Relationship between budgeting practices and performance in Nairobi Oil Corporation (NOC)

Abstract

This is a study on the relationship between budgeting practices at Nairobi Oil Corporation. Budgets occupy a leading place among the special tools of management employed to direct and control the affairs of large and multifarious organizations. This is a case study aimed at getting detailed information regarding the budgetary practices at the Nairobi Oil Corporation of Kenya (NOC) and their relationship with the firm's performance. Primary data was collected from the company staff by use of interview guides. The interview guide comprised of open ended questions to allow for a greater depth of response. Secondary data sources were also be used to provide additional information. These were obtained from already documented materials such as in-house publications, in-house training materials and periodic performance reviews. The study concludes that a good budgetary practice is crucial for the success of an organization since it is important in bringing management discipline and organization control as well as enhancing accountability in different management function and more specifically, the practice ensures that, proper performance is met and issues that would make the organization not meet the budget are addressed and resourced well in advance. The study further concludes that budgetary process helps in monitoring efficacy of resource utilization and the productivity borne out of the use of the resource which is then used in the performance process through target setting and evaluation. In addition the practices enable a company to manage its expenditure. Proper budgetary practices, thus aid in the resource optimization, cost containment, budgetary projections, corporation for control, accountability and communication of company's financial and non-financial information over a specific period. The study conceals the real name of the entity studied at the request of the management. This is due to the sensitivity of the subject within the oil industry. Nairobi Oil Corporation has been adopted as the alternative name.