ABSTRACT
This study appraises the Cost Management
Practices in the Delivery of Capital Projects in Nigeria with set objectives of
(i) Identifying and assessing the courses of ineffective cost management
practices in delivery of capital projects., (ii) Identifying and assessing the
effect of ineffective cost management practices in the delivery of capital
projects in Nigeria and (iii) proffering of solution to the problems. Relevant
texts, journals, personnal interviews and administered questionnaires were used
to obtain data from the stratified randomly sampled population. A total of
sixty seven questionnaires were administered to respondents and fifty were
returned making a 75% response rate.
The questionnaires were structured and
administered in the following order. Architects-5numbers, Builders-9Numbers,
Quantity surveyors-17Numbers. Mechanical Engineers-4Numbers, Electrical
Engineers-4Numbers, civil/structural Engineers-17Numbers, others-17Numbers. The
percentile grading and Relative importance index and mean score statistical
techniques were used to analyze the data collected. The analyzed data formed
the bases of the findings (i) Lack of continuity in government and corruption
(causative factors) abandonment of projects and extra budgetary (effects) and
(iii) reduction and corruption practices by government and accountability in
Government circle (solution) and these further led to the major recommendation
that Government should endeavour to reduce corruption practices as it is
associated with the cost Management and Delivery of capital projects in
Nigeria.
CHAPTER
ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Procurement of Capital projects in Nigeria has become a source of
worry to both Government and Private sector developers as it is evident from
the recent outcries of unfavoured professional group(s) of the construction
industry in the inclusion exercises into the National Council on Public
Procurement. This Council has had some of these set cardinal objectives as
follows;
i.
the establishment of pricing standards and
setting bench mark
ii.
enduring the application of fair, competitive,
transparent, value for money standard and
iii.
the attainment of transparency, cost
effectiveness and
professionalism
in the public sector procurement system.
According
to Onyeri (2008):
“The latest survey conducted by the World
Bank on procurement activities prior to the enactment of the 2007 Act; that
bribery and corruption dominated Nigeria’s N775 billion contract award in 2007.
In fact the survey did not tell us anything that we are not aware of. We have
always known that the system of
The above statement in direct terms, confirms the belief that there is
problem in the cost management practices (if any) adopted in delivery of
capital projects in the country and this projects ranges from mass housing
projects through highways and road infrastructures, other civil engineering
works and industrial engineering construction works.
According
to (Adetola, 2007):
It is very disturbing to know about 90%
of the road contracts awarded by various levels of government in Nigeria is
done through only one professional grouping – “Engineering” who designs,
estimates the cost of construction, makes payment and contracts. It is the
situation and arrangement that forces former Minister ofWorks, Senator Ogunlewe
to verbally attack the engineers in a public hearing on the Procurement Act.
The professional businesses in the
construction industry needs to be better and equitably distributed for improved
and specialized handling.
According
to Ogunlewe (as cited in Adetola, 2007):
We are talking of due process, shouting
due process. What is due process? In the Federal Ministry of Works where I
preside as the minister, I
don’t believe there is
anything that is due process. How can there be due process when the engineers
designs the roads, estimates the costs of the roads, settles the contractor,
construct the road, supervises the construction, recommend payment for work
done, approve the payment certificates and the quality of work! All these by
one person! Haba! This cannot be due process. Not until roles are assigned to
relevant professionals like the quantity surveyors to be in charge of cost and
cost management of roads and highways, can there be any due process in Federal
Ministry of Works.
The statement of the Senator does not only depict emotional attachment
towards resolution of the problems, but also it substantially exposes possible
areas and ways of resolving the problem from his own angle of perception.
According to Oforeh, (1997): “The Nigerian construction
industry contributes at least 60% to the Nations yearly Gross Domestic
Products (GDP)”,
The implication of this statement when married to the other points on
cost management discussed above is that any problem in the cost management of
capital projects within the construction industry is a major problem to the
Nigerian economy and the people and this should be taken serious.
Cost management of capital projects in Nigeria is poor and demands
urgent attention. This is obvious from incessant abandonment of capital
projects (Elephant Projects – Ajaokuta Steel Rolling Plant to mention a few).
Complaint of cost overrun of capital projects and a host of other cost
related and disturbing issues.
Fair-enough, there is no doubt that mush words have been undertaken in
recent years in at least proffering solution to the menacing problems of poor
cost management of a capital projects as it is evident form the consistent
dramatized effort of government and the scholarly works of eminent
professionals and educationists in this area. Notably among these works are
those of Mogbo (2000) “The procurement and financing of roads in Nigeria
through new private sector and Government initiatives and that of Oladapo
(2000) “Cost management of engineering infrastructure”
Notwithstanding these efforts made so far, much is yet to be desired
particularly in area of efficient and effective cost management of those
projects, hence the need to identify the problems constraining the efficient
cost management of capital projects
i.
Late appointment of quantity surveyor in the
delivery of capital projects will certainly lead to ineffective cost management
practices.
ii.
