Study of Factors Affecting Construction Cost Performance in Nigerian Construction Sites

Study of Factors Affecting Construction Cost Performance in Nigerian Construction Sites

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Abstract on Study of Factors Affecting Construction Cost Performance in Nigerian Construction Sites

Maintaining steady cost projection on construction projects had been until recently an issue of serious concern, both to the client and project contractors. Cost deviation from initial Cost plan, had been prevalent on Construction sites. However, little or no efforts has made to curtail the phenomenon, it is against this background that this research work attempt to study the factors that are responsible, so as to identify them and proffer possible  ways of tackling the menace. The study attempt this through chosen  construction practitioners as population and samples were drawn  to this effect at random from the category of professionals, using probability sampling methods. The Data were collected from primary source consisting of structured questionnaire designed in Likert Scale in rating Scale of 1 to 5, while the Secondary Data were collected through review of Journal articles and relevant Text books. The Data were analysed using Severity Index, Ranking and Simple Percentages. It was discovered from the analysis that factors such as Contractors inexperience, inadequate planning, Inflation, incessant variation order, and change in project design were critical to causing cost overrun, while project complexity, shortening of project period and fraudulent practices are also responsible. The study concluded with recommending, adequate planning using conventional techniques, Studying and applying project history, material bulk purchase, proper project design and establishing proactive fraud prevention system on sites, as panacea for effective cost performance on sites.

KEY WORDS: Performance, Cost, Construction, Factors.

Chapter One of Study of Factors Affecting Construction Cost Performance in Nigerian Construction Sites

INTRODUCTION

Construction industry in Nigeria had been a major source of employment for 70% of labour force in the country, thus it controls the capital flow, as well as labour resources, which has cost implications. Adequate management of these resources is considered an important aspect of   project works; it determines to a large extent   the overall success of project works. So also if the resources are adequately harnessed, issues that pertains to cost overrun would not arise which could result to variations and claims. Some firms rely on claim as a result of variation incurred during the course of the project execution and afterward evaluate their profit after incurring necessary and unnecessary cost on a project.                                                 This however has tendency of positioning such in a disadvantageous profit position. An effective cost management strategy is therefore necessary, this could be achieved  through putting in place a proactive cost management strategy. (Love et al, 2005; Ogunsemi and Jagboro, 2005; Ferry et al, 1998).

They described cost management system as a process that should be carried out throughout the life cycle of a project, from the inception to final completion and final payment to the contractor. In the light of this, the timeliness and cost effectiveness of various operation and decision carried out will determine to an extent the magnitude of cost that could be saved on the project. ( Kerzner, 2005; Ogunsemi and Jagboro, 2005).

However Dissanayaka and Kumaraswamy,(1999) opined that Time, Cost, Quality target as well  as project satisfaction tend to be most important key to measure the overall performance of a project work. Furthermore, various research works have also indicated that most project records cost or time overrun during their tenure of execution.( Odusami and Olusanya, 2000).  (Mbachu and Olaoye, 1989; Madewsley, et al, 2004); opined that 51percent of average delay were experienced yearly which culminates in cost overrun, certain factors are responsible for this, to this end however this study attempts at investigating such factors and proffer solution to the pandemic.  The scope of this research work shall be limited to building construction sites within the selected area in Nigeria, Ogun state, Lagos state and Northern part of Nigeria. This is attributable to unique project environment they possess. The aim and objectives of the research are as follows: The research work is to determine the various factors that interplay in impacting project cost performance, investigating the order of severity of the factors, and recommending ways of curtailing the effects. Field survey was carried out with 100 questionnaire distributed  and 67 were used for analysis of response from construction practitioners selected randomly from population of construction firms, The primary data were collected with the aid of structured questionnaire designed on Likert Scale of 1to 4 rating scale.  Mean item score, Simple percentages and severity index were used as analytical tool of the generated data. SPSS (Statistical Packages for Social Science Students) was used in determining pattern of relationship among the cost determinants and variables. The factors were ranked in order of their degree of severity. It was discovered from the findings that, these factors are the major ones that results in cost overrun on construction sites.

(i).Inadequate planning (ii) Contractors project inexperience (iii) Inflation (iv) Incessant  variation order (v) Change in project design (vi) Project complexity (vii) shortening of contract period and (viii) Fraudulent practices.

In order to prevent occurrence of cost overrun or a practice action towards prevention of such, the following are recommended.

(i)inadequate planning:  breaking of project planning into short term achievable goals, medium term planning and Long term planning ( ii)Studying of project history for possible application on another similar projects  (iii) Bulk purchase of material  (iv)Proper design of the project during design stage so as to avoid. Undue on-project variation (v) Establishing fraudulent detecting system or system of individual accountability to discourage pilfering, stealing and other related vices.

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