determining the needs of planning and budgeting management for

DETERMINING THE NEEDS OF PLANNING AND

BUDGETING MANAGEMENT FOR CONSTRUCTION

PROJECTS IN THE GOVERNMENTAL SECTORS IN

KINGDOM OF BAHRAIN

`

BY

FAISAL AHMED ABDULLA

Project Paper Submitted in Partial Fulfillment of the Requirement for the Degree of Master of Project Management

Open University of Malaysia

2015

2

ABSTRACT

The main goal of this research is to determining the needs of planning and budgeting

management for the construction projects in the government sectors in kingdom of

Bahrain held by a sample of 84 engineers in different fields. A self-administered

questionnaire was used to gather the data. The study investigated the impact of a

number of demographic factors on engineers and as well as questionnaires which

showing their knowledge about planning and budgeting management for the

construction projects. The results also indicates the purpose of planning and budgeting

for the construction project and who is the person responsible for that and give a

recommendation about what should the governmental sectors to provide to achieve their

objectives as well as the internal and external factors effecting planning and budget the

government construction projects.

3

ACKNOWLEDGEMENT

After working with this research, I would say that it was one of the best things I did in

my life, exploring could be fun sometimes, but it becomes more beneficial after

accepting the challenges in the life and exploring new knowledge. It was really

interesting to join the Master program and have the opportunity to involve and share the

experience of exploring new ways for developing and improving the processes for a

non-profit service organization in Kingdom of Bahrain. My thanks go first to my

family, who have supported and held me up with love, patience and understanding.

Special thanks go to my close friends for their kind supports. I would like to express

my thanks to my Academic Supervisor, my deep thanks and appreciation to Prof.

Sridhar Mani & Dr. Hisham Al Asheeri for organizing my project, their patience and

support. I would also like to thank all OUM academic faculty members. Finally, my

thanks go to all my friends from the engineering construction field and others in

government ministries.

Faisal Ahmed Abdulla Hassan

4

DECLARATION

Name: Faisal Ahmed Abdulla

ID Number: 51080787

I hereby declare that this project paper is the result of my own work, except for

quotations and summaries which have been duly acknowledged.

Signature: _________________________________ Date: ________________

5

OPEN UNIVERSITY MALAYSIA CENTRE FOR GRADUATE STUDIES

PROJECT PAPER SUBMISSION FORM Name of Student: Faisal Ahmed Abdulla,

ID: 51080787

Dear Sir, Attached are the following documents for your evaluation and examination.

Preliminary Information

Chapter 1: Introduction.

Chapter 2: Literature Review.

Chapter 3: Research Methodology (Design).

Chapter 4: Data Analysis and Results.

Chapter 5: Discussion & Conclusion.

References and Appendixes

I have thoroughly checked my work and I am confident that it is free from major

grammatical errors, weaknesses in sentence constructions, spelling mistakes,

referencing mistakes and others. I have checked with CGS Guideline for Writing

Project Papers and I am satisfied that my project paper proposal satisfies most of its

requirements.

Thank You,

Student's Signature: Faisal Ahmed Abdulla

………………………….……..

I have read the students' research proposal and I am satisfied that it is in line with the

CGS Guideline for writing project proposal. It is also free from major grammatical

errors, sentence construction weaknesses, citation and others.

Supervisor's Signature:

………………………….……..

6

Chapter One: Introduction

1.1 Background of the Study

The construction projects planning and budgeting consider being the most important

issue for any organization dealing with these majorities. Being a manager in the higher

level management will keep you always thinking about how to provide a good

construction project from all aspects, costs, ease of construction, proper

implementation, durability and profitability. This paper describes a computational

approach to calculating the final cost and budget of a construction project, which is

based on the data normally developed by a cost system during the life of the project.

While most cost systems are able to collect total budget and to-date cost, budget, and

quantity data, there is often less capability to use this data to forecast the final cost of a

project. In many cases, the cost forecast for UN started work does not reflect the

overruns or under runs that are recorded early in the life of a project.

The proper management of a project involves more than just getting the project built.

Financial Management is a critical part of the overall project management process. If a

project is managed well financially, it is more likely to be successful and profitable. If

your organization has the appropriate resources, such as reports, documents, and checks

and balances, there should be no surprises. Remember to use all of your available

resources to help you manage the financial aspects of your project. A well-built quality

project that loses money is still a losing situation.

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Successful project management requires team leadership and coordination, diligent

project planning, and effective oversight of the delivery process. The Project

Management section offers guidance for the entire team to successfully and effectively

carry out a high performance building project.

Construction’s management services covers a wide a range of project delivery

methods in which the construction management team is involved during the project

commencement and design phase, the deliverables in construction management

includes:

Project Estimation

Budget Finalization

Cost Control

Project Scheduling in Phases

Value Engineering

Technology Applications

Material and Labor Resources

Scope of Work Estimation, Bidding, Negotiations & Subcontract Awarding

Project Management & Supervision on Site

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It is critical to establish the qualities of the project that are necessary to satisfy client

and end user needs and expectations for the finished project, once it is delivered and in

use. Value for the money in construction involves completing a project on time, on

budget and to a level of quality that meets those determined needs. A well-programmed

project will continue to provide value and meet user needs throughout its lifetime and

will contribute positively to the environment in which it is located with a wide range of

social and economic benefits. Early investment in planning, programming and design

can help deliver these benefits and avoid unnecessary costs and delays.

The responsibility for delivering high-quality products rests with the entire team. When

programming, the whole-life value should be considered and not just initial capital

costs. Over the lifetime of a building increases in building quality result in better

performing facilities with reduced costs. A small amount of additional upfront planning

by the client, design and construction teams can have enormous benefits to the project

value and make everyone's job easier.

Figure 1.1: Triple constrain triangle

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1.1.2 Construction projects planning

Basic Concepts in the Development of Construction Plans

Construction planning is a fundamental and challenging activity in the management and

execution of construction projects. It involves the choice of technology, the definition

of work tasks, the estimation of the required resources and durations for individual

tasks, and the identification of any interactions among the different work tasks. A good

construction plan is the basis for developing the budget and the schedule for work.

Developing the construction plan is a critical task in the management of construction,

even if the plan is not written or otherwise formally recorded. In addition to these

technical aspects of construction planning, it may also be necessary to make

organizational decisions about the relationships between project participants and even

which organizations to include in a project. For example, the extent to which sub-

contractors will be used on a project is often determined during construction planning.

In developing a construction plan, it is common to adopt a primary emphasis on either

cost control or on schedule control as illustrated in Fig. Some projects are primarily

divided into expense categories with associated costs. In these cases, construction

planning is cost or expense oriented. Within the categories of expenditure, a distinction

is made between costs incurred directly in the performance of an activity and indirectly

for the accomplishment of the project. For example, borrowing expenses for project

financing and overhead items are commonly treated as indirect costs. For other projects,

scheduling of work activities over time is critical and is emphasized in the planning

process. In this case, the planner insures that the proper precedence’s among activities

10

are maintained and that efficient scheduling of the available resources prevails.

Traditional scheduling procedures emphasize the maintenance of task precedence’s

(resulting in critical path scheduling procedures) or efficient use of resources over time

(resulting in job shop scheduling procedures). Finally, most complex projects require

consideration of cost and scheduling over time, so that planning, monitoring and record

keeping must consider both dimensions. In these cases, the integration of schedule and

budget information is a major concern.

1.1.3 The Budgeting Process

The process of preparing a meaningful and useful budget is best undertaken as an

organized and structured group exercise. The budget process involves asking a number

of questions. These start with plans and goals, not numbers. These questions can only

be answered by programmer and finance staff working together:

What are the objectives of the project?

What activities will be involved in achieving these objectives?

What resources will be needed to perform these activities?

What will these resources cost?

Where will the funds come from?

Is the result realistic?

Once the budget has been agreed and the activity implemented, the process is completed

by comparing the plan (budget) with the eventual outcome (‘actual’), to see if there is

anything we have learnt or could do differently next time.

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1.1.4 Governmental Projects in Bahrain

Most of the government sectors in Bahrain such as Ministries, Institutes, Shared

factories, and etc. having a construction projects which helps them to manage the

different activities they have. Therefore these sectors must have the full organization

teams for planning and controlling these projects from the different aspects and views.

In this essay I am going to concern about the Ministries projects which facing a lot of

problems and difficulties in planning, controlling and managing their projects. My

research will focus in the important process required to identify the different

requirements for these Ministries and how the construction management teams set all

the specifications from the planning stage until the completion of the project.

The most ministries having a construction projects in Bahrain are ministry of, works,

housing, Interior, defense, minusability and electricity. All these sectors facing

problems in setting their projects managements because of different management

processes they have internally or externally. Budgeting of the projects consider to be the

most important factors effecting the planning and controlling any projects under

construction or even before starting, during the evaluation and concept stage.

