The impact of e-procurement on the profitability of listed construction firms

Project Abstract

E-procurement has become an increasingly popular method for managing procurement processes in various industries, including the construction sector. This research aims to investigate the impact of e-procurement on the profitability of listed construction firms. The study focuses on how the implementation of e-procurement systems influences cost savings, process efficiency, supplier management, and overall operational performance within construction companies. Through a comprehensive review of existing literature, this research establishes a theoretical framework that highlights the potential benefits of e-procurement in enhancing the financial performance of construction firms. The theoretical framework is supported by empirical evidence gathered from financial data and performance metrics of listed construction companies that have adopted e-procurement systems. The research employs a mixed-methods approach, combining quantitative analysis of financial data with qualitative insights from interviews with procurement managers and executives from selected construction firms. By analyzing financial indicators such as cost reduction, profit margins, and return on investment, the study evaluates the direct impact of e-procurement on the profitability of construction companies. Furthermore, the qualitative data obtained through interviews provide a deeper understanding of the challenges and opportunities associated with e-procurement implementation in the construction industry. Factors such as procurement process efficiency, supplier relationship management, and technology integration are explored to identify critical success factors for leveraging e-procurement to drive profitability in construction firms. The findings of this research contribute to the existing body of knowledge on e-procurement effectiveness in the construction sector and offer practical insights for industry practitioners and policymakers. The results highlight the significant role that e-procurement can play in improving the financial performance of construction firms by streamlining procurement processes, reducing costs, and enhancing strategic sourcing capabilities. Overall, this research provides a comprehensive analysis of how e-procurement influences the profitability of listed construction firms, shedding light on the mechanisms through which digital procurement technologies can create value and drive competitive advantage in the construction industry.

