Financial Planning Practices and Performance of the Constituency Development Fund; a Case of Borabu Constituency, Nyamira County, Kenya
Journal Title: International Journal of Business and Management Invention - Year 2018, Vol 7, Issue 6
Abstract
The Constituency Development Fund (CDF) was implemented in 2003 to address development challenges of unbalanced development in Kenya. However, studies indicate that up to 40% of projects funded by the Fund have failed, with up to 54% failure in Borabu Constituency alone. Whilst financial planning practices have previously been shown to influence performance, the relationship between cash budgeting, cash flow projection and capital budgeting practices and the performance of Borabu CDF is unknown. The main purpose of this study was to establish the relationship between financial planning practices and performance of Borabu CDF, and specifically to; establish the role of cash budgeting process in the management of CDF-funded projects in Borabu Constituency; determine the relationship between cash flow projection and the performance of CDF-funded projects in Borabu Constituency; and to evaluate the influence of capital budgeting on the management of CDF-funded projects in Borabu Constituency. A correlational research design was used for the study. The target population was the 270 Project Management Committee (PMC) members of the 45 on-going projects in the constituency. Random sampling technique was used to select a sample of 162 PMC members while questionnaires were used to collect data. Test-retest coefficient of 0.8 on five CDF funded projects in the adjacent North Mugirango constituency and content validity index (CVI) of 0.72 were used to measure reliability and validity of the questionnaire respectively. Multiple regression analyses were used to analyse the data. The study reveals a positive significant correlation (R = 0.532, p = 0.00) between financial planning practices and performance of the Fund implying that a unit increase in financial planning practices leads to a corresponding increase of 0.532 in performance of CDF. It was also revealed that a unit increase in cash budgeting leads to a 39.4% significant increase in performance of CDF (β = 0.394, p = 0.047); a unit increase in cash flow projection leads to a 33.8% significant increase in performance of CDF (β = 0.338, p = 0.01); and a unit increase in capital budgeting leads to a 41.2% increase in performance of CDF (β = 0.412, p = 0.000). It is concluded that financial planning practices are significant in influencing performance of CDF funded projects.
Authors and Affiliations
Robert Okari Maosa, Patrick Nyatete Kenyanya
Keywords
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