Economic contractions have been reported recently in resource-dependent economies, Nigeria in par... more Economic contractions have been reported recently in resource-dependent economies, Nigeria in particular. Construction businesses in such countries have become more vulnerable to receivable issues because the financial situations of their clients have worsened. This is not new; even in good times, construction businesses must have a well-managed strategy to succeed under severe bad debt regimes – successful businesses in Africa's public procurement arena must be able to cope with debts owed to them for several years, including frequent and debilitating new debts. How does a business remain afloat when clients remain bad debtors persistently? There is more to this than simple cultural or economic science. This study aims to explore strategies used by these businesses to survive the huge burdens of accounts receivables under the Nigerian public procurement arena. It proposes a conceptual model for an efficient management of account receivables by using data obtained from three major construction firms operating in Nigeria. The firms' archival records were compared with data from a questionnaire survey. Conclusions are drawn on alternative strategies for construction businesses regarding trade receivables in chaotic times e.g. by way of invoice factoring options. Implications of this study are quite useful to international construction businesses and project management researchers. Insights are drawn on the importance of finance on the concept of project success in developing countries and firms' business success.
Built Environment Project and Asset Management, 2018
Purpose A section of project management literature attributes overruns to estimators’ deceit and ... more Purpose A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs. Design/methodology/approach The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (deta...
Public procurement system in Nigeria has over the years been grossly abused leading to cost infla... more Public procurement system in Nigeria has over the years been grossly abused leading to cost inflation,delay in project delivery, poor quality of work, and project abandonment. The aim of this study is toexamine the impact of the Due Process Policy on construction projects delivery in Nigeria. Data werecollected using a structured questionnaire distributed to 52 random selections of contracting, consultingand public organisations operating in Lagos Nigeria. Data were analysed using descriptive statistics. Theresults show that due process policy has a very positive impact in Nigeria’s procurement terrain.Adherence to due process proceedings had highest impact on cost savings, prequalification ofcontractors and detailed project design, quality of project delivery, and project duration. The study serveas a feedback to the construction stakeholders in Nigeria and contains useable information for optimizingthe existing due process mechanism to enhance not only probity, accountability, tra...
Journal of Building Performance ISSN: 2180-2106 Volume 4 Issue 1 2013 , 2013
Public procurement system in Nigeria has over the years been grossly abused leading to cost infla... more Public procurement system in Nigeria has over the years been grossly abused leading to cost inflation,delay in project delivery, poor quality of work, and project abandonment. The aim of this study is to examine the impact of the Due Process Policy on construction projects delivery in Nigeria. Data were collected using a structured questionnaire distributed to 52 random selections of contracting, consulting and public organisations operating in Lagos Nigeria. Data were analysed using descriptive statistics. The results show that due process policy has a very positive impact in Nigeria’s procurement terrain. Adherence to due process proceedings had highest impact on cost savings, prequalification of contractors and detailed project design, quality of project delivery, and project duration. The study serve as a feedback to the construction stakeholders in Nigeria and contains useable information for optimizing the existing due process mechanism to enhance not only probity, accountability, transparency and competition in public contract awards, but also the policy’s resultant effects on quality of executed projects, delivery-on-budget and time considerations.
Built Environment Project and Asset Management Vol. 8 No. 4, 2018 pp. 358-371, 2018
Abstract
Purpose – A section of project management literature attributes overruns to estimators’ ... more Abstract Purpose – A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs.
Design/methodology/approach – The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (detailed in the study). The goal of the analysis is to explore spontaneity and causal impact in the relationship between changes in prices of construction materials and project costs. Kolmogorov-Smirnov and Anderson-Darling tests were used to obtain the probability distributions of the causal relationships.
Findings – Findings show disproportionate positive correlations between changes in material prices and outturn costs in Nigeria. An important dimension to this, however, is that although fluctuations in material costs often trigger variations to project costs, outturn price only accounts for about one-third of actual cost variability. Recovery of costs, not least profit making, under these conditions is a complex process. Originality/value – This paper concludes that dynamism in cost attributes is neither a deceit nor a delusion; understanding and tolerating them is not a systemic weakness, rather an essential key to project success and stakeholder satisfaction. Findings from the study also bring measured certainties to the transformation of variable costs into fixed price outcomes, an important consideration that will help contract estimators and project managers to understand the likelihood of fluctuation in material costs and how these might trigger variability in project costs.
Economic contractions have been reported recently in resource-dependent economies, Nigeria in par... more Economic contractions have been reported recently in resource-dependent economies, Nigeria in particular. Construction businesses in such countries have become more vulnerable to receivable issues because the financial situations of their clients have worsened. This is not new; even in good times, construction businesses must have a well-managed strategy to succeed under severe bad debt regimes – successful businesses in Africa's public procurement arena must be able to cope with debts owed to them for several years, including frequent and debilitating new debts. How does a business remain afloat when clients remain bad debtors persistently? There is more to this than simple cultural or economic science. This study aims to explore strategies used by these businesses to survive the huge burdens of accounts receivables under the Nigerian public procurement arena. It proposes a conceptual model for an efficient management of account receivables by using data obtained from three major construction firms operating in Nigeria. The firms' archival records were compared with data from a questionnaire survey. Conclusions are drawn on alternative strategies for construction businesses regarding trade receivables in chaotic times e.g. by way of invoice factoring options. Implications of this study are quite useful to international construction businesses and project management researchers. Insights are drawn on the importance of finance on the concept of project success in developing countries and firms' business success.
