Magnifying the Operational and Financial Best Practices Of

8/13/2019 Magnifying the Operational and Financial Best Practices Of

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OBLEPIAS, Jan Carlo A.

ALBARICO, Marc Jayvee L.

PICAZO, Jerric Christian Z.


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This research aimed to magnify the operational

and financial best practices of Makati Development

Corporation. The study used descriptive method of

research to gather information about present existing

conditions needed in the chosen field of study. The

respondents of the study were composed of 30 top

and middle management of Makati Development

Corporation.


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Survey-questionnaires were distributed to the

management people who provided the data for analysis and

interpretation. The data gathered from the questionnaires

were analyzed and interpreted with the use of thestatistical tools such as the percentage and frequency

distributions for establishing the perspective of the

management people, weighted mean in determining the

average respondents of different options provided in the

various parts of the survey questionnaire used, and analysisof variance in testing the significant differences among the

lead variables.


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This research aimed to magnify the operational andfinancial best practices of Makati Development Corporation.

Moreover, this study sought to draw the profile of the management

people, company perspectives, construction best practices,

financial implications, maintaining quality, problems encountered

and its proposed solutions and any significant difference between

the profile of the management people and the lead variables.

Specifically, this study aimed to answer the following:

1.0 What is the profile of the management people of Makati

Development Corporation as to:

1.1 Age;

1.2 Sex;

1.3 Civil Status;

1.4 Highest Educational Attainment;

1.5 Position in the Company; and

1.6 Length of Employment?


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2.0 What is the company perspective of Makati DevelopmentCorporation as to:

2.1 Form of Business Organization;

2.2 Years in Operation;

2.3 Sources of Capital; and

2.4 Number of employees?

3.0 How do the management people view the construction bestpractices of Makati Development Corporation with regards to:

3.1 Contracts;

3.2 Contract Change Orders; and

3.3 Safety?

4.0 How do the management people view the financial

implications of Makati Development Corporation as to:4.1 Accounting System;

4.2 Accounting for a Project;

4.3 Measurement Methods; and

4.4 Financial Reports?


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5.0 How does Makati Development Corporation maintain

high quality construction projects?

6.0 What are the problems encountered and the proposed

solutions thereto?

7.0 Is there a significant difference between the profile ofthe management people and the lead variables?


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The following summaries were drawn from thefindings presented in the prior chapter:

1. Profile of Management People

Management people that belong to the age bracketof below 26 have the highest percentage of 40% of the totalmanagement people. Sixty percent of them were female andmajority of them were single with 63.3% or 19 out of the 30management people. Findings showed that 30 or 100% werecollege graduates. Lastly, out of the 30 management peoplesurveyed, 15 or 50% of them were from 1 up to 3 years inposition.


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2. Company Perspective

After reviewing the information gathered, the

researchers found out that the company has been

operating from 10 years and above. It also has morethan 15 employees. Lastly, the company is a

corporation and its primary source of capital is

investment from parent company.


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3. Construction Best Practices

As to contracts, management people agreed with an

average weighted mean of 4.39, that the company provides

policies to ensure that contracts are entered into with high

consideration. They agreed that the general contractor

should issue bid invitations to subcontractors, in sufficienttime for subcontractors to review the project documents and

prepare responsible and responsive bids and that several

factors like expenses and desired profit are being considered

in deciding the contract price. Also, the general contractor

allows the project financing information accessible to thesubcontractor even before the deadline of the sub bids and

guidelines are used on whether a contract should be treated

as a single construction contract or a group contract.


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As to contract change orders, management peopleagreed with an average weighted mean of 4.18, that the

company ensures that contract change orders are added or

deducted from the original contract price based on nature,

that every change order is documented and reported to the

customer and that every aspect in the construction must becarefully examined whether it is a part of the original

contract or a change order. Also, the management people

agreed that change orders may due to the personal requests

of the clients, change orders may be due to some unforeseen

conditions and any work done that is not present in the

original contract is considered as a change order. On the

other hand, the management people were undecided on

whether change orders may go without pricing even though

the work is defined and costs are incurred, and whether

errors made by the contractor may also result to change

orders.


