AN APPRAISAL OF BUDGETING AS A TOOL FOR EFFECTIVE CONTROL IN PUBLIC SECTOR. A CASE STUDY OF POWER HOLDING COMPANY OF NIGERIA

CHAPTER ONE: Introduction

1.0     INTRODUCTION

Increasing competition is continually pushing businesses towards more efficient processes, and slimmer margins. Highly capitalized industries have to ensure that their resources are used most effectively. Yet at the same time, businesses must adjust to rapidly changing customer requirements and supply chain conditions. The key to achieving operational excellence,  therefore, is in the effective and flexible management of resources, and this means optimizing and scheduling people, processes, vehicles, equipment, and materials so that utilization is maximized while business goals are met.

Rowden (1995) define resources management as the process of using a company's resources in the most efficient way possible. These resources can include tangible resources such as goods and equipment, financial resources, and labor resources such as employees. Resource management can include ideas such as making sure one has enough physical resources for one's business, but not an overabundance so that products won't get used, or making sure that people are assigned to tasks that will keep them busy and not have too much downtime.

The wealth of any organization is to a very great extent determined by its human resources. The place and value of human effort as a resource for any organizational productivity, efficiency and effectiveness in operation cannot be over emphasized.  This capacity building developing and maintaining well trained, skilled experienced and quality human resources that will carry out the various task of the organization becomes an issue of importance.

One of the major constraints to organizational development is lack of adequate and effective managed human resources. It was not surprising therefore when the third national Development Plan of the Osuji 1975 – 1981 as aptly documented by Zahradeen (1980) echoed that successful implementation of a development plan either at organizational level, or national Level depends not only on the availability of financial and other capital input, but more importantly on the adequacy of well trained, and managed human resource in various occupation.

Ugbana (1986), most of the organizations both public and private are beginning to realize the significance of material management. In most organizational balance sheet, it would be seen that the materials carries the lion share of the total expenditure representing about seventy percent (70%) of the organizational resources while cash represent twenty percent (20%) and other forms of the organizational expenses carried ten (10%). But amazingly it is found that most organizations takes good care of cash by providing it with high security than materials irrespective of its highest share of organizational resources. 

This should not be so; materials which have the lion share of the organizational resources should be provided with adequate security and should be managed properly by competent and efficient personnel (Ammer 1996). At the wake of 20th century many organizations had recognized the role of materials and most material activities were carried out by autonomous department such as purchasing, warehousing, stock control, and distribution which at the same time was creating problems.

In Nigeria there has been series of changes in the managerial capabilities and operations towards financial management with the recent years, the noticeable changes are complex. Eminent Nigerians of various caliber have dealt with the failure trend to financial management of enterprises in Nigeria from deferent perspectives, for example, the banking industry has experienced problem of various types such as fraud, mismanagement of funds which leads to poor overall performance. There and other problems formed the basis for inadequacies in financial management.

Some analyst has classified these causes in a member of ways as factors militating against proper financial management and progress in privately owned enterprises in Nigeria.

As development proceeds and the structure and organization of the economy become increasingly complex, the failure of financial management assures increased complexity. As many factors have been identified it will enable the researcher to ask how and why these causes have surfaced. What are the conditions for proper financial management

It is against this background that the researcher investigates the role of resources management on organizational development.

1.0.1  Brief Historical Background of Power Holding Company of Nigeria    (PHCN) Plc.

Electric Power Development in Nigeria started towards the closing year of the last century when the first generation plant was installed in the city of Lagos in 1898 from this date onwards and until 1950 the pattern of electricity development was set up at various towns, some of them by the Federal Government the Jurisdiction of the public works department and some by the Native Authority and one or two large Municipal Authorities.

Electricity Corporation of Nigeria 1950 in order to integrate power development and make it effective the Government passed the Electricity Corporations of Nigeria ordinance No. 15 of 1950.  This ordinance brought under one control, all the electricity undertakings which were under the public departments and all those undertakings which were under Native Authority or municipal ownership and control. The Electricity Corporation of Nigeria, usually referred to as ECN, then became the statutory body responsible for generation, transmission, and distribution and sales of electricity to all consumers and customers in Nigeria.