Built Environment Project and Asset Management, 2018
Purpose A section of project management literature attributes overruns to estimators’ deceit and ... more Purpose A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs. Design/methodology/approach The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (deta...
Public procurement system in Nigeria has over the years been grossly abused leading to cost infla... more Public procurement system in Nigeria has over the years been grossly abused leading to cost inflation,delay in project delivery, poor quality of work, and project abandonment. The aim of this study is toexamine the impact of the Due Process Policy on construction projects delivery in Nigeria. Data werecollected using a structured questionnaire distributed to 52 random selections of contracting, consultingand public organisations operating in Lagos Nigeria. Data were analysed using descriptive statistics. Theresults show that due process policy has a very positive impact in Nigeria’s procurement terrain.Adherence to due process proceedings had highest impact on cost savings, prequalification ofcontractors and detailed project design, quality of project delivery, and project duration. The study serveas a feedback to the construction stakeholders in Nigeria and contains useable information for optimizingthe existing due process mechanism to enhance not only probity, accountability, tra...
Journal of Building Performance ISSN: 2180-2106 Volume 4 Issue 1 2013 , 2013
Public procurement system in Nigeria has over the years been grossly abused leading to cost infla... more Public procurement system in Nigeria has over the years been grossly abused leading to cost inflation,delay in project delivery, poor quality of work, and project abandonment. The aim of this study is to examine the impact of the Due Process Policy on construction projects delivery in Nigeria. Data were collected using a structured questionnaire distributed to 52 random selections of contracting, consulting and public organisations operating in Lagos Nigeria. Data were analysed using descriptive statistics. The results show that due process policy has a very positive impact in Nigeria’s procurement terrain. Adherence to due process proceedings had highest impact on cost savings, prequalification of contractors and detailed project design, quality of project delivery, and project duration. The study serve as a feedback to the construction stakeholders in Nigeria and contains useable information for optimizing the existing due process mechanism to enhance not only probity, accountability, transparency and competition in public contract awards, but also the policy’s resultant effects on quality of executed projects, delivery-on-budget and time considerations.
Built Environment Project and Asset Management Vol. 8 No. 4, 2018 pp. 358-371, 2018
Abstract
Purpose – A section of project management literature attributes overruns to estimators’ ... more Abstract Purpose – A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs.
Design/methodology/approach – The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (detailed in the study). The goal of the analysis is to explore spontaneity and causal impact in the relationship between changes in prices of construction materials and project costs. Kolmogorov-Smirnov and Anderson-Darling tests were used to obtain the probability distributions of the causal relationships.
Findings – Findings show disproportionate positive correlations between changes in material prices and outturn costs in Nigeria. An important dimension to this, however, is that although fluctuations in material costs often trigger variations to project costs, outturn price only accounts for about one-third of actual cost variability. Recovery of costs, not least profit making, under these conditions is a complex process. Originality/value – This paper concludes that dynamism in cost attributes is neither a deceit nor a delusion; understanding and tolerating them is not a systemic weakness, rather an essential key to project success and stakeholder satisfaction. Findings from the study also bring measured certainties to the transformation of variable costs into fixed price outcomes, an important consideration that will help contract estimators and project managers to understand the likelihood of fluctuation in material costs and how these might trigger variability in project costs.
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Purpose – A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs.
Design/methodology/approach – The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained
from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (detailed in the study). The goal of the analysis is to explore spontaneity and causal impact in the relationship between changes in prices of construction materials and project costs. Kolmogorov-Smirnov and
Anderson-Darling tests were used to obtain the probability distributions of the causal relationships.
Findings – Findings show disproportionate positive correlations between changes in material prices and outturn costs in Nigeria. An important dimension to this, however, is that although fluctuations in material
costs often trigger variations to project costs, outturn price only accounts for about one-third of actual cost variability. Recovery of costs, not least profit making, under these conditions is a complex process.
Originality/value – This paper concludes that dynamism in cost attributes is neither a deceit nor a delusion; understanding and tolerating them is not a systemic weakness, rather an essential key to project success and stakeholder satisfaction. Findings from the study also bring measured certainties to the transformation of variable costs into fixed price outcomes, an important consideration that will help contract estimators and project managers to understand the likelihood of fluctuation in material costs and how these might trigger
variability in project costs.
Purpose – A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs.
Design/methodology/approach – The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained
from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (detailed in the study). The goal of the analysis is to explore spontaneity and causal impact in the relationship between changes in prices of construction materials and project costs. Kolmogorov-Smirnov and
Anderson-Darling tests were used to obtain the probability distributions of the causal relationships.
Findings – Findings show disproportionate positive correlations between changes in material prices and outturn costs in Nigeria. An important dimension to this, however, is that although fluctuations in material
costs often trigger variations to project costs, outturn price only accounts for about one-third of actual cost variability. Recovery of costs, not least profit making, under these conditions is a complex process.
Originality/value – This paper concludes that dynamism in cost attributes is neither a deceit nor a delusion; understanding and tolerating them is not a systemic weakness, rather an essential key to project success and stakeholder satisfaction. Findings from the study also bring measured certainties to the transformation of variable costs into fixed price outcomes, an important consideration that will help contract estimators and project managers to understand the likelihood of fluctuation in material costs and how these might trigger
variability in project costs.