1.1.5 Ministry of Works (as an example)

The Ministry of Works is the construction arm of the Government of the Kingdom of

Bahrain. It is entrusted with a major portion of the public works sector and capital asset

formation in Bahrain.

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With responsibility for public works and infrastructure engineering covering

construction, roads and sanitary drainage projects the Ministry has an extensive

portfolio of projects across these key sectors. Implementation requires rigor,

responsiveness, flexibility and a high degree of coordination between development

partners.

Today, the Ministry’s responsibilities include:

Buildings: design, supervision of construction and maintenance of schools and

public buildings

Roads: planning, design, supervision of construction and maintenance of roads,

bridges and traffic facilities.

Sanitary drainage: planning, design, supervision of construction and operations

and maintenance of networks, treatment plants, pumping stations and Treated

Sewage Effluent (TSE) systems.

Electricity and Water: This function is delivered through the Electricity and

Water Authority which is independent from the rest of the Ministry of Works.

The Works undertaken by the Ministry include a large number of small projects

and services that are local in nature such as small schools, local access road

sections, road safety works, signs and signals, sanitary house connections,

repairs of the sewage network; in addition to medium-sized projects and large

complex projects that are of strategic nature or of global community interest

such as ports, airport, hospitals, bridges, complex interchanges, and sports

facilities that normal span several years to complete and require large budgets

and specialist expertise.

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1.1.6 Ministry of Finance

It is the location for issuing and controlling the governmental budget, through a

systematic procedures and right actions from the experts.

The Kingdom of Bahrain has developed a National Economic Strategy (NES) which

sets out goals to be achieved by 2014 by way of six year strategic plans towards

implementing and achieving the aspirations of the Economic Vision for Bahrain 2030.

These strategic plans are further divided into two year budget cycles. Strategic funding,

operating on the bi-annual and strategic level, will play a key role in providing a tool to

implement the objectives set out in the NES, and in improving the level of transparency

in government, a primary aim of the Economic Vision 2030.

The primary objective of the 2013-2014 budget process is to link the fiscal policy to the

national priorities to achieve the aspirations of the Economic Vision 2030. The main

objectives are as follows:

Execute the royal directives on the priorities of the state budget for fiscal years 2013-

2014.

Determine the fiscal policy for the next two years with setting and committing to the

expenditure caps.

Develop the mechanism of setting the state budget in relation with the priorities of

the National Economic Strategy at ministries and government entities level through

applying the Strategic Funding process.

14

Develop the process of defining detailed budgets for ministries and government

entities.

Develop a mechanism for expenditure and performance follow-up.

Build qualified human caliber for strategic planning and follow-up.

1.2 Research Problem(s)

For cost control on a project, the construction plan and the associated cash flow

estimates can provide the baseline reference for subsequent project monitoring and

control. For schedules, progress on individual activities and the achievement of

milestone completions can be compared with the project schedule to monitor the

progress of activities. Contract and job specifications provide the criteria by which to

assess and assure the required quality of construction. The final or detailed cost estimate

provides a baseline for the assessment of financial performance during the project. To

the extent that costs are within the detailed cost estimate, then the project is thought to

be under financial control. Overruns in particular cost categories signal the possibility

of problems and give an indication of exactly what problems are being encountered.

Expense oriented construction planning and control focuses upon the categories

included in the final cost estimation. This focus is particular relevant for projects with

few activities and considerable repetition such as grading and paving roadways.

For control and monitoring purposes, the original detailed cost estimate is typically

converted to a project budget, and the project budget is used subsequently as a guide for

management. Specific items in the detailed cost estimate become job cost elements.

15

Expenses incurred during the course of a project are recorded in specific job cost

accounts to be compared with the original cost estimates in each category. Thus,

individual job cost accounts generally represent the basic unit for cost control.

Alternatively, job cost accounts may be disaggregated or divided into work elements

which are related both to particular scheduled activities and to particular cost accounts.

Thus, this analysis of budgeting and planning initiates the following:

What is the purpose of planning and budgeting for the construction project and who

is the person responsible for that?

What should the governmental sectors to provide to achieve their objectives?

What are the internal and external factors effecting planning and budget their

projects?

Different researcher from different parts of the world discussed attitudes towards

determining the needs of planning and budgeting for the construction projects, we found

there is a lack of research in this area in Bahrain.

1.3 Objectives of the Study

The aim of the research is to examine the different procedures that the governmental

sectors in Bahrain used in their organization with related to the plan and budget their

projects, also to determine the management structure for these organization and how

they are using the different resource available to complete the different projects they

16

have. On the other hand the research are going to discover the different factors

externally and internally that affecting running the project in proper way.

1.4 Research Questions and Hypotheses

This examine and investigation is very important because it will help the different

management in setting their organization properly in order to run their project according

to measured plan from the initial stage until hand over the project, therefore a careful

review of research questions led to the development of the following research

objectives:

To determine what is the purpose of planning and budgeting of any construction

project and who is the person or group responsible to carry this type of

responsibility.

To identify what should the government sectors provides to achieve their objectives.

To investigate what is the internal and external factors that effecting planning and

budgeting of their projects.

1.5 Significance of the Study

The study is valuable as it provides the different project management processes such as

the discipline of planning, organizing, and managing resources to bring about the

successful completion of specific project goals and objectives. It is often closely related

to and sometimes conflated with program management.

http://en.wikipedia.org/wiki/List_of_academic_disciplines

http://en.wikipedia.org/wiki/Planning

http://en.wikipedia.org/wiki/Organizing

http://en.wikipedia.org/wiki/Managing

http://en.wikipedia.org/wiki/Resources

http://en.wikipedia.org/wiki/Program_management

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A project is a temporary endeavor, having a defined beginning and end (usually

constrained by date, but can be by funding or deliverables), undertaken to meet

particular goals and objectives, usually to bring about beneficial change or added value.

The temporary nature of projects stands in contrast to business as usual (or operations),

which are repetitive, permanent or semi-permanent functional work to produce products

or services. In practice, the management of these two systems is often found to be quite

different, and as such requires the development of distinct technical skills and the

adoption of separate management.

The primary challenge of project management is to achieve all of the project goals and

objectives while honoring the preconceived project constraints. Typical constraints are

scope, time, and budget. The secondary—and more ambitious—challenge is to optimize

the allocation and integration of inputs necessary to meet pre-defined objectives.

1.6 Scope of the Study

To study the effect of planning and budgeting management for construction project and

determining the needs of these components in any project in initial stage or during

construction, a clear scope should be prepare in order to achieve the objective of this

study as follow:

Collect all the information require for this type of study starting from defining the

different terms in planning and budgeting management in any organization and also

determining the main components of planning and budgeting management.

Collect clear information from the experts in this field, either by interview or

questioners.

http://en.wikipedia.org/wiki/Project

http://en.wikipedia.org/wiki/Business_operations

http://en.wikipedia.org/wiki/Management

http://en.wikipedia.org/wiki/Scope_(project_management)

http://en.wikipedia.org/wiki/Time

http://en.wikipedia.org/wiki/Budget

http://en.wikipedia.org/wiki/Operations_research

http://en.wikipedia.org/wiki/Resource_allocation

18

Investigate the citizen needs and how they are dealing with the different government

sectors to study their requirements.

Collect information from previous study.

Analyze of all information’s received.

1.7 Definition of Terms

Construction planning: Is a fundamental and challenging activity in the management

and execution of construction projects. It involves the choice of technology, the

definition of work tasks, the estimation of the required resources and durations for

individual tasks, and the identification of any interactions among the different work

tasks. A good construction plan is the basis for developing the budget and the schedule

for work. Developing the construction plan is a critical task in the management of

construction, even if the plan is not written or otherwise formally recorded. In addition

to these technical aspects of construction planning, it may also be necessary to make

organizational decisions about the relationships between project participants and even

which organizations to include in a project. For example, the extent to which sub-

contractors will be used on a project is often determined during construction planning.

Project Budgeting: A budget is a plan that identifies the financial resources required to

achieve programmatic objectives. Once constructed, this plan assists staff and board in

managing the organization both programmatically and financially throughout the year.

Establishing a schedule of key action and decision points in the process allows adequate

time for information gathering and decision making. How long the process should take

19

and who should be involved varies depending on the management style and complexity

of the organization. Typically the budgeting process should begin at least four months

before the end of the fiscal year to ensure the budget is approved by the Board before

the start of the New Year.

20

Chapter Two: Literature Review

This study was designed to determine how the government sectors dealing with their

construction projects and what is the different factors affecting them to manage their

program. The review begins with definition of Construction planning and budgeting,

what the government should do to achieve their objectives.

There are a several variables affecting the study of determining the need of planning

and budgeting management for the government construction projects, and though my

research the most important variables are:

2.1 Organization Staff and their Qualification.

Any management dealing with construction should have special project organization

structure starting from top level. This structure may vary in majorities depends on the

type and the requirements of their organization, therefore each of these team members

has a different ideas and vision through the need of proper planning and budgeting

management for the projects under their responsibilities. The upper level of this

management may have a different strategy for the project to be constructed, than those

who are receiving the order in the other level on their organization.

