Procurement internal control systems and cost-effectiveness in force account construction projects

Abstract

Public organisations consistently face challenges in achieving cost-effectiveness in construction projects, and this issue remains a global concern. In response to this issue, the present study examines the role of procurement internal control systems on cost-effectiveness in force account (FA) construction projects in local government authorities (LGAs). A cross-sectional research design with a sample size of 318 respondents from selected LGAs in Dodoma, Tanzania was used. Data were collected using a structured questionnaire and analysed using covariance-based structural equation modelling. The findings revealed that attributes of procurement internal control systems that include stock control (β = 0.165, p < 0.015), record keeping (β = 0.355, p < 0.001), authorisation process (β = 0.233, p < 0.002), have significant and positive relationships with cost-effectiveness in FA construction projects. The study’s findings failed to confirm the significant link between the segregation of duties and the cost-effectiveness in FA construction projects (β = 0.094, p < 0.095). These results imply that among the considered procurement internal control systems; segregation of duties does not significantly matter in explaining cost-effectiveness in FA construction projects in LGAs. The study was limited by its geographical context. Therefore, the generalisation of findings should be done with caution because the study relied on the evidence from FA construction projects in primary schools within LGAs in Tanzania. This study provides valuable practical insights for procurement practitioners and members of the FA committee in the public sector. It guides the adherence to the procurement internal control systems to enhance the cost-effectiveness in construction projects.

Download

PDF

Keywords

Construction projects
,
Cost-effectiveness
,
Force account
,
Local government
,
Internal control systems

References

  1. Abiodun, O. S. (2020). Auditing and internal control mechanisms: an instrument of accountability in Ekiti state, Nigeria. African Journal of Accounting and Financial Research, 4(1), 1-13.
  2. Adi, Y.B, and Rohman, A. (2023). Determinants of Fraud Prevention of Procurement of Goods and Services in Government Agency. JAK (Journal Akuntansi) Kajian Ilmiah Akuntansi 10(2), 234–55. https://doi.org/10.30656/jak.v10i2.5498
  3. Alavipour, S. R., & Arditi, D. (2018). Optimizing financing cost in construction projects with fixed project duration. Journal of Construction Engineering and Management, 144(4), 04018012. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001451
  4. Albtoush, A. M. F, Doh, S. I., Abdul Rahman, A. R. B., & Albtoush, J. F. A. A. (2020). Factors affecting the cost management in construction projects. International Journal of Civil Engineering and Technology, 11(1), 105-111.
  5. Allred, S. B., & Ross-Davis, A. (2011). The drop-off and pick-up method: An approach to reduce nonresponse bias in natural resource surveys. Small-Scale Forestry, 10(3), 305–318. https://doi.org/10.1007/s11842-010-9150-y
  6. Aloyce, D., Monko, R. J., & Luvara, V. G. (2024). Critical audit indicators for assessing Construction Projects Performance (CPP) at pre-contract stage in Tanzania. International Journal of Construction Management, 24(5), 530-539. https://doi.org/10.1080/15623599.2023.2179682
  7. Ashika, M., & Monisha, V. (2019). Material management in construction projects using an inventory management system. IRE Journals, 3(5), 52-58.
  8. Azman, M. A., Chuweni, N. N., Muhamad Halil, F., Ku Azir, K. M. A., Lee, B. L., Juhari, F. N., & Skitmore, M. (2024). The impact of the change in institutional regulation on construction productivity: Firm-level evidence in a developing economy. Construction Management and Economics, 42(3), 199-214. https://doi.org/10.1080/01446193.2023.2227286
  9. Bajomo, M., Ogbeyemi, A., & Zhang, W. (2022). A systems dynamics approach to the management of material procurement for the Engineering, Procurement and Construction industry. International Journal of Production Economics, 244, 108390. https://doi.org/10.1016/j.ijpe.2021.108390
  10. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
  11. Beste, T., & Klakegg, O. J. (2022). Strategic change towards cost-efficient public construction projects. International Journal of Project Management, 40(4), 372-384. https://doi.org/10.1016/j.ijproman.2022.04.006
  12. Bhagat, G., & Jha, K. N. (2023). Corruption risks in public construction. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 15(2), 04522062. https://doi.org/10.1061/JLADAH.LADR-936
  13. Brammer S, Jackson G, Matten D. 2012. Corporate social responsibility and institutional theory: new perspectives on private governance. Socio-Economic Review, 10, 3–28.
