Project Cost Control In The Nigerian Construction Industry

ABSTRACT
The construction industry being solely responsible for economic growth of the nation will base on the government’s fiscal policy and budget the formulation of its own policy plan on how to carry out development within that budget and equally give the nation a healthy developed environment. Besides, the overall aim of cost control and management is to make sure that scarce resources are utilized to the optimum benefits of the main parties to a construction contract. That means that design and execution of a project should produce maximum value for money. Given therefore, the high cost rate of money for construction resources and high interest in this dwindling, deregulated and depressed economy, it is pertinent that efficient costing should be a very strong element in project design and implementation.

The economic aspects of construction are complicated by the fact that the functions of design and production are generally separated. At the design stage, the designer will usually not know the methods and equipment available to the contractor who may ultimately build the project, and who is directly responsible for the materials used, which for most buildings account for about two-thirds of the total cost of the project. This is not to suggest that the contractor has no contribution to make, but since the labour which he controls, cost only about half that of the materials, his efforts can easily be nullified by any design which makes excessive or unnecessary use of materials. This will have serious adverse effect on the project cost, its execution and completion date and may lead to delay and outright abandonment.

The need to have cost data available from the earliest stages of the design has encouraged the development of methods of “cost planning” and the wider application of such techniques if cost is to become as it should be, an integral part of design. All these should be geared towards effective cost management and control as a solution to project abandonment.

Management is a leading factor in any investment. Prosperity breeds mismanagement. Paradoxically, management is the single factor which forces an upturn in a recession. Management is the single factor which separates prosperity and recession. It is the resources well managed or mismanaged today that makes for tomorrow’s prosperity or depression. The economic depression we are now facing is more out of mismanagement of resources than lack of resources. The key to the success of our construction investment industry is professional management. There is urgent need for innovations in the cost management of our construction resources for viable products. The vital question however is whether the Project Manager being the construction cost planner is economizing enough the variables that affect the cost of construction which are supposed to be under his control in other to bring down cost of construction to a tolerable level. This is the main focus of the study to unveil the management philosophy, practice and inputs to be affixed in evaluating and monitoring construction cost in order to reduce project abortion and abandonment, which are caused by project cost overruns.

Key Words: Project Cost, Cost control, Construction Industry, Project abandonment, Cost over-run, Time over-run, Project delay, Project Management.

I THE PROBLEM
In Nigeria, many construction Projects development have failed owing to the various technical and financial pressures of cost limit, quality and value optimization. Jagboro and Banalola (2005) wrote that the interim report of the Presidential panel on contracts at the wake of the present democratic government in Nigeria confirmed a staggering amount of over four hundred and fifty billion naira for project which can be classified as failed contracts, spanning from 1979 to 1998. The main reason for this is not far-fetched as many of the professional firms involved in project administration lack adequate management inputs in both quantitative and qualitative terms.

Another reason for this high rate of projects abandonment and failed contracts in Nigeria, is that in most government projects, the mobilization fee which is given to the contractor is reimbursed to those who awarded the contract as “bribe” usually of huge sums of money and this thereby increases the cost of the project, affects the quality of job executed by the contractor and will also leave the project either unexecuted or abandoned. This is because the money meant for the project execution have been diverted into individual pockets(Osemenam, 2004).

However, the design of building and other infrastructure is predicated on different contributors exhibiting various professional skills with a view to obtaining an optimum design solution. These inputs are based on the understanding of design and execution parameters ranging from functionality and usefulness of the project, aesthetics and appearance, safety of the structure, quality of workmanship, cost and financial matters and most importantly clients satisfaction with the project on completion. Business everywhere is faced with everyday challenges for survival and the need to adapt is very important. Appointing the project manager at the right time and seeking his professional advice for cost matters is a very key problem in the Nigerian construction delivery.

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