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2.2 The External and Internal Factors.

The representative of this variable is the government themselves, because they are the

one who prepare the required budget through Ministry of Finance after communication

and discussing with the other government sectors. Every year there will be budget

allocate for each ministry for their projects and maintenance, and through my research I

should investigate how the order is prepared by different ministries or authorities to

their projects before sending to ministry of finance to do the rest of other procedures.

On the other hand Parliament and Shra Council affecting in passing the budget approval

for the different field through their finance committee, and they have the right to say

yes or no for the overall kingdom budget allocated.

2.3 Previous Studies

Various authors on this topic have provided many definition on planning and budgeting

in construction projects.

2.3.1 Definitions of Construction Planning and Budgeting

Management.

Project planning is one phase from project management which identifying the use of

some management tools and techniques to get proper project report progress during the

other different phases. For example using of Gantt charts easily provide us with proper

project development schedule.

22

Projects planning and budgeting is how to combine the different activities in order

to obtain the cost of the project and that usually calculated through the length of the

task and the different resources allocated to the project. cioarchives (January 1997),

Peurifoy, R.L., (1970) Construction Planning Equipment and Method

Projects planning is how to use the different types of planning process and

techniques to construct and execute a full project with minimum variations and valid

time, these techniques are resource planning, control planning, and cost planning.

K.K. Chit Kara, (1998), Construction Project Management, Planning

Planning is the first step of Construction Planning and Project Management which

involves in identifying the basic scope of the project when an Institution/Sector is

considering to build a new facility or to renovate an existing one. This step also

include steps such as feasibility studies, master planning, creation of a planning

team, etc…

Figure 2.1: Project Development Schedule

Stallman, (Nov. 2005) Applied Software Project Managment

http://www.cioarchives.ca.gov/IT

23

Budgeting is the second stage which involves/covers the development and evolution

of the project budget within budget formulation process. This phase is concurrent

with the planning phase as it informs and is informed by those activities.

K.K. Chit Kara, (1998), Construction Project Management, Planning

2.3.2 Why is the planning and budgeting Management for construction

projects?

Work planning determines how to keep all the activities and issues related to the project

construction under control and proper handling by the projects team, for example how

to transmit engineering information to the construction management group, checking

which tasks from the project could be award to a subcontractor and which can be self-

preformed. It’s very important to establish a construction schedule includes all activates

for the project and to convert them into a multi-discipline logic to a timetable specifying

the start and finish of those activities. Usually that could be by providing duration to the

specified activities and analyzing against the required time to finish the scheduled task,

on the other hand there will be another developed schedule option through the schedule

risk assessment process. The owners of the project and the construction team should

revised all the schedule activities as necessary to concur with dates, and also to check

all the risks might happen because of project timing in order to develop contingency

plans.

Through all these process in addition to establishing scope and viability, to budget,

schedule and team requirements, you can insure that your projects are going to success

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before it begins. And also it will allow the project team easily to evaluate the all topics

of the project in closing phase.

(S tanley K. Henshaw, Unintended Pregnancy in the United States)

2.3.3Strategic Project Planning

Strategic project planning is the determination of a client’s strategy in chase of its goal.

The strategic planning process allows owners to identify its needs and generally

involves the following steps:

Give clear picture about the project, vision and mission ( Project Goals)

Identify the external and internal priority issues: Opportunities, Threats,

Strengths and Weaknesses.

Determining the results: Mission and Objective Statements.

Leeds to achieve goals: Strategic Alternatives.

Construction process plan.

Calculate and measure your performance.

2.3.4 Process Development & Improvement

It’s essential to develop and improve client processes and procedures to enhance the

efficiency and effectiveness for construction firms and projects. The process of

Development and Improvement involves the steps such as Recruiting and staffing,

Procurement, Cost estimating, Scheduling, Training, Marketing and sales, Finance and

Accounting and General Office Administration etc…

Marketing and Sales

Finance and Accounting

25

General Office Administration

(Baracco-Miller, E. (1970), Planning for Construction)

2.3.5 Cost Management

The costs of a constructed facility to the owner include both the initial capital cost and

the subsequent operation and maintenance costs. Each of these major cost categories

consists of a number of cost components. The capital cost for a construction project

includes the expenses related to the initial establishment of the facility such as Land

acquisitions, Planning and feasibility studies, Design costs, cost of construction

including materials, equipment’s & labor, Construction financing charges, Insurance &

taxes, Owner’s general overheads etc…

Hence the Question, How much? It is the first and most important question to be asked

and convinced before investing the time and money required to develop a concept into a

realized project, and answering it incorrectly at the concept phase will definitely lead to

cost overruns and time delays later on.

(Stanger, Steve, Douglas D. Grasberg, (11-1999) Design-Build Award Method

The costs of a constructed facility to the owner include both the initial capital cost and

the subsequent operation and maintenance costs. Each of these major cost categories

consists of a number of cost components. The capital cost for a construction project

includes the expenses related to the initial establishment of the facility:

Availability of land and improvement possibility if required.

26

Proper studies of the project and proper planning.

Design concept and preparation of full set of drawing for construction.

Pre-construction meeting and start executing.

Supervision team for construction.

Construction financing

Insurance and taxes during construction

Owner's general office overhead

All items not included in construction

Closing: Inspection and commissioning.

Therefore, how much? It is the first and most important question to ask before investing the

time and money required to develop a concept into a realized project, and answering it

incorrectly at the concept phase will assuredly lead to cost overruns and time delays later

down the road.

2.3.6 Capital Planning and Budgeting

The capital planning and budgeting usually start with improvement program, which usually

a short range plan four to ten years, which identifies capital projects need and all other

things related, equipment’s purchases, planning schedule and identifies option of financing

the plan. These process are providing all the links between the type of projects to be

constructed, municipality, schools, housing, parks and all other local government entity and

a comprehensive and strategic plans and annual budget.

27

A local government’s inventory of capital assets often represents its most significant

investment of municipal resources. To ensure that essential operations continue

uninterrupted, local managers must effectively plan for the acquisition and replacement of

them.

Capital assets, which are sometimes called fixed assets, generally have a useful life of more

than one year. Examples include the acquisition or construction of, or improvement to,

property (typically land or buildings); the purchase or manufacture of equipment, such as

vehicles or machinery; and development and major reconstruction of infrastructure, such as

communications, sewer, water and highway systems. Capital assets may be owned outright

or acquired through agreements such as lease-purchase.

2.3.7 Benefits of Capital Planning and Budgeting

Provide a proper and realistic management of a different projects at the same time.

The ability to prioritize the type of project need which help to manage budgeting.

Serve as a public relations and economic development tool.

A focus on preserving a governmental entity's infrastructure while ensuring the

efficient use of public funds.

Integrate between the construction project and the infrastructure requirement, which

will help to give a full developments for country and cities, for example all the

government sectors are going to improve his requirement to the project from

different majorities.

http://en.wikipedia.org/wiki/Infrastructure

http://en.wikipedia.org/wiki/Public_funds

28

2.3.8 Features of Capital Planning and Budgeting

Prepare a list of all capital projects and equipment’s needed.

Categories and ranks of the project.

The way of financing the projects.

Work program for the project: start and complete.

Justification for the project.

Explanation of expenses for the project.

2.3.9 Overall Process for Capital Planning and Budgeting

With refer to old discussing for improvement and development of capital planning and

budgeting, the government should define the objective, criteria and kind of projects that

should be included and organize a process of development the plan. The capital planning

and budgeting are vary from one country to another depends on the size of the local

government and the citizen need. Generally they will be tangible items that have a live

expectancy greater than year.

On the other hand, a local government will also need to forecast where it believes it will

face future demands and growth, by using the existing facilities, infrastructure or any

available material and inventory, because the capital planning and budgeting includes

financing issues, and that cause the local government to develop basic policies for

implementing the plan. Which will allow them to seek advice from their financial advisor

29

and bound council, and that also will keep the government to review the current finance and

related to the future requirements for their projects.

2.3.10 Specific Steps Required for Capital Planning and Budgeting

Managing the project proposal by capital planning committee.

Submit capital project, considering the inventory of existing capital assets.

Prepare the project financial analysis.

Rank the project in serials.

Prioritize the projects.

Develop the funding source projection.

Capital plan review and approval.

Capital budget development & management.

Project executing.

Proper closing of the project, and handing over.

Alderson, W. 1959, Project Planning & Budgeting Cycle, Planning Process

30

2.3.11 Why Capital Planning and Budgeting

One reason for Capital Planning & Budgeting is the sheer magnitude of any capital projects,

especially certain infrastructure improvements and building projects. Much money is at

stake in decisions about these projects, and a country or city needs to make sure that the

decision are the right ones and that the money them spent wisely. Therefore’ providing the

capital infrastructure, facilities and equipment’s needed for public service is among the most

important responsibility of country and city officials. So, capital planning, budgeting and

finance may be defined as a process that has the following steps:

(David M. Lawrence and A. John Vogt, 2007)

2.3.12 Definition and Classification of Capital Expenditure

Capital expenditure is defined in decree through the Local Government. In general terms it

represents expenditure in relation to:

• The acquisition or creation of a new asset.

