An Appraisal Of The Effects Of Delay On Construction In Nigeria

Project and Seminar Material for Building Technology BT

An Appraisal Of The Effects Of Delay On Construction In Nigeria


Abstract


One of the most common problems in the construction project delivery is delay. Projects can be delayed due to number of reasons that may be due to the client, the contractor, consultants, or a third party and may occur early or later in the project development. The objective of this study was to assess the major causes of delay, to evaluate the resultant effects of delay, to investigate the methods of minimizing delay in construction project and developing a model on the relationship between cost overruns and time overruns. This study was carried out based on literature review and questionnaire survey. The statistical tools employed in the analysis were bar charts; pie charts; percentages; mean score ranking. The degree of agreement among ranking was tested using the F-test. A total of thirty three causes of delay, seventeen resultant effects of delays and fifteen methods of minimizing construction delay were identified based on literature review. The questionnaire survey was distributed to the targeted respondent in Lagos, Nigeria construction industry. The objectives of the study have been successfully achieved hence the top most important factors that contributed to the causes of delay are financially related such as Financial/ Cash flow difficulties; Financial difficulties faced by contractors and public agencies and Failure to pay for completed works. Time overruns and cost overruns remained the most common effects of delays in construction projects. To minimize delays in construction projects it has been investigated that the top two most effective methods of minimizing construction delay includes: having a reliable sources of funding for the project and consistent payment of interim certificates as and when due. From the model developed it can be deduced that there is a significant relationship between cost overruns and time overruns. Based on the outcome of the findings recommendations were made.

Keywords: Delay; Construction Cost overruns; Project.


Table of Contents


  • Section
  • Page
  • Title page
  • Certification
  • Declaration
  • Dedication
  • Acknowledgement
  • Table of Contents
  • List of Tables
  • List of Figures
  • Abstract

Chapter One

Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Aim and Objectives
  • 1.4 Research hypotheses:
  • 1.5 Significance of the study
  • 1.6 Scope and delimitation of the study
  • 1.7 Definition of key terms

Chapter Two

Literature Review

  • 2.1 Introduction
  • 2.2 Types of delay
  • 2.3 Causes of delay
  • 2.4 Delay mitigation measures
  • 2.5 Effects of delay
  • 2.6 Reduction of Effects of Delay
  • 2.7 Summary

Chapter Three

Research Methods

  • 3.1 Introduction
  • 3.2 The Universe of the study
  • 3.3 Re-Statement of Hypotheses
  • 3.4 Research Design
  • 3.5 Methods of Data collection
  • 3.6 Questionnaire Design
  • 3.6.1 Section A: Company and Respondent profile
  • 3.6.2 Section B: Causes of Delay
  • 3.6.3 Section C: Effects of Delay
  • 3.6.4 Section D: Methods of minimizing Construction Delay
  • 3.6.5 Section E: Case project
  • 3.7 Questionnaire Distribution
  • 3.8 Target Population

Chapter Four

Data Presentation, Analysis and Discussion of Findings

  • 4.1 Introduction
  • 4.2 Analysis and presentation of descriptive data
  • 4.3 Discussion of Findings

Chapter Five

Conclusion and Recommendations

  • 5.1 Conclusion
  • 5.2 Recommendations
  • 5.3 Areas for further studies.
  • 5.4 References
  • 5.5 Appendices

List of Tables


  • 2.1 Major causes of delay as identified by previous researchers
  • 2.2 Major causes of delay and their corresponding mitigation measures as identified by CIRC Report (2001)
  • 2.3 Delays reduction measures as suggested by Assaf and Hejji (2006)
  • 3.1 Questionnaire distributed and responses
  • 4.1 Years of experience of respondents
  • 4.2 Mean Score (MS) and Rank (R) of the thirty three causes of delay on project delivery as perceived by the three groups of respondents
  • 4.3 Mean Score (MS) and Rank (R) of the seventeen resultants effects of delay on project delivery as perceived by the three groups of respondents
  • 4.4 Mean Score (MS) and Rank (R) of the fifteen ways of minimizing the effects of delay on project delivery as perceived by the three groups of respondents
  • 4.5 Multiple Regression Analysis on the relationship between time overruns and cost overruns
  • 4.6 Test of agreement on the Mean Score of the stakeholder’s perceptions on the causes of delays on project delivery
  • 4.7 Test of agreement on the Mean Score of the stakeholder’s perceptions on the effects of delay on project delivery
  • 4.8 Pearson’s correlation on the relationship between cost overruns and time overruns on project delivery.

List of Figures


  • 4.1 Academic Qualifications of respondents.
  • 4.2 Professional Qualifications of respondents.
  • 4.3 Type of Organization

Chapter One


Introduction

1.1 Background of the Study

Delay in a construction project is a universal problem and has become a major endemic facing the Nigerian Construction Industry. Delay in this sense is a situation when the contractor, the project owner or several other factors jointly or severally contribute to the non-completion of the project within the original or the stipulated or agreed contract sum and agreed contract period.

