DEPARTMENT OF MASTER OF BUSINESSADMINISTRATION

PROPOSAL/ RESARCH TITLE:-FACTORS AFFECTING THE OPERATIONAL

PERFORMANCE OF AMHARA ROADWORK ENTERPRISE

By

Abeba Anteneh

ADVAISER NAME: TAFER WOREKU /Assistant Professor/

APRIL 2022

Bahir Dar, Ethiopia

Table of Contents

PROPOSAL/ RESARCH TITLE:-FACTORS AFFECTING THE OPERATIONAL

PERFORMANCE OF AMHARA ROADWORK ENTERPRISE........................................................i

CHAPTER ONE: INTRODUCTION..............................................................................................1

1.1. Background of the study...................................................................................................1

1.2. Statement of the problem..................................................................................................4

1.3.1. General objective.................................................................................................................5

1.3.2. Specific objective.................................................................................................................5

1.4. Research hypothesis......................................................................................................................6

CHAPTER TWO.........................................................................................................................7

LITERATURE REVIEW............................................................................................................7

2.1. Theoretical literature.........................................................................................................7

2.2. Construction industry performance measurement theories and models...........................9

2.3. Empirical literature.........................................................................................................12

2.4. Conceptual framework........................................................................................................22

CHAPTER THREE: RESEARCH METHODOLOGY................................................................28

 3.1. Description of the study..................................................................................................28

3.2. Research Approach.............................................................................................................28

4.3. References...............................................................................................................................35
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 CHAPTER ONE: INTRODUCTION

1.1. Background of the study

The construction industry can be described as the sum of all economic activities related to
civil and construction work: concept, planning, implementation, and maintenance. Such
activities typically involve capital investment in roads, railways, airports, ports and beaches,
dams, power plants, irrigation schemes, health centers and hospitals, educational institutions,
warehouses, factories, offices, and residential buildings. The development of an investment
program in a developing country is widely accepted as an important part of the project. As a
result of such a significant contribution, the construction industry will have a significant
impact on a country's economic growth (Tecle, 2009).

As construction is becoming more complex, a more sophisticated approach is necessary to

deal with initiating, planning, financing, designing, approving, implementing and completing
a project. The common assessment of the success of construction projects is that they are
delivered on time, to budget, to technical specification and meet client satisfaction (BIRUK,
2019).The construction industry includes a large number of clients, contractors, consultants,
stakeholders, shareholders, and supervisors and this component can affect the project's
performance in several related topics and factors. This multi-party participation; various
processes; different levels and levels of work; and with significant input from the public and
private sectors, the main purpose of which is to complete the project (Habtemariam, 2019).

HRM plays an important role in the process of project management. Although HRM continues to
operate with the most basic of personnel functions, which differ little from the traditional
practices of personnel management, HRM has qualitatively developed in its strategies.
International construction projects are one of the activities of this industry, which involve
multinational participants from different political, legal, economic and cultural backgrounds.
HRM has the potential to be of critical importance in the international construction project for

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the way in which various employees, despite the casual nature of employment, are benefited
from the process of the project (Anthony Raj B. Vijay, Kothai P. S., 2014).
HRM can also contribute to success in achieving the main objectives of attaining target dates,
meeting financial plans and controlling the quality of the final project. Practically, the usual
requirement is for business strategy to be translated into human resource practices. HRM plays
an active role in this process. Human resource managers need to develop human resource
strategies based on the defined business strategies. As a consequence, a human resource strategy
directly influences the success of a business. In construction, effective and efficient HRM
strategies positively affect costs, schedule and quality at the project level (Anthony Raj B. Vijay,
Kothai P. S., 2014).

The present study was based on the framework that the HRM practices shape the pattern of
interactions between and among the managers and employees. Further, the organizations
generally organize human resource practices that are consistent with their organization culture
(osteman 1987). This study clearly indicates that the HRM practices along with organization
culture play a significant role and affect the managerial effectiveness of the organization .

Peters and Waterman (1982) argued that companies with strong culture are highly successful.
They argued that a superior firm performance is only be achieved if the company moves away
from a pure technical, rationalistic approach toward a more adaptive and humanistic approach.
Amhara Road Works Construction Enterprise is one of the leading state-owned enterprises in the
region. Established in 2002, EC. The enterprise is mainly engaged in Road works, house building,
bridge and construction. It is a road works construction company in the state and has been
carrying out large and large projects throughout the region and neighboring states.

Organizations have difficulty adapting and responding to the new environment. Contractors
can continuously improve their performance by competing with the needs of high users,
environmental awareness, and limited resources, competition for the construction market.

Performance management is a major issue in construction projects and recent and external
factors include political, social, economic, legal, cultural, environmental, and technological. It
is a continuous process of identifying, measuring, and enhancing performance in

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organizations by linking the performance and purpose of each individual to the overall
mission, vision, and goals of the organization. (Mohammed ,2013)

The current state of the construction industry shows that most construction projects are rare in
terms of timeliness, budget expenditure and quality required. The main reason behind this is
that construction projects are inherently unique, time-consuming, costly, and full of
uncertainties. As a result, claims and disputes become common place, especially in large-scale
civil engineering contracts (Taye, 2016).