• The enhancement of existing assets.

2.3.13 Identification of Capital Need

This can involve capital assets management system that identify needs for the renovation or

replacement of existing infrastructure and capital assets, and long term (five to twenty years

or so) strategic or master planning to technology needed to meet or spur development and

growth.

31

2.3.14 Prioritizing Capital Projects and Equipment Request

Prioritization usually occurs in the capital improvement programming process. It considered

one of the main issues that government keep in their vision before proceeding with projects,

especially the urgency and citizen needs. The request of the project should identify the goal

and objectives, which usually raised to higher authority for approval.

2.3.15 Capital improvement Program

This is the heart of capital planning; it involves planning and scheduling major capital needs

for approval, funding and implementation over a future period usually five to six years.

2.3.16 Assessment and Forecast of Final Condition

The government has to seek for the project resources that will be available to finance

the project, that usually affected by both capital need and future annual budget

requirements over same forecast period cover by the capital improvement program.

Some resources for the capital construction fund are:

Income and gains from the investment of capital construction funds

Grants restricted to capital construction projects

Cash transfers in from other fund groups

Issued debt

32

2.3.17 Capital Financing Methods

Major capital projects are often financed by issuing bonds or other forms of dept. other

source of capital financing include, current revenues, capital reserves, impact fees or other

changes to property and grants.

2.3.18 Why do planners need to know about capital budgeting and

finance?

Capital budgeting is a serious process as most small businesses resources are quite limited,

therefore the owner need to devote seriously to the capital budgeting process. Capital

budgeting is the planning of expenditures on capital assets (i.e., assets with a useful life or

returns on which are expected to extend beyond one year). Capital budgeting compares

present operations with a proposed project, or several alternatives based on the costs and

revenues of each option. These comparisons are made using selected financial measurement

tools to help determine the relative value of each. Option, keeping on mind the cost of

business capital. The followings are some of the popular approaches of capital budgeting

which are payback period and net present value methods.

Burstiner, Irving. (1994).

Kyambalesa, Henry. (1994

33

2.3.19 Capital Planning, Resource Allocation and Budgeting

The outcome is a measure of the relative importance of each investment initiative as inputs

to Consolidated Capital Planning and Budgeting decisions. Learn about the challenges of

capital planning and the impact that a streamlined and repeatable process can have on the

value delivered. Capital investment decisions are some of the biggest challenges in

planning. Multiple stakeholders are involved in the decision, from the users of the capital

assets to the management team, the operations team, maintenance team, construction,

engineering planning, etc. There are competing objectives, such as focusing on elements of

sustainability vs. transformation to meet future needs and there may be other considerations

about the environment, safety and security. Decisions have a significant and lasting impact

that can often span years. Long-term capital plans are susceptible to continuous changes, so

the planning phase has to not only prioritize the competing objectives.

Varshney, R.L.; K.L. Maheshwari (2010)

2.3.20 Capital Budgeting from a Local Government Perspective

It is very important to prepare a full analysis and examine the impacts of a capital budget

plan on a local government unit. This analysis includes developing and implementing a

capital budget and visualized its difficulties. This analysis documents a systematic plan for

local government units to follow for the implementation of the capital budget process,

linking it to the government strategic goals, and also describes the various methods for

funding the proposed plan. (Jill Wendorf, 2005)

34

The governments should prepare and adopt a formal capital budget as part of their annual or

bi-annual budget process. The capital budget should be directly linked to, and flow from, the

multi-year capital improvement plan. In many jurisdictions, the first year (or first two years

in a bi-annual budget) of the multi-year capital plan would be adopted by the governing

body. It may be necessary to modify projects approved in the capital plan before adopting

them in a capital budget. Modifications may be necessary based on changes in project scope,

funding requirements, or other issues. If these modifications are material, jurisdictions

should consider the impacts these may have on their multi-year capital and financial plans.

2.3.21 Budget Process

The budget provides an important tool for the control and evaluation of sources and the uses

of resources. Using the accounting system to enact the will of the governing body,

administrators are able to execute and control activities that have been authorized by the

budget and to evaluate financial performance on the basis of comparisons between budgeted

and actual operations. Thus, the budget is implicitly linked to financial accountability and

relates directly to the financial reporting objectives established.

Budgeting is the process of allocating finite resources to the prioritized needs of an

organization. In most cases, for a governmental entity, the budget represents the legal

authority to spend money. Adoption of a budget in the public sector implies that a set of

decisions has been made by the governing board and administrators that culminates in

matching a government's resources with the entity's needs. As such, the budget is a product

of the planning process.

35

The link between financial planning and budget preparation gives the budget document a

unique role in governmental organizations. Budgets in the public arena are often considered

the definitive policy document because an adopted budget represents the financial plan used

by a government to achieve its goals and objectives. When a unit of government legally

adopts a financial plan, the budget has secured the approval of the majority of the governing

board and reflects:

public choices about which goods and services the unit of government will or will not

provide,

the prioritization of activities in which the unit of government will be involved,

The relative influence of various participants and interest groups in the budget

development process, and the governmental unit's plan for acquiring and using its

resources.

2.3.22 Central Government Budget

In August, all the ministries present their final budgets to the Ministry of Finance. Together,

they form the central government budget. Like other Bills, the central government budget

and the Budget Memorandum are forwarded to the Council of State for advice, which is

received in the first week of September. The ministers respond to the advice in writing. The

central government budget and the Budget Memorandum are then printed so that they will

be ready on time. Any amendments necessitated by the Council of State’s advice and the

latest figures are made in the printer’s proofs. The budget is then ready to be presented on

Budget Day.

36

2.3.23 Budget implementation

Once parliament has approved the departmental budgets, the ministries carry out the

policies. Both the ministries and the House of Representatives monitor the implementation

of the budget. The ministries inform the House of the budget’s implementation by means of

memorandums. The most important memorandums are the Spring Memorandum and the

Autumn Memorandum. The Spring Memorandum considers the status of the current budget.

If necessary, measures are proposed to change revenues or expenditures in response to

developments since the budget was prepared. The Minister of Finance sends the Spring

Memorandum together with the first supplementary budgets to the House of

Representatives. The Spring Memorandum is issued no later than 1 June in the current

budget year. The Autumn Memorandum is the final budget memorandum to be sent to the

House of Representatives and the Senate during the budget year. It is issued no later than 1

December. The Autumn Memorandum considers the implementation of the budget since the

adoption of the Budget Memorandum. The budget can be amended if there have been

financial windfalls or setbacks or if policy has been changed.

2.3.24 Government Planning, Budgeting, reporting and evaluation cycle

The processes of planning, budgeting and reporting cycle are very important and to be

defined in proper way because it’s describes the relationship between these processes and

emphasises that the executive is accountable to the relevant elected representative body for

the entire process. All the process above required a regular report at each stage of the

project.

37

Therefore, the government should but in consideration the following reports:

reports on plans and priorities

report of departmental performance

report of the funding and budget cycles

report of the financial monitoring, statements

report of the expenditure management system and related cycles

2.3.25 Factors Affecting Planning and Budgeting the Governmental

Construction Projects

In any government sectors, the management of planning and budgeting facing some

difficulties in running their projects, these difficulties is due to some factors which required

a proper studying before proceeding with any project, even if the project are not related to

their entire management.

Therefore, projects are affected by a multiple of factors which can be external or internal to

the organization responsible for its management and execution. The external or internal

influences are known as the project environment.

The external factors includes, client (customers), consultant, contractor, suppliers,

competitors, politicians and local government, while the internal are includes, organization

management, project team, internal department and stakeholders.

Both of these factors are related to each other, which mean successes of the project are

subjected to resolving of all the factors affecting that project planning and budgeting issues,

on the other hand the team of the project should indicates the sub-factors which represent

the main factor because those sub-factors are the main part of project execution.

Figure 2.3: Strategic Planning & Implementation

Cycle

38

Chapter Three: Research Methodology (Design)

This chapter indicates the methods used to answer research questions. It specifically describes

the research design, population and sampling, instrument, data collection procedures, and data

analysis.

3.1. Background of the Study

Different researches from different parts of the world explored the effect of planning and budget

the construction project in the governmental sector, in researching this field; it is found that there

is little effort applied in Bahrain, and that might happen due to rare knowledge of how to plan for

new construction project and the conflict between the different parts in the higher organization.

The aim of the research is to measure the different type of projects handled by the different

ministries and how the internal organization plan to go ahead with construction.

3.1.1 Research Design

This study is categorized as a descriptive research. It describes data and characteristics about the

population or phenomenon being studied. Describing a situation may provide important

information and that in many situations descriptive information is all that is needed to solve

problems.

