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Effect of the Payment Process on the Performance of Construction Companies in Rwanda: Case of Rwanda Biomedical Center and Ministry of Health

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  • Christian Gakuba

    (Master’s student (Procurement and Supply Chain Management), Graduate School, University of Kigali, Rwanda)

  • Dr. Thomas K Tarus

    (Lecturer, 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

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  • Christian Gakuba & Dr. Thomas K Tarus, 2022. "Effect of the Payment Process on the Performance of Construction Companies in Rwanda: Case of Rwanda Biomedical Center and Ministry of Health," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(11), pages 769-780, November.
    • Handle: RePEc:bcp:journl:v:6:y:2022:i:11:p:769-780
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    References listed on IDEAS

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    1. Bollerslev, Tim & Xu, Lai & Zhou, Hao, 2015. "Stock return and cash flow predictability: The role of volatility risk," Journal of Econometrics, Elsevier, vol. 187(2), pages 458-471.
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