          Niger Dams Authority

The Niger Dams Authority was established by an Act of parliament in 1962. The Authority was responsible for the construction and maintenance of Dams and other works on the River Niger and elsewhere generating electricity by means of water power improving navigation and promoting fisheries and irrigations construction of the Kainji Dam which began in march 1964 was completed on schedule in Dec 1968.

          Nigeria Electric Power Authority   

In September 1969 the Federal military Government decide to merge the Electricity corporation of Nigeria and the Niger Dams Authority into a Single body. A year later a Canadian firm of consultants “Shawment Lurruted” was appointed to look into the technical details of the merger. The report was submitted on November, 1971 by Decree No. 24 of 27th June 1972 (which become effective from 1 April, 12972).

The Electricity Corporation of Nigeria (ECN) and Niger Dam Authority (NDA) were merged to become the National Electric Power Authority (NEPA).

The actual merger did not take place until 6th January 1973 when a General manager was appointed. The decree stipulates that the authority is to develop an d maintain an efficient, coordinated and economical system of electricity supply for all parts of the federation.

Prior to privatization programmes that was introduced during the regime of former President Chief Olusegun Obsanjo the company was privatized and subsequently, the named was changed to Power Holding Company of Nigeria Plc. 

1.0            STATEMENT OF THE PROBLEM

The challenge in most organizations has posed a threat on the realization of its development and the achievement of it’s set objectives. This is as a result of fundamental issues of inadequate and improper acquisition, utilization and maintenance of its human resource.

The under utilization of human Resource in the PHCN  has seriously led the organization into a mess because human factor is not properly managed. Mismanagement is another serious problem facing our organization today and has reduced it to nothing as people are no longer kin with their work nor ready to own up to vital Resources in the organization.

Both public and private organizations are usually faced with problems of managing their material resources effectively starting from the point of procurement to stores, issuance to user departments and finally the finished goods. These material resources are scarce and should be utilized properly for proper assimilation.

The factors that contributed or that are responsible for the failure of different companies have different problems. Financial resource management is neglected and has made most organizations to loose a substantial part of their fund through these enterprises because of Fraudulent act, Indiscriminate financing, Poor management, Lack of zealousness and experienced personnel and Inability to utilized its financial potentials etc

The poor quality and low quantity of product have revealed that the quality of Human and material resource put in place in organizations are not up to expectations and has thereby reduced the company productivity.

1.3     OBJECTIVE OF THE STUDY

The objective of this study is to assess the role of Resources management on organizational development. The specific objectives are:

1.                 To identify the need of developing employee programme in an organization.

2.                 To identify the impact of material resource management on organizational development.

3.                 To identify Identifying the causes of inadequacies in  financial resource management

4.                 To identify and ascertain some of the problems poised by materials management in an organziation

5.                 To examine the problem of developing employee productivity for efficiency.

1.4     SIGNIFICANCE OF THE STUDY        

The significance of the study brings out the need for an organization to constantly develop means of managing resources for organizational development.

The importance aspect of the study includes the following:

a.                 It will assist managers to know the need for human resource training and development and ensure that the right numbers of skilled/trained manpower are available for employment at the right time for all levels in the organization.

b.                 The study, will contribution positively at the rate at which, how resource can be effectively utilized and how it can bring about high productivity in the organization.

c.                  Students aspiring to be a material executive in the future see this study as an opportunity to fully investigate into the field of human, material and financial resource management to see the challenges therein.

d.                 It also hopes that the study will assist future researchers of resources management and how it can leads to organizational development.

1.5     STATEMENT OF HYPOTHESIS

For the purpose of this study, the following hypothesis is formulated:-

Ho:    Resource management does not play a significant role in organizational development.

Hi:     Resource management plays a significant role in organizational development.

