CHAPTER
ONE
1.0
INTRODUCTION
1.01 (Background of the study)
According to Luke chapter 14 verses 28-30 which says for
which of you intending to build a tower siteth not down first and counteth the
cost whether he have sufficient to finish it? Lest haply, after he hath laid
the foundation, and is not able to finish it, all that behold it began to mock
him.
The above quotation from the Bible summarizes the problem
of abandoned project after committing huge financial resources on them are
getting out of hand in Nigeria. It is obvious that poor budgetary planning and
cost control is responsible for failure of those project as most failures could
be traced to poor funding in the project.
According to Iwu Anthonia (2006) Sited that cost control
should be exercised at the execution phase as the budget is the financial
compass for comparing projected and actual cost of the project in budgeting
knowledge of why cost may change from one period to the next is very essential.
Cost control should not be achieved without good understanding of source of
cost variance. It is expected that within the budgeted project cost, the
project be designed to provide at least good value for client’s money in terms
of profitability. Efficient cost control measures will ensure that the project
team controls the circumstances surrounding the project procurement instead of
the circumstances controlling them.
1.02 STATEMENT OF THE PROBLEMS
According to ANDAWEI M. (2007) said that construction
project’s success especially in Nigeria is mostly circumscribed by time and
cost overrun, sub standard work, poor or ineffective pre-contract and post
contract planning cost which eventually could lead to project failure. This
phenomena pose a big threat to the construction industry. It is factual that,
most project are abandoned or failed on the account of especially poor
budgeting and cost control, which eventually leads to time and cost control,
which eventually leads to time and cost overrun from the outset of the
construction project. Consequently, these have marked negative effect both on
the economy and the public at large as the construction industry supplies the
basic need for shelter, roads and hospitals etc. arising from the inability of
the construction clients at both private and public sectors to proceed with the
project.
According to KERZNER H (1987) Sited that construction
project success is largely attributed to adequate budgeting and cost control
techniques in the design and construction process of a construction project.
Therefore, to curb these inherent problems proper investigation on the effect
of budgetary and cost control on construction projects is highly inevitable.
1.03 SIGNIFICANCE OF THE STUDY
There is need to operate an efficient and effective
budgetary control before any contract is carried out efficient cost, cost
control process during the design stage of a project is important in other to
ensure that the total cost of a building is within the clients cost limit.(JOHN
ALUFOHAI 2002).
RAYMOND KOTEY 1989 sited that budgetary planning and
contract auditing are tools, which have great potentials in the fight against
corruption in a situation where the budget exceeds the clients cost limit the
design has to be modified mostly the finishing’s. These modifications should
aim at given him a building that is soundly constructed with good aesthetics
and well suited to perform the function for which it is required.
To keep the final account figure within the employer’s
budget, it is mostly based on approximate estimated cost prepared by the
quantity surveyor in the early stages of the project of the design process.
Having known this, it is obvious that effective cost
planning and cost control should be applied through out all stages of design
and execution of the project.
1.04 AIMS AND OBJECTIVES
The paramount aim of this study is to determine the effects
of budgetary and cost control measures on the building or construction
projects.
This aim could be realized through the following objective.
1.
To identify the various cost control measures or techniques
mostly employed in the construction projects.
2.
To examine the significance of these techniques on
construction project success.
3.
To determine the flexibility level. Of budgeting and cost
control measures in the construction projects.
4.
The determine the reasons these approaches or measures is
inevitable for adoption in the successful completion of a construction project.
1.05 SCOPE AND LIMITATION OF THE STUDY
The overall scope of this study is restricted to
construction projects executed or under construction projects that are
considered in this content are selected:-
–
Tertiary Institution Buildings
–
Educational Buildings
–
Office Complex Buildings
In the course of carrying out this research work, I have
been faced with some limitations of time, finances and lack of relevance
materials for this research. I was unable to reach some vital places and people
that could have offered immense contribution or information relating to this
study.
Also, following the bureaucratic nature of some on going
construction project site, which I was able to visit, most of their staff
personels were afraid to provide accurate information inquired of them.
Sequel to the above constraints, the extent to which data
could have been collected was affected and consequently the scope of the
research.
1.06 RESEARCH QUESTION
Sequel to the objectives of this study, answers shall be
proffered to the following research questions, formulated and carefully handled
to enable these research objectives to be achieved.
1.
What are the possible budgeting and cost control measures
or techniques mostly employed by the quantity surveyor in the construction
project?
2.
What is the significance of cost control and budgeting in
the construction project?
3.
What are the factors that affect the budgeting and cost
control in the construction projects?
4.
What is the level of application of budgeting and cost control techniques or
approaches in the construction projects.
1.07 DEFINITION OF TERMS
BUDGET:- The forecast and monitoring of both anticipated income and expenditure of an
organization globally.
BUDGETING:- The process of financial control where actual
expenditure for a period is compared with appropriate budget allowance for each
unit.
COST:- Cost in respect of building work implies amount paid
by client for either completed building or for specific section of building.
COST LIMIT:- Maximum expenditure the clients are
prepared to make in relation to
completed building.
COST CONTROL:- All method of controlling cost of building projects within the limits of
predetermined sum throughout the design and construction stages.
PLAN:- A purpose or intending course of action.
COST PLAN:- A statement of the proposed expenditure on each
section or element of a new building related to a definite standard of quality.
COSTCHECK:-The process of checking the estimated cost of
each section or element of the building as detailed designs are developed
against the cost target set against it in the cost plain.
COST ANALYSIS:- The systematic breakdown of a cost data
often on the basis of element to assist estimating the cost and in the cost
planning of future project.
COST MODELING:-This is a symbolic representation of a system expressing the
contents of that system in terms of the
factors, which influence its costs.