Construction project delay however, often leads to costly disputes and leaves a debilitating effect on parties involved (owner, contractor, consultant) to the contract in terms of growth in adversarial relationships, dispute, protracted litigation, arbitration, total abandonment, and a general feeling of apprehension towards each other. It is however imperative to create awareness of the extent to which these delays can adversely affect project delivery (Ahmed, Azhar and Castillo, 1999).

According to Al-Momani (2000), the successful execution of construction projects and keeping those within estimated cost and the prescribed duration therefore depend on a methodology that requires sound engineering judgment. He further stated that reliable prediction of construction

cost and duration; controlling it within budget and schedule is widely used in decision making and is an essential part of successful management. This estimated construction cost and duration fixed for individual projects are probable cost and period arrived at as a result of the conventional factors that have over the years become a standard for calculating such costs and period from experience usually ends up serving as guides that do not often end up as actual cost/ time in project delivery.

Arriving at the stipulated project cost and duration from the inception however, is an indicator of efficiency, but the construction process as a whole is subject to many variables and unpredictable factors (resulting from many sources) which however in a long run will have an effect on the whole construction cost and period. These sources include the performance

the parties, resources availability, and environmental conditions, involvement of other parties, and contractual relations and many more.


1.2 Statement of the Problem

One of the major outcomes of the present ailing social and economic conditions in Nigeria is the enormous waste of resources due to project delay and cost overruns. This issue of delay has become a watch word of the construction industry during the late 80s’ and up till now. Emphasis is however placed on delay as one of the major factors causing cost overruns of construction projects and leaving a deliberating effect on the various parties involved to the contract in terms of growth in adversarial relationships, dispute, protracted litigation, arbitration, total abandonment and a general apprehension towards each other. Designers and Contractors try to respond to various effects of delay by seeking to find alternative methods on how this delay can be minimized if not totally eradicated.

In bridging the huge delay and cost overruns, there is an urgent need for a thorough appraisal of the processes involved in project delivery in Nigeria. Recent studies discovered that various projects of high economic and social relevance to Nigeria are in complete state of abandonment as a result of the various project delay and cost overruns. Nonetheless, the pivotal role of the Nigerian construction industry in the mainstream economy gives weight to the need for effective planning and management of this sub sector. Dlakwa and Culpin (1990) observed that

Construction investment accounts for 60% of the gross fixed capital formation (GFCF) (i.e. the total national investment in Nigeria). By implication, the construction industry in Nigeria has a far reaching effect as it could impede national growth and planned national developments if it becomes ineffective. The enormous debt burden of over US$31 billion as at 2005 ending makes this problem of project delay and cost overruns in practically all infrastructural projects much worse (Omoregie and Radford 2006) . It therefore become imperative to critically analyze the causes and effects of delay in project execution and propose appropriate measures that would help reduce its occurrence.


1.3 Aim and Objectives

The aim of the study is to assess the effect of delay on construction project delivery in Nigeria.

The objectives are therefore:

  1. To assess the major factor that causes delay in construction projects delivery in Nigeria.
  2. To evaluate the resultant effects of delay on construction project delivery.
  3. To investigate the methods by which these effects of delay on construction project delivery could be minimized.
  4. To develop a model on cost overruns and time overruns.

1.4 Research Hypotheses:

According to Kerlinger (1973), hypothesis is a conjectural statement of the relationship between two or more variables. A hypothesis states the researcher’s expectations concerning the relationship between the variables in the research problem.

Six sets of research hypotheses would be adopted in order to achieve the stated aim and objectives of the study. They are:

  1. H1.1: There are no significant differences in the stakeholder’s perceptions relating to the causes of delay on construction project delivery.
    H1.2: There are significant differences in the stakeholder’s perceptions relating to the causes of delay on construction project delivery.
  2. H2.1: There are no significant differences in the stakeholder’s perceptions relating to the effects of delay on construction project delivery
    H2.2: There are significant differences in the stakeholder’s perceptions relating to the effects of delay on construction project delivery.
  3. H3.1: There is no relationship between cost overruns and time overruns on construction project delivery.
    H3.2: There is relationship between cost overruns and time overruns on construction project delivery.

1.5 Significance of the Study

Construction industry plays an active role in the fixed capital formation of any economy. It however accounts for over 60% of the Gross Fixed Capital Formation of any nation. In Nigeria for example, the contribution of the construction industry to national growth has necessitates improved efficiency in the industry by means of cost-effectiveness and would certainly contribute to cost savings for the whole country as a whole.

Planning and implementation of capital projects is the backbone of any economic development but the case is different in Nigeria as relevant professional bodies are hardly involved in the full circle of budget preparation and implementation (Ezeokonkwo 1995).

It’s been however proven that delay, time and cost overruns are regarded as the most important factor for project abandonment or contractor failure in Nigeria with average cost overruns exceeding 20% (Elinwa and Uba, 2001) and time overruns of between 50 and 420% (Elinwa and Joshua, 2001). Improper planning at pre- contract stage does give rise to delay in project execution with the resultant consequences of project disruption and abandonment. Adequate planning at early stages is however considered as an important factor in reducing delay in most projects in the developing countries taken Nigeria as a case study.

