiu.ac.ug

ABSTRACT

This study explores the factors contributing to inadequate working capital in Nigerian construction projects, identifying risk factors like delayed payments, fluctuating material costs, ineffective project management, and poor financial planning. It suggests comprehensive mitigation strategies to improve efficiency, minimize risks, and ensure sustainable growth. Proper materials management can also reduce waste generation, improve work quality, and optimize profitability for construction contractors. This study examines the impact of insufficient working capital on construction project performance, identifying strategies to mitigate adverse effects and enhance sustainability. The study uses a mixed-methods approach to examine the relationship between working capital management and construction project performance, considering ethical considerations and survey data from 670 professionals. A survey of Professional Bodies in the Built Environment in Enugu Urban, Nigeria, involved 337 copies of questionnaires of which 73% returned. Current working capital management strategies used in construction projects in Enugu Urban include aggressive (12%), moderate (17%), conservative (18%), moderate (40%), and significant (13%). A study found that 57% of respondents believe working capital management enhances a company’s earnings and profitability. The null hypothesis was accepted, indicating no significant relationship between working capital management components and the time performance of construction projects in Enugu Urban. The study suggests strategies for improving cash flow management, financial planning, contractual arrangements, stakeholder collaboration, technology adoption, and policy reforms in construction companies to improve working capital management, mitigate risks, and ensure successful project delivery in Nigeria.

Keyworks: Construction Projects, inadequate capital, performance, strategies, working capital

Cite As: Aroh Frankline, Nwagbara Augustine and Nnadi Ezekiel Ejiofor (2024). Mitigating Inadequate Working Capital Risks in Nigerian Construction Projects. RESEARCH INVENTION JOURNAL OF ENGINEERING AND PHYSICAL SCIENCES 3(3):1-8.