The Effect of Variation on Final Cost of Building Project in Nigeria
CHAPTER ONE
Objectives of the study
- To identify various types of variations on final cost of building project caused by consultants.
- To assess and rank each variations according to their severity of occurrences in projects.
- Identify the initiator of the variations among the consultants.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Construction contract time is very important to an investor of a construction project and by extension to all the parties involved in the construction activity. The chapter covers a review of literature related to the study. It covers the following: methods for calculating contract time, methods used to calculate variation time, effects of variations on delay on building construction projects, the implications of construction project delay and the possible intervention mechanisms to control variation on construction project if any.
Construction Industry in Nigeria
The Nigerian construction industry occupies an important position in the nation’s economy even though its contribution is lower than the manufacturing or other service industries. This contribution to national economic growth necessitates improved efficiency in the industry through cost-effectiveness. One aspect is timelines adherence which would certainly directly contribute to cost savings for the economy as a whole.
In a research done on Nigeria Central government projects executed between 1966 and 1984, Mbatha, (1986) found out that 73% of the projects are normally delayed while only 38% of them have cost overruns. The problem of variations in construction industry is a worldwide phenomenon, and its effects leads to friction among clients, consultants and contractors due to project cost overruns creating a significant financial risk to clients. Mbatha, 1986 went on to document that in Nigeria, majority of government building contracts suffer cost and time overruns. Time overruns are more frequent than cost overruns and the two are not related. Big projects have been shown to be more prone to both time and cost overruns than the smaller ones although delays have been found to bear no relationship to contract sizes. One of the causes of poor time performance is the inadequacy of initial contract periods which have been found to be inconsistent and erroneously calculated.
Kivaa (2000) made a conclusion from his finding that either the cost estimates are more realistic than contract period estimates or project participants manage costs more carefully than they manage contract period. Wachira (1986) gives the main reason for the ‘too optimistic’ contract time as being the insufficient data on productivity of labour for accurate analytical estimation of activity times on the project schedule whose sum gives the construction period.
Muli (1996) attributes the ‘optimism’ and poor time performance to the attitudes of project participants towards the project schedule, by the clients and consultants failing to appreciate the full importance of the schedule.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The design involve the use of questionnaire survey to collect data needed to assess the impact of variation on project delivery. The questionnaire was self- administered to various categories of respondents within the target population, which are then analysed by frequency distribution and percentage and mean item score.
Sources of Data
The data for this study were generated from two main sources; Primary sources and secondary sources. The primary sources include questionnaire, interviews and observation. The secondary sources include journals, bulletins, textbooks and the internet.
Study population
The category of population for this research included the professionals in Ibadan, Oyo state because they are all contributed towards the effect of variation on final cost of building project in Nigeria within Ibadan, Oyo state, Nigeria.
Sampling of the study
Sampling frame consisted of consultants who have represented the client in various building construction projects (such as quantity surveyors, architects, civil engineers) and contractors involved in execution of the projects selected for this study within Ibadan, Oyo state.
CHAPTER FOUR
RESULT AND DISCUSSION
Table 1 showed the official designation of respondents contacted for this study, 35.9% are Quantity Surveyors, 33.3% of the respondents are Builders, 16.1% are Architects while the remaining 14.1% are Civil Engineers. The types of organisation where various respondents worked; 42.3% of the respondents worked with a contracting organisation, 37.2% worked in a consulting organisation and 19.2% of the respondents are civil servants. Academic qualification of respondents; 55.1% of the respondents are Higher National Diploma Holders, 33.3% are holders of Bachelor in Degree and 10.3% are Master’s degree holder. It also revealed the years of experience of respondents, 33.3% of the respondents have between 1-5years working experience, 25.6% have between 6-10years working experience, the same percentage goes for those within the range of 11-15years working experience. 6.4% of the respondents have 16-20years of experience and 21-30years of experience and 1.3% of the respondents have between 31 and above years of experience. 15.4% of the respondents have executed project ranging from 0-5, 24.4% of the respondents have executed 6-10 projects, 11-15 projects were executed by 20.5%, 16-20 projects were executed by 12.8% of the respondents and 24.4% of the respondents have executed project that are more than 20 in number. This shows that the respondents are qualified to give their opinion on this area of study.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
Conclusions
This study assessed the effect of variation on final cost of building project in Nigeria. The main aim of the client is to get their project completed without any delay or additional cost which should also be the focus of consultant who is representing the client in achieving the objective of project in term of cost, time and quality. Based on outcome of this research, it was concluded that;
- Financial problems of the owner affect severely the quality and progress of the project, therefore adequate funding should be guaranteed by the client before the commencement of any project.
- Change in specification by owner, change in scope of the project, inadequate working drawing details and change in design by the consultants are major changes affecting the quality and cost of the construction.
- The nature of the work which has to do with the complexity of the work, environmental conditions and the type of procurement methods used play a major role in influencing the occurrence of variation, thus affecting the rate of project delivery.
- Delays in the project as a result of reworks, demolition, procurement of material, health and safety have the most predominant impacts of completion of the project.
Recommendations
After the extensive research on this topic from introduction to conclusion, the following recommendations will serve as means of minimizing the impacts of variation on project delivery in Ibadan, Oyo state, Nigeria. Generally minimizing variation is not easy. Some situations are avoidable and some may be unavoidable, but there are strategy actions that can be taken in order to minimize variation at different stages as:
- Clients should provide a clear brief of the scope of works, Clear and thorough project brief would assist in eliminating variations arising because of the unclear scope of work for the contractor it will also help to reduce the miscommunications between the parties.
- Enhance communication, and co-ordination is required at the design stage and all parties should be proactive all times. Direct communication and continuous coordination will provide professionals an opportunity to review the contract documents thoroughly that would help in eliminating the variations arising because of conflicts in contract documents and also eliminate design discrepancies and errors as well as omissions in design.
- Consultant should ensure that the design/specifications fall within the approved budget and the budget team should be appointed and participate during the design phase;
- Most variation orders can be traced back to reduced time spent on project planning and design stages due to consultant accepting unreasonable time frame from clients. More time for thorough detailing in design should be given to reduce variation in future. Contract document and adequate time for the Quantity Surveying to prepare the document is important in order to avoid problem in future.
- The building design should be comprehensive enough and local building materials should be specified for the work.
- Based on the prevailing economic climate in Nigeria, the pricing, opening of tenders and award of contract should not exceed 28 days.
- Project managers should study the materials that have irregular trends of inflation and carefully prepare their inventory management so that they can reduce the menace of inflation. They should also get accurate information and research with regard to procurement procedure, material and plant.
- Design and Build form and other similar forms of contracts, should be operated for major projects. This reduces the risk of variations
- All expenses of prime cost provisional sums and others by the contractor should be under the approval of the clients or his representative on site.
- The clients should release fund whenever it is due to the contractors so that to avoid delays and subsequent cost overrun.
An advance payment to cover cost of materials on site should be made to contractors on time.
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