A study of advance payment (mobilzation fund) in the construction industry in Ghana: A case study of the Ghana education trust fund (GETFUND) projects

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Date
2021-06-29
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Abstract
The study aimed at assessing the effects of advance mobilization loan to contractors on construction product delivery in Ghana. With this aim, three (3) objectives were set which were to identify the available source of capital for construction firms, to identify the effects of mobilization advance payment on the contractor and to identify the problems associated with advance mobilization. Establishing the objectives led to the extensive review of literature and subsequently, developing a structured interview guide to aid in the collection of data from the respondents. Ten (10) construction firms were interviewed which comprised of five (5) contractors who have worked or are working on a GETFund project with advance mobilization and five (5) contractors have worked or are working on a GETFund project without advance mobilization. Their responses were analyzed using the content analysis. With the first objective, the respondents were asked to discuss the sources of finance available for a contractor if not given mobilization. The findings of the first objective was that, the source of working capital for contractors is bank borrowing whiles a few indicated trade credits. However, most of the respondents spoke of trade credits as another major source finance to proceed with the work delivery after bank loans. With the second objectives, the respondents were asked to discuss the effects of mobilization advance payment to the contractor and the effect of no mobilization to a contractor on GETFund projects. The findings of the second objective was that, advance mobilization quickens the work delivery process, free interest loan and the flexible repayment schedules and how it affects their cashflow. With the third objective, the respondents were asked to discuss some of the problems associated with advance mobilization on GetFund projects. The findings of the third objective was that, the problems of given mobilization are the tendency of misuse of the funds and the cost to client for giving the mobilization. However, the first category of respondents added to the list by stating that, it is very difficult for them to obtain a guarantee for the advance mobilization loan. With these findings, it was recommended that, clients should strive to make mobilization advance payment available and easily accessible to contractors to enhance their project delivery performance and save them the burden of relying on banks for working capital with high charges which may affect the overall cost of the project and the clients should implement proper contract administration techniques to prevent misuse of mobilization advance payments given to the contractor
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A thesis submitted to the Department of Building Technology, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirement for the Award Degree of Master of Science.
Keywords
advance payment, construction industry, GETFUND
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