Asset Management and Financial Performance of Construction Companies in Greater Kampala Metropolitan Area

Abstract

The financial performance of construction companies is increasingly dependent on effective asset management practices that enhance operational efficiency, reduce project delays, and strengthen long-term sustainability. Despite the construction sector’s significant contribution to Uganda’s economic development, firms within the Greater Kampala Metropolitan Area continue to experience weak profitability, high debt ratios, and cost overruns, partly attributed to poor asset management systems. This study examined the effect of asset management on the financial performance of construction companies in the region, focusing on three key dimensions: asset register accessibility, repair and maintenance scheduling, and budget tracking and forecasting. Guided by the Dynamic Capabilities Theory, the study adopted a cross-sectional survey design and collected data from 191 construction companies selected through proportionate sampling. Structured questionnaires were used to gather quantitative data, and instrument validity and reliability were confirmed through expert review and Cronbach’s Alpha. Data were analyzed using descriptive statistics, correlation analysis, and hierarchical regression. Findings revealed that all three asset management practices were positively associated with financial performance. Asset register accessibility showed a moderate significant relationship with financial performance (r = .313, p < .01), while repair and maintenance scheduling demonstrated a weaker but significant association (r = .273, p < .01). Budget tracking and forecasting also exhibited a positive relationship (r = .168, p < .01). Hierarchical regression results further indicated that asset register accessibility contributed the largest increase in explained variance (9.4%), followed by budget tracking and forecasting (2.7%), while the contribution of repair and maintenance scheduling was positive but minimal and statistically insignificant in the final model. Overall, the models explained 15% of the variance in financial performance. The study concludes that effective asset management enhances financial performance, particularly when firms maintain accessible and up-to-date asset registers and implement robust budgeting and forecasting systems. It recommends that construction firms strengthen digital asset management systems, adopt preventive maintenance schedules, and integrate data-driven financial planning tools to improve profitability, ensure timely project delivery, and enhance financial resilience in an increasingly competitive construction environment