CHAPTER ONE
INTRODUCTION
The Construction Industry is of crucial importance to the economy and national development of a nation, particularly in Nigeria. It plays an essential role in the socioeconomic development of a nation, and its nature is a cyclical industry aligned with economic performance generally. There cannot be much progress in national development without the provision of basic infrastructure and amenities. The Construction sector is a crucial factor of competitiveness in the economy, it provides the infrastructure and buildings on which every other sectors relies on. In economic terms, the importance can be assessed by the rate of investment. In Nigeria’s third national development plan, the planned expenditure on construction activities accounts for about 40 % of the 30 billion earmarked for the whole plan period. Mogbo (2004) noted that construction is being used to control the economies of nations. It is always strongly related to politics, economics, sociology and the legal framework. Political contribution in construction planning is obligatory in the current world democracies. Construction cannot grow in a weak and docile economy. It cannot feature where there is social distress and social instability. Hillebrandt, (1985) stated that in developed countries, construction is considered unique hence it can stimulate the growth of other industrial sectors. However, looking at the growth of the Construction Industry in terms of it contribution to GDP in isolation is somewhat misleading because of the crucial roles played by the industry. Therefore, improving construction efficiency by means of cost effectiveness and timeliness would certainly contribute to cost saving for the county as a whole.
The Construction Industry in Nigeria is faced with lots or problems, among which is delay in project execution. It has been researched that delay is a major setback in Nigeria Construction Industry. It was observed that the performance of the industry in terms of time was poor. Odeyinka and Yusif (1997) has shown that seven out of ten projects surveyed in Nigeria suffered delays in their execution. Mogbo (2004) stated that, construction is being used to control the economy of nations; it is always strongly related to politics, economics, sociology and the legal framework. Over the years, several emphases were made concerning the high rate of project delays and abandoned in different parts of Nigeria after enormous fiscal mobilizations.
Furthermore, Kumaraswany and Chan (1998) studied delays in Hong Kong Construction Industry. They emphasized that timely delivery of projects within budget and to the level of quality standard specified by the client is an index of successful project delivery. Failure to achieve targeted time, budgeted cost and specified quality result in various unexpected negative effects on the projects. Normally, when the projects are delayed, they are either extended or accelerated and therefore, incur additional cost. The normal practices usually allow a percentage of the project cost as a contingency allowance in the contract price and this allowance is usually based on judgment. Although the contract parties agreed upon the extra time and cost associated with delay, in many cases there were problems between the owner and contractor as to whether the contractor was entitled to claim the extra cost. Such situations, usually involved questioning the facts, causal factors and contract interpretation. Therefore, delays in construction projects give rise to dissatisfaction to all the parties involved and the main role of the project manager is to make sure that the projects are completed within the budgeted time and cost. Among the major economic sectors, the importance of the Construction Industry is unique regardless of whether the country is underdeveloped, developing or developed. For instance, the Construction Industry is subjected to quarterly and annual statements of national accounts. This appears more than once in the national accounts: GDP, GNI and GFCF. The outputs are measured by gross output, capital formation and added value. More than half of GFCF consists of construction outputs. The homes, offices, roads, factories and shopping malls are all part of the outputs of the Construction Industry, among other capital or investment goods.
The following can be said to be some of the major uses of the Construction Industry:
· Strategic tool to achieving sustainable development
· Construction output as growth initiating and growth dependent
· Contributes significantly to the economy; GDP, GNI
· Contributes to Gross Fixed Capital Formation (GFCF)
· Provide outputs to most industries and utilises the outputs of many industries
· Contributes significantly to the informal sector
· Income generation and re-distribution
· Employment generation, etc.
1.1.1 RATIONALE FOR TOPIC
The Nigerian Construction Industry is fast growing and it continues to occupy an important position in the Nation’s economy, even though it contributes less than the manufacturing or other service industries. It’s also yet to realize its full potentials despite Nigeria’s deficit in infrastructures. The study on Construction Project delays in Nigeria has received increased attention over the past years with the main focus given to the effect of abandoned projects. Most studies on construction project delay based mainly in identifying the causes and effect, without developing a mitigation plan for project delays which often leads to project failures or abandonment in Nigeria.it has been researched and confirmed by numerous researchers that construction failure is on the increase in Nigeria based on delay. These delays represent an area of leakages in the construction project. In Nigeria, the problem of delay is severe especially when one considers the present economic condition of the country. According to Kasimu (2012), Construction delay is a universal evident reality not only in Nigeria but all countries across the globe. Delay in projects varies from one project to another.
Delay has an adverse effect on the project success in terms of timed, cost and quality. Many projects experience extensive delays and thereby exceed initial cost estimate. Ina addition to impacting the economic feasibility of projects capital baseline, extensive delays could cause a ground for disputes or lawsuits between owners and contractors, increased costs, loss of productivity and revenue, and contract termination. However, with the rapid increase in construction failures and delays in Nigeria, this research becomes necessary so as to have a basis for weighing the causes and factors influencing delays and cost overruns on construction projects in Nigeria and more importantly propose a mitigation strategy.
