AN INVESTIGATION INTO THE CAUSES OF DELAY IN LARGE CONSTRUCTION PROJECTS IN NIGERIA

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AN INVESTIGATION INTO THE CAUSES OF DELAY IN LARGE CONSTRUCTION PROJECTS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In the construction industry, the term delay is used to describe the time overrun of a project beyond the officially agreed completion time due to causes by the parties in the contract, who are the, employer, contractor and the consultant (Msafiri, 2015). Project delays are a common problem not only with an immeasurable cost to society, but also with debilitating effects to the contracting parties (Ondari & Gakera, 2013). Project delays are a reoccurring problem and have negative impacts on project success in terms of time, cost, quality and safety (Knight, Hurst & Farahani, 2009).

Currently, construction accounts for a large percentage of the annual gross domestic product (GDP). However, the growth in the construction industry has influenced the country’s economic development. As observed in developed countries, construction is considered unique in that it can stimulate the growth of other industrial sectors. Hence to consider growth of the construction industry in terms of its contribution to GDP in isolation is somewhat misleading in that, to do so understates the crucial role played by the construction industry .Therefore, improving construction efficiency by means of cost effectiveness and timeliness would certainly contribute to cost saving for the country as a whole. Efforts directed to cost and time effectiveness were associated with management issues. If delay is well mitigated and managed, it would act as capacity building in the growth of the small and medium contractors.

According to Abedi et al., (2011), eight hundred and forty five of Kick starter top projects in the USA missed their targeted delivery dates. Jonathan and Arditi(2001), studied 50 most funded projects around the USA and found that out of the studied projects; only 8 out of the 50 met their set deadlines. Successful execution of projects and keeping them on time and within budget depends on effective planning and scheduling right from the beginning. High levels of experience and accurate time and cost estimating are necessary to plan a project effectively (Keane & Caletka, 2008). Chan & Kumaraswamy (1998), studied projects delays in Hong Kong.

They observed that for projects to be deemed as having been successfully delivered, they should be on time, within budget and expected quality, otherwise lack of any of these is deemed a project delay. An investigation by Odeyinka &Yusif (2010) shows that seven out of ten projects surveyed suffered delays. There are many factors that contributed to causes of delays in construction projects. These range from factors inherent in the technology and its management, to those resulting from the physical, social, and financial environment. Delays can give rise to disruption of work and loss of productivity, late completion of project, increased time related costs and third party claims and abandonment or termination of contract. Delays are costly and often result in disputes and claims. Therefore, mitigation measures will minimize or avoid the adverse consequences of delays in construction projects (Abedi et al., 2011).

According to Ahmed et al. (2002), delays can be grouped in the following four broad categories according to how they operate. The four categories include: excusable or non-excusable delays, excusable compensable delays or non-compensable delays, concurrent delays or non-concurrent delays and critical or non-critical delays. Each of these categories of delay is defined by how they operate contractually.

According to studies on projects in Ghana by Fugar & Agyakwah (2010), indicate that project financing, economic and natural material supply are the major causes of project delays. Akinsiku & Akinsurile (2012) while studying projects in Nigeria indicate that some of the factors that influence project delays include poor contractual management, slow or delayed project approval processes by project stakeholders change in laws and regulations, poor communications and contractual problems among others.

Kikwasi (2012), studied causes of project delays in Tanzania. He classified the causes of project delays according to material related delays, design related delays, equipment related delays, project related delays, contractor related delays, and consultant related delays and external related delays as the most common and highly rated factors influencing delays in projects. Assaf et al. (1995) summarized main causes of delay in large building and construction projects in Saudi Arabia and classified causes of project delays into contractual factors, organizational factors,

client factors, external related factors and project factors. With each of this they identified approval of shop drawings, delays in payment to contractors, slow decision making and executive bureaucracy in owner’s organizations among others as the most important causes of delay. According to Ayudhya (2011) delays in construction may be caused by the client, the contractor, the consultants, acts of God, or a third party and they may occur early or late in the job.

