EVALUATION OF CAPITAL BUDGETING IN PUBLIC SECTOR ORGANIZATIONS IN NIGERIA

EVALUATION OF CAPITAL BUDGETING IN PUBLIC SECTOR ORGANIZATIONS IN NIGERIA

ABSTRACT

Capital budgeting decision usually involves substantial’s expenditures on new assets. These decisions are particularly important because the firm losses much of its flexibility by looking into projects and because budgeting decisions define the firm strategic direction. Capital budgeting in Ikorodu local government is very vital and must be approached with all sense of diligence. This project is intended to create awareness in capital budgeting in Nigeria local government. The need for this study arises from the variation in capital budgeting in Ikorodu local government that has been noticed and this research work hoped to improve the standard. In order to achieve this, project has gone into so many past works of authors and related literatures. The data for the study were made up of primary data. Interviews and questionnaires were used for proper and precise responses. The questions were of the closed type. This was done to empower the respondents and chi-square was used to analysis the result.

Capital budgeting decisions are made in terms of both quantitative factors (monetary measure of costs and benefits) and qualitative factors (non-monetary measure of costs and benefits). Capital budgeting decisions are particularly difficult in non-profit organizations such as national and local government organizations, since it is not always possible to precisely quantify the costs and benefits of a project.

The major findings that emerge from the study can be summarized as follows:

i. There is relationship between effectiveness of Ikorodu Local government and optimal allocation of resources

ii. There is relationship between efficiency of Ikorodu Local government and optimal allocation resources.

iii. Effectiveness and efficiency of capital budgeting improve the revenue generation of Ikorodu Local government

From the above mentioned summary of major findings, it is observed that capital budgeting is very relevant to public sector organizations.

It was recommended that capital budgeting aids planning of annual operations, co-ordinating the activities of the various parts of the organization, communication of plans to various responsibility centre manager, motivating managers to achieve organizational goals. Control of activities and evaluation of the performance or governmental institutions or government and its enable the management of nonprofit organization to make more informed decisions about the allocation of resources to meet the overall objectives of the organization.

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