  14. Campbell JL. 2007. Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967
  15. Cao, F., & Wang, C. (2023). Corruption, accountability, and discretion of procurement officials: An analysis of selection Preferences for Performance-based Evaluation Criteria (PBEC) in PPP procurement. PLOS One, 18(3), e0282542. https://doi.org/10.1371/journal.pone.0282542
  16. Chadee, A., Martin, H., Gallage, S., & Rathnayake, U. (2023). Reducing cost overrun in public housing projects: a simplified reference class forecast for small island developing states. Buildings, 13(4), 998. https://doi.org/10.3390/buildings13040998
  17. Changalima, I. A., Ismail, I. J., & Mchopa, A. D. (2024). Effects of supplier selection and supplier monitoring on public procurement efficiency in Tanzania: a cost-reduction perspective. Vilakshan-XIMB Journal of Management, 21(1), 55-65. https://doi.org/10.1108/xjm-04-2022-0077
  18. Changalima, I. A., Mushi, G. O., & Mwaiseje, S. S. (2021). Procurement planning as a strategic tool for public procurement effectiveness: Experience from selected public procuring entities in Dodoma city, Tanzania. Journal of Public Procurement, 21(1), 37-52. https://doi.org/10.1108/JOPP-05-2020-0047
  19. Chen, Q., Jin, Z., Xia, B., Wu, P., & Skitmore, M. (2016). Time and cost performance of design-build projects. Journal of Construction Engineering and Management, 142(2), 04015074. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001056
  20. Chiu, T., & Jans, M. (2019). Process mining of event logs: A case study evaluating internal control effectiveness. Accounting Horizons, 33(3), 141-156. https://doi.org/10.2308/acch-52458
  21. Dacin MT. 1997. Isomorphism in context: the power and prescription of institutional norms. Academy of Management Journal, 40, 46–81.
  22. Di Maggio PJ, Powell WW. (1983). The iron cage revisited: institutional isomorphism and collective rationality in organisational fields. American Sociological Review, 48(2), 147–160
  23. Dolnicar, S., Grün, B., & Leisch, F. (2016). Increasing sample size compensates for data problems in segmentation studies. Journal of Business Research, 69(2), 992-999. https://doi.org/10.1016/j.jbusres.2015.09.004
  24. Durdyev, S., & Hosseini, M. R. (2020). Causes of delays on construction projects: a comprehensive list. International Journal of Managing Projects in Business, 13(1), 20-46. https://doi.org/10.1108/IJMPB-09-2018-0178
  25. Ejoh, N., & Ejom, P. (2014). The impact of internal control activities on the financial performance of tertiary institutions in Nigeria. Journal of Economics and Sustainable Development, 5(16), 133-143.
  26. Engelbert, A., Kaltenborn, M., & Reit-Born, N. A. (2016). Effective corruption control: Supplier remedies in public procurement in Kenya, Uganda and Tanzania-A comparative analysis of mechanisms and their implementation (Vol. 68). Logos Verlag Berlin GmbH.
  27. Fazil, M. W., Lee, C. K., & Tamyez, P. F. M. (2021). Cost estimation performance in the Construction Projects: A systematic review and Future Directions. International Journal of Industrial Management, 11, 217-234.
  28. Ferrer, P. S.S, Galvão, G. D. A., & de Carvalho, M. M. (2020). Tensions between compliance, internal controls and ethics in the domain of project governance. International Journal of Managing Projects in Business, 13(4), 845-865. https://doi.org/10.1108/IJMPB-07-2019-0171
  29. Firouzi, A., Yang, W., & Li, C. Q. (2016). Prediction of the total cost of a construction project with dependent cost items. Journal of Construction Engineering and Management, 142(12), 04016072. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001194
  30. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
  31. Frontoni, E., Marinelli, F., Rosetti, R., & Zingaretti, P. (2020). Optimal stock control and procurement by reusing obsolescences in manufacturing. Computers & Industrial Engineering, 148, 106697. https://doi.org/10.1016/j.cie.2020.106697
  32. Frumkin P, Galaskiewicz J. 2004. Institutional isomorphism and public sector organisations. Journal of Public Administration Research Theory, 14(3), 283–307
  33. Gadisa, B., & Zhou, H. (2021). Exploring influential factors leading to the poor performance of public construction project in Ethiopia using structural equation modelling. Engineering, Construction and Architectural Management, 28(6), 1683-1712. https://doi.org/10.1108/ECAM-12-2019-0689
  34. Hair Jr, J. F., Howard, M. C., & Nitzl, C. (2020). Assessing measurement model quality in PLS-SEM using confirmatory composite analysis. Journal of Business Research, 109, 101-110. https://doi.org/10.1016/j.jbusres.2019.11.069
  35. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2009). Multivariate data analysis (7th ed.). Prentice-Hall.
