Workforce Productivity, Project Cost Accounting, and Firm Performance in Pakistan’s Construction Industry

Abstract

The construction sector in Pakistan is a very sensitive sector that leads to the development of the economy in terms of creation of employment, building of infrastructures, and gross domestic product (GDP). Nevertheless, construction companies are usually confronted with workforce productivity, cost control and project completion issues, which in turn have a direct impact on their financial and operational outcomes. This paper will discuss how workforce productivity and project cost accounting affect the performance of firms in the construction industry of Pakistan. Workforce productivity is efficiency, use of skills and output of people working on construction projects and project cost accounting is systemic tracking, reporting and control of project costs to ensure cost efficiency. The quantitative research method was used to collect data on managerial and supervisory employees of the selected construction companies in Karachi using the structured questionnaires. The research utilizes descriptive statistics, correlation analysis, and structural equation modeling (SEM) in order to explore the associations between the variables. The results indicate that productivity of the workforce and cost accounting of a project are both significant in improving the performance of the firm. The efficiency of the working force ensures the completion of the project in time, wastage reduction, and optimal resource utilization, whereas proper project cost accounting is relevant to the successful budgeting, cost control, and making financial decisions. In addition, project cost accounting also mediates the association between the workforce productivity and the firm performance, which implies that those firms incorporating labor efficiency with stringent financial monitoring attain greater operational and financial performance. The findings provide empirical data to prove the use of strategic human resources practices and effective cost management systems to increase competitiveness within the construction industry in Pakistan. Viewed in pragmatic terms, the findings point to the necessity to invest in the workforce training of managers, introduce new tools of advanced cost accounting, and implement performance measurement systems to ensure the optimization of project execution and the profitability of the firm.