Project Overview

<p> <b></b></p><p><b>INTRODUCTION</b></p><p><b><b>1.1 &nbsp; &nbsp; &nbsp; Background to the study</b></b></p><p><b><b></b></b></p><b><b><p>Electronic procurement (e-procurement) has been<br>labelled as a tool that can improve competence and performance while enabling<br>simplicity and automation (Phillips &amp; Piotrowicz, 2006; Hendrickson &amp;<br>Mahnke, 2005). Davila <i>et al </i>(2002) explained e-procurement as any<br>technology that facilitates the acquisition of goods and services by a private<br>or public organization over the internet, a view that is substantiated by<br>Parida &amp; Parida, (2005).</p><p>&nbsp;The e-procurement value chain comprises indent<br>management, e-tendering, e-auctioning, vendor management, catalogue management<br>and contract management. Indent management is the workflow involved in the<br>preparation of tenders.</p><p>Profitability is<br>defined as the operating income divided by sales, as a measure of<br>profitability. Whether you are recording profitability for the past period or<br>projecting profitability for the coming period, measuring profitability is the<br>most important measure of the success of the business. A business that is not<br>profitable cannot survive. Increasing profitability is one of the most<br>important tasks of the business managers. Managers constantly look for ways to<br>change the business to improve profitability.</p><p>Supply Chain Managers are to<br>take into account the effects of IT and know how to make a commercial case for<br>electronic procurement. Today,<br>businesses are increasingly demanding in terms of decisions to be taken with<br>regard to e-procurement and to manage the huge number of influences and<br>pressures. However, in spite of huge<br>stress on the benefits associated with e-procurement, research on the topic is<br>lacking with regard to the integration theory of strategic choice. </p><p>The present procurement<br>process consists of traditional manual procedures that are slow and even slower<br>systematic process of purchasing entries (Hawking et al., 2004)</p><p>Most developing and developed countries<br>governments would like to implement public e-procurement technology in such a<br>way, as to enhance transparency and accountability in business procurement<br>processes. The basic principle of the procurement is straightforward: to<br>acquire the right item at the right time with the right price. The process<br>should be open, objective and transparent. However, corruption in public<br>procurement processes leads to problems such as lack of accountability and<br>transparency, lack of political control and auditing, weak professionalization<br>of the bureaucracy and many more.</p><p>&nbsp;To overcome these concerns relating to<br>corruption in the government procurement, information and communication<br>technology (ICT) can play an important role to reduce corruption by promoting<br>good governance (Bertot,Jaeger &amp; Grimes, 2010), enhancing relationships<br>between government employees and citizens tracking activities, monitoring and<br>controlling the government employees and reducing potentiality of corrupt<br>behaviours. ICT enabled technology especially public e-procurement plays an<br>important role for minimizing the risk of corruption in public procurement<br>processes (OECD, 2008).</p><p><b>1.2 </b><b>&nbsp; &nbsp; &nbsp; Statement<br>of the problem</b></p><p><b></b></p><b><p>Just<br>like every other concept in business and management E-procurement is also faced<br>with some problem as regards making goods and materials available to the<br>organizations at when needed which includes:</p><p>The challenges involved with e-<br>procurement. The most important of these bothers on how best to employ the use<br>of IT in this era of communication revolution to enhance the procurement<br>process.</p><p>Poor skill and in<br>professionalism of staffs<br>of an organization need to acquire the necessary skills that can enable them to<br>operate effectively and efficiently while using the new e-procurement system if<br>staff is not adequately trained, they may not be able to own the e-procurement<br>system and this may contribute to failure.</p><p>The success of<br>e-procurement also depends on communication to the users the organization<br>adopting an e-procurement system must be able to communicate this information<br>to the users distorted communication of information may lead to<br>failure of the system.</p><p>Behavioural uncertainty<br>arises because web retailers (suppliers) have the chance to behave in an<br>opportunistic manner by taking advantage of the distant and impersonal nature<br>of e-commerce in this context e -procurement and the buyer’s inability to<br>monitor adequately all transactions it is important for organizations to ensure that<br>all the perceived risks are handled properly to ensure success of the<br>e-procurement project</p><p><b>1.3 </b><b>&nbsp; Objective of the study</b></p><p><b></b></p><b><p>The<br>main objective of the study the impact of E-procurement on the profitability of<br>listed construction firms, other specific objectives includes to:</p><p>i. &nbsp; &nbsp; &nbsp;To determine the importance of e-procurement<br>on the profitability of listed construction firms in Nigeria. </p><p>ii. &nbsp; &nbsp;To find out the effect of e-procurement staff<br>training on the profitability of listed construction firms in Nigeria.</p><p>iii.To<br>examine the impact of e-procurement facility maintenance on the profitability<br>of listed consumer firms in Nigeria.</p><p>iv. To<br>identify the behavior (willingness/unwillingness) of employees to adopt<br>e-procurement in listed construction firms in Nigeria.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </p><p><b>1.4 &nbsp; &nbsp; &nbsp; Research hypotheses</b></p><p><b></b></p><b><p>In<br>order to achieve the objective, the following research Hypotheses are<br>formulated and assessed:</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>i. &nbsp; &nbsp; H0:<br>E-procurement adoption has no significance on profitability in construction<br>firms in Nigeria</p><p>&nbsp; &nbsp; &nbsp; <br>ii. &nbsp; &nbsp; Hi: E- procurement adoption has<br>significance on profitability of consumers firm in Nigeria.</p><p><b>1.5 &nbsp; &nbsp; &nbsp; Scope of the study</b></p><p><b></b></p><b><p>This<br>study is restricted to Construction <br>companies in Kaduna. it also<br>focuses on the E-procurement and its impact on productivity and<br>it covers a period of (2009-2014) The study will also be limited to the subject<br>matter The study aimed to provide a complete and analysis of the importance of<br>e-Procurement and Supply Chain Management Integration, private sector<br>perspective in Nigeria through a theoretical framework developed. Therefore,<br>the first step of the research was to undertake a complete study of all factors<br>relevant with the subject matter that guided the experiential examination of<br>e-procurement implementation on listed construction firms in Nigeria.</p><p><b>1.6 &nbsp; &nbsp; Significant of the study</b></p><p><b></b></p><b><p>The study will be of<br>benefit to construction firms as it can be used to get more knowledge on<br>factors affecting the use of E-Procurement. The knowledge will also be used by<br>such firms to use E-Procurement to reduce cost and increase profits. The<br>research will be of benefits to Scholars interested in conducting research in<br>e-Procurement and related areas as a source of reference. The policy makers on<br>Procurement in both the private and public sectors will find this study useful<br>in policy formulation.</p><p>This<br>study intends to explore the practical significance of e-procurement in<br>reference to corporate organizations in economic growth and bringing more<br>employment opportunities for the nation, has motivated the researcher to<br>explore the importance of e-procurement and integration with the supply chain<br>management of the private and public sector in Nigeria.</p><p>The<br>study will also provide the public with firsthand information and knowledge on<br>e-procurement.</p></b></b></b></b></b></b></b> <br><p></p>