Performance measures (PM) are used in organizations for a wide array of reasons: to gauge
performance, control, direct behavior and improve motivation, continuously improve
processes, enhance productivity, identify areas requiring attention, improve communication,
increase accountability, implement strategy, clarify goals and objectives, facilitate
organizational learning, support goal achievement and provide information on strategy
implementation. Companies that extensively use performance measurement systems (PMS)
with both financial and, in particular non-financial, metrics earn higher stock market returns
than firms with similar strategies and value drivers that do not use their measurement systems
as extensively. A performance measure is defined as a metric used to quantify the efficiency
and/or effectiveness of an Action (Mohammed, 2013).

In general, the performance of organization is affected by many factors which come from both
inside and outside of the organization such as human resources, raw material availability,
organizational culture, political, economic, social, and legal and so on. Therefore, clearly
identifying which factors are deterring the organizational performance in the public owned
development enterprise, in this case, the organizational performance in ARWE, may enable to
address the issue in the manner that would help to achieve their goals and objectives.

The study will focus on identifying the main internal factors that affects the performance of
ARWE and test how they will affect with overall performance to help improve performance of
the enterprise in the future.

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1.2. Statement of the problem

The Ethiopian construction industry is experiencing a construction boom due to large projects
associated with the developmental need of the nation as a whole, the growing demand for
Housing, and the investment in different infrastructure projects, such as railway and road
infrastructures, mega-dams, massive irrigation programs, mega malls, etc. Today, the
Ethiopian construction industry is suffering from several problems associated with Cost
overrun, completion time, disputes, transparency, and so on. Inefficient leadership and
management practices have been frequently reported as the main reason for delays, cost
overruns, and disputes (GIRMA, 2018).

Performance metrics may have one or more indicators and may be influenced by different
project characteristics and stakeholders. Several factors affect project performance in project
construction, one of which is the contractor. Large-scale projects have been killed by Nigerian
contractors, but most have been completed successfully. The contractor’s performance in
Nigeria is below expectations. It is not uncommon for domestic projects to be unfinished or
severely delayed. This poor performance has significant implications for competition. The
contractors have shown remarkable performance due to their leadership skills, technical and
non-technical staff, as well as weak and incompetent labor (Olanipekun, 2017).

Key challenges in the industry, lack of skilled and incompetent manpower, lack of machinery
and equipment, lack of proper standards and guidelines, lack of institutional capacity to
adequately control the construction industry, construction project management, and control
skills are among the many. These challenges have contributed to low industrial performance
due to delays, inflation, and poor supply. Thus, the main challenges in terms of manpower,
materials, and machinery, organizational and system issues are said to be low performance
(Hailemeskel, 2013).

The Growth and Transformation Plan (2015) identified capacity constraints, lack of
integration, lack of funding, lack of good governance, technology gaps, and lack of control,
and implementation problems that could be addressed by the National Development Plan.

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 The construction industry everywhere faces problems and challenges. However, in developing
countries, these difficulties and challenges are present alongside a general situation of socio-
economic stress, chronic resource shortages, institutional weaknesses, and a general inability
to deal with the key issues. There is also evidence that the problems have become greater in
extent and severity in recent years.

Companies often sacrifice profitability for growth in order to accelerate the development of
new products. Similarly, efficiency may be sacrificed for growth. While it seems clear that
organizational performance is multi-dimensional and that effective performance on one
dimension may be at the cost of effective performance in another dimension, exactly what the
different dimensions of overall organizational effectiveness are, or should be, is a matter of
considerable debate (Carton, 2004).

Therefore, this study will focus on identifying the main internal factors and their influence on
construction performance for ARWE and test the internal factors affecting performance of the
enterprise and how they will correlate with overall performance to help improve performance
of the future.

1.3. The objective of the study

1.3.1. General objective

To identify the factors that affects the performance of Amhara Road Works Enterprise

1.3.2. Specific objective

In order to achieve the general objective of the study, this researcher will identify the following
specific objectives;

 To Examine how human resource affects the performance of Amahara Road Work
Enterprise (ARWE).
 To explain the effect of Raw material accessibility on the performance of Amahara Road
Work Enterprise (ARWE).

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  To explain the effect of organizational culture on the performance of Amahara Road
Work Enterprise (ARWE).

1.4. Research hypothesis

To meet the above objectives, the following research hypotheses will be formulated.

H1: Raw material availability has a significant effect on organizational’ performance.

H2: Human resources has significant effect on organizational’ performance.
H3: Organizational culture has a significant effect on organizational’ performance.

1.5. Significance of the study.

The study will provide significant contributions to different users including the construction
companies, government agencies, contemporary researchers, and other interested parties. This
will bring the strength and weakness of Amhara Road work enterprise to light. As a result, it will
be helpful to improve the strategy to overcome those gaps in the past period.
1.6. Scope of the study.
The scope of the study is limited to the study of factors affecting the performance Amhara Road
work enterprise (ARWE). The study will cover employees’ representatives of the enterprise who
have been working in the enterprise for more than six months. Though there are a wide range of
factors that affect the performance of the enterprise, These are raw material
avaliabilty,Organaizational culthure, Human resource ,machinery and equipment availability
this study will delimited to the assessment of internal factors, Human resource management,
Organizational culture and raw materials affecting the performance of the Amhara Road work
enterprise (ARWE).The Study will be Quantitative research approach and Explanatory research
design

1.7. Organization of the study

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 The study will be conduct for the researcher consists of five chapters. The first chapter include
that the introduction of the research topic including background of the study, statement of
the problem, research objective and hypothesis of the study, significance of the study and
scope of the study. The second chapter focuses on the literature review; theoretical, empirical,
and conceptual framework. The third chapter consists of overall research methodology of the
study. The fourth chapter includes data analysis, and discussion of the results. The last chapter is
about summary of major finding, conclusions, recommendations and references.