1.1.2 RESEARCH QUESTION
Research question is the most critical part of any research. It is essential to develop a research question that the researcher is interested in so as to enable him focus completely on the research. According to Eriksson & Kovalainen (2008, p. 37-39) the purpose of the Research question is to acquire and develop new information and knowledge from existing information on the topic of study with the objective of formulating your findings to enable you complete your study on the topic. Choosing the appropriate question is important, questions that are neither too broad nor too narrow.
In this research work, the researcher intends to focus on the following Research Question:
· What are the major factors responsible for delays and subsequent desertion of construction projects in Nigeria? This question seeks to provide information on factors responsible for failures, delays and neglecting of construction projects and then drawing attention to the most compelling factor.
· What variables influence time and cost overruns in construction projects?
· What is the rate and influence of delay in construction project in Nigeria?
· What are the proposed solutions for project delays and failure in Nigeria Construction Industry?
1.1.3 RESEARCH OBJECTIVES
The research objectives are derived from the research question allowing the researcher to gain insight into specific information of the topic in question. Saunders et al (2009) defines research objectives as clear, specific statements that identify what the researcher wishes to accomplish as a result of doing the research. Objectives are more generally acceptable to the research community as an evidence of the researcher’s clear sense of purpose and direction. The purpose of this research work is
· To evaluate the rate and effect of delay and cost overrun in completion of construction projects in Nigeria.
· To identify the factors that lead to project delays
· To propose a mitigation strategy for improving and achieving construction project based on the outcomes of the study.
1.1.4 RESEARCH HYPOTHESES
Hypotheses are testable propositions about the relationship between two or more variables in a specified population (Saunders et al, 2009). The hypothesis translates the problem and purpose of the research into a clear explanation or prediction of the expected results or outcomes of the study. To facilitate the investigation justifying the research objectives and to answer the research question, certain assumptions have to be considered initially. The hypotheses that need to be proved or disapproved are as follows:
H1: Delay and cost overrun has a great impact on the massive project failures in
Nigeria.
H2: Well-developed mitigation strategy could help minimise delay and failure in
Construction Projects in Nigeria.
1.1.5 NEW AND RELEVANT RESEARCH
To be of value to the larger academic community, research must ‘‘further current knowledge in the field through both a synthesis of present knowledge and an original contribution extending that knowledge’’ Machi, L. and McEvoy, B. (2009). In Nigeria, Studies carried out by Odeyinka and Yusuf (1997) has shown seven out of ten project suffered delays in their execution. It was also observed that construction projects overrun their duration by 50% (Aibinu & Jagboro, 2002). The newness of this research will look to demonstrate the positive correlation between cost overrun and delay, and the impact of integrating all the project management knowledge area towards mitigating the elimination of delay and cost overrun in construction projects. A lot has been researched on Delay in Construction and its effects on project failures but most of those studies basically focus on the western part of world such as Australia, Canada, Iceland, Israel, Japan, New Zealand, Norway, South Korea, Switzerland, the United States and countries of the European Union, with little attention given to developing countries like Nigeria. Considering the crucial nature of Construction Industry to economic and national development, yet Nigeria frequently witness delays and failure in major public projects. Odeyinka and Yusif (1997) observed that 7 out 10 projects surveyed in Nigeria that suffered delay in their execution, showed poor performance in terms of time. With the fast growing failure and project abandonment in Nigeria, it is significant to continually review each project cycle.
The relevance of this research can be beneficial as it will look to ascertain the current level of delay and failures in projects. According to Kontangora (1993) as cited by Ayodele et al. (2011), there are about 4000 uncompleted or abandoned project belonging to the Federal Government of Nigeria with an estimated cost of above N300 billion which may take up to 30 years to complete at the execution pace and capacity of the present Government. also this issue of delay has been left without adequate attention for too long which is now having a multiplier effect on the construction industry in particular and the national economy as a whole. For the above reasons and due to personal interests, the author proposes to further study the factors influencing delay and cost overrun in construction project in Nigeria and propose a mitigation plan using project management tool and techniques.
1.1.6. RECIPIENT OF THE RESEARCH
This dissertation is submitted as part of the curriculum of Masters in Project Management at Dublin Business School, in association with Liverpool John Moore University. The principal recipient of this dissertation will be Dublin Business School and Liverpool John Moore’s University which is the awarding body and the academic community and practitioners who might be interested in this line of study. As this research is intended to perform a detailed study on factors influencing delays and cost overruns on construction projects in Nigeria and developing a mitigation strategy, some of the respondents of the survey questionnaires who have shown interest in this research and have given their permission to participate in the survey.
1.1.7. ORGANISATION OF THE DISSERTATION
This dissertation comprises of six chapters, the content of which is outlined below;
Chapter 1: Introduction
This chapter provides an introduction to the research topic. It outlines the research rationale, the research question, research objectives and hypotheses on which this research is based. It also explains the new and present research, researcher’s suitability, dissertation process, research recipients, time, cost and project management and organisation of the dissertation. Chapter 2: Literature Review
A literature review is an effective evaluation of selected documents or information on a research topic. In this chapter, the views of various authors and their attempts relevant to the topic have been described. The first is an overview of the Construction Industry, followed by Construction in Nigeria, Construction delays in Nigeria, types of delay causes in construction projects, causes of construction delay/cost overrun, the effects of delay in construction projects and the conclusion.