  36. Hashem M. Mehany, M. S., Bashettiyavar, G., Esmaeili, B., & Gad, G. (2018). Claims and project performance between traditional and alternative project delivery methods. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 10(3), 04518017. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000266
  37. Hooper D, Coughlan J., & Mullen M.R. (2008) Structural equation modelling: guidelines for determining model fit. The Electronic Journal of Business Research Methods, 6(1), 53–60.
  38. Israel, B. (2023). The impact of clients’ procurement challenges on the substance goals of roads construction projects in Songwe, Tanzania. International Journal of Construction Management, 23(12), 2144-2150. https://doi.org/10.1080/15623599.2022.2045861
  39. Jensen, M.C. & Meckling, W.H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
  40. Kazungu, I., & Kubenea, H. (2023). Customer satisfaction as a mediator of service facility and word of mouth in higher learning institutions. Journal of Applied Research in Higher Education, 15(5), 1649-1663.https://doi.org/10.1108/JARHE-04-2022-0128
  41. Khanzadi, M., Sheikhkhoshkar, M., & Banihashemi, S. (2020). BIM applications toward key performance indicators of construction projects in Iran. International Journal of Construction Management, 20(4), 305-320. https://doi.org/10.1080/15623599.2018.1484852
  42. Khoza, J. D., & Haupt, T. C. (2021). Measuring health and safety performance of construction projects in South Africa. In IOP Conference Series: Earth and Environmental Science (Vol. 654, No. 1, p. 012031). IOP Publishing
  43. Kusi-Sarpong, S., Mubarik, M. S., Khan, S. A., Brown, S., & Mubarak, M. F. (2022). Intellectual capital, blockchain-driven supply chain and sustainable production: Role of supply chain mapping. Technological Forecasting and Social Change, 175, 121331. https://doi.org/10.1016/j.techfore.2021.121331
  44. Lill, P. A., Wald, A., & Gleich, R. (2020). Agility and the role of project—Internal control systems for innovation project performance. International Journal of Innovation Management, 24(07), 2050064. https://doi.org/10.1142/S1363919620500644
  45. Lindhard, S., & Larsen, J. K. (2016). Identifying the key process factors affecting project performance. Engineering, Construction and Architectural Management, 23(5), 657-673. https://doi.org/10.1108/ECAM-08-2015-0123
  46. Makoye, M., Mlinga, R. S., & Ndanshau, M. O. (2023). Impact of macroeconomic factors on the performance of construction industry in Tanzania. International Journal of Construction Management, 23(15), 2625-2636. https://doi.org/10.1080/15623599.2022.2084259
  47. Matto, M. C. (2022). Records management and performance of procurement management units in Tanzania: a case study. Records Management Journal, 32(1), 75-95. https://doi.org/10.1108/RMJ-05-2021-0018
  48. Matto, M. C., Ame, A. M., & Nsimbila, P. M. (2021). Influence of contract management on value for money procurement in Tanzania. International Journal of Procurement Management, 14(6), 724-741.
  49. Mchopa, A. (2015). Integrating contract management practices to achieve value for money in Tanzanian public procurement: evidence from selected procuring organisations in Moshi municipality. Journal of Public Procurement, 15(2), 129–149.
  50. Mohamed, B. M., Rasheli, G. A., & Mwagike, L. R. (2018). Marginal effects of factors influencing procurement records management: A survey of selected procuring entities in Tanzania. International Journal of Social and Administrative Sciences, 3(1), 22-34.
  51. Muhwezi, M., Mutebi, H., Mayanja, S. S., Tukamuhabwa, B., Namagembe, S., & Kalema, R. (2023). Information integration, procurement internal controls, material and purchasing procedure standardisation and procurement performance in humanitarian organisations. Journal of Humanitarian Logistics and Supply Chain Management, 13(4), 410-432. https://doi.org/10.1108/JHLSCM-11-2021-0115
  52. Muntu, D., Setyawati, R., Riantini, L. S., & Ichsan, M. (2021). Effect of human resources management and advances to improve construction project performance. Physics and Chemistry of the Earth, Parts A/B/C, 122, 103000.