CHAPTER TWO

LITERATURE REVIEW

2.1. Theoretical literature

Performance development is a journey, and performance level defines the place in the
journey. The current level of performance is generally based on 6 components: context, level
of knowledge, level of skill, level of identity, personal circumstances, and fixed factors. Three
stocks are offered for effective performance improvement. These include performance
thinking, immersion in a rich environment, and participation in reflective practices. To
determine performance and performance effectiveness at the level used by designations such
as “level 1” and “level 2”. That is, in stage 3, a person or organization is performing better
than an individual or organization. Quality improvements, increases capacity, capacity
building, increase knowledge, increases skills etc…develops more emotionally as a
professional (Don, 2010).

Organizations undertake a variety of activities to achieve their organizational goals. These

recurring steps should also be taken into account to identify the level of performance and
improve the performance and, if necessary, provide information-based support to the
management. Thus, it can be said that there is a strong connection between organizational
purpose and the concept of organizational performance. Therefore, not all companies try to

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achieve certain goals with the help of available resources. Thus, two aspects of the concept:
organizational purpose and organizational resources or resources can be considered in the
definition of organizational performance. Thus, performance can be interpreted as the choice
of those who try to assess a company's competitive advantage using the following efficiency,
effectiveness, or social reference criteria. Efficiency refers to the extent to which product
activities can and do meet the needs and requirements of customers. Effectiveness, on the
other hand, is the evaluation and evaluation of how corporate resources are used economically
in the implementation of the organization's goals. The numbers, the performance, and the
scale are related to each other, that is, they can generally be measured in different dimensions
(Hashem, 2015).

Organizational success is almost the ultimate goal for every project. The success of
construction projects depends mainly on the success of performance. According to Abdel
Nasser, ( 2012) the success of a construction project depends on the budget, the quality
required, and customer satisfaction. The Sudanese construction industry is facing several
challenges, such as poor performance of construction projects. Relative Value Index (RII) is
used to rate factors that affect project performance. The results show that the five most
important factors affecting project performance are project team leadership experience,
planning efforts, design and detail competency, cost progress control, and leadership skills.

Accordingly, for (Habtemariam, 2019) the most important factors affecting the performance
of the construction industry: deadline for the contract, lack of skilled workers, inadequate
supply of materials, increase in material prices, political environment, physical environment,
delay in payment of contractors, planning Effort, technical staff and project leaders early and
continuous participation in the project. The performance problems of the construction industry
in emerging economies can be divided into three stages: problems or lack of industrial
infrastructure (mainly resource supply), problems with customers and consultants, and the
contractor's qualifications. Lack of manpower skills, poor supervision and site management,
poor performance; Customer satisfaction, improper management; Lack of equipment, and
malfunctions contribute to construction delays (Biadiglign, 2017).

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2.2. Construction industry performance measurement theories and models

Due to the dynamic nature of construction industries and with dynamic environment, the
performance of organizations is changed drastically. But the main thing is what, how to
measure performance and when to implemented performance measurements in an
organizations are the critical concepts that needs to addressed. Since, performance is the
ability to meet certain criteria’s, the time it takes, and the path used to get there. Also
performance is about how successful a business is in generating and sustaining value (Alie,
·August 2017).

A performance measurement system that enables a company to meet these demands

successfully is essential. It helps ensure better informed and more effective decision-making
at both strategic and operational levels. Most performance measurer center on four aspects:
input measurement where the focus is on resources used to produce products and services;
activity measurement focusing on actions taken to produce products; output measurement
focusing on the volume of products and services produced and outcome measurement
focusing on the impact of products and services produced.

Organizational performances are examined including accounting, balanced scorecard, strategic

management, entrepreneurship, and microeconomics perspectives. Accordingly, an argument
was proposed for a single-constituency, multidimensional model of performance for for-profit
organizations, from the perspective of the common stockholder (Carton, 2004). Even with a
homogeneous sample with respect to the concept of value (such as publicly owned companies,
family-owned businesses, or not-for-profit organizations), performance is a multi-dimensional
construct, which permits value to be created on differing dimensions (Trailor, & Hill, 1996). It is
also possible to conceive of multiple measures of the value created. This fact is supported by the
number of different dependent measures that have been used to measure organizational
performance in research studies (Carton, 2004).

Performance measurement refers to the process of measuring the action’s efficiency and
effectiveness (Neely, 2005). Performance measurement is the transference of the complex reality

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of performance in organized symbols that can be related and relayed under the same
circumstances (Lebas, 1995). In the current business management, performance measurement is
considered to be in a more critical role compared to quantification and accounting (Koufopoulos,
2008). This is consistent with (Bititci, 1997)who described performance management as a
process wherein the organization manages its performance to match its corporate and functional
strategies and objectives.

In theory, the concept of performance forms the core of strategic management and empirically,
most strategy studies make use of the construct of business performance in their attempt to
examine various strategy content and process issues. In management, the significance of
performance is clear through the many prescriptions provided for performance enhancement.
Research dedicated to governance structures relationship with financial performance was highly
dependent on accounting-based indicators. Some studies have adopted individual measurements
(accounting-based or market-based measurements).

Performance measures are used to identify the strong and weak sides of the management
system which is very helpful to improve the effectiveness of the company. The development
of the performance measures for construction material management help to measure the
effectiveness of the construction material management on construction projects. The
performance measurement of the construction material management is used to develop a
benchmark and to improve the efficiency based on the measured benchmark (Dawd, 2015).

