Software Implementation of Construction Company Payroll Management System (A Case Study of Julius Berger Company)

1.1 Introduction

A Construction Company payroll system is software which organizes and arranges all the tasks of employee payment and the filing of employee taxes. These tasks may include keeping tracking of hours, calculating wages, withholding taxes and deductions, Net pay, Payroll software plays several roles for the user, the employees and the company. Payroll system is the heart of any Human Resource System of an organization. The solution has to take care of the calculation of salary as per rules of the company, income tax calculation and various deductions to be done from the salary including statutory deductions like Income tax and provident fund deductions. It has to generate pay-slip, cheque summary and MIS report.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitation of the study and Definition of technical terms.

1.2 Background of Study

A payroll system is a company's list or records of its employees, which is often used to refer to the total amount of money that a company pays to its employees. Payroll makes deductions from employee’s wages for taxes, wage garnishment, health and life insurance, spending accounts and retirement investments. Payroll works with your accounting department to ensure that wage deductions and other payroll expenses are paid and properly reported.

The term Payroll refers to a series of accounting transactions involved in the process of paying employees for the services rendered after taking all the statutory and non-statutory deductions into account, in conformance with the terms of employment, company policy and the law of the land i.e., payment of payroll taxes, insurance premiums, employee benefits and other deductions. An efficient payroll system facilitates an error-free, accurate and timely employee payment while ensuring that the employment is well within the valid work permit.

To effectively assess job applicants, organizations should have an employment screening and short-listing management system for ensuring a fair and consistent approach. This system should be designed up in accordance with anti-discrimination legislation and an organization’s own equal opportunities guidelines. With the increasing effect of globalization and technology, organizations have started to use information systems in various functions and departments in the last decades. Human resources management is one of the departments that mostly use management information systems. HR information systems support activities such as identifying potential employees, maintaining complete records on existing employees and creating programs to develop employees’ talents’ and skills. HR systems help senior management to identify the manpower requirements in order to meet the organization’s long term business plans and strategic goals. Middle management uses human resources systems to monitor and analyze the recruitment, allocation and compensation of employees. Operational management uses HR systems to track the recruitment and placement of the employees.

Selection of staff involves the systematic assessment of candidates for a position based on their skills and experience, training and qualifications, employment record, references and, traditionally, their presentation at interview. The process of selection is, therefore, a very important investment in the long-term future of an organization. Staffs are one of an organization’s greatest assets and the costs of not selecting well are very high. Each organization should develop a set of systematic, formal procedures for the selection of staff so as to ensure fairness and equality to candidates as well as effective and appropriate selection for the organization. Recruitment involves drawing up a job description, person specification, application form and advertising the position. The organization will then receive applications and this is when the task of selection begins. Selection is a two-way process (Clarke, 2008).

In an organization, there are several departments and each department has a payroll section to manage its payroll activities. Each section has to perform necessary personnel operations like data collection and preparation, entry, updates, monitoring and reporting of data. Many of these existing practices and procedures need to be reassessed at this time of changing needs, changing demands of employees and changing technologies So an organization needs an integrated web based payroll system that would integrate personnel and pay- roll related data collection, processing in individual departments and payroll audit in a more efficient and streamlined way. With this computer based payroll system, payroll section would be able to keep a record of employees including their personnel data, pay band, allowances, deductions, savings and taxes etc.. Net pay of each employee is calculated by using the information about his allowances and deductions. All these complex calculations have been incorporated herein. Many optional allowances and deductions for the employees are added by specifying the corresponding details.

The individual pay slips and deduction vouchers are printed out as a receipt. Pay bands, grade pay, allowances, deductions and tax information are updated if there is an amendment in salary structure. A payroll is a list of the employees and the payments due to each employee for a specific pay period. A pay period is the amount of time over which an employee is paid. Most businesses use weekly, biweekly (every two weeks), semimonthly (twice a month), or monthly pay periods.