When projects experience delays, timelines are extended and rate of work is increased to try and beat the deadlines. This then results in poor quality of projects, increased costs incurred, little or no return on investment, inability to meet project need, legal issues arising between parties or total abandonment of the project. This brings about distrust between parties, dissatisfaction and sometimes broken work relationships.

1.1.1 Project Delays in Nigeria

In Nigeria, construction projects are referred to as part of the main pillars contributing to economic growth. Delays in Nigerian construction projects are said to be a common and re-occurring phenomenon and are experienced in any-sector that delivers services through project constructions (Msafiri, 2015). The government of Nigeria and its developing partners continue to allocate huge financial resources to finance development. However the benefits intended for the developments are partly or never realized due to un-successful project implementations. Specific, research undertaken to investigate what ails construction projects in Nigeria especially in the public sector provides insights to what is said to be the major causes of project delays including poor planning, poor quality and risk measures, poor communication and poor stakeholder involvement (Kagiri & Wainaina, 2008).

According to KNBS (2012), the construction industry contributed 3.8%, 4.1%, 4.3%

and 4.1% towards Gross Domestic Product (GDP) for the years 2008, 2009, 2010 and 2011 respectively. This is an average of 4.1% as compared to the 10% for the developed economies. KNBS (2012) attributes delay of Nigerian projects to various factors including financial constraints and political influence, poor bidding and awarding processes among others.

In Nigeria, construction projects continue to experience delays hence never taking off (Mbaluka & Bwisa, 2013). Project management procedures are said to guide managers on how to manage project resources efficiently ensuring delivery. Pre project activities comprising of planning, designing, estimating, negotiating, purchasing, scheduling, controlling and accounting should be done carefully before embarking on any project development activities to ensure elimination of project delays .According to a report done for African Development Bank to its board of directors on its projects portfolio, the biggest delay facing its projects is the approval process delay (Gohou & Soumare, 2010).

Talukhaba (1999), in his study of Nigerian high-rise projects observed that factors that cause project delays are associated with the project participants, the process and the environment of project implementation. He further described the effects of each of these factors on the projects and their implications on the same. Some of the described effects include cost overruns, time overruns and the legal issues arising due to delay. In summary, one can conclude that the main problem with Nigerian construction industry is related to client erratic payment, architects instructions, improper planning, clients’ instruction, climatic related factors such rock, underground water and rain, design changes, slow decision making and executive bureaucracy.

1.2 Statement of the problem

The success of a construction project is critically affected by the capacity of the implementing firms, design variations, nature of the contract and stability of the economic environment. However there seems to be no agreement among scholars and practitioners as to the nature of the causes of delays in construction projects. There also seems to be lack of consensus as to the principal causes of delays in public construction projects. For instance, Aibinu et al (2002) argue that the main cause of delay is poor planning. According to Frimpong (2003), poor risk management is to blame while Karimi (1998) argues that lack of experience and intellectual ability among contractors as the main reason. Other causes that have been highlighted include; poor organizational culture (Kagiri, and Wainaina 2008)

poor government policy guidance (Karimi, 1998). In Nigeria, more than 40% of all project failures leading to litigation arise from delays in project completion (Kagiri, and Wainaina, 2008).

The increase in project delays in the construction industry is hurting the economy because it results in wastage of resources, enhanced costs of projects and frustration among customers, yet construction is one of the principal sectors that can revitalize economic growth in Nigeria. Investment in construction projects and related infrastructure and services has multiple direct and indirect effects. It triggers forward and backward linkages through additional investment in manufacturing of building material, transport and government (GOK, 2001). Unfortunately, delays in large construction projects particularly buildings, will continue to plague the construction industry in the foreseeable future unless strategic measures are taken by the industry. The government may lack sufficient mitigating measures to address the problem. Although much has been done in identifying the factors that influence projects delay in large construction projects in Nigeria, the industry still experiences delays (Alaghbari & Salim 2007). This is attributed to the fact that there is still lack of information for the effective mitigation of delay. This study therefore seeks to contribute to these attempts by others in identifying further the causes of delay in large construction projects in Nigeria and then come up with strategies to mitigate such delays.