The current performance of companies is the first to be evaluated by investors all over the globe.
Currently, the world has become smaller in terms of the opportunities to conduct business
anywhere around the world. Globalization has facilitated business high performance as economic
globalization helps people the world over. By eliminating the barriers to corporate trade and
financial investments, development and growth are realized and better opportunities can be
paved. Performance measurement is very crucial for the organization’s effective management
and enhancement of the process is impossible without outcome measurement. Hence,
organizational performance requires measures to identify the effect of organizational recourses
upon business performance (Al-Matari, 2014)

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 The study also confirmed that sufficient cash flow, leverage, and liquidity are Effective
performance evaluation systems for projects and organizations in South Africa. Financial
management strategies were found to have a positive effect on project and organization
performance. Lastly, budgeting, creditworthiness, risk management, and review and
evaluation were found to be effective financial management strategies among the
organizations sampled (Emmanuel Dele Omopariola, 2019).

The leverage has a significant negative effect on financial performance; the firm increases
debt beyond the optimum level, financial performance declines and the possibility of
bankruptcy also increases. Nevertheless, an optimal level of leverage can enable a firm to
improve its financial performance as it can accrue tax advantage (tax shield) associated with
the optimum level of debt. Liquidity plays an important role in improving the firm’s financial
performance. Thus, firms with optimum levels of liquidity report better financial performance
As a result of the risk-return tradeoff (S. Ping, 2011).

Peter E.D. and Gary D. (2000) identified from their research that, Construction business
performance measurement (BPM) is myopic (lack of foresight), most often being project-
specific, profit-orientated, and neglecting broader ``stakeholder'' issues. Construction BPM tends
to relay on “traditional” (bottom-line) performance measures, such as efficiency, return on
capital employed, and profitability. If construction organizations are to remain competitive in the
longer term, they need to develop and better understand their relations with their customers,
suppliers, employees, lenders and the wider community.

Effective management of construction resources results in high productivity and cost savings.
Construction is a labor-intensive industry. Construction relies heavily on the workforce.
Resources/raw material, labor, machinery and finance are the most valuable asset of the
industry. It is important to improve productivity by improving resources productivity; it has a
significant impact on the performances of contractors and on sustainability to achieve
contractor and customer goals.

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There are many models of performance measurement both in the public and private sectors. We
shall analyze four models: two with private sector orientation while the other two with public
sector orientation. The models are the European Foundation for quality management (EFQM),
balanced scorecard (BSC), the value chain model, and the framework for performance
assessment (Nalwoga, 2016).

The Z-Score is a linear analysis in that five measures are objectively weighted and summed up to
arrive at an overall score that then becomes the basis for classification of firms into distressed
and non-distressed. New York University Professor Edward Altman introduced the Z-score
formula in the late 1960s. Rather than search for a single best ratio, Altman built a model that
distills five key performance ratios into a single score. As it turns out, the Z-score gives investors
a pretty good snapshot of corporate financial health.

Note that the model does not contain a constant (Y-intercept) term. This due to the particular
software utilized and, as a result, the relevance cutoff score between the two groups is not zero.
Other software program, like SAS and SPSS, have a constant term, which standardizes the cutoff
score at zero if the sample sizes of the two groups are equal (Max, 2000).

2.3. Empirical literature

The main reason for the company's failure to achieve its goals is its lack of productivity. One
of the reasons for the production is that the workforce is smart and integrated with other
resources as opposed to organizational resources, and the role of increasing and decreasing
organizational productivity has given this body a special place in the organization. Human
resources practices such as recruitment and selection, training and development, performance
appraisal, communication, compensation, teamwork, and job security. Productivity is also
measured as labor productivity (Abdel Nasser H. Zaieda*, 2016).

The success of the Ethiopian construction industry in its construction project depends on its
budget satisfaction, the quality required, and customer satisfaction. In general, Ethiopian
construction industry stakeholders and construction company managers and their staff face

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several challenges, particularly poor construction performance, lack of funding, deadlines and
implementation, implementation planning efforts, and incomplete design. And details cost
progress control, construction company managers, project managers, and project team leaders
lack leadership (GIRMA, 2018).

Construction productivity is a concern for researchers and practitioners who are concerned
about the productivity of construction projects. The five main factors that have a major impact
on productivity are timely availability of workplace materials, supply delays, strikes by
political parties or stakeholders, regular review of drawings, additional work/rework, and
timely availability of workplace drawings. The findings shed light on the impact of
productivity on the Indian context and help construction professionals develop effective plans
for productivity improvement (Sudhakumar, 2014).

Habtemariam, (2019), stated that the main factors affecting the performance of the building in
Ethiopia: lack of time, lack of skilled staff, inadequate supply of materials, the rising cost of
materials, political environment, physical delays, contractor development fees, planning
efforts, project staff, and project management technical skills Early and continued
participation in the project.

According to Kifleyohannes(2020), the unique nature of the construction industry, combined

with changing global competitiveness challenges and regulatory requirements, has created a
strong demand for highly skilled and competent project managers. Project management is a
philosophy and technique that enables users to maximize their limited resources and
profitability. Qualifications needed to achieve project goals and objectives are the skills and
characteristics of the project manager. Effective project implementation can be achieved by
matching individual competencies, job needs, and project environments.