Non appointment of quantity surveyor in the
delivery of capital projects will certainly lead to ineffective cost management
practices.
iii.
Inadequate budgeting at the inceptional stages
of project delivery will lead to ineffective cost management practices.
iv.
Inflation during the period of capital project
delivery can lead to ineffective cost management practices.
v.
Lack of optimized concurrent professional
engineering environment in the delivery of capital projects (industrial
engineering construction in particular) will lead to in effective cost
management practices.
vi.
Inadequate funding of capital projects can
lead to ineffective cost management practices.
vii.
Corruption will obviously lead to ineffective
cost management practices in the delivery of capital projects.
viii.
Political instability will lead to ineffective
cost management practices in the delivery of capital projects.
ix.
Lack of continuity in government can lead to
ineffective cost management practices in the delivery of capital projects.
x.
Ignorance on the part of client will cause
ineffective cost management in the delivery of capital projects.
xi.
Client’s contractual negligence will lead to
ineffective cost management practices in the delivery of capital projects.
xii.
Unanticipated increase in interest rate during
the period of capital project delivery will lead to ineffective cost management
practices.
xiii.
Lack of cost risk analysis in delivery of
capital projects (industrial engineering construction works in particular will
lead to ineffective cost management practices.
xiv.
Lack of cost control exercises at pre-contract
stages of project delivery will lead to in-effective cost management practices.
xv.
Lack of value analysis will lead to
inefficient cost management practices in the delivery of capital projects.
xvi.
Lack of value engineering will lead to
inefficient cost management practices in the delivery of capital projects.
xvii.
Lack of proper monitoring by cost managers and
cost engineers at construction phase of capital projects’ delivery will lead to
ineffective cost management practices.
xviii.
Poor project management will lead to
ineffective cost management in the delivery of capital project.
1.3 AIM
AND OBJECTIVES
AIM
The
aim of this study is to appraise the general cost management practices
available in the delivery of capital projects in Nigeria.
OBJECTIVES:
The
set of objectives in achieving the above mentioned aim is as stated below:
i.
To identify and assess the causes of ineffective
cost management practices in the delivery of capital projects in Nigeria.
ii.
To identify and assess the effect of
ineffective cost management practices in the delivery of capital projects in
Nigeria.
iii.
To proffer solution to the problems.
1.4 RELEVANT
RESEARCH QUESTIONS
i.
How can early appointment of quantity surveyor
in the delivery of capital project bring about effective cost management
practices?
ii.
How can correction of attitude of Non
inclusion of quantity surveyors and cost engineers in the delivery of capital
projects bring about improved cost management practices?
iii.
How can adequate budgeting for proposed
capital projects bring about improved cost management practices?
iv.
Do you consider tackling of inflation as a way
of bring about improved cost management practices in the delivery of capital
projects?
v.
How would optimized concurrent professional
engineering environment bring about improved cost management practices?
1.5
DEFINITION OF TERMS AND CONCEPTS
Optimized concurrent engineering: An environment that provides opportunity to substantially reduce the total cost of a project through integration of construction / engineering product teams, containing members of various skilled disciplines, enabling a simultaneous contribution to an early product development and definition. Valued Analysis: It involves the analyses of a product with respect to product process cost and it is typically a technique used on existing items/products in light of a new processes, materials or assembly method being available.
Value Engineering: It is an approach that vigorously examines the relationship between a product function and cost and can be used during the concept stage of a product development.
1.6 SCOPE
AND LIMITATIONS OF THE STUDY
This study focuses on construction industry professional practicing
firms, clients of the industry (public and private), selected industrial
engineering construction companies, and construction and engineering
manufacturing firms.
These were some of the extraneous and constraining circumstances that
created imperfection in the study
·
Finance was one of the main constraining
factors in this study as there was not enough funds to carry-out and supervise
the field work as the researcher would have expected,
·
The researcher is based in Lagos and had
time-problem to fully follow-up personally and supervise the administration of
the questionnaire to respondents. The researcher was not available all the
time and so friends and colleagues helped out to the best of their ability.
·
Some of the respondents did not comply to
instructions and requests as expected.
1.7 SIGNIFICANCE
OF THE STUDY AND JUSTIFICATION FOR INVESTIGATING
IT
This thesis examines the causes and impacts of ineffective cost
management practices in the delivery of capital projects in Nigeria with a view
to proffer solution to these problems.
However, the significance of the study is to enlighten the government
and prospective private sector clients on the observed associated problems of
cost management practices in the delivery of capital projects and ways out of
the problems when investigating them.
It will equally educate the would-be clients on their contractual
obligations when embarking on such projects. It will also highlight the need
for and appointment of proper professionals when embarking on such projects.
It will highlight the accruing benefits to proper cost mismanagement
of capital projects.
The result of the research will aid government, their respective
agencies and concerned private sector developers in revisiting existing and
on-going projects that are presently suffering from these
professional/technical denials. The result of the research will
equally help the different professional actors to know about the parts they are
expected to play at strategic periods of capital project delivery with special
regards to cost management practices.
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Item Type: Project Material | Size: 130 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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