1.3 Aim of the Study

The rationale of this evaluation is: (a) to appraise the major causes of delay in large construction projects in terms of the impact on the parties involved. (b) to minimize the delays by improving the functionality of management of projects within the construction industry.

1.4 Objectives of the Study

1.4.1 General Objective

The overall objective of this study is to determine the causes of delays in the completion of large construction projects in Nigeria and find solutions to this problem.

1.4.2 Specific Objectives

The specific objective is of the study are:-

i. To identify the causes of delays in the completion of large construction projects in Nigeria.

ii. To analyze how finance causes delays on the completion of large construction projects in Nigeria.

iii. To analyze the influence of design variation on delays in the completion of large construction projects in Nigeria, and

iv. To develop a strategy to mitigate delays in the completion of large construction projects in Nigeria.

1.5 Research Questions

The study sought to answer the following research questions:

i. What are the causes of delays in the completion of large construction projects in Nigeria?

ii. What is the effect of finance on delays in the completion of large construction projects in Nigeria?

iii. What is the influence of design variation on delays in the completion of large construction projects in Nigeria? and

iv. What strategy can be developed to mitigate delays in the completion of large construction projects in Nigeria?

1.6 Justification of the Study

This study will provide insights that reveal the factors influencing project delays in Nigeria with an aim of enabling project delivering organizations become more knowledgeable of the factors hence looking into ways that can minimize project delay. With this, project delivering organizations shall maintain productivity and sustainability by identifying, acquiring and adequately implementing measures that prevent delays in projects hence leading to improved delivery.

The study sought to highlight the important factors accounting for the delays in large construction projects. In this way, the study findings will contribute to the universe of knowledge regarding the initiation, planning, execution and termination of construction. This knowledge is important especially to the construction industry which is constantly looking for better ways to complete projects on time, within costs and agreed- upon performance parameters. An understanding of the key causes of delays will play an important role in the ways large projects are conceptualized, planned and executed.

This study will also be important to the government in formulation of construction industry policies and the way these policies are implemented. An informed policy provides useful guidelines to the industry which minimizes project failures, reduces risks and severally enables order in the construction industry. This study will also benefit other stakeholders such as;

Contractors: The results of this study will be of great importance to any individual involved in project construction and implementation since it will give them an insight on the factors that influence project delays in Nigeria.

Developers: The results of this study will be of great importance to the owners of the project since it will give them an insight on how effectively projects can be implemented and delivered without experiencing delays caused by the identified factors.

Scholars: The results of this study will be of great importance to scholars since it shall provide insight on the factors influencing project delays in Nigeria hence enable them attain informed information on the same.

This study also intends to spawn practical and theoretical further research questions that can become useful study basis for future researchers. Study findings should be considered as a contribution in the debate about how to improve the efficiency and effectiveness in the construction industry particularly with regard to scheduling and cost management.

1.7 Definition of Terms

Delay: Akinsiku & Akinsulire (2012), define delay as a pervasive phenomenon in construction project delivery. According to Aibinu & Jagboro (2002), delay can be defined as a situation in which a project contractor and project owner jointly or separately fail to meet their end of the bargain in project completion.

Construction Delays: Assaf et al. (2008) defined delay as the time overrun compared to completion date as specified in a contract, or beyond the date that the parties agreed upon for delivery of a project. Majid & McCraft (2009) defined delays as the time overrun beyond the contract date or the date that the critical activities have been delayed.

Contract Delays: Akinsiku & Akinsulire (2012) define contract delays as delays that are caused by inability of a contractor to proceed with the project diligently or efficiently due to lack of or as a result of inadequate resources needed to perform work on a project.

Finance: Finance, related delays are said to be delays that are concerned with financial characteristics. Some of these characteristics include cash flow problems, financial constraints among others (Ibironke. Oladinrin, Adeniyi & Eboreime, 2013).

Organization: Organizational factors that contribute to project delays are said to be factors that are as a result of organizational activities, processes and guidelines. Organizational related delay factors are said to be influenced mainly by the organization’s operations hence the influence of factors coming from this on projects (Frimpong, Oluwoye & Crawford, 2003).

Concurrent delays: Delays caused by both parties in the contract.

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