Factors influencing the construction of construction projects in India: Timely availability of

materials in the workplace, delay in supply, a strike by political parties, or frequent review of
drawings, additional work, and timely availability. A better understanding of the factors affecting
productivity in the Indian context in the workplace and the development of professionals will

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help them develop effective plans to improve productivity (Sudhakumar, 2014). According to
Jamaldin and et al (2018), factors that affect the cost and quality of construction are the wrong
plan. Malawarachichina (2015) identified technical and vocational competence and lack of
resources, staff commitment, and a lack of education and training to drive the improvement
process.

The main reasons are the use of professional contractors and the poor control of the site. Other
important factors are inadequate construction capacity and lack of access. Other reasons are
lack of communication; project manager ignorance and lack of knowledge; lack of resources;
weak materials and planning; decision-making delays, the issue of multiple projects at hand
(workload); design changes; verification with explanations; user customer engagement final;
and security with customer support (Ernest, 2017).

Due to the many problems and challenges faced by Ethiopian construction companies,
professional institutions, designers, and addictive development practices. Rent-seeking and
corruption, lack of skilled manpower, inefficient construction project management, and
technology transfer, lack of competitive environment, lack of efficient supply chain, lack of
proper financial institutions, lack of cooperation from industry stakeholders, gaps in control of
the construction industry, and lack of guidance for industrial development Special challenges
and problems related to contract award, performance, and payment procedures are known to
impede the competence and growth of construction contractors in particular (Hintsay, 2016).

Considering all the responses, the most important factors affecting productivity are timely
availability in the workplace, the delayed supply of materials, strikes by political parties or
terrorists, repeated revisions for future work/designs, and lack of workplace drawings when
necessary. Project managers, on the other hand, are the main reasons for delays in the
workplace and lack of pictures when they want to coordinate the project and simplify project
planning and scheduling. The low wages of artisans were among the lowest responders
(Thomas, 2014).

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Productivity is an important aspect of the construction industry that can serve as a guide for
productivity. Effective management of construction resources results in high productivity and
cost savings. Productivity continues to be an exciting topic and a leading theme in the
efficient use of resources in the construction sector. Increased time and expenditure on
construction projects have resulted in lower productivity of major construction workers.
Construction is a labor-intensive industry. Labor is the most valuable asset of the industry. It
is important to improve productivity by improving labor productivity. Decreasing the
productivity of the project has been a threat to the construction industry (Sabihuddin3, 2018).

Labor supervision, labor motivation, quality, time, skilled labor, pay, availability of materials,
the relationship between site management and staff, project manager management, change of
work orders (Dhaval Jagtap, 2019); Lack of labor experience, lack of building materials, lack
of labor skills, hazards, lack of tools and equipment, poor working practices, site
management, lack of monitoring, payment delays and abandonment of safety precautions
(Melese, 2016); Lack of staff experience, late payment, re-employment due to employee
errors, lack of control and lack of resources (Mahamid, 2019); Knowledge management,
information and communication technology, human resource development, creativity and
innovation, and organizational culture all have a significant impact on employee performance
(Tuffaha1, 2020).

Factors influencing their productivity and the productivity of their workforce are frequent
delays in design, resource management, lack of communication between stakeholders,
overwork, lack of training, lack of equipment and tools, decision making, lack of materials,
adverse weather effects (rain, wind, high/low temperature, etc.) and delays in inspection and
instruction (Biren Patel1, 2018).

The impacts of factors related to the personal attributes of workers on the productivity and
performance of construction projects. Based on semi-structured interviews with experts in the
literature and construction industry, the impact of labor behavior and other labor productivity
has been identified and a list of labor-friendly labor characteristics has been compiled in
Croatia (Držislav Vidakovi´c *, 2020).

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Factors influencing the construction and labor productivity include lack of supervision,
unrealistic timelines and staff performance estimates, lack of experience, lack of management
skills in construction manager, lack of skills, and delays in answering information requests. ,
Payment delays, communication problems between site management and labor, rain and late
arrival, early quitting, and frequent unscheduled breaks (Ellis, 2014).

Factors affecting labor productivity in construction in Central Gujarat: lack of trained

manpower and lack of experience; Late payment; Poor health of workers; Low payment rate;
Lack of energy development; Poor work plan; Design changes; Lack of labor safety; Poor
condition of equipment/tools; Ignore safety precautions (Er. Shriyank Sen1, 2018).

Factors affecting labor productivity in the construction industry in Libya include lack of labor
control; Labor experience and skills; Construction technology; Coordination between the
construction industry sectors; Errors in design drawings. The findings of the study to fill the
gaps in the knowledge of the factors affecting the productivity of workers in Libya are to
provide a more in-depth look at the factors that affect the effectiveness of charities ( (Rabia
Almamlook1, 2020).

Labor productivity is often an important part of the overall cost of a construction project.
Although studies have been conducted on the causes of labor productivity, the frequency of its
occurrence has not yet been determined. Participants identified the following five factors as
significant factors affecting worker productivity: poor labor control, delayed pay, poor work
environment, low skilled workforce, and poor weather conditions (Abu-Hijleh, 2020)

The main reason for the company's failure to achieve its goals is its lack of productivity.
Among the productive factors are manpower cognitive and coordination factors, which, in
contrast to organizational resources, play a role in increasing and decreasing organizational
resources and corporate productivity; improving organization and overall productivity.
Human resource practices such as recruitment and selection, training and development,
performance appraisal, communication, compensation, teamwork, and job security.
Productivity is also measured as labor productivity (Abdel Nasser H. Zaieda*, 2016).

