The relationship between capital budgeting methods and performance of water services boards in Kenya
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Date
2009-11Author
Munyao, Geoffrey M
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
One management practice which has been widely adopted by corporations is capital budgeting. The
current study sought to establish the relationship between capital budgeting methods and performance of
Water Services Boards in Kenya. The study was guided by the following specific objectives:- to identify the
capital budgeting techniques employed by the Water Services Boards in Kenya; to establish the factors
that influence the choice of the capital budgeting techniques used by the Water Services Boards in Kenya;
and to establish the relationship between capital budgeting techniques and organizational performance ..
A descriptive design was used to identity the relationship between capital budgeting techniques and
performance in Water Services Boards in Kenya, whose number stood at 8 as at June 2008. A semistructured
questionnaire was used to collect primary data from the respondents. Since all the Water
Services Boards have websites and reliable internet connection, the researcher sent the questionnaires to
the respondents outside Nairobi by electronic mail. The Boards whose Head offices are located in Nairobi
received their questionnaires by hand delivery (See Appendix III). Statistical Package for Social Sciences
(SPSS) was used as an aid in the analysis. For purposes of the current study, the data pertaining to the
profile of respondents was analyzed by employing content analysis. In order to determine the relationship
between capital budgeting techniques and performance, regression analysis was used.
Findings of the study indicated that the capital budgeting techniques used by Water Services Boards in
Kenya include Net Present Value, Internal Rate of Return, Profitability Index, Average Rate of Return and
Payback Period. The findings further showed that the Factors that Influence the choice of capital
budgeting techniques include: - Cost of debt to the Water Service Board, either from public or private
sources; Internal Rate of Return; Average cost of capital for its stakeholders; Average rate of return on
equity invested by the Water Services Boards; and Risk associated with the project. The findings also
pointed at a positive relationship between usage of capital budgeting techniques and organizational
performance. Improved access to funding to undertake projects and informed decision making were cited
by the respondents as being the major benefits of adoption of capital budgeting techniques.
Citation
Masters Of Business Administration (MBA) DegreePublisher
University of Nairobi School of Business
Description
A Management Research Project Report Submitted in Partial Fulfilment of
the Requirements for the Degree of Master of Business Administration
(MBA), School of Business, University of Nairobi