  53. Musarat, M. A., Alaloul, W. S., & Liew, M. S. (2021). Impact of inflation rate on construction projects budget: A review. Ain Shams Engineering Journal, 12(1), 407-414. https://doi.org/10.1016/j.asej.2020.04.009
  54. Mushi, G. O., Ismail, I. J., & Mchopa, A. D. (2024). The influence of procurement skills on the cross-functional coordination in public procurement: evidence from Tanzania. Cogent Social Sciences, 10(1), 2324972. https://doi.org/10.1080/23311886.2024.2324972
  55. Mwaiseje, S. S., Mchopa, A. D., Panga, F. P., & Nkuhi, M. S. (2024). Exploring the nexus between procurement contract administration and quality attainment of force account construction projects in Tanzania. Cogent Engineering, 11(1), 2432516. https://doi.org/10.1080/23311916.2024.2432516
  56. Namukasa, J. (2017). Records management and procurement performance: A case of NAADS program in the central region of Uganda. Records Management Journal, 27(3), 256-274.
  57. National Audit Office of Tanzania (NAOT) (2019). The Annual General Report of the Controller and Auditor General on Audit of the Local Government Authorities for the Financial Year 2018/2019. NAOT, Dodoma.
  58. National Audit Office of Tanzania (NAOT) (2021). The Annual General Report of the Controller and Auditor General on Audit of the Local Government Authorities for the Financial Year 2020/2021. NAOT, Dodoma.
  59. Nawaz, A., & Guribie, F. L. (2024). Impacts of institutional isomorphism on the adoption of social procurement in the Chinese construction industry. Construction Innovation, 24(3), 846-862. https://doi.org/10.1108/CI-02-2022-0035
  60. Nduhura, T., Nakalanzi, B., Ssempebwa, B., Cristiana, T., Wilcky, B., & Muhairwe, B. (2022). Internal Control Systems and Procurement Effectiveness in Public Entities in Uganda: A case of Uganda Human Rights Commission. International Journal of Academic Management Science Research (IJAMSR), 6(9), 173-189.
  61. Ngari, G. M. (2017). The effect of internal controls on the financial performance of microfinance institutions in Kenya. International Academic Journal of Economics and Finance, 2(3), 112-140.
  62. Nguyen, T. S., & Mohamed, S. (2021). Mediation Effect of Stakeholder Management between Stakeholder Characteristics and Project Performance. Journal of Engineering, Project & Production Management, 11(2), 102-117.
  63. Niazi, G. A., & Painting, N. (2017). Significant factors causing cost overruns in the construction industry in Afghanistan. Procedia Engineering, 182, 510-517. https://doi.org/10.1016/j.proeng.2017.03.145
  64. Njoka, B. K., & Gikonyo, N. (2023). Influence of approval processes on performance of capital projects in energy-based state corporations in Kenya. International Academic Journal of Human Resource and Business Administration, 4(3), 378-387. https://iajournals.org/articles/iajhrba_v4_i3_378_387.pdf
  65. Noor, S., Tajik, O., & Golzar, J. (2022). Simple random sampling. International Journal of Education & Language Studies, 1(2), 78-82. https://doi.org/10.22034/ijels.2022.162982
  66. Obi, L. I., Arif, M., Awuzie, B., Islam, R., Gupta, A. D., & Walton, R. (2021). Critical success factors for cost management in public-housing projects. Construction Innovation, 21(4), 625-647. https://doi.org/10.1108/CI-10-2020-0166
  67. Ochelle, C. A., Muturi, W., & Atambo, W. (2017). Effect of inventory control methods on the performance of procurement function in sugar manufacturing firm in western Kenya. International Journal of Social Sciences and Information Technology, 3(2), 13-27.
  68. Panda, B., & Leepsa, N. M. (2017). Agency theory: Review of theory and evidence on problems and perspectives. Indian journal of corporate governance, 10(1), 74-95. https://doi.org/10.1177/0974686217701467
  69. Paul, B., Tondihal, S., & Das, B. B. (2021). Safety stock in inventory management and wastage analysis at construction sites. In Recent Trends in Civil Engineering: Select Proceedings of TMSF 2019 (pp. 509-517). Springer Singapore.
  70. Podsakoff, P.M., Mac Kenzie, S.B., Lee, J.Y. and Podsakoff, N.P. (2003). Common method biases in behavioral research: a critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879-903.
