Effect Of Due Process In Direct Labor And Contract Administration In Nigeria Construction Industry

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Effect Of Due Process In Direct Labor And Contract Administration In Nigeria Construction Industry


Abstract


This research work looks at Due Process Application in direct labor and contract administration in Nigeria construction industry. It gives a brief background of the introduction of due process generally in the Nigerian public sector and specifically in the construction industry. This research goes further to highlight the gains made by the introduction and application of due process in construction projects. This was achieved by interviews and administering of questionnaires, which focused on the awareness/understanding of the concept of due process by project participants in the Nigerian construction industry. This project also looked at the effectiveness of the application of due process procedure in the Procurement of construction project, since it’s adoption. It further asserts that ‘application or non-application’ of due process procedure or mechanism affects project delivery. This research finally recommends that due process procedure should strictly be complied with and further extended to other tiers of Government, which are the State and Local Government. In doing this the gains so far made in the procurement of construction projects in the public sector would be fully harnessed.


Table of Content


  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content
  • List of Tables
  • Abstract

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background to the Study

When someone speaks of due process, or receiving their “due”, they are usually talking about something that they feel is entitled to them. In fact, that is precisely the historical meaning of due process (Maine,2000). Ever since antiquity, every society has had some concept of it. That’s because the notion of due process varies from society to society. The basic idea remains constant, but how much a person feels rightly entitled to depends on the historical and cultural context in which they live. Due process is tied to custom, which can vary even among regions or localities within a nation (Sadler,1986). Customs are the regular habits and non-religious rituals of a local people. Customs along with folkways (proverbs and symbols) and norms (guides for behavior) make up the sociological definition of culture. The extent of due process among the customs of a people is the hallmark of a civilized or decent society.

Due process generally refers to the regularity, fairness, equality, and degree of justice in both procedures and outcome (Maine,2000). The ancient Egytians, for example, required judges to hear at least both sides of a case. The code of Hammurabi is a type of due process— something written down so people would know what the laws are. Even the ancient Chinese had some minimal procedures for notice and hearing when people were charged with something. When Jesus Christ was put on trial, He was given the opportunity to reply and present evidence. Even in the Igbo traditional setting, there are procedures set out by the elders on sharing of community lands to families in that community. When these procedures are followed, the issue of due process comes to mind. Historically,the founding fathers thought of due process as fairness.

Fairness is the idea of doing what is the best. It may not be perfect, but it’s the good and decent thing to do (Haiman,1991). Now, lets trace the origin of due process as relates to contract award in the Nigerian context.

Over the years in Nigeria, the public procurement system has been described to be characterized by non compliance with the principle of tendering process in the selection of contractors that have the financial, technical and managerial know-how to execute projects to time, cost and quality ends. The increasing reports on the abuse of public procurement system in the three tiers of Government in Nigeria have led to huge losses of resources in various public projects (Binpiu,2005).

Obiora (2006) states that the country has lost billions of money over the years as a result of abuse of procedures, inflation of contract costs, lack of transparency, competence based competition and merit as the fundamental criteria for the award of public contracts. There was also the problem of influence peddling, sycophancy and use of primordial considerations. These abuses led to abandonement of government projects, non value for public treasury, high cost of procurement and others. It is a well known fact that the process of contract award both in the public and private sectors in Nigeria leaves much to be desired. It has not only entrenched corruption in the system, but has also contributed immeasurably to the underdevelopment of our country. This has also equally led to unquantifiable wastages and delays in the execution of contracts, as well as loss of confidence in Nigeria by foreign and even local investors (Agbu,2010). Based on wide spread corruption in the award and execution of contract, conducting government business degenerated so much by the year 2000 (Oguonu,2012). This was due to the fact that no serious attention was paid to Public Service Rule, Financial Regulations and Ethics and Norms because of obvious systemic failure.

The construction industry activities include procurement of goods and services as well as the execution of a variety of physical structures and infrastructure (Ayangade, Wahab and Alake 2009), using different procurement methods. The activities of construction industry has helped in contributing to Gross Domestic Product (GDP), Gross fixed capital formation and creation of high level of employment to the changing professionals (Wahab, 2005). In industrialized countries, the building industry is responsible for up to 22.00% of the GDP and employs up to 12.00% of the total labour force, but in Nigeria, it is responsible for 16.00% of the GDP and employs up to 20.00% of the labour force (Akindoyeni, 2004). The construction industry has many features which set it apart from other process industries and which accentuate the need for professional engagement. Various methods have been used for procuring building and other infrastructural facilities in the country. One of the changes and new trends, which now influence the procurement system in the country, is the increasing fragmentation of the stages involved in construction process (Bamisile, 2004).
Until 1999, Nigeria had practically institutionalized corruption as the foundation of governance.

