BUIL07 - COMPARISON OF PUBLIC AND PRIVATE CONSTRUCTION PROJECT PERFORMANCE IN SOUTH WESTERN NIGERIAN CONSTRUCTION INDUSTRY

CHAPTER ONE

1.0                                                           INTRODUCTION            

1.1       Background of the Study

Developing countries such as Nigeria are in dire need of infrastructure development, and some developing countries are venturing into public–private partnerships (PPPs). The multiple objectives of PPPs (Bing  et al., 2004), including promoting infrastructure development, developing the local economy, reducing costs, increasing construction and operation efficiencies, and improving service quality by incorporating the private sector's knowledge, expertise and capital, have attracted increasing interest from policy makers, researchers and industry practitioners. Governments believe that PPP procurement can provide a wide variety of net benefits for society, including enhanced government capacity, innovation in delivering public services; reductions in the costs and times associated with project implementation, and transfer of major risk to the private sector, with the net result of securing value for money for taxpayers (Gruneberg, Hughes and Ancell, 2007). In Uganda, for example, the ministry in charge of public works and transport has been seeking the development of PPP-funded infrastructure projects, and the government is in the process of formulating policies and guidelines for their implementation. Despite great efforts to increase locally generated income to finance national activities from the nation's budget, full local budget financing remains an unachieved goal in Uganda. Local taxes still finance 75% of Uganda's 7.552 trillion shilling annual national budget (equivalent to approximately 2.8 billion US dollars), and there is a backlog of infrastructure projects to be undertaken. In the recent past, a few projects financed under PPP arrangements have been undertaken, such as the Karuma hydroelectric power dam and the Police Headquarters (Ministry of Finance Planning and Economic Development, 2010).

PPPs are risk-sharing investments in the provision of public goods and services, seen by governments as a means to launch investment programmes that would not be possible in reasonable amounts of time within the available public-sector budget (European Investment Bank, 2005). The Canadian Council for PPPs defines a PPP as "a cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards" (Grant, 1996). PPP are arrangements whereby the public and private sectors, with the financial assistance of financial/lending institutions, work together to implement public-sector projects and services, from the planning stage through the design, construction, and operation and maintenance stages, or parts of these stages (Bing   et al., 2004). Each of the parties has his/her own interest in the success of this "union of convenience". In developed countries, the involvement of the private sector in the development and financing of public facilities and services has increased substantially over the past decade (Li   et al., 2005).

In Nigeria, the legal framework for PPP in Infrastructural Development is the Infrastructure Concession Regulatory Commission (ICRC) Act of 2005. The Act empowers the ICRC to monitor and regulate PPP related projects and, also specifies the requirements for the participation of the private sector in government infrastructure projects such as in financing, construction, development, operation and maintenance through various contractual arrange-ments. However, for foreign investors, there is an additional requirement in compliance with the provisions of the Nigerian Investment Promotion Commission (NIPC) Act of 1998 which is Nigeria’s principal investment law. This Act governs entry of foreign direct investment into Nigeria. Under it, and in order to do business in Nigeria, foreign companies are required to incorporate local subsidiaries or branches. They are also subject to the Foreign Exchange (Monitoring and Miscellaneous) Provisions Act of 1995 on the free movement of foreign exchange directly attributable to the specific investment. Since the establishment of the ICRC and its variants in some of the States in Nigeria, various infrastructure projects have been embarked upon in power and energy, water supply, road construction and other transportation facilities, health care, housing and agriculture. And in the most recent in the tend of public procurement in Nigeria was the public procurement act of 2007, The objective of the procurement act 2007 is to ensure accountability, fairness, openness, and integrity in the probity and transparency in the procurement process of public infrastructural facilities (Ekpenkhio, 2008). It was observed that prior to 1999 public procurement process in Nigeria was uncoordinated and disorderly with the result that government at the Federal, States and Local Government Levels and their Agencies were purchasing or procuring apparently the same goods and services within the same budget period at price differential as wide as 1000% (Moneke, 2011). It was obvious that procurement exercises were seen as opportunistic vehicles through which the public office holders siphon the public fund with the result that projects were poorly implemented; with consequential huge costs and hardship on the citizenry. The Public Procurement Act 2007 was initiated to ensure that the gains of the Due Process Office were not lost or reversed with his exit. The Act came into being on 4^th June, 2007 following the assent of the Bill by President Umaru Musa Yar’Adua. Also in the trends of public procurement system in Nigeria is establishment of The Bureau of Public Procurement (BPP), The Bureau of Public Procurement (BPP) plays an important role in ensuring due process in the procurement of public works and services. It uses techniques such as benchmarking to ensure that the prices paid for goods and services are fair and reasonable. The integration of different elements of a project into a single contract makes benchmarking difficult, however, and there is a risk that it may slow down the procurement timetable and increase costs for bidders as well as the authority.