The result of this research would therefore serve as a foundation for addressing this problem of delay by providing ways by which these effects on construction delivery can be minimized.


1.6 Scope and Delimitation of the Study

In view of the fact that construction projects are very wide in scope ranging from Building projects, Civil engineering projects to Heavy and Industrial engineering projects, but the causes of delay on these projects remains virtually the same although it may be more in terms of cost/time implication in some than the other due to lack of detailed documentation and expertise.

The research work therefore will be limited to various building engineering projects at different point within the last 10 years. The data collected shall be limited to Lagos state of Nigeria. This is because greater proportions of the building construction industries have their head offices located in the state.


1.7 Definition of Key Terms:

Construction Cost Overruns:

This is defined as the change in the Final Contract Amount to its Initial Contract Amount divided by the Initial Contract Amount (Jackson, 1990). Mathematically represented as:

Cost overruns = Final Contract Amount- Original Contract Amount

Original Contract Amount

Construction Time overruns:

This is defined as the lapse between the agreed completion date and the actual date of completion

Delay:

This is known as the most common, costly and risky problem encountered in construction project and that because of the overriding importance of time for both the owner in terms of performance and the contractor in terms of money, it is the source of frequent disputes and claims leading to arbitration, litigation and eventual abandonment of the total project scheme (Ahmed, Azhar, Castillo and Kappagantula, 1999).

Project:

A project is a unique undertaking or scheme that involves an individual or group of people which has a pre- determined start and finish dates and not only a strict budget but considers the investment involved and the benefits that may accrue from such investment (Ekpo 1995).


Chapter Five


Conclusion and Recommendations

5.1 Conclusion

The ultimate desire of any client is to get their project completed without any delay or additional cost. However, the results emanated from the study can be concluded that all respondent groups tended to admit their own fault as shown in the top significant causes of construction delay. There is therefore an agreement in the view of the stakeholders that financial related delays such as financial / cash flow difficulties and financial difficulties faced by the contractors and public agencies are the top significant causes of delay in construction project delivery.

The conventional cost overruns and time overruns still remained the most frequent effects of delay in the Nigeria construction industry although the effects are slightly more on time overruns than cost overruns. This could be as a result of contractors’ inability to honour contract deadlines and using shortages of material as an excuse or the consultants’ inability to implement proper design and obtaining adequate knowledge about the usage of materials.

Arbitration/Litigation and Total abandonment of projects were no longer seen to be the usual effects of delay as outlined by past researchers. This could be as a result of the implementation of risk management procedure which enables the parties to the contract to terminate, treat, transfer and tolerate contractual risk hence, the number of disputes and court proceedings on construction contracts have enormously declined.

The provision of reliable sources of funding for the project; the consistent payment of interim certificates as at when due and the effective strategic planning and control mechanisms are the most significant means of mitigating the effects of construction delays in project delivery as greed by the stakeholders in the industry.

The inclusion of increased contingencies as a means of mitigating the effects of delay (cost overruns) on construction project delivery on the other hand may not be absolutely correct as most projects despite the inclusion of a certain percentage as contingencies still do experience cost overruns at the end of the day.

From the model, it could be deduced that there is a significant relationship that existed between cost overruns and time overruns hence, cost overruns is deduced as a function of a constant (-7.17) and a coefficient (Time overruns) of (2.26). It should however be noted that the model could have been better validated if factors that constitute cost overruns such as variation; provisional sums; prime cost sums; provisional quantities; fluctuations; and contractual claims were considered along side with time overruns. It is only after these had been done that the model could be permanently applied.


5.2 Recommendations

Based on the above conclusion drawn from the findings in chapter four, the following recommendations were made:

  1. Adequate funding should be guaranteed by any client before commencement of any project. This does not mean that the client must have all the funds ready from the onset, but proper budgetary planning must be put in place to ensure adequate funding of the project otherwise alternative sources of finance should be employed such as BOOT and BOT which allows contractors to participate in financing new projects. This will ensure that the contractors are paid in accordance with the contract agreement once a comprehensive economic analysis and workable financial plans are been fully put in place. The contractors on the other hand must ensure a proper management of his resources and plan his cash flow by utilizing the progress payments and ensure regular progress on site.
  2. Sufficient planning and the establishment of sufficient quality control mechanisms should be put in place to avoid design changes. Appropriate time should be allocated to careful production of designs and complete tender documents, so as to improve the quality of contract documents with minimum errors and discrepancies and reduce delay during the construction stages.
  3. Design related issues such as changes in drawings; incomplete and faulty specification; clients initiated changes and general change order have very damaging effect on project delivery which invariably leads to delay and cost overruns. These are issues that can be controlled by proper design process management and timely decision making.

5.3 Areas for Further Studies

Delays thus have significant effect on cost overruns. The model relating delay and cost overrun provide a benchmark for future research work in the study of project management in Nigeria and also facilitate comparison with other countries.


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