Description research is used in this study for describing frequencies, averages and other

statistical calculations. Survey is used in this study to discover answers to research questions.

The purpose of this survey is to get a general opinion on the construction planning and budgeting

system that will be applied in most of governmental sector in the Kingdom. Survey was the best

39

method to be employed in this study as it enables us to gather data about planning and budgeting

the construction project through managers and engineers, which is the main aim of the current

study.

As a mechanism for obtaining information and opinion, self-administered questionnaires have a

number of advantages when compared with other survey methods. Questionnaires are effective

mechanisms for efficient collection of information’s. It permit managers and engineer’s time to

consider their responses carefully without interference from, for example, an interviewer. In

addition, it is possible to provide questionnaires to large numbers of experts in cost-effective

manner. Often, questionnaires are designed so that answers to questions are scored and scores

summed to obtain an overall measure of the attitudes and opinions of the respondent.

3.2 Frame Work for Data Analysis

3.2.1 Study Population and Sampling Procedure

There are approximately 1500 engineers registered in Bahrain society of engineers with different

majorities in engineering fields, such as civil, architectural, electrical, mechanical, chemical and

etc. most of them working in government sectors and some of them in private. Since it is difficult

to include all the engineers and for convenience, the study will focus only on some engineers in

different position at the following ministries:

Ministry of Works

Ministry of Housing

Ministry of Interior

Ministry of Municipalities Affairs and Urban Planning

Private sectors (contractors), to have a clear survey.

40

The table below showing the sample distributed to different ministries:

No. Government Sector N. of Engineers Percentage

1 Ministry of Works 25 22.727

2 Ministry of Housing 20 18.182

3 Ministry of Interior 30 27.273

4 Private Sector 10 9.091

5

Ministry of Municipalities Affairs and

urban Planning

25 22.727

Total 110 100%

3.2.2 Instrumentation

A self-administered questionnaire was used as an instrument to collect information for

the study under consideration. Surveys provide quick, inexpensive, efficient and

accurate means of assessing information about the population, especially when the

information to be gathered is related to peoples' attitudes. Also surveys are considered

quite flexible; especially when the target population is large as it is in this study.Survey

research is used in this study to assess attitudes, perceptions, and opinions of the proper

management to be used in planning and budgeting for the construction projects.

Table 3.1: Questionnaires Distributed

41

A questionnaire was developed for the purpose of this study containing twenty items

measuring attitudes towards construction projects planning and budgeting with a 5-level

Likert Scale ranging from very positive to very negative.

The first section of the questionnaire elicited demographic and self-identified computer

and Internet access information from the participants, and the position level of the

participants. The second section includes20 items designed to measure the perceived

awareness of the projects management and organization group. A Likert scale was used

to elicit participants’ responses on a scale from 5 to 1 (strongly agree to strongly

disagree).

42

Chapter Four: Data Analysis and Results

4.1. Introduction

This chapter presents the statistical analysis of the data collected to answer research

questions. The data collected from the survey was edited, coded and entered in the

computer using the Microsoft excel software.

The chapter is organized as to present the data about the respondents’ characteristics,

the descriptive statistics of the study variables and the answer of each research question

sequentially.

4.2. Paper Distributed

Out of 110 paper sample distributed, total of (84) questionnaires were collected. The

table and chart below showing the percentage and ratio of the sample.

Distrbuted Received

Sample 110 84

Percentage 100% 76.36%

Table 3.2: Ratio of Sample Distributed and Received

43

4.3. Respondent’s Characteristics

The first part of the paper distributed was about self information. The data were

grouped and analyzed according to different factors such as age, gender, position, and

some other information helps to analyzing this study. The table below shows the

distribution of research sample according to its different characteristics.

Characteristics

Frequency Percentage

Gender Male 58 69.1

Female 26 30.9

Total 84 100

Age 25 - 29 25 29.76

30 - 39 30 35.71

40 - 49 18 21.43

50 and above 11 13.09

Total 84 100

Sector Government 74 88.09

Private 10 11.9

Total 84 100

0

50

100

150

Distrbuted Received

Questionnaires

Questionnaires Percentage

Figure 3.1: Ratio of Sample Distributed and Received

44

Using of

computer Yes 84 100

No 0 0

Total 84 100

Access to

Internet Yes 72 85.71

No 12 14.28

Total 84 100

Position Project Manager 7 8.33

Senior Engineer 17 20.23

Site Engineer 29 34.52

Architect 11 13.09

Quantity

Surveyor 6 7.14

Others 14 16.66

Total 84 100

4.4Questionnaires Data Analysis

From the questionnaires distributed, twenty statements (Part B) prepared in Likert scale

which represent the research questions discussed in the chapter one of this study essay.

The following are the analysis of the received samples:

Table 3.3: Respondents Characteristics

45

1) Determining the priority of any construction project is the most important issue

before proceeding with the project.

S. Agree Agree Neutral Disagree S. Disagree Total

Statement (1) 40 35 6 3 0 84

Percentage 47.619 41.667 7.143 3.571 0 100

2) Planning needs of feature requirements, done in probably way in most of the

government projects.

Column1 S. Agree Agree Neutral Disagree S. Disagree Total

Statement (2) 19 41 17 7 0 84

Percentage 22.619 48.81 20.238 8.333 0 100

Table 3.4: Data Analysis Collected for Statement 1

Figure 3.2: Chart for Statement 1


46

3) Most of the government sector, having their own construction project

organization.


Statement (3) 15 33 24 9 3 84

Percentage 17.857 39.286 28.571 10.714 3.571 100


0

20

40

60

80

100

S. Agree Agree Neutral Disagree S.Disagree

Total

Statement (3) Percentage



47

4) There is enough budget issue by government to all ministries to carry out the

project.


Statement (4) 11 23 29 16 5 84

Percentage 13.095 27.381 34.524 19.048 5.952 100

5) The government is capable to customize the project type and citizen needs.


Statement (5) 9 36 26 13 0 84

Percentage 10.714 42.857 30.952 15.476 0 100




48

6) There is no corporation between the different government sectors regarding

construction project planning.


Statement (6) 6 31 29 15 3 84

Percentage 7.143 36.904 34.524 17.857 3.571 100



49

7) Most of the construction projects delay because of government internal

organization.


Statement (7) 16 28 28 12 0 84

Percentage 19.048 33.333 33.333 14.286 0 100



50

8) Considering the infrastructure, before planning of the project is clearly visional

in government projects.


Statement (8) 14 33 27 10 0 84

Percentage 16.667 39.286 32.143 11.905 0 100



51

9) Parliament and Shura Councils effecting the procedures of planning and

budgeting the government projects.


Statement (9) 12 23 37 9 3 84

Percentage 14.286 27.381 44.048 10.714 3.571 100



52

10) Projects planning and budgeting require special teams within the government

organization.


Statement (10) 37 29 12 6 0 84

Percentage 44.048 34.527 14.286 7.143 0 100



53

11) Construction projects planning and budgeting require a special instruments

and technology software’s.

Scale S. Agree Agree Neutral Disagree S. Disagree Total

Statement (11) 26 42 16 0 0 84

Percentage 30.952 50 19.048 0 0 100



54

12) Planning and budgeting of construction projects getting affected by some

political issues.


Statement (12) 12 28 38 4 2 84

Percentage 14.286 33.333 45.238 4.762 2.381 100



0

10

20

30

40

50

60

70

80

90

100




55

13) In construction project many contractors find difficulties to streamline cash

flow by collecting payments quickly from their clients and allocating fund to

the correct job plan as scheduled.


Statement (13) 19 33 25 7 0 84

Percentage 22.619 39.286 29.762 8.333 0 100

14) In Construction project, while execution; there is lots of maintenance works

involved in different phases of construction works.


Statement (14) 8 41 18 17 0 84

Percentage 9.524 48.81 21.429 20.238 0 100




56

17) Creating reports and correct data to the team member is one of the most

critical management functions for any project in government sectors.


Statement (15) 36 33 15 0 0 84

Percentage 42.857 39.286 17.857 0 0 100



57

15) In Construction project, project estimation is very critical function, may need

different adjustments in different time.


Statement (16) 26 37 11 10 0 84

Percentage 30.952 44.048 13.095 11.905 0 100



0

10

20

30

40

50

60

70

80

90

100




58

16) As an efficient project manager, your job is to measure the overall progress of

the project along with the time line and schedule and to track jobs these are

delayed due to unavoidable reasons.


Statement (17) 39 37 8 0 0 84

Percentage 46.429 44.048 9.524 0 0 100

16) In construction project, you need to execute tender and invite bidding to find

right vendor who can provide you competitive rate of material, services and

can execute certain portion of your construction work.


Statement (18) 36 33 15 0 0 84

Percentage 42.857 39.286 17.857 0 0 100




59

17) The contractors dealing with government are capable to carry all types of

construction.


Statement (19) 16 34 14 14 6 84

Percentage 19.048 40.476 16.667 16.667 7.143 100



0

10

20

30

40

50

60

70

80

90

100




60

18) The higher level in the organization supported the created ideas given by

engineers.