Hence institutions of society easily decayed to unprecedented proportions as opportunities were privatized by the powerful. This process was accompanied, as to be expected, by the intimidation of the judiciary, the subversion of due process, the manipulation of existing laws and regulations, the suffocation of civil society, and the containment of democratic values and institutions. Power became nothing but a means of accumulation and subversion as productive initiatives were abandoned for purely administrative and transactional activities. The legitimacy and stability of the state became compromised as citizens began to devise extra-legal and informal ways of survival. All this made room for corruption. (BPP website).

There was therefore an urgent call for Procurement Reforms and enthronement of Due Process in the Nigerian public Sector. It is as a result of this, that due process was established in 2001.

Nigeria nation has lost several trillions of Naira on poorly executed contracts, bad workmanship, collapsed structures, delayed and abandoned projects, and the multiplier economic and social benefits derived from such projects are unachievable (Ajator, 2004). The problems of capital development program from the era of military dictatorship were characterized by full paid ghost projects, poorly executed or even abandoned projects.

Since the early 80s, Nigeria has been confronted with a magnitude of economic problems. These economic problems include stagnant growth, rising inflation, unemployment, food shortage and mounting external debt. Nigeria therefore like most other nations, has been battling with how to achieve its major economic objectives. These objectives include full employment, price stability, economic growth and healthy balance of payments. It has not been easy for Nigeria to realize the above objectives. The root of all these problems is corruption (Oguonu 2007).

Over the years in Nigeria, the public procurement system has been described to be characterized by non-compliance with the principles of tendering process in the selection of contractors that have the financial, technical and managerial know-how to execute projects to time, cost and quality ends. The increasing reports on the abuse of public procurement system in the three tiers of government in Nigeria have led to huge losses of resources in various public projects [BMPIU, 2005]. Oboirien, 2005 showed that the country might have lost billions of money over the years as a result of abuse of procedures, inflation of contract costs, lack of transparency, competence based competition and merit as the fundamental criteria for the award of public contracts. There was also the problem of influence peddling, sycophancy, and use of primordial considerations. These abuses led to abandonment of government projects, non- value for public treasury, high cost of procurement and others.

Obasanjo (2004) rightly observed that Nigeria had practically institutionalized corruption as the foundation of governance. Hence, institutions in the society easily decayed to unprecedented proportion as opportunities were privatized by the powerful. Power became nothing but a means of accumulation and subversion as productive initiatives were abandoned for purely administrative and transactional activities. The legitimacy and stability of the state became compromised as citizens began to devise extra-legal and informal ways of survival. All this made room for corruption.
There was therefore an urgent call for Procurement Reforms and enthronement of Due Process in the Nigerian public Sector. In 2001, the Federal Government issued New Policy Guidelines for procurement and award of contracts in Government Ministries/Parastatals (Circular F. 15775 of 27th June, 2001).

In the President Obasanjo political dispensation, the Budget Monitoring and Price Intelligence Unit (BMPIU), also known as Due Process was inbuilt into the capital budgetary system, so as to ensure that projects started are completed within stated criteria.

Due process implies that governmental activities and business can be carried out openly, economically and with transparency without favouritism and corruptible tendencies (Ezekwesili 2004). The essence of this is to ensure that rules and procedures for procurement are made in such a way as to be implementable and enforceable. It is hoped that this Due Process should put an end to “the Business as Usual Syndrome” in Nigeria.

Adesugba (2004) opined that in order to provide additional boost to government anti-corruption policy, an office of the BMPIU, otherwise known as Due Process (D.P) was established in June 2003. To realize the objective for which it was set up, BMPIU was headed by a financial specialist, Mrs. Obiageli Ezekwesili and staffed with experts in financial regulations, project management and corruption prevention.

The seemingly professional failure of Nigerian project planners, designers and administrators to give value to capital projects has cast doubt on the credibility and relevance of construction professionals and contractors. Nigerian government since 2002 fiscal year has reservation on the import of consultancy fee scale in capital project delivery (Awosemusi 2002) and has instituted the Due Process Compliance (DPC) exercise in the planning and implementation of capital budget /projects (Ezekwesil 2002). The goal of BMPIU is to ensure full compliance with laid down guideline and procedures for the procurement of capital and minor capital project as well as associated goods and services for all Government contracts.

The objectives of BMPIU according to Ezekwesili (2003) are as follow:

  1. To introduce more honesty, accountability and transparency into the procurement process.
  2. To determine whether or not Due Process has been observed in the procurement of services and contracts.
  3. To establish and update pricing standards and benchmarks for all suppliers to Government
  4. To ensure that only projects which have been budgeted for are admitted for execution.
  5. To harmonize existing government policies / practices and update same on public procurement
  6. To monitor the implementation of projects during execution with a view to providing information of performance output and compliance with specifications and targets.