The payroll is a major expense for most construction companies. To ensure accurate records, most business set up a payroll system for recording and reporting employee earning information. Payroll is an application that lends itself well to the computer because of its repetitive procedures and calculation. A Web based payroll system can perform the same basic function as those performed manually by payroll clerk. The important differences are the computer’s speed, accuracy, reliability, and ability to easily generate reports. In a web based payroll system, the computer stores data such as an employee’s name, address, social security number, marital status, number of withholding allowances, pay rate and voluntary deductions. At the end of each pay period, the operator enters all payroll transaction data, such as regular and overtime hours for each employee and deduction into the computer. The computer calculates all withholding taxes and other deductions and accumulates and updates the earnings and withholdings.

It is understood that organizations are tired of managing thousand of odd papers, pay slips, payroll reports, and salary details and so on. Imagine that organizations have a payroll processing system which will generate our pay slips and payroll reports within seconds. An organization can help others automated payroll system by developing a customized payroll application that suits their specific requirements.

1.3 Statement of Problem

Employment screening and short-listing is a complex task. Several organizations lack automated system that will enable them to carry out the task of recruitment. The traditional flat file organization is still in use and this makes the management and retrieval of information pertaining to recruitment difficult to manage. Manual system of short-listing employees is very costly and also time consuming, due to the time wastage on sorting applicants’ resumes. These problems are ever nagging and awaiting solutions in the process of recruiting and selecting personnel. It is in view of this that this study is conducted to develop an automated staff recruitment management system. Investigation revealed the specific problems of the existing system which are stated as follows:

1. Calculating salaries through manual operation is burdensome and stressful.
2. Difficulty in handling personnel records and inaccessibility of information when needed
3. Overpayment/Underpayment of salaries and less security in the manual system.
4. Delay in payment of staff salaries because too much time is spent in preparation of the payroll.
5. The use of paper to keep pay details about each employee which results in too much paper work.

1.4 Aim and Objectives of the Study

The aim of the study is to design and implement a Construction Company Payroll Management System that will eliminate the problems of the existing system. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:

1. Calculate the basic salary and allowance of staff.
2. Provide an easy way not only to automate all functionalities involved,
3. Manage the leaves and Payroll for the employees of the Julius Berger Company.
4. Provide full functional reports to the management of the school with the details about usage of leave facilities.
5. Accurately stores employee data and retrieves payment history when needed.
6. Ensure job applicants registration and accurate short-listing of qualified applicants.

1.5 Significance of Study

The significance of the study is that it will reveal the relevance of automated employee screening and short-listing system and the need for its adoption by organizations. It will help Julius Berger Construction Company solve the present challenges they are facing in handling applications by providing a software system that processes the application of different applicants and shortlists the qualified. It will also save them time and cost of recruiting.

The major importance of the study is to improve the efficiency of payroll management and to quickly find out information of an employee details to provide easy and faster access information, also to provide user friendly environment for staff workers during payroll activity. Department can use it sitting at different locations simultaneously.

The study will aid in reducing errors, fraud, increase speed and also aid growth in organizations if successfully implemented. Manual payroll systems in organizations will be totally eliminated with this Web based system in place.

This study will also be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

1.6 Scope of Study

The study focuses on the Design and Implementation of Construction Company Payroll Management System using Julius Berger Company in Lagos State as a case study. It is limited to short-listing based on academic qualification and position applied for.

1.7 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Research material: availability of research material is a major setback to the scope of the study.
4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).

1.8 Definition of Terms

EPM: Employee Payroll Management

Payroll: List of employee and all their wages and salaries including their allowance and deductions.

Salary: This is usually a monthly payment for regular employment on a yearly basis.

Shift Allowance: This is the allowance granted to an employee who works on shift basis.

Arrears: This represents the accumulation of staff entitlement.

Rent Subsidy: These represent the rent given to an employee for his or her house.

Application: A formal and usually written request for something such as a job, a grant of money, or admission to a school or college

Employment: The condition of working for pay

Human resources: The field of business concerned with recruiting and managing employees

Recruitment: To enroll somebody as a worker or member, or to take on people as workers or members