Statement (20) 19 32 24 7 2 84

Percentage 22.619 38.095 28.571 8.333 2.381 100



61

Chapter Five: Discussion and Conclusion

Introduction

The first part of the questionnaires was personal information about the sample selected

which consider to be important to answer the first research question, why do we need

planning and budgeting and who is the person involve in doing it.

The second part of the questionnaires consist of (20) statements in a Likert scale which

required to answer the other research problems and to determine how the construction

organization were prepared to do proper planning and budgeting for a given project.

The evaluations of the questionnaires statements have been calculated in five scales

strongly agree, agree, neutral, disagree and strongly disagree. However the result

obtained doesn’t reflect that the entire sample selected understand the meaning of

proper planning and budgeting, and that can be easily found from the personal

information on the first part.

On the other hand the higher level in any organization can encourage their employees to

prepare and list the projects required for construction even if there is no budget

allocated to proceed with.

At the end of this chapter Implication, Limitation of the study and Direction of future

research will be discuss in brief.

62

5.1 Summary and Finding (Respondent’s Characteristics)

With refer to the table in section 4.3 you can visualize and evaluate the respondents

characteristics from different aspects and that may help you to get full information

about the person needed to do a proper planning and budgeting.

5.1.1 Gender

This characteristic has no effect in determining the best employee needed to do a proper

planning and budgeting for any organization, but through my evaluation I found that the

male represent 69% from respondents while the female represent 31% which may show

that male is more effective in construction organization than the female and that might

happen maybe due to the nature work for the male, especially in the site construction

which you can see the male moving to supervise the projects more than the female, and

that keep them very close to the way of construction, proper management planning to

the project under construction and close to the market and the price of materials.

5.1.2 Age

Most of the respondents selected were between 30 and 39 years, which mean they are in

a position of engineer and senior engineer, and 8% of them were a project manager and

the rest was an engineer’s specialist in different field of engineering. This factor is not

important for the person required in construction project planning and budgeting, but

even though the experience is very important to understand the citizen needs and

prioritize the projects accordingly.

63

5.1.3 Usage of Computer and Special Software’s

All of the respondents are using computer with different software’s, but none of them

are using the special software required for good planning and budgeting, so any

organization dealing with construction should give a training to some engineers and

quantity surveyors in the construction management software’s in order to achieve the

objectives for accurate planning and budgeting for their projects.

5.1.4 Types of Projects

All of them are dealing with construction projects from different majorities, designing,

supervision, quantity surveying and maintenance. But they are facing difficulties in

Proper Corporation and communication. And that happen because of a poor

management in that organization, therefore the projects which spouse to be start in the

recent year caused delays for the next year, so they are losing the budget allocated for

this project and they have to put it in the next years plan which might be no enough

finance available to allocate for that project.

5.1.5 Private Sectors

A respondent from private sectors states that the governmental sectors having problems

in planning their projects because of changing the purpose of the projects and because

of delaying in payments.

64

5.2 Statements Evaluation (Discussion)

With refer to the tables and charts in section 4.4, From the questionnaires distributed,

twenty statements (Part B) prepared in Likert scale which represent the research

questions discussed in the chapter one of this study essay. The following are the

evaluation of the data analysis received.

1. Determining the priority of any construction project is the most important issue

before proceeding with the project.

For this statement I found most of the respondents were between strongly agree (40) and

agree (35) and that give a total of (90%) agreeing this statement , which means the

priority of any construction project consider to be an important factor before proceeding.

I agree with them because for most projects, all three parameters—scope, schedule and

cost (resources)—are important. Setting priorities enables the project team to determine

which of the three is most essential. These priorities support scope planning, decision

making, constraint management and plan optimization, negotiating project changes, and

integrated change control.

Therefore, the government sector should always indicate what type of development

needed for the country from wide vision and that can be made through certain process:

1. Identify a problem or deficiency.

2. Explore possible solutions.

3. Develop a scope for the project, which takes into consideration possible environmental

impacts, roadway design issues, and stakeholder concerns.

65

4. Based on the project scope, develop a cost estimate or estimated range.

5. Determine the benefit the project will provide.

6. Compare the costs and benefits of this project with other projects of its type to determine

its order of rank and priority.

2. Planning needs of feature requirements, done in probably way in most of the


For this statement I found (41) respondents agree, (19) strongly agree and (17) neutral,

which means almost (71.5%) agreeing and its reflects that most of the government

sectors having proper planning needs for projects on their organization, but some of

them having lake in part of engineering organization and that might happen because of

improper recruitments for their needs, less or no important of construction in their

organization.

Figure 5.1: Chart of Project Priority Process

66

Therefore, any government organization required to identify the following for their

projects planning:

What do we mean by needs and resources?

Why develop a plan for assessing local needs and resources?

Who should be involved in developing a plan for assessing local needs and resources?

When needs and assets should be identified?

How do you develop a plan for assessing local needs and resources?

3. Most of the government sector, having their own construction project organization.

From this statement I found that (33) respondents agree, (15) strongly agree and (24) are

neutral, which show that most of the government sector dealing with construction having a

complete project construction management in their organization.

On the other hand some organization like the municipality having a variety of engineers

dealing with building permits and some other engineering field which not related to

Figure 5.2: Project Organization Chart

67

construction, even if they have some construction such as landscaping and gardens, they

involve an external consultant to do the full planning and budgeting to their projects, but

most of the government sector like ministry of housing, ministry of works and the authority

of electricity and water having a full engineering organization corporate with each other to

approach their objective such as designing department, supervision department, quantity

surveying department and quality control department. And in my vision any organization

having these groups are not going to find difficulties in planning and budgeting their projects

unless there are some other factors preventing doing that.

4. There is enough budget issue by government to all ministries to carry out the

project.

From this statement I found (29) respondents were neutral, which represent (34.5%), (23)

agreeing and (11) strongly agree. The budget allocated from the government to the different

ministries or authorities are vary and that why some ministries having enough finance to

proceed with their projects while the others may delay some projects to the next year in order

to get enough to proceed with their projects.

The budget process is a critical issue facing all the government sector because the budget

cycle moving through certain procedure which called a capital budgeting. Through my

research I found many government organizations suffering from delaying of approving the

budget allocated for their projects, which keep them delaying most of the activity they

planned for it previously.

68

5. The government is capable to customize the project type and citizen needs.

This statement came up with a result of (36) agree, (26) neutral, (13) disagree, and (9)

strongly agree, which give you an indication that (43%) of the respondents are agree

regarding the ability of the government to customize the citizen needs, but also I found that

(31%) were average and (15.5%) were disagree, which mean there is something weak and

require to be develop.

Through my research there were many complained from the organization themselves about

the difficulties of approaching their idea to the higher authority to prevent from doing and

construction of some projects. For example the citizen needs a housing project while the

government is continuing of construction the apartments.

Figure 5.3: Accountability of Financial Management

69

Therefore, citizen needs is a very important issues in terms of construction for different

requirements such as housing, roads, hospitals, electricity, educations and many other

construction help the people to be relax in their life.

6. There is no corporation between the different government sectors regarding

construction project planning.

From this statement I found most of respondents agree that there is no corporation between

the government sectors regarding the construction project planning (31) with a percentage of

(40%) and percentage of (34%) in average, which mean there is an improper planning during

construction. In this issue we must understand that the process of construction must involves

all the parties required before proceeding with the project, for example you should not start

construction if you don’t have a permit to supply electricity and water to that project, but we

can clearly see some projects finish and take time to provide electricity and water or they

have to wait until the supply is available.

Figure 5.4: Determining Citizen Needs

70

Therefore, all the government sectors should be involve before proceeding with construction,

ministry of finance to allocate the budget, ministry of works to provide all the information

regarding soil condition, road accessibility and drainage connection required, the authority of

electricity and water must approve to supply these services to the project.

All these issues can be Easley done if there is a corporation between the government sectors with

a different ways of communication, letters, internet, telephones and etc.

7. Most of the construction projects delay because of government internal

organization.

From this statement I found (28) respondents agree, (28) considering average and (16) were

strongly agree which can give a percentage of (52%) agree and (33%) in average and that

consider to be a big ratio comparing with the total of respondents collected. If the internal

organization causing a delay to the construction projects it’s mean that the general manager or

the director of that organization are weak in leading the team of his organization or the staff of

that organization are not capable to handle the job they have.