Lock (1989) opined that the objectives of contract / project performance or management can be condensed under three headings. A successful project is one which has been finished on time, within its cost budget and to a technical or performance standard which satisfies the end user. The Due Process Certificate ensures that the stated criteria are met by who will be the contractor to execute any project and the originating government Ministry and Public institutions.

For any project to actually get Due Process Certificate readiness to implement, Kharbanda and Stallworthy (1989) stated some criteria for choosing the contractor to include:

  1. Cost incentive and liability arrangement proposed
  2. Local currency content of the project cost and the total investment required for the project
  3. Appreciation and knowledge of local conditions at the job site.
  4. Quality of personnel nominated to carry out the project, with special emphasis on the project manager
  5. Long terms meant for the project
  6. Project organization and relationship with local subcontractors
  7. Quality and contents of the technical proposal
  8. Contractor’s recent experience in the design and construction of similar projects
  9. Ability to provide the owner with technical support services
  10. Schedule for project completion

The above criteria which are not exhaustive are similar to that used by the Due Process Unit (DPU) in contract procurement, regulation, certification, monitoring, implementation, evaluation, training and advisory. It is worthwhile to inquire whether this DPC has impacted positively or not on the performance of public executed projects since its inception.

The introduction of Public Procurement Reforms in Nigeria followed a World Bank Country Procurement Assessment survey conducted in 1999 which established the link between poor/weak public procurement procedures and corruption as well as its far reaching negative \consequences on national development especially in the area of infrastructural development in Nigeria. The Assessment Report revealed that 60k was being lost to underhand practices out of every N1.00 spent by Government and that an average of ten Billion US Dollars ($10b) was being lost annually due to fraudulent practices in the award and execution of public contracts through inflation of contract cost, lack of procurement plans, poor project prioritization, poor budgeting processes, lack of competition and value for money and other kinds of manipulations of the procurement and contract award processes.

In order to address the above shortcomings, the Federal Government initiated the Public Procurement Reform as part of its Economic Reform agenda designed to restore due process in the award and execution of federal government contracts. This led to the setting up of the Budget Monitoring and Price Intelligent Unit (BMPIU known as Due Process) in 2001 to implement the Federal Government’s Public Procurement Reform Policy aimed at minimizing open abuses to known rules, processes and standards in the award and execution of public sector contracts in Nigeria.

The federal government under former President Olusegun Obasanjo noted the urgent need for transperency in government procedures so as to be able to move the system forward. Hence the federal government in 2000 commissioned the World Bank to collaborate with some private sector specialists to study financial systems and general procurement-related activities of the country (Oguonu, 2012). The essence of that request to the World Bank was to assist Nigerian government “ with a process of enthroning efficiency, accountability, integrity and transparency in governemnt procurement and financial management system” (Ekpenkhio,2003). It was based on this that the Country Procurement Assessment Report was produced through a participatory review approach from stake holders including representatives from the private sectors and federal state and local governments with assistance from international and national consultants.

Following the growing Public demand that the reforms are sustained and institutionalized with legal backing, a Public Procurement Bill was articulated in 2003/2004 by the Leadership of BMPIU and presented to the National Assembly. The Public Procurement Bill was thereafter passed by the National Assembly on the 30th of May, 2007 and subsequently signed into Law by President Yar Adua on the 4th of June, 2007. (BPP website)

Today the duties carried out by the bureau of public procurement is popularly referred to as due process.


1.2 Statement of the Problem

There are various procurement methods used in carrying out different project in the construction industry, of which due process is applied. Analysis have shown that most contracts awarded by the government or its officials are awarded through corrupt means. Some of these contracts are awarded to contractors who have agreed to give the procurement official a certain percentage of the original contract amount. This encourages contractors to use substandard goods, render poor services or sometimes project abandonment (Ayodele, Charles, Akinusi & Marion 2010).

Over the period, Nigeria as a nation has lost several trillions of Naira on poorly executed contracts, bad workmanship, collapsed structures, delayed and abandoned projects, and the multiplier economic and social benefits derived from such projects are unquantifiable. It has not been easy for the nation to realize the full economic objectives. The root of all these problems is corruption ( Ejiofor 2009).

In recent years, many people are wary of doing business in Nigeria because; the cost of doing business here is predictably higher than elsewhere. There seems to be more need, now than ever, to ensure that, rules and procedure put in place for any form of procurement show adequate clarity of purpose to make them implementable and enforceable ( Nwaogwugwu 2005).

There are due process criteria set for any public project to be undertaken at different government levels. Irrespective of this, there are still several abandoned public projects due to selfish reasons. It is therefore worthwhile to investigate the level and extent of the use of due process for project procurement in Nigeria.


