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Construction Financial Management

   

Added on  2021-01-01

9 Pages2834 Words500 Views
Construction financialmanagement

Table of ContentsINTRODUCTION...........................................................................................................................11) Evaluation of the characteristics of a generic construction business financial managementsystem..........................................................................................................................................12) Analyses of the limitations of financial management of SME contractor..............................23) Recommendation of an approach for managing financial management for SME contractorsto avert insolvency.......................................................................................................................4CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7

INTRODUCTION Construction industry plays a significant role in nation economic growth. It helps inproviding basic and essential infrastructure. Also, it generates revenue and contributes in growthand development of other industries as well. In this sector there has been high failure of smalland medium enterprises (Liao, 2018). This is due to poor financial planning. Often financialmanagement is done through a proper framework or approach. It consists of guidelines which isfollowed in assessment of finance. This assignment will evaluate characteristics about financialmanagement in construction sector. Also, it will discuss limitation of financial management toSME contractor that leads to business failure. At last several recommendations will be given formanaging finance to avoid business failure. 1) Evaluation of the characteristics of a generic construction business financial managementsystemEvery business requires a proper management of finance which allows them to maintainrecords of funds. Financial management refers to planning, utilising and decision making offinance in a business. It is a process of evaluating financial performance of firm by takingeffective decisions and planning. A construction business is entirely dependent on varioussources of finance available and how it is been utilised. A financial plan helps in controlling andregulating overall resources in effective manner. Besides this, in construction companies differfrom one another on basis of their size and goals. They have to face many challenges forproducing product. There are several principles as well which has to be followed by SME. Itsupports them in maintaining authenticity and integrity of funds and their source. They are ableto identify profit or loss from funds acquired. The characteristics of FMS are as follows :- Estimating financial requirements- FM enables construction business to analyse requirementsof specific project. It also support in estimating long and short term needs of business (Purnuşand Bodea, 2015). Moreover, both asset and liabilities are evaluated and flow of working capitalis ascertained. This enables in allocating resources in efficient way. Furthermore, it helps insetting short and long term goals. However, business is able to maintain stability in alldepartments. Also, estimation benefits in smooth running of firm. Selecting source of finance - This is another characteristic of financial management. Inconstruction there are various types of project which are been undertaken. Thus, FM assistsbusiness in selecting relevant source. With help of it, business is able to evaluate different1

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