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The waste of materials should also be minimized throughout the construction stage to avoid
loss of profit. Failure in managing site material and inventory will result in cost overrun,
postponements in project completion, and reduce overall project performance. Better
management among the purchase and finance departments will help in attaining greater
efficiency in Inventory management. The firm, employing a proper and efficient material
management system can have increased their overall efficiency by 35%. How profitability can
be achieved via effective management of materials with particular attention to sourcing,
receiving, storing, and issuing materials (Daniel D. C., 2019).

One of the problems which face the construction industry of Addis Ababa is poor construction
material management. Studies show that construction material covers around 60% of the
project cost. Construction materials hold a major part in the profitability and effectiveness of
the construction project. Identifying performance measures for material management help for
effective management of the construction project. The top three important performance
measures are material availability, material wastage, and construction time lost and the top
three practical performance measures are total surplus, materials receipt problems, and
procurement period (Dawd, 2015).

The impact of materials management with an emphasis on building projects are reduced cost
of materials, good quality control, better field material control, better handling of materials,
adequate storage of materials on-site, productivity improvements, and completion of the
project on time. Based on the findings, it was concluded effective materials management
practices improve the overall handling of materials for more efficiency and effectiveness on
the construction site (Idowu, 2018).

The lead time was highly significant to organizational performance through acquiring and
delivering the needed materials within the shortest time possible. The study advocated that a
lot of emphasis needs to be directed to materials management to achieve significant cost
savings, reduction in wastes and production costs, and to achieve an increase in profitability
and product quality, consequently improving the organizational performance (Jerutokeitany,
2014)

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In a construction project, the cost of construction material may range from 60-70 % of the
total construction cost. The most common root causes of ineffective material management
identified were matching price to competitor’s price; time spent investigating non-qualified
suppliers and unavailability of material (Vatsal, 2017).

Equipment may range from simple hand tools or apparatus to heavy-duty construction
equipment. The main contributing factors for equipment productivity loss (machine factor,
human factor, management factor, and work factor) the management problem ranked first.
Although there was low construction equipment productivity in the entire study site, the
Resident Engineers (RE) do not have any complaint on the contractor regarding their poor
Performance (Abebaw, 2014).

Construction equipment management is associated with procurement, retirement, replacement,

operation, logistics, and maintenance of the equipment. The business objective of a heavy
equipment company is to minimize operation, maintenance, and repair costs whilst keep
maximizing the utilization of the equipment. These responsibilities can be classified into two
groups, i.e. operational and strategic. These responsibilities are held by the project manager to
determine the equipment requirement within a specific period (Putranto, 2019).

The overall equipment efficiency was improved with less idling, low machine breakdown, and
minimized accident in plants which maximized the productivity rate, optimized process
parameters. Improve the production rate of equipment is essential for the construction
industry. In equipment management, proper planning, installation, selection, procurement,
operation, maintenance, and equipment replacement policy plays a vital role in the successful
completion of the project. The overall productivity of construction is affected by various
reasons. The downtime and an idle run time of equipment play important role in a production.
These downtime & idle time factors also affect the total cost of the project (Phadatare, 2016)

The different values and beliefs based upon employee performance help in an organization‘s
association. The organizational culture helps in internalizing harmonious management and
employee relationship that leads to effective organizational performance. In an organization,

18
strong culture enables effective and efficient management of the workforce. Based on some
conditions, organizational culture helps improve and provide a competitive edge. Every
person or employee in the organization has different values and beliefs that he/she works with
them. Organizational culture is a major determinant of employee motivation and commitment
which improves the organization's performance. Organizational culture reflects the values and
beliefs of the founder and shaped the traits of the organization (GIRMA, 2018).

The culture beyond its direct impact exerted an indirect impact on organizational performance
through the mediation of employee’s organizational commitment that the extent of indirect
impact was significantly higher than direct impact (Nikpour, 2017); Organizational culture
constantly reinforces the notion that organizational culture is necessary for effective
functioning and performance of the organizations’.

The results show that organizational culture dimensions do not affect firm financial
performance (Salih Yesil a*, 2013); Organizational culture has a deep impact on the
performance of employees that can cause to improve in productivity and enhance
organizational performance. Results of these studies mostly show a positive association
between strong culture and performance improvement (Shahzad, 2012); The nature and power
of organizational culture and influence upon sustainability are enormous in this contemporary
time (Mohammed J. I., 2017).

HR practices have a significant impact on organizational performance in construction

companies. Moreover, training and development, as well as performance appraisal, have a
significant impact on organizational performance, while the two other practices (recruitment
and selection, and compensation) did not have a significant impact (Yousef Al Abdallat,
2020).

Construction companies need to have a system of committed HR practices to improve the

individual’s knowledge, skills, and ability, stimulate knowledge sharing within projects and
the company, learned from the external environment to facilitate the capture of organizational
knowledge and learning. Hence, a positive relationship between HR practices (especially

19
training and rewards) and organizational performance (financial indicators, effectiveness,
efficiency, development, the satisfaction of employees and clients, innovation, and quality) in
the context of Chinese construction SOEs. Thus, according to resource-based theories, the
mediating effect of organizational learning on the relation of HR practices and organizational
performance is postulated (Zhai, 2011).