In this way, the government organization should search for section or team causing this delay

because it will affect the construction from different points, cost, quality, and t ime required to

complete the project. On the other hand the internal organization also should provide the proper

atmosphere for their employee to complete their tasks and that may solve through the quality

performance which it is A numerical measurement of the performance of an organization,

division, or process. Quality of performance can be assessed through measurements of physical

products, statistical sampling of the output of processes, or through surveys of purchasers of

http://www.businessdictionary.com/definition/performance.html

http://www.businessdictionary.com/definition/organization.html

http://www.businessdictionary.com/definition/division.html

http://www.businessdictionary.com/definition/measurement.html

http://www.businessdictionary.com/definition/product.html

http://www.businessdictionary.com/definition/sampling.html

http://www.businessdictionary.com/definition/output.html

http://www.businessdictionary.com/definition/process.html

http://www.businessdictionary.com/definition/survey.html

http://www.businessdictionary.com/definition/purchaser.html

71

goods or services, also referred to as quality of service. Therefore, the organization should

improve the employee performance by giving them training in how to deal with projects.

8. Considering the infrastructure, before planning of the project is clearly visional in


From this statement I found (33) agree, (27) neutral and (14) were strongly agree, that indicates

that most of the respondents with a percentage of (56%) were agreeing that there is a

consideration of providing the infrastructure before planning of any project.

In my opinion I’s a good result, but also we have to know that there are many projects in the

kingdom has been modified due to improper planning for the infrastructure before proceeding

with the project, especially in road construction and development, many underground services

has been modified many times because of poor planning from beginning.

Therefore, considering the infrastructure for the government projects having many advantages in

planning and budgeting such as insure that all services are provided for citizens existing

building, new construction and future projects and also help the government to reduce the budget

allocated for modifying the existing services.

http://www.businessdictionary.com/definition/goods.html

http://www.businessdictionary.com/definition/services.html

http://www.businessdictionary.com/definition/quality-of-service-QoS.html

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9. Parliament and Shura councils affecting the procedures of planning and budgeting the


For this statement the respondents agree were (23), neutral were (37) and strongly agree was

(12), which mean that (42%) were agreeing that the parliament and Shura council are effecting

procedure of projects planning in the kingdom.

It’s happen because the capital budgeting will not be pass to the different ministries and

authorities without their approval which may cause delaying in tendering the different projects

due to the unavailable funds.

In 2013, the Parliament rejected the Capital budgeting issue by ministry of finance to pass for the

years of 2013 and 2014 due to some personal needs like increasing employee and retired salary

and because of that the overall budget being delay including the budget allocate for project to be

constructed and even delay the payments of some running projects under construction.

Figure 5.5: Infrastructure Development Process

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According to that the government should separate the budget allocate for projects in order to

prevent delaying of handing over and to make sure that the contractor are not going to stop

working due to not paying their contract payments.

10. Projects planning and budgeting require special teams within the government

organization.

Out of (84) respondents collected a total of (66) between strongly agree and agree to this

statement, which represent (79%) from the total. That mean any organization dealing with

construction they should have special team for planning and budgeting within their organization.

Therefore, The financial manager can best fulfill his role and have the most beneficial effect on a

facility planning project as an active member of the planning team from the onset of the project.

In addition to representing a realistic financial planning perspective to the project's development,

the financial manager can, very early in the process, begin to determine and refine various costs

associated with facility planning and construction. The role is a vital and active one from the first

planning meeting through development, financing, construction and activation.

These requirement are available in some of government sectors, while the other required to

improve their organization by providing the expert teams to ensure the best projects planning and

budgeting and to prevent poor estimation for budget required for different construction.

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11. Construction projects planning and budgeting require a special instruments and

technology software’s.

For this statements a total of (68) respondents were between strongly agree and agree, and (16)

were neutral, and that show percentage of (81%) were supporting to have a special instruments

and technology software’s during all construction phases. Most of the government sector in the

kingdom is using these type of technology, but on the other hand there are some still following

the old techniques in organization management for their projects planning.

In my vision I agree that using the advanced technology will help the entire organization to get

True job costs, more efficient payroll and accounting, Better management of construction

projects, Single-entry integrated system, All-inclusive features, Strong training and technical

support.

Figure 5.6: Project Software’s

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12. Planning and budgeting of construction projects getting affected by some political

issues.

There were (38) respondents neutral, (28) agree and (12) strongly agree, which can give an equal

percentage of (47%) between agreeing and neutral for this statement. Sometimes the political

issues might prevent the government sectors from proceeding with some projects and also

sometimes the government will reject construction some other projects based on their deep

vision.

Some of the governmental projects in the Kingdom of Bahrain has been affected by the problems

happened in 2011, which may ordered to transfer the budget allocated for specified project to use

for some other type of projects required to provide safe and secure atmosphere to the citizen and

therefore, the budget might go for example to ministry of Interior to use for security or to

Bahrain Defense Force to use for protect Bahrain from any external entry.

Therefore, the higher authority has the rights to proceed or to stop any projects if they feel it will

be the right decision. Also the entire organization of any government sector has to revise their

plan and rescheduled again in order to be ready when ever it’s required.

13. In construction project many contractors find difficulties to streamline cash flow by

collecting payments quickly from their clients and allocating fund to the correct job

plan as scheduled.

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From this statement I found that (33) respondents were agree, (25) were neutral and (19) were

strongly agree and that bring us to the difficulties that contractor are facing in collecting their

payments from the clients (Government Sectors).

The result received and through my research I found that more than (62%) respondents agreeing

that many contractors not receiving their payments for construction project on time, it’s getting

delay several times due to some reasons which you can’t blame the contractors if the projects

delay even if they submitted the performance pond and sign the bank grantee.

Sometimes the internal organization of the government sector doesn’t have a finance directorate

in their organization to issue the payments after it’s signed from the authorized, so the contractor

has to wait until the invoice certified from ministry of finance to get his payment, and that might

take long procedures.

This problem are affecting the construction planning, because the project will be delay in

handing over (completion date) and also next time the contractor might not trust the government

even if there is an agreement sign contain all the specification and rules.

14. In Construction project, while execution; there is lots of maintenance works involved

in different phases of construction works.

From this statement the highest respondents agree with almost (54%) and the other between

(21%) neutral and (20%) disagree, which consider a good relation ratio due to the type of

construction and the location of construction, for example some construction might be extension

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to an existing structure which required a lot of modification and maintenance to meet the new

requirements.

And some of construction designed without surveying the ground services which may require

reroute underground services for new construction. The most and more costly construction is the

one which require a structure maintenance and development.

Therefore, in this type of construction you should investigate and make over view survey in

order to prevent any restriction might delay the project plan and caused extra cost to the budget

allocate for the project during executing.

Also, during the initial stage the planning management should allocate contingency amount or a

provisional sum for future requirements that may need during executing phase.

Figure 5.7: Rerouting of Underground Services

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15. In Construction project, project estimation is very critical function, may need different

adjustments in different time.

For this statement a (66) respondents were between strongly agree and agree and the rest were

neutral, which mean (79%) agree that the cost estimation is the most critical issues required to be

adjust in different time before starting construction and also after that.

This matter is very important require a special team to look after it. And the general manager of

the project should take the responsibility to control the project cost from different view by

checking and reviewing the bill of quantity for the project, specification and the drawing issue

for construction.

In this case the management should always seek for the better manager who can take this

responsibility and always searching for the experts to do it. Sometimes you need to have a

special program for project budgeting or get help for external consultant specialist in quantity

surveying.

Figure 5.8: Project BOQ Cost

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So, in order to achieve the best cost estimate the government should keep in consideration the

different type of cost estimation required such as:

Construction Cost

Manufacturing Cost

Software Development Cost

Resource Exploration Cost

Facility Operation Cost

Facility Maintenance & Repair Cost

16. As an efficient project manager, your job is to measure the overall progress of the

project along with the time line and schedule and to track jobs these are delayed due to

unavoidable reasons.

For this statement I found (75%) of the respondents were agree and the rest were neutral, it’s an

excellent ratio, because any government organization must seek for the best general manager

who views the construction from different vision which keep the construction move according to

the plan fixed.

The professional project manager for the construction always seeks for the best project team in

different majorities, whom help him to carry the different task during construction with proper

communication and decision making.

http://en.wikipedia.org/wiki/Manufacturing_cost

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Therefore, a construction project manager may perform the following tasks:

Interpret plans and estimate costs and quantities of materials needed

Plan construction methods and procedures

Coordinate the supply of labor and materials

Supervise construction sites and direct site managers and subcontractors to make sure

standards of building performance, quality, cost schedules and safety are maintained

Study building contract documents and negotiate with building owners and subcontractors

Control preparation of cost estimates and the documentation for contract bids

Control payment to subcontractors by valuation of completed works

Make sure that building regulations, standards and by-laws are enforced in building

operations

Consult with architects, engineers and other technical workers to make sure that design

intentions are met.

17. Creating report and presenting correct data to the team member is one of the critical

management functions for any construction project in government sectors.

Most of the respondents with a percentage of (82%) were strongly agree and agree to this

statement, which indicates that the government sectors management has to consider about this

issue especially wile executing the project. Creating the reports with a correct date will help the

project management to achieve their goals and objective during construction phases.

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On the other hand construction report might take a different type, construction progress report

which can be daily and monthly report, site instruction report, variation report, minutes of

meeting report and etc. usually a written report is the most common used in government, but also

with the use of different communication technology the report might be send through email or

fax, so the receiving and action will be take faster. The report also either to be prepared by site

engineer or by the contractor.