1.2       RESEARCH PROBLEM

There is confusion and misinterpretation of the roles of some of the professionals in the management of Construction projects in Nigeria. This could be attributed to many factors. One of the factors is the lack of proper working knowledge on the part of majority of people as to the roles of each professional in the industry. As a result of this, qualified and appropriate professionals are often not engaged for the design of projects as well as for the execution process of the projects. To compound the problem, there are Building Regulations in Nigeria, this has brought the construction industry into a case of deception and lack of quality assurance into the construction industry, improperly regulation design are being made and the construction phases of building project including their control and inspection during site execution. As a result of these reasons, we continue to hear of such things like: Design and details that cannot be economically constructed, over designing, inappropriate/inadequate specifications, Poor workmanship, Breaking up and re-construct, collapse of buildings, and so on.  These are a waste of national material and human resources and a great loss to the economy of the Nigerian nation, which should not be the case in the first place. To a greater extent, qualified engineers and architects are now carrying out the designs of most of our buildings projects accurately as expected. This has led to lack of better and functional buildings being designed. The construction phase however, is not yet so lucky. In majority of cases, unqualified persons, who are artisans, craftsmen and technicians or people without any technological knowledge of the construction process, are carrying out the production process. In other to provide clarity in the building project delivery, this study discusses the roles and conduct of professionals in the planning, design, execution and administration of building projects and the use of qualified and appropriate professionals for both the planning, design and the construction phases of building projects in Nigeria.

1.3       RESEARCH QUESTIONS

a.         What is the discrepancy between the public and private construction project performance in Nigeria construction industry?

b.         What are the various regulatory policy been used in controlling the public and private sector in the Nigeria construction industry?

1.4       AIM OF THE STUDY

The aim of this research is to make comparison between public and private construction project performances with a view to assisting in knowing the different processes and techniques used between the two sections in the project delivery process in the construction industry. 

1.5       OBJECTIVES OF THE STUDY

a.         To examine the discrepancies between the public and private construction project performance.

b.         To assess the various regulatory policing being used in controlling the public and private sector in the construction industry.

1.6       SIGNIFICANCE OF THE STUDY

The private sector takes the responsibility and risks for designing, financing, enhancing or constructing, maintaining and operating the infrastructure assets needed to deliver a public service in accordance with the public sector's output specification. The public sector pays for the project through a series of performance- or through put-related payments, including service delivery and return on investment. A central government may provide payment support to the public sector through grants and other financial mechanisms. The supervising project manager is the client’s representative and his appointment is to ensure that, the project is carried out according to the contract documents. His duty id to coordinate the inputs and activities of the parties on the project and also administer the contract on behalf of the client. This is different from managing construction project process. While the role of the supervising project manager is more of administering (Administrative) the contract, managing the construction process is purely technical. It is wise and cost effective to ensure that the physical execution of building construction is carried out by builder(s). Any changes to the design involves rework which may be abortive, modifications and or additions to the scope of works. This in turn increases the time required for the rework itself and thus the cost, decreasing the productivity due to the interruption of work flow and affecting the morale of the workmen to a certain extent. The measurement of the project scope based on quantities indicates the productivity that can be utilized for estimation, control, measurement and monitoring of outputs.

1.7       SCOPE AND LIMITATION

The scope o this study is to assess the comparison of public and private construction project performance in Nigerian construction industry and his limited to the private and public construction project

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