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
Description
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