Figure 5.9: Project Reporting Type

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18. In government construction project, you need to execute tender and invite bidding to

find right vendor who can provide you competitive rate of material, services and can

execute certain portion of your construction work.

For this statement a (66) respondents were between strongly agree and agree and the rest were

neutral, which mean (79%) agree that any project to be construct required the right way of

tendering. In kingdom of Bahrain most of the government sectors are sending the projects to be

construct to the tender board, which they have the categories of contractor suitable for this type

of construction.

Some construction projects are tender in government sectors internally, by getting the list of

contractor and categories from ministry of works which has the approved list of contractor in

different majorities. But it’s actually wrong way according to the construction regulation, and

this concept might be used for small construction work only or through the term contract which

is commonly used.

19. The contractors dealing with government are capable to carry all types of construction.

(59%) from the respondents were between strongly agree and agree, while the others were

between neutral, disagree and strongly disagree, which mean some of the contractors having the

man power to execute the projects and some others are not.

In this subject the government sectors organization should have a team to check the full profile

of the company from different aspects, man power, machinery, engineers and foreman’s, bank

statement, cash flow and etc.

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20. The higher level in the government organization supported the created ideas given by

engineers.

Through my research and the note received I found the result were average between the

engineers, most of them were agree and the rest between neutral and disagree. And that happen

usually, where you can find employee happy in their position because they have a good

administration where they get encouragement and support from their management for any issues

they raised while the other not.

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5.3. Conclusion

From the research findings, we can conclude the following:

The personal information (characteristics), are not affecting when selecting the employees

required for the construction projects planning and budgeting, it’s found that the employee above

30 years are the most respondents to this research.

Some of government sectors having a full engineering management to deal with construction

projects, and some others having only a small section.

Most of the construction projects in government sectors getting delays because of the delay of

payments to contractor or changing happen during executing stage.

There is no corporation between the different government sectors regarding different issues

related to some construction field.

Some government sectors are suffering from the low budget allocated for the construction

project they need to handle.

Difficulties from the government to prioritize the projects for construction, especially the on

related to the citizen needs.

Some government employee’s (engineers), facing difficulties in dealing with their management

mangers during construction project phases.

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5.4 Limitation of the Study

This study is not exempt from limitations. Since I’m going to deal with governmental

sectors, some hidden information might be hidden due to many reasons that

organization have such as political, confidences, and etc.

Therefore, I will try to collect most of the information from different resources through

the government ministries and others. On the other hand through my research I will add

some information from the private sectors those dealing with the government in the

construction projects field.

5.5 Recommendation and further studies

The government sectors should have an expert teams to prepare the “government work program”

for at least three years indicating the priority of the project, period required to finish and budget

to be allocated for this project in the programmed years.

The government sectors dealing with construction projects should have a full organization

management staff from different majorities of engineers, quality and quantity staff, finance and

controlling. That should happen by corporation with human resource directorate in their

organization or connecting with CPA. To fill position for different vacancy.

The Government sectors must communicate with each other’s in relation with construction

project in order to solve the different matter that might effecting a capital projects and to avoid

delaying, by using the different ways of communication.

The government sectors must always taking right direction in tendering their projects, which

should be made through tender board.

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Parliament and Shura council should understand that the overall budget (capital budget) is not

only consist of what they recommend for citizen, but also include huge amount to be paid for

something else’s.

The planning management in any government organization should support the idea created by

their employee’s and they should train their employees all the latest courses and new technology

related to their field especially the new software’s used for perfect planning and budgeting.

87

REFERENCES

(www.cioarchives.ca.gov/IT - January 1997)

Stallman, (Nov. 2005) Applied Software Project Management

Peurifoy, R.L., (1970) Construction Planning Equipment and Method

Alderson, W. 1959, Project Planning & Budgeting Cycle, Planning Process

(www1.eere.energy.gov/.../reconstructionguide/pre_planning_programmi)

(Stanley K. Hens haw, Unintended Pregnancy in the United States)

(www.spireconsultinggroup.com)

(http://www.osc.state.ny.us/localgov/tools.htm)

(http://www.gfoa.org/committees/economic)

(David M. Lawrence and A. John Vogt, 2007)

(Vicki Elmer, University of California at Berkeley1 Department of City and

Regional Planning)

(www.decisionlens.com, 2009)

(Jill Wendorf, 2005)

(http://www.government.nl/government)

Hal pin, Daniel. Construction Management. Hoboken, NJ: Wiley, 2006

(Stanger, Steve, Douglas D. Grasberg, (11-1999) Design-Build Award Method

http://www.cioarchives.ca.gov/IT%20-%20January%201997

http://www.decisionlens.com/

http://www.government.nl/government

88

TABLE OF CONTENTS

List of Figures ………………………………………………………………1X

List of Tables ………………………………………………………………..1X

Chapter One: Introduction

1.1. Introduction ………………………………………………………….....02

1.1.1. Background of the Study ……………………………………………..02

1.1.2. Construction projects planning …………………………………….... 05

1.1.3. The Budgeting Process ……………………………………………….06

1.1.4. Governmental Projects in Bahrain …………………………………....07

1.1.5. Ministry of Works ………………………………………………….....07

1.1.6. Ministry of Finance …………………………………………………...09

1.2. Research Problem(s) ……………………………………………………10

1.3. Objectives of the Study …………………………………………………11

1.4. Research Questions and Hypotheses …………...……………………….12

1.5. Significance of the Study..……………………………………………… 12

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1.6. Scope of the Study…….…………………………………………………13

1.7. Definition of Terms ……………………………………………...............14

Chapter Two: Literature Review

2.1. Organization Staff and their Qualification………………………. ……...16

2.2. The External and Internal Factors………………………………... ……...17

2.3. Previous Studies………….. ……………………………………………...18

2.3.1. Definition of Construction Planning and Budgeting Management….…18

2.3.2. Why is the Planning and Budgeting Management for Construction …..19

2.3.3 Strategic Project Planning…………………………………………….…20

2.3.4. Process Development & Improvement ……………………………….. 20

2.3.5. Cost Management ……………….... …………………………………..21

2.3.6. Capital Planning and Budgeting ...……………………………………..22

2.3.7. Benefit of Capital Planning & Budgeting ………………….. …………23

2.3.8. Features of Capital Planning and Budgeting …………………………..24

2.3.9. Overall Process for Capital Planning and Budgeting ………………….24

2.3.10. Specific Steps Required for Capital Planning and Budgeting ………..25

90

2.3.11.Why Capital Planning and Budgeting …….…………………………. 25

2.3.12. Definition and Classification of Capital Expenditure ………………...26

2.3.13. Identification of Capital Need ………………………………………...26

2.3.14. Prioritizing Capital Projects and Equipment Request ...………………27

2.3.15. Capital improvement Program ………………………………………..27

2.3.16. Assessment and Forecast of Final Condition …………………………27

2.3.17. Capital Financing Methods …………………………………………...28

2.3.18. Why planners need to Know about Capital planning Budgeting ……. 28

2.3.19. Capital Planning, Resource Allocation and Budgeting ………………29

2.3.20. Capital Budgeting from a Local Government Perspective ….………..29

2.3.21. Budget Process ………………………………………………………..30

2.3.22. Central Government Budget ………………………………………….31

2.3.23. Budget Implementation ……………………………………………….32

2.3.24. Government Planning, Budgeting, Reporting and Evaluation Cycle ...32

2.3.25. Factors Affecting Planning & Budgeting the Governmental Projects..33

Chapter Three: Research Methodology (Design)

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3.1. Background of the Study ………………………………………………...34

3.1.1. Research Design …….…………………………………………………34

3.2. Frame Work for Data Analysis…………... ……………………………...35

3.2.1 Study Population and Sampling Procedure …………………………….35

3.2.2. Instrumentation ………………………………………………………...35

Chapter Four: Data Analysis and Results

4.1. Introduction ………………………………………………………………38

4.2. Paper Distributed ………………………………………………………...38

4.3. Respondents Characteristics ……………………………………………..39

4.4. Questionnaires Data Analysis ……………………………………………40

Chapter Five: Discussing & Conclusion

5. Introduction..………………………………………………………………57

5.1. Respondents Characteristics ……………………………………………..58

5.1..1 Gender ………………………………………………………………….58

5.1.2. Age ……………………………………………………………………..58

5.1.3. Usage of Computer and other Software’s ……………………………...59

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5.1.4. Type of Projects ………………………………………………………..59

5.1.5. Private Sectors ………………………………………………………...59

5.2. Statements Evaluation ……………………………………………………60

5.3. Conclusion…………. ……………………………………………………80

5.4. Limitation of the Study …………………………………………………..81

5.5. Recommendation and Further Studies .…………………………………..81

References ……………………………………………………………………83

Documents

determining the needs of planning and budgeting management for