Assessment of the effectiveness of budgeting and budgetary control in construction companies case study: house of concrete East Africa limited

Abstract

Budgetary control is as crucial as cash itself and any theft, waste, excessive use or stock out could lead to the business’s poor performance. The Purpose of the study was to assess the effectiveness of budgeting and budgetary control in construction companies. Case study of House of concrete east Limited. The study was guided by Objectives; To assess whether budget monitoring and control contribute to the effectiveness of House of concrete East Africa Limited, Identify challenges faced in budget preparation, implementation and control system in House of concrete East Africa Limited, To investigate causes of variance between the budgeted amount and actual in House of concrete East Africa Limited, the study guided by Accounting Theory in Budgetary Control and employed the descriptive study design. The study considered 50 respondents in House of concrete East Africa Limited and sample of 44 staffs were selected according to Krejcieand Morgan’s (1970) sample size table. The study used the purposive sampling technique to select participants from House of concrete East Limited. Primary data was used to collect data using a close-ended questionnaire. The study found out that the majority of the respondents were males and majority respondents were qualified for Bachelor’s Degree. The findings found out that that majority found out that the budget utilization process for this company is efficient. Majority found out that when the budget is being set, any anticipated problems are resolved and any areas of potential confusion are clarified. Furthermore, the study found out that the budget is prepared in a manner that sets specific performance measures for departments and business units. Majority were not sure, whether Master budgeting is the best and most effective type of budgeting for this company or not. It can be concluded that Flexible budgeting is the best and most effective type of budgeting for this company. Majority stated that they are involved in the budget-setting process. The findings suggests that an organization should pay attention to the human side of budgeting. The human side of budgeting demands that budget should be used for performance evaluation of departmental managers in a way it will not lead to unwholesome rivalry among managers. The results suggests that further studies should be carried out to determine factors that impact on achievement of budgeting objectives in parastatals in Uganda.