Abstract 3

Assessing the Financial Management Practices in Construction Contracting Organizations in Pakistan

Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. Project finance refers to the financing of projects that are dependent on the project’s cash flows for repayment as defined by contractual relationships within each project. Without proper financial planning a new enterprise or project is unlikely to be successful. Construction companies are different from most other companies and are faced with unique challenges and problems not faced by other companies in other industries. Accounting and management of financial resources hence is of utmost importance to the success of a construction organization.

As for most economies, the construction industry of Pakistan serves as the backbone of the country’s economy. Historically, however, the construction industry of Pakistan has remained plagued with under-performance; particularly with respect to cash flow and financial issues. Anecdotal evidence suggests that there is a dire need to adequately and properly use financial management tools and techniques in order to successfully complete the projects within budget, on schedule and as per required specifications.

This study intends to capture the financial accounting and management strategies currently employed by the contractors in the construction industry of Pakistan. It is expected that the outcome of the study would help identify the gaps and obstacles in the successful implementation of financial management practices in the local construction industry. It is also expected that the study will prove to be pivotal in fostering the concept of application of financial management tools and techniques in the local industry.

Key Words: Financial management, Cash flow, Project management, Contractors, Pakistan.