Inventory Management Practices and Project Performance of Selected Construction Companies in Nairobi City County, Kenya

Abstract

Proper inventory management has a significant effect on project performance. Construction companies play a major role in setting up and completing projects that contribute to the overall growth of an economy. Over the past years, the construction companies in Nairobi have been experiencing performance-related challenges in their projects. At times, inventory costs run beyond the estimates, which eventually results in losses for the firms. Some of the large construction companies have many projects with fixed prices based on the contracts, and they sometimes bear the risk of cost overruns. The companies sometimes experience interrupted operations because the inventory runs out of stock. However, most of them have insufficient inventory management approaches. It leads to a delay in finishing projects, and they incur more costs than their estimates during budgeting. The study's primary goal was to analyse Nairobi's performance and inventory management in selected construction firms. The study had three objectives, and they include; to determine the relationship between the inventory management controls and the performance of selected construction companies in Nairobi, Kenya, to establish the effect of inventory management costs incurred on the project performance of selected construction companies in Nairobi, Kenya and to analyse the effect of inventory management systems on project performance of selected construction companies in Nairobi, Kenya. It is hinged on four theories and they include Lean theory, transaction cost economic theory, and theory of constraints and the theory of organizational performance. The study utilized a descriptive research design. The target population included three construction companies in Nairobi; Seyani Bros Ltd, Intex Ltd and Epco Builders Ltd. 686 employees were drawn from Seyani Bros Ltd, Intex Ltd and Epco Builders Ltd specifically working in procurement, finance and warehouse departments. A sample size of 206 was obtained through stratified random sampling technique. Using selfadministered questionnaires, primary data was obtained and used to establish the sample size. Tables' graphs and also charts were used in the analysis based on the data collected. From the findings, the objectives had a positive and significant effect on the project performance of selected construction companies. The increase is significant given that the p-value is .046. This implies that inventory management controls have a significant and positive effect on the project performance of construction companies. On inventory management cost it had 0.00 p value which means a unit increase in inventory cost management results in an improvement in performance holding other factors constant. The increase is significant given that the p value is .026. This means that inventory management systems have significant and positive effect on project performance. The recommendations are based on the research outcomes and that construction companies should direct their efforts and this will help the companies in Improving their profit margins.