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As to safety, the management with an averageweighted mean of 4.76, strongly agreed that the company

ensures the safety of its employees and workers. They

strongly agreed that construction work can be particularly

hazardous and personal protective equipment, fire safety,

electrical safety, and other precautions are essential for safeconstruction work. Permanent safety engineers and

inspectors permit is secured for safety, any area that poses a

physical threat to workers and/or pedestrians requires

barriers or guards, site inspections are carried out to ensure

that the safety and health standards, rules and practices are

being complied with and corrective actions are taken asnecessary and accident investigations are conducted and

corrective actions are recommended for preventing similar

accidents.


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4. Financial Implications

As to accounting for a project, the management people

strongly agreed with an average weighted mean of 4.51, that

materials and supplies inventory are maintained; a purchasing

department which handles all the purchase transactions is

established; purchase order form is sent from purchasing

department to supplier for purchases of materials; receiving

reports, purchase invoices and purchase order forms are being

tallied for checking purposes; completion reports are prepared to

document the progress of the project; and there should be an

acceptance of the client in order for a project to be considered

close. Also, the management people agreed that daily informationreports from projects are carefully monitored to account for daily

transactions; upon completion of a project, technical close-out is

performed; upon completion of a project, financial close-out is

performed; and during a financial close-out, every aspect which

relates financially are settled.


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As to measurement methods, the managementstrongly agreed with an average weighted mean of 4.54, that

project costs are initially estimated; percentage of

completion is usually measured by an expert engineer to

provide accurate progress documentation; and to accurately

recognize revenue, percentage of completion accounting andproject cost allocation is applied.


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As to safety, the management with an averageweighted mean of 4.76 strongly agreed that the company

ensures the safety of its employees and workers. They

strongly agreed that construction work can be particularly

hazardous and personal protective equipment, fire safety,

electrical safety, and other precautions are essential for safeconstruction work, permanent safety engineers and

inspectors permit is secured for safety, any area that poses a

physical threat to workers and/or pedestrians requires

barriers or guards, site inspections are carried out to ensure

that the safety and health standards, rules and practices are

being complied with and corrective actions are taken asnecessary and accident investigations are conducted and

corrective actions are recommended for preventing similar

accidents.


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With regards to its financial reports with an averageweighted mean of 4.57, the management people strongly

agreed that financial statements are prepared in accordance

with the Generally Accepted Accounting Principles; contract

revenue is measured at the fair value of the consideration

received or receivable; when the outcome of a constructioncontract cannot be estimated reliably, revenue shall be

recognized only to the extent of contract costs incurred that

it is probable will be recoverable; when the outcome of a

construction contract cannot be estimated reliably, contract

costs shall be recognized as an expense in the period in

which they are incurred; and when it is probable that totalcontract costs will exceed total contract revenue, the

expected loss shall be recognized as an expense

immediately.


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Also, they agreed that contract revenue shallcomprise the initial amount of revenue agreed in the

contract; contract revenue shall comprise variations in

contract work, claims and incentive payments to the extent

that it is probable that they will result in revenue and they

are capable of being reliably measured; and when theoutcome of a construction contract can be estimated

reliably, contract revenue and contract costs associated with

the construction contract shall be recognized as revenue and

expenses respectively by reference to the stage of

completion of the contract activity at the end of the

reporting period.


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As to maintaining quality, the management agreedwith an average weighted mean of 4.32, that the

organization reviews the proposed contract to ensure that all

requirements are adequately defined, that all verbal

requirements are documented, all differences are resolved,

and the organization is capable of meeting all contractrequirements; the top-ranked contractors indicated that

inspection and testing activities are performed during all

phases of the projectreceipt, storage, field fabrication,

erection, and upon completion prior to handing over to the

client; the top-ranked contractors have well-documented

procedures to identify the acceptability of constructionitems with regard to inspection and tests performed

throughout the construction process;


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whenever a Nonconformance Report (NCR) is issued and thedisposition is agreed upon, the value of the problem (i.e.,

the cost of rework, replacement, project delay, etc.) is

calculated and documented on the Nonconformance Report

(NCR); the top-ranked contractors showed evidence that the

procured project materials and equipment, when received at

the site or during construction, are handled properly and in

such a way that their quality will not be degraded because of

inappropriate handling, lifting, and rigging.