  71. PPRA. (2020). Annual Performance Evaluation Report for the Financial Year 2019/20. Public Procurement Regulatory Authority. Dodoma, Tanzania.
  72. PPRA. (2021). Annual Performance Evaluation Report for the Financial Year 2020/21. Public Procurement Regulatory Authority. Dodoma, Tanzania.
  73. PPRA. (2022). Annual Performance Evaluation Report for the Financial Year 2021/22. Public Procurement Regulatory Authority. Dodoma, Tanzania.
  74. Primanda, P. P., & Harahap, S. N. (2019). Analysis of Internal Control of Procurement of Government (Case Study on at XYZ University). In Asia Pacific Business and Economics Conference (APBEC 2018) (pp. 87-93). Atlantis Press.
  75. Rattini, V. (2023). Worker autonomy and performance: Evidence from a real‐effort experiment. Journal of Economics & Management Strategy, 32(2), 300-327. https://doi.org/10.1111/jems.12511
  76. Said, H., Badru, B. B., & Shahid, M. (2011). Confirmatory factor analysis (CFA) for testing validity and reliability instrument in the study of education. Australian Journal of Basic and Applied Sciences, 5(12), 1098-1103.
  77. Satheesh, S. A., Verweij, S., van Meerkerk, I., Busscher, T., & Arts, J. (2023). The impact of boundary spanning by public managers on collaboration and infrastructure project performance. Public Performance & Management Review, 46(2), 418-444. https://doi.org/10.1080/15309576.2022.2137212
  78. Sayed, M., Abdel-Hamid, M., & El-Dash, K. (2023). Improving cost estimation in construction projects. International Journal of Construction Management, 23(1), 135-143.
  79. Scott, W. R. (2004). Institutional theory: Contributing to a theoretical research program. In K. G. Smith & M. A. Hitt (Eds.), Great minds in management: The process of theory development (pp. 460–484). Oxford University Press.
  80. Setia, M. S. (2016). Methodology series module 3: Cross-sectional studies. Indian Journal of Dermatology, 61(3), 261-264.
  81. Sinesilassie, E. G., Tripathi, K. K., Tabish, S. Z. S., & Jha, K. N. (2019). Modeling success factors for public construction projects with the SEM approach: Engineer’s perspective. Engineering, Construction and Architectural Management, 26(10), 2410-2431. https://doi.org/10.1108/ECAM-04-2018-0162
  82. Tembo, C. K., Muleya, F., & Kanyemba, A. (2024). An appraisal of cost management techniques used in the construction industry. International Journal of Construction Management, 24(1), 10-18. https://doi.org/10.1080/15623599.2022.2132355
  83. Tumuhairwe, R., & Ahimbisibwe, A. (2016). Procurement records compliance, effective risk management and records management performance: evidence from Ugandan public procuring and disposing entities. Records Management Journal, 26(1), 83-101.
  84. United Republic of Tanzania (2021). Revenue and Expenditure Estimates Report for the Financial Year 2022/2023. President’s Office – Regional Administration and Local Government, Government Printers.
  85. United Republic of Tanzania (2022). Revenue and Expenditure Estimates Report for the Financial Year 2022/2023. President’s Office – Regional Administration and Local Government, Government Printers.
  86. United Republic of Tanzania (2023). Public Procurement Act of 2023. Government Printers.
  87. Winata, L. E., & Gultom, Y. M. (2024). The effects of governance on performance: the case of Public–Private Partnership (PPP) toll roads in Indonesia. International Journal of Construction Management, 24(13), 1398-1406.
  88. Winge, S., Albrechtsen, E., & Arnesen, J. (2019). A comparative analysis of safety management and safety performance in twelve construction projects. Journal of Safety Research, 71, 139-152. https://doi.org/10.1016/j.jsr.2019.09.015
  89. Yamane, T. (1967), Statistics: An Introductory Analysis, 2nd Edition. Harper and Row, New York.
  90. Zaman, U., Florez-Perez, L., Khwaja, M. G., Abbasi, S., & Qureshi, M. G. (2021). Exploring the critical nexus between authoritarian leadership, project team member’s silence and multi-dimensional success in a state-owned mega construction project. International Journal of Project Management, 39(8), 873-886. https://doi.org/10.1016/j.ijproman.2021.10.007
DOI: https://doi.org/10.58548/2025abmj31.3752
Submitted:
Published: June 12, 2025