Assessment of financial and non-financial performance indicators used by small and medium construction firms in Nigeria

Abstract

Measurement of performance has become an important component of any organisation that desire to remain competitive in the current dynamic business environment. It is necessary for tracking, forecasting and controlling important variables in order to evaluate whether a business is meeting its objectives or not. This paper investigated the use of financial and non-financial performance indicators among managers and owners of small and medium size construction firms in Nigeria. Adopting a quantitative approach, data was collected from a sample of 139 owners/CEOs and top managers of Nigerian construction small and medium enterprises (CSMEs) through a cross sectional questionnaire survey. Both financial and non-financial data were collected subjectively. The data obtained was analyzed with the aid of SPSS software. Finding shows that, there is significant awareness among owners and top managers of CSMEs on the importance of both financial and non-financial measures in assessing firm performances. The most preferable financial measures of interest used by the CSMEs are: return on investments, general profit, growth in revenue and growth in assets while quality of products and services, product and service delivery performance, client’s general satisfaction, employee competency and client retention were the most adopted non-financial indicators used for evaluating performance among CSMEs in the study. The study however revealed that the level of both financial and non-financial performance was moderate among the CSMEs. It was concluded from the study, that although there is an appreciable understanding of the significance of combining both financial and non-financial measures in assessing performance among Nigerian CSMEs, there is however, need for more improvement in the general performance of CSMEs in the construction sector.