1.3 Objectives of the Study

The aim of this study is to assess the effect of due process in direct labor and contract administration in Nigeria construction industry.

The following are the study objectives.

  1. To examine the level of understanding/awareness of Due Process in direct labor and contract administration in Nigeria construction industry
  2. To assess the effectiveness of due process in direct labor and contract administration in Nigeria construction industry
  3. To determine challenges or barriers of due process application in direct labor and contract administration in Nigeria construction industry.

1.4 Research Questions

Based on the research objectives, the following research questions have been proposed.

  1. What is the level of awareness/understanding of Due Process in direct labor and contract administration in Nigeria construction industry?
  2. How effective is due process application in direct labor and contract administration in Nigeria construction industry?
  3. What are challenges/barriers towards effective due process application in direct labor and contract administration in Nigeria construction industry?

1.5 Hypothesis of the Study

The study formulated and tested the following hypothesis in order to achieve the study objective;

  1. H0: Due process application have no significant effect in direct labor and contract administration in Nigeria construction industry
  2. H0: Due process application have a significant effect in direct labor and contract administration in Nigeria construction industry

1.6 Significance of the Study

This study is to assist the policy makers and other stakeholders on the effects of the Due Process procedure in the delivery of public projects in Nigeria. The assessment of the Due Process application will help to ascertain the gains of its use from when it was introduced in 2001 to 2013 in contract award, performance and implementation using Due Process certifications. Finally, this will throw more light on the importance of due process procedure as a prerequisite for project procurement used for public project delivery.


1.7 Scope of the Study

As it is more directly related to construction procurement, construction contract, project delivery, monitoring, implementation and evaluation. Sampling of the professionals will be limited to Architects, Quantity Surveyors, Civil/Structural Engineers, Builders and Services Engineers along with the construction firms that have handled public project contract. This study will focus on the project carried out within five years in which due process procedure was applied.


1.8 Limitation of the Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study.


1.9 Definition of Terms

Due Process

This is a mechanism for ensuring strict compliance with the openness, competition and cost accuracy rules and procedures that should guide contract award within the Federal Government of Nigeria.

Due Process Unit

The Unit under the Presidency charged with budget monitoring and price intelligence. It ensures that project procurements are implemented in accordance with laid down criteria.

Due Process Methodology

The application of basic tools and criteria in project management, assessment, monitoring and evaluation of government projects to ensure transparency, integrity, competence, competitiveness and create value for money in the planning and execution of capital program by the Due Process.

Procurement

This is the process that creates, manages and fulfills contracts. It is an integral part of construction projects and it covers the overall pattern of decision made by the client in executing project

Due Process Compliance

The exercise and assurance that these basic tools and criteria in the planning and implementation of capital budget / projects are adhered to by all the parties involved in project execution.


1.10 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows.

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the effect of due process in direct labor and contract administration in Nigeria construction industry, Enugu State as case study. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was on the effect of due process in direct labor and contract administration in Nigeria construction industry, Enugu State as case study. The study is was specifically focused on examining the level of understanding/awareness of Due Process in the procurement of construction projects by projects participants assessing the effectiveness of due process in public project execution in Nigeria and determining challenges or barriers of due process application in project procurement process in Nigeria.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are Architects, Quantity Surveyors, Civil/Structural Engineers, Builders and Services Engineers.


5.3 Conclusions

With respect to the analysis and the findings of this study, the following conclusions emerged;

  1. That the due process mechanism to a reasonable extent has established transparency and fair play in contracting procedures and also allow participation by reputable, competent and reliable contractors in bidding for contracts. The agency has succeeded to a great extent in eliminating of sales of contract papers to touts and sychophants. As a result, the level of contract manourvers have reduced and you can’t use yes I have my man at the helm of affairs to get contract without following the procedures.
  2. That Nigerians understands due process office as an agency set up by Government to regulate and set standard to enforce harmonised bidding and tender documents in contract bidding and equally understand the agency as an institution that formulates general policies and guidelines on public procurement. That an efficient construction sector is a pre-requisite to effective national development and usually contributes to gross national product and national employment

5.4 Recommendation

Based on the findings the researcher recommends that;

  1. There is need for government to examine issues critically on how projects are initiated, bid for, negotiated and awarded and why they get abandoned. Who and what are really responsible?. Are poor planning, harphazard procurement, and incompetent contractors and project management the key causes or is it financial management?. Inspite of the mobilization fees already paid, why is nobody held accountable when projects are not completed.
  2. The composition of the public procurement council under the procurement act is very critical to contracts implementation. The federal Government should expeditiously constitute the council for proper administration and monitoring of contracts in Nigeria.

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