The major factors that cause project cost overrun in water and sanitation construction project
are underestimating time requirements, poor project control (cost, schedule, and quality),
contractual claim (extension of time), delay in construction, inadequate supply of raw
materials and equipment by contractors, delays between design and procurement phases,
lowest bidding procurement procedures, inflation, design error and omissions, and inadequate
preconstruction study. These top factors were the highest impact on the performance of
project cost overrun from the client’s, consultants’, and contractors’ perspective (Daniel B. ,
2017).

factors affecting construction cost are cash flow and financial difficulties faced by contractors,
contractor's poor site management and supervision, inadequate contractor experience, shortage
of site workers, incorrect planning and scheduling by contractors are the most severe factors
while changes in the scope of the project and frequent design changes are least affecting
factors on construction cost. Spearman correlation analysis showed that incorrect planning
and scheduling by the contractor has a strong positive relationship with contractor’s poor site
management and supervision, the inadequate experience of contractors has a strong positive
relationship with incorrect planning and scheduling; and contractor’s poor site management
and supervision, changes in the scope of the project has a strong positive relationship with
frequent design changes; and vice versa (Aftab Hameed Memon*1, 2010).

The function of obtaining efficient working capital management is to maintain current assets
and current liabilities in respect to each other and to generate maximum returns. Working
Capital Management (WCM) is an important corporate financial decision since it directly
affects the profitability of the firm. Working capital management efficiency is vital especially
for Construction firms, where the major part of assets and liabilities are composed of current

20
assets, especially inventory and receivables, and current liabilities; payable (B.Arunkumar,
2013).

The concept of working capital management addresses companies’ managing of their short-
term capital and the goal of the management of working capital is to promote satisfying
liquidity, profitability, and shareholders’ value. It is the ability to control effectively and
efficiently the current assets and current liabilities in the abilities in a manner that provides the
firm with maximum return on its assets and minimizes payments for its liabilities (Ephrem,
2018).

Ethiopian construction industry stakeholders in general and construction company managers

and their employees, in particular, are facing numerous problems and challenges such as poor
performance of construction projects, shortage of financial capability, scheduling problem and
organizational system of implementation, performance planning effort, incomplete design and
specification groundwork, cost progress monitoring, scarcity of leadership skill of the
construction company managers, project managers, and project team leaders (GIRMA, 2018).

Project management frameworks describe the preferred approaches to project quality

management, as well as applicable methods and tools. Despite this, quality problems in the
construction project are still widespread. A systematic literature review (SLR) was used to
identify previous studies on quality-related factors. Literature review and further quantitative
analysis revealed that quality-related factors are related to three categories: Quality of project
process, quality of organizational processes, and quality of results (products), which together
create the quality of the whole construction project (Držislav Vidakovi´c *, 2020).

Productivity is an important aspect of the construction industry that may be used as an index
for the efficiency of production. Efficient management of construction resources can lead to
higher productivity which can help to achieve cost and time-saving. Productivity remains an
interesting subject and a leading theme to the efficient use of resources in the construction
sector. It has been observed that the low productivity of construction workers is one of the
major causes of time & cost overrun in construction projects. Construction is labor oriented

21
industry. It heavily relies on the skills of its workforce. Labor is the industry’s most valuable
asset. It is important to improve the efficiency of production by improving the productivity of
labor. Decreasing the productivity of projects has always been a major concern for the
construction Industry (Sabihuddin3, 2018).

2.4. Conceptual framework

The independent variables are proposed as determinants of the changes in the dependent
variables. The changes in the dependent measures are considered to represent “performance”
caused by the variations in the independent measures. The critical point here is that performance
as a concept involves measurement of the effects of organizational actions (Carton, 2004).In the
citation of previous studies, little attention is being paid to construction organization
performance in Ethiopia and specifically in ARWE. Based on a literature review of the existing
internal factors affecting the performance of construction firms, they can be grouped as raw
material, labor, organizational culture, machinery and equipment, and financial factors. These
categories form the basis by which the research model developed to measure their effect on the
construction performance of this study. It is graphically presented as shown below.

22
 Raw material accessibility

Performance/Profit
Human resources

Organizational culture Dependent variable

Independent variable

Figure 1: dependent and independent variable of performance

27
 CHAPTER THREE: RESEARCH METHODOLOGY

3.1. Description of the study

This chapter discusses the methodology and research design used to achieve the objectives of
the study. The chapter begins with a description of the research design and follows the accuracy
of the chosen method. The research design includes a list of selected studies and samples, a
design for data collection tools, and methods for data collection.

The study will be conducted on one of the Amhara Regional state public enterprises called
Amhara Road Work Enterprise (ARWE).

The current ARWE was established 2002 EC in Bahir Dar /Rule Number 71/2002, From the
establishment of the offices until 2004, it was accountable to Amhara Rural Roads Authority.
After the establishment of the Amhara Road Works Enterprise from 2005, it was engaged in
tarmac, rural road work and other civil construction projects and related activities only/Amhara
road work enterprise 2008 EC report/.

3.2. Research Approach

To the attainment of the broad objective presented in the first chapter, this study uses quantitative
research approach. Because in mostly conducted in social sciences using the statically methods. The
results achieved will be logical, statistical and unbiased. The quantitative research approach is best to
investigate the perceptions and problem of the study and to discover the hidden values, feelings,
attitudes and motivations (Svensone, 2003).

3.2.Research Design

The present study is adopts explanatory type of research design because explanatory research design
will use to examine the relationship between Human resource capability, Organizational culture and
Raw material availability with Organizational Performance. By doing so, it helps to identify if there

28
are any causal links between the independent variables (raw material, organizational culture and
human resource) and organization performance and thereby answer what does seem the effect of
human resource, organizational culture and raw material on performance of Amahara Road Work
Enterprise.

