ABSTRACT
Over the years, there has been an increasing cost of building projects.
This work aimed at examining the extent of fluctuation trend in the prices of
materials used for building projects and its cost from 1999 to 2009, by
establishing the trend in building material prices over the years, providing
price analysis of these materials which would identify significant variances on
the cost of building projects and then foster remedial measures for fluctuation
to be tackled. This research is important as it would help in the control of
cost of building projects with respect to its inflation. Hence “Price Relative
Index” was used as a tool for analyzing the data gotten from survey done in
five major building material markets in Enugu state. “Average Price Relative
Index” was equally use for further analysis. It was discovered that there has
been a tremendous instability in material prices over the years which in turn
led to the cost fluctuation of building project and its subsequent inflation as
materials take a higher percentage in the overall building cost. It is
recommended that government policies should be made not to have sporadic effect
on material prices and also, measures to be taken to tackle inflation and
exchange rate in the country.
CHAPTER ONE
1.0
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Right from the earliest times, shelter
remains the second most needed amenity by man after food. This need for shelter
by man explains the origin of building construction. These days, buildings are
not needed only for residential purposes but for other uses like offices,
schools, industries and hospitals etc.
With the growth in the construction
industry, cost of construction products becomes an important factor. People now
recognize the need for having ideas of what a new building will cost. Hence the
need for cost fluctuation in building projects and its control becomes very
important during construction.
The Longman Dictionary defines
fluctuation as a sudden change in price such as amount etc. in Nigeria, just
like in some other countries of the world, sharp increase in the prices of
most inputs to construction like in areas such as materials, components and
labour is often experienced at relatively short time or notice. Since
construction products take some time to come by, those changes tend to increase
the cost of building execution. Therefore, fluctuation as it applies to the
construction industry is a terminology used to denote changes in the basic
price of labour, goods and materials during a project execution.
According to Oforeh (1991), “the term
fluctuation is frequently used in economic analysis to explain the unstable (up
and down) nature of prices of goods and services over a given period of time”.
It can be seen that fluctuation has become a trend in the industry which can
not be neglected as the result is not favourable to the stakeholders in the
construction industry.
Turner (1979) stated that a graphic
display of the unstable (up and down) nature of goods and services over a given period of time by economists and statisticians produces the so
called “scatter” diagram from which a line of “regression” is obtained to give
a clearer picture of the general behaviour or trend in the price movement. The
trend can also be obtained by the methods of moving averages. The general trend
in prices often shows upward movement (although with varying gradients) and
this may be the reason why the term fluctuation has come to be associated or is
always construed to mean price increase.
1.1
STATEMENT OF PROBLEM
As a result of the unsteady nature of
prices of materials, components and labour cost as it pertains to building
projects, initiating a project by a client or an organization requires a large
measure of resources to produce a result or an end product different or
precisely, higher than the estimated. Hence, most building projects in Nigeria
run above estimated cost over time due to inflation.
Moreover, in this day of ever increasing cost, majority of clients of
building projects are insisting on projects being executed to give maximum
value for money-tending towards ways in which these fluctuations can be
tackled, so that projects will be executed within the estimated cost. This
necessitates a reform and improvement on the activities in the Nigerian
construction industry and in the policies of both federal and state government.
1.2
SCOPE AND LIMITATIONS OF THE STUDY
As the topic suggests, the scope of this
study is limited to the fluctuations in the prices of materials commonly used
in the course of caring out building projects. This dissertation is with
particular reference to some significant materials used for building projects.
Enugu state was chosen as my area of
study because of its centrality and access proximity to States around.
Enugu is a former regional head-quarters and it is the head of
South-east geopolitical zone. I have studied Enugu and discovered a lot of
pronounced projects going on which requires materials estimation. Finally, in
Enugu, there are standard building materials markets where choices could be
made in terms of where and what to buy. Besides the wider range of building
materials markets there, the traders are very understanding and ready to feed
one with any information needed for any research. These are what made me choose
Enugu as my area of study. The study focuses on the prices of ten (10)
significant materials used for constructing buildings, from 1999 to 2009. The
study also examined the causes and effects of fluctuation on building project
delivery and attempts to foster remedial and reasonable solution to tackle it.
1.3
AIM AND OBJECTIVES OF THE STUDY
The aim of this research work is to
examine the extent of cost fluctuation trend in the prices of materials used
for building construction from 1999 to 2009 with particular reference to
some significant materials used in construction with the following objectives:
1.
To establish a price trend in building
materials prices from 1999 to 2009, which would identify significant variances
on the cost of building projects over the years?
2.
To foster remedial measures to control cost
fluctuation in building project delivery.
3.
To provide basis for further research work on
cost fluctuation in building projects delivery.
1.4
RESEARCH QUESTIONS
Upon the identification of the above
problems and objectives, it is imperative to ask the following questions to
help give solution to the problem.
1.
Is there fluctuation in the prices of
materials used for building project from 1999 to 2009?
2.
Does a change in the prices of these materials
have any significant effect on the cost of building projects?
3.
What is the trend of cost fluctuation in
building projects delivery for the past ten years?
4.
How could this cost fluctuation be tackled?
1.5
RESEARCH HYPOTHESIS
Hypothesis
I
Ho: There
is no fluctuation in the prices of materials used for building projects
from 1999 to 2009.
Hi: There
is fluctuation in the prices of materials used for building projects from 1999
to 2009.
Hypothesis
II
Ho: The
change in the prices of building materials does not have any significant
effect on the cost of building projects.
Hi: The
change in the prices of building materials has significant
effect
on the cost of building projects.
Hypothesis
III
Ho: There has been an upward
movement in the trend of
cost
fluctuation in building projects for the past ten years.
Hi: There
has been no upward movement in the trend of cost fluctuation in building
projects for the past ten years.
Because of the problems alluded to this
research work, the above hypothesis was postulated by the researcher to guide
in the data analysis proceedings. These above hypothesis were all put in both
null (Ho) and alternative (hi) hypothesis.
1.6
SIGNIFICANT OF THE STUDY
This research involves the examination of
building construction cost and its materials price fluctuation. This study would be very helpful to the Architects, Builders and Quantity
Surveyors etc. and to the construction industry as a whole, and it will also
act as a good guide or technique for monitoring and analyzing the rate of
fluctuation of construction inputs in the construction industry.
The study will serve as a reference point
upon which other subsequent research studies will be based on.
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Item Type: Project Material | Size: 77 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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