ASSESSMENT OF STRATEGIES FOR MAXIMIZING PROFITABILITY IN SMALL AND MEDIUM CONSTRUCTION FIRMS IN ABUJA

Abstract

Maximization of profit is a very vital objective for a firm to remain in business and to withstand competition from firms operating in similar industry. It is a major pre-requisite for long-term survival and success of a firm while it is a key pre-condition for the achievement of other financial goals of a business entity. The purpose of this research is to assess profit maximisation strategies used by small and medium-sized construction firms in Abuja in order to improve profit margins and avoid firm collapse. For the purpose of this research, a well-structured questionnaire was used to gather information from 224 professionals working in construction firms. The questionnaire was administered to two hundred and twenty-four (224) respondents, and one hundred and fifty-five (155) were retrieved, representing a response rate of 69%. The analysis of the data was carried out with the use of percentages and the mean item score. The study revealed supply costs (MIS = 4.34) as the most important factor affecting the profit maximisation of the construction firm. The result of the analysis of the measures of profitability of construction firms revealed investment (MIS = 4.36) as the most effective measure of profitability for these firms. Time (MIS = 4.52) was revealed as the most important challenge faced by contractors that affected the realisation of profit maximization. However, it was determined that minimising waste, setting profitable goals, and improving productivity skills were the most effective strategies for increasing profitability in Abuja's small and medium-sized construction firms. The major recommendation from the study is that the construction companies should put in place an effective waste management strategy so as to maximise profitability. The management of the construction company should set profit margin goals at the beginning of every year in order to improve the overall profitability of the company