1.6            SCOPE AND LIMITATIONS OF THE STUDY

The study is to assess the role of resource management on organizational development. The study will be restricted to Power Holding Company of Nigeria plc.  Man, material, money and machines constitute the resources of an organization. This study will not cover all the resources of PHCN and as such it will be limited to Human, Material and financial resources.

Data were collected and used based on records gotten from the organization and it only covered records on past years as relevant information which were suppose to be gotten based on recent and current events were not given due to problems arising in the organization in form of break down in machineries, mismanagement, fraud etc.

Other materials are from text books, journals, periodicals, internet browsing etc will serve as the secondary source of data for the research study.

The scope of the study has limited the research work and in any research undertake it is usually associated with some constraints. Some of the constraints of this research work include the following:

a.                 Financial constraint: this is considered to be the first constraint faced by the researcher.  This hindered students from getting all the needed data for this research work. This really did not help matters looking at the very fact that as a student, there is always limited fund at ones disposal which formed part of those factors that discouraged the researcher to go further than this. This extent in getting all this needed data from this research work. A typical example is the fund for going to different places to get information buying of related literature text books that are not available in the school library.

b.                 Available data: in no small measure, incomplete and inaccurate data also provide a lot of difficulty in carrying out this research work. As a matter of fact it is because most of the senior staff were either too busy running their official responsibility that made them hardly available to give the researcher the needed time to gather information or they were not just willing to do that, though some did cooperate just like most senior staff.

c.                  Time constraint: this was the biggest constraint faced by the researcher because combing rigorous drilling of the institution i.e. lectures, assignments (both individual and group), tests etc. and carrying out the research work made it virtually impossible to dedicate all the time needed to carry out this research work.

1.7     DEFINITION OF TERMS

In order to avoid any form of ambiguity as regards to the terms used in this research work, the following are given optional definition:

-Human Resource Planning (HRP): This is the process of getting the right number of qualified people into the right job at the right time.

Productivity: productivity is the measure of how well resources are brought together in organizations and utilized for accomplishing a set of results. Productivity is reaching the highest level of performance with the least expenditure of resources.

Organization: this is the process of dividing work into convenient tasks or duties or grouping such duties in the formal posts delegation of authority to each post and approving qualified staff to be responsible that the work is carried out as planned.

Motivation: motivation is the term used to describe those processes both instructive and rational by which people seek to satisfy the basic desires, perceived needs and personal goals which trigger human behaviour.

Forecasting: is the process of estimating the future number of people required and the skills and competences they will need.

Material Management: This is defined as the grouping under one head all or some of the activities involved in the organization and use of materials employed from the need stage up to the storage of finished goods.

Purchasing: Purchasing is defined as the activity directed to securing by legal means, the materials suppliers and equipment required in the operation of an enterprise.

Sourcing:  This is referred to the investigation and evaluation of sources of supply and suppliers.

Negotiation: Is a process of planning, receiving and analyzing used by both buyer and seller to arrive at an acceptable agreement through common understanding.

Expediting: It is a process of ensuring that goods are promptly delivered to the right place and at the right time.

Purchasing Requisition: It is a form usually prepared when a department or stores need materials to be purchased.

Issue: Issue is the withdrawal of goods and handover of some of user backed with authorized documents.

Quality Control: Is a process whereby goods and services are examined to ensure that they conform to predetermined standards.

·        Obsolescence: These are materials for which there is no demand either because of the presence of a better substitute or they are out of use or fashion.

Stocktaking: This is the complete process of verifying the quality balance of the entire stock hold in the store

Mission: a statement of an organization over riding purpose or vision for the organization usually expressed in general terms, but tends to suffuse the organization culture.

Objective: an objective is the end point of a management program wherever stated in general or specific terms.

Planning: can be defined as the act of setting and selecting goals or objectives in relation to the strategies, policies and procedures for achieving the goals and objectives.

 Manpower Planning: is concerned with developing a systematic procedure for achieving an organizations objective through the acquisition, utilization, maintenance and development of the human resource required presently and in the future.

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