Project Financing, Implementation and Control Practice: A Study on Selected Business Organizations in Ethiopia

Abstract

Once a project is selected after going through rigorous appraisal process, promoters must also decide the way in which the capital projects will be financed. Project delay is common problem especially in developing countries like Ethiopia mainly because of problems in the implementation and control. The main objective of this study is to examine how capital projects in Ethiopia are financed, implemented and monitored. To achieve this objective, primary data was collected using self administered questionnaire from 109 large private and public owned business organizations found in Addis Ababa, Ethiopia. The finding of the survey indicated that most projects are financed using either internal sources or borrowing from banks. The use of stock and bond to finance capital projects is very much limited because of absence of capital market. Further, the main reason for project delay includes lack of foreign exchange and not properly making project design at the beginning. Most firms use traditional methods to schedule, monitor and control capital projects. Modern project scheduling and monitoring techniques such as CPM and PERT are rarely used in Ethiopian firms.