3.4. Population of the study

The target populations for the survey will be permanent employees who have been working for more
than six months in the Amhara Road work enterprise. The list of research participants’ employees will
be obtained from human resource corporate human resource of the enterprise. The total number of
department is nine (9) departments of which, Three (3) are main work/operational departments and
the remaining six (6) are supportive work department and the total population of the bureau is 189
permanent employees.

3.5. Sample size determination

A sample size of more than 30 and less than 500 is appropriate for any social science research
(DELİCE*, 2010). A simplified formula to calculate sample sizes. This formula is used to determine
the population size under study is finite (Yamane, 1967).

 Where: n is the sample size,

 N is the total number population size > 6 month experience permanent employee = 189
 e is the level of precision (allowable error commonly 5% = 0.05)
Accordingly, the total sample size selected from the total population by stratified sampling method is
132
Table 1: Total sample Size

Sample
No Types of Department Population Remark
size

Internal Audit Service Supportive work

1 7 5
Department

29
 Plane and Business Development Supportive
2 13 9
work Department
3 Construction Main Work Department 16 11
Design Preparation and Contract
4 36 24
Administration Main Work Department
Machineries and Vehicles Administration
5 36 24
And Maintenance Main Work Department
Purchase and Property Administration
6
Supportive Work Department 26 17
7 Finance Supportive work Department 20 13
Kaizen And Personal Relation Supportive
8
work Department 14 9
Human Resource Supportive Work
9
Department 21 14
Total 189 132

3.6. Sampling Procedure

According to Taherdoost (Taherdoost, 2020), Stratified random sampling technique increases the
probability that the final sample will be representative in terms of the stratified groups. So, in this
study Stratified random sampling technique is used to get information from representative of different
departments. This technique is preferred because it assists to minimize biasness. With this technique,
the sampling frame is organized into relatively homogeneous groups (strata) of departments before
selecting participants for the sample .The researcher will select sample from each stratum in a
proportion base. Finally simple random sampling method using lottery method will be employed.

3.7. Data source, type and Collection Methods

The necessary data for the study will be collected by questionnaire, information gathered directly
from respondents the data source is Primary data and data type will be quantitative. In Primary
data, information gathered directly from respondents which can be gathered through
questionnaire collected through survey questionnaires. The layout of the questionnaire has set very
simple to encourage meaningful participation by the respondents. The questions have set as concise /
to the point/ as possible with care taken to the actual wording and phrasing of the questions. The
reason for the appearance and layout of the questionnaire are importance in any survey where the
questionnaire is to be complete by the respondent (Muijs, 2004). Structured Questionnaires will

30
translate to Amharic because question in English language may not produce the required response and
assume to limit their participation on the survey. Questioner is adapted from

3.8. Data Analysis and interpretation method

Collected data will be organized to make analysis easy. In order to ensure logical competence and
consistency of responses, data editing is carried out daily by the researcher. Once editing will
completed, data will be analyzed quantitatively using statistical package for social science (SPSS)
version 26 software. The techniques for quantitative data analysis are used to both descriptive and
inferential statistics to analyze the result and draw conclusion. Descriptive Statistics used to
measures the central tendency and measures of variability or dispersion. Inferential statistics are
used to estimate the parameters and to test the statistical hypothesis, and to make generalizations
about the populations from which the samples are drawn. In particular, these statistics test for
statistical significance of results – i.e. statistically significant relationships between variables. The
study will employed multiple linear regressions so as to see the significant relationship between
the independent and dependent variables. Multiple linear regression analysis is a powerful
technique used for predicting the unknown value of a variable from the known value of two or
more variables. It is used to determine the proportion of respondents choosing the various
responses and to see the relationship between the determinant factors of employees’ performance
and employee performance. To measure or test the degree of linear relationships between
variables the researcher used correlation analysis (r), to check how strong that relationship is and
whether the relationship is positive or negative. In addition to this, test multi-co linearity problem
is tested.

CHAPTER FOUR: WORK SCHEDUL, BUDGET BREAK DAWEN AND REFERENCES

4.1. Work Schedule

List of activities Period 2022 GC. Performer Remark

31
1 Problem identification March 10-20 The researcher

2 Submitting the first draft of March 31 The researcher

research proposal

3 Submitting the revised April 15 The researcher

research proposal

4 Questioner preparation April 25-30 The researcher

5 Pilot study May 1-5 The researcher

6 Refining questioners based on May 6-10 The researcher

the pilot study

7 Training data collectors May 11-15 The researcher

8 Data collection May 16-31 Data collectors

9 Editing and coding data June 1-5 The researcher

10 Data entry and presenting for June 6-10 The researcher

analysis

11 Data analysis and writing up. June 11-20 The researcher

12 Submitting the first draft of the June 21 The researcher

research result

32
 13 Summating the revised June 25 The researcher
research result

14 Presentation of the research June 30 The researcher

4.2. Budget break down.

N Item Description Measurement Quantity Amount

1 Per diem Per diem for the researchers 20 days 340*2*20 13600.00
from Bahirdarto different
Project site to distribute
questioners.

2 Data collection Per diem for 3 supervisors 8 days 340*8*3 8160.00

Per diem for 10 data collectors 12 days 340*12*10 40800.00

3 Photocopy. Different copy. 1200(pages) 1200*1 Birr 1200.00

4 CDMA mobile 2(researchers) 2*10*100 2,000.00

card

33
5 Stationeries - - 2,000.00
materials

6 Transportation For the researchers from 10round trips 10 trips * 2 6,000.00

cost Bahirdar to project site *300

Total 73,760.00

Contingency 5% 3,688.00

Grand Total 77,488.00

34
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