International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue XI, November 2022|ISSN 2454-6186
Christian Gakuba1, & Dr. Thomas K Tarus2
1Master’s student (Procurement and Supply Chain Management), Graduate School, University of Kigali, Rwanda
2Lecturer, Graduate School, University of Kigali, Rwanda
Abstract: The challenge facing construction firms is that many construction projects delay and go beyond the expected and proposed timeframe. The argument is that contractors are not paid on time, and this has led some construction projects to stop their activities due to a lack of funds. The overall objective of this research was to examine the effect of the payment process of public institutions on the performance of the construction industry in Rwanda. The study has used both descriptive and analytical research designs. The sample size of this study was 150 composed by contractors, managers, supervisors, and engineers from 35 construction companies that worked with RBC and MoH. The field data were collected using a questionnaire, the data was analyzed using SPSS. As key finds, the descriptive statistic of payment process variables shows the respondents agreed that infrastructure/ IFMIS doesn’t play any role in the delay of payment process with an X̄=1.688 and σ= 0.35, the respondents strongly agreed that processing time is a major cause of delay of payment process which causes poor performance of construction companies in Rwanda with an X̄=4.16 and σ= 0.365, the respondents agreed that cash flow plays an important role in payment process with an X̄=4.32 and σ= 0.32. The regression result indicates that R2 is 0.624. This means that 62.4% of the performance of construction companies is explained by the factor variable of the payment process: Processing Time and Cash flow. The regression coefficient revealed that infrastructure was positive but not significant (β1= 0.093; p= 0.252). Processing time is positively affecting the performance of construction companies as indicated by a positive coefficient (β2= 0.453; p< 0.05). Cash flow is positively affecting the performance of construction companies as indicated by a positive coefficient (β3=0.229 and ρ=0.007). The study concluded conclude that the performance of construction companies in Rwanda depends on the payment process, especially on processing time and cash flow. The study recommends that: 1) Government institutions should process the payment of contractors as fast as possible to boost the performance of construction companies in Rwanda. 2) Government institutions should make sure that cash flow is available, the budget line is provided, and budget reallocations are requested and approved on time to avoid any interruption of construction activities which leads to the poor performance of construction companies in Rwanda. 3) The recommendation for policymakers is to advocate for the integration of an article on the penalty for delayed payment in procurement law.
Keywords: Construction companies, Ministry of Health, payment process, performance, Rwanda Biomedical Center.
I. BACKGROUND OF THE STUDY
Construction projects are considered successful when delivered within the scheduled execution period, allocated budget, and specified quality. performance of a construction firm based on delivery time, budget cost of the proposed project, and quality of the delivered facility.