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5. Problems Encountered and Proposed Solutions

As to the problems encountered, the management

people strongly agreed that hits and misses are always a

lessoned learned in a project. Also, they encountered

problems regarding delays caused by environmental factors

and the targeted time completion may not be attained andthe prepared budget may sometimes focus a managers

attention of goals that are not necessarily in harmony with

the organizations over all objectives. Also, they strongly

agreed that large projects can involve highly complex

financial plan; prepared budget estimates may be missed;facilities requested by the client are custom designed and

constructed and may also require a long time to complete

and that both design and construction of a facility must

satisfy some conditions.


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On the other hand, they were undecided on whethermanagement may sometimes become impatient and losses

interest because it expects too much too soon.

As to the possible solutions, the management people

agreed to the proposed solutions for the problems

encountered, that the company is encouraging participationof employees in each level of organization; the management

is appointing a team to monitor and control the compliance

of employees to the rules and regulation; internal and

external factors in preparing the budget are considered by

the Budget Personnel; the management uses high technologydevices in making up the complex budget; the data is

accessible in a timely and understandable way and that the

company plans the flow of information.


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6. Difference Between the Profile of the Management Peopleand the Lead variables

On the account of the difference among variables,

shows that there is no significant difference between the

construction best practices, except for the age, and the

gender, civil status, highest educational attainment and thelength of employment of the management people. It also

shows that there is no significant difference between the

financial implications, except for the length of employment,

and the age, gender, civil status and the highest educational

attainment of the management people.


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It showed that there was no significant difference betweenmaintaining quality and the age, gender, civil status, highest

educational attainment and the length of employment of the

management people. No other significant differences are

found except for the above mentioned.


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After applying the appropriate statistical tools on thedata gathered and analyzing the results thereon, the

aforementioned findings were revealed. In relation with this,

the researchers had formulated the following conclusions:

1. Profile of management people

The profile of the management people belongs to theage bracket of below 26, of which are female, single and are

all college graduate. Moreover, majority of the management

people are accountants and in the position for 1 up to 3

years.


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2. Company PerspectiveMakati Development Corporation has been operating

for more than 10 years. Also, it is a corporation whose

primary source of capital is investment from its parent

company and has more than 15 employees.


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3. Construction Best PracticesThe management people agreed that they have good

construction practices as to their contracts, contract change

orders, and safety. The management clearly analyzes the

contracts they are entering and changes in the original

contract are given consideration in order for the changes toreflect to the contract price. Workerssafety is also ensured

by the management through its safety policies and

personnel.


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4. Financial ImplicationThe management people strongly agreed that proper

policies and procedures are being followed on the financial

implication of their accounting system, accounting for a

construction project, measurement methods and in

maintaining their quality.


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5. Problems Encountered and Proposed SolutionsWith regards to problems encountered, problems are

given enough consideration, since these hinder them from

achieving their goals. In relation to possible solutions, the

management people perceived that these proposed solutions

are effective ways to avoid those problems that the companymay encounter in the future.


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6. Difference Between the Profile of the Management Peopleand the Lead Variables

The null hypothesis shows that there are no

significant differences between the profile of the

management people and the lead variables hence, should be

accepted.


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Based on the findings and the conclusions drawn, thefollowing recommendations are hereby offered:

Makati Development Corporation reflects an

outstanding performance as to safety. Keeping up their

current policies and measures will continue this pleasing

rate. Also, the corporation should keep their current policiesand measures concerning contracts. Maintaining current

quality control during operations will also satisfy clients and

maintain the reputation built by the company.


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On the other hand, the management must updatewith the latest trends and techniques to enhance their

operations and profitability.

With regard to the employees, new personnel must

be informed more about the contract change orders usually

encountered by the corporation, activities or seminarsrelating to these contract change orders may help.

For further research study, the study provides

additional information with regard to the subject matter and

how it may help further researchers in their study.


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Readers and other researchers may use theinformation established for the improvement of the study

itself and their related study. It is highly recommended that

they should seek appropriate advice from suitable qualified

professionals in the field of construction and obtain

independent advice and verification of the relevance and

appropriateness of the use of any information prior to the

use of these.

Magnifying the Operational and Financial Best Practices Of

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