The construction industry is a very important sector of the Nigerian economy. It contributes significantly to its Gross National Product. The rapid growth in Nigeria's economy and population, particularly during the oil-boom years, required additional physical infrastructures to accommodate additional inputs to various components of the TCSS national product. Thus, the construction industry has a weighted influence on all sectors of the Nigerian economy.
Onabule (1991) described the building construction activities as the single largest investment sector in the Nigerian economy. In addition, appreciable percentage of the loans and advances of merchant and commercial banks, insurance companies e.t.c are invested in real estate and constructions. The promulgation of decree 53 of 1989, to establish Mortgage has also increased investment in real estate in recent times.
Unfortunately, the per capita cost of building construction is increasing at a much faster rate than at which income grows for individuals, companies and governments. Houses are becoming more affordable. Closely associated with this high cost of construction is project overruns and abandonment of construction projects nationwide.
The construction industry, unlike many manufacturing ventures, is concerned mostly with one-off projects (Harris and McCaffer, 1979). This naturally creates difficulties for effective cost control because each new contract often has a fresh management team because labour transient and recruited on ad-hoc basis and sites and passed throughout the country.
For construction company, the scenario described above tends to create problems of selecting communication with other parts of the company. Therefore, subcontracting and Labor are common. Added to all these are problems associated with changing conditions. The resultant effect of these problems of costing is cost overrun.
Cost overrun can be considered as the difference between actual cost of a project and its Cost limit. It occurs when the resultant cost target of a project exceed its cost limits where Cost limit of a project refers to the maximum expenditure that the client is prepared to incur on a completed building project while cost target refers to the recommended expenditure for each element of a project.
The ugly marks of these project cost overruns are seen in the numerous abandoned building project in the country. According to Akindoyemi (1988) projects are rarely completed in the country at scheduled time and cost.
The problem of project abandonment is serious and pervading during the era of military rule. This situation has become so worrisome that the present Obasanjo administration had to set up a panel to look into cases of abandoned federal projects in Nigeria. This study is design to examine the incidence of project abandonment (Project cost overruns) in the building industry in old llorin states. This study will provide information that will serve as a basis for articulating public policy regarding project abandonment in Nigeria. This position has become very necessary because government and their agencies are the single most important client in this industry, they account for over 80% of projects in the industry.
This study establish the incidence of cost overrun in building projects, determine the causes of project cost overruns in building and assess the management techniques to forestall overruns in the Nigeria building industry.
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