MODELLING THE IMPACT OF CONTRACTORS CAPACITY ON CONSTRUCTION PROJECT DELIVERY

ABSTRACT

The study examine the modelling impact of contractors’capacity on construction project delivery in Nigeria. The survey research was used in this study to sample the opinion of respondents. This method involved random selection of respondents who were administered with questionnaires. Relevant conceptual, theoretical and empirical literature was reviewed. The target population of the study comprised selected students from Nile University, Nigeria. Three hundred (300) respondents constitute the sample size for this study. The descriptive and analytical approach was adopted using Chi-square to test and analyze the hypotheses earlier stated.Findings revealed that contract’s capacity has a significant impact on construction project delivery in Nigeria. Findings of the study also reveals that there are  factors militating against the delivery of construction project in Nigeria. Findings of the study also reveals that there are contractor’s skills that promote adequate contruction delivery. Finally, findings of the study further reveals that contractor’s capacity has a significant relationship with construction project delivery in Nigeria. It was therefore concluded that contractors’capacity significantly impacted on the construction project delivery in Nigeria. It was recommended that there is need to pay more attention to the management capacity of contractors during the selection process for successful project delivery.

CHAPTER ONE

INTRODUCTION

1.1 Backgound of the Study

          The construction industry all over the world constitutes one of the most important sectors in the economy of any country. It is well known that the construction industry is a very challenging industry as it is very competitive and unstable during economic down turn (De Valence &Runeson, 2011).Oladinrinet al. (2012) noted that construction industry plays an important role in the economy, and therefore vital to the achievement of national socio-economic development goals of providing shelter, infrastructure and employment. Construction activities affect nearly every aspect of the economy and the industry is vital to the continued growth of the economy. Oftentimes, it is perceived to be the enterpriser of its respective economy as it cuts across all aspects of human activities.

          The Nigerian construction industry is not an exception as its contributions range from enabling the procurement of services to the provision of buildings and other infrastructure, thereby providing employment opportunities to its labour force, while contributing immensely to the Gross Domestic Product (Ikechukwuet al., 2017). The industry accounts for 3.05% of the GDP and also provides employment opportunities for over 11 million Nigerians (National Bureau of Statistics, 2016).

          However, Oluwakiyesi (2011) stated that the construction industry is complex and requires proficient professionals who are ready to meet the expectations of their clients. Clients in the construction industry could be private individuals including corporate bodies or public organizations which include the government. In Nigeria, the Federal Government is often seen to be involved in the most complex projects with about 38.4% of the market (Ayangade,2009), thereby contributing significantly to the economic development of the country. Consequently, construction industry is a business arena for both construction and non-construction professionals. This is manifested in the ways construction firms sprang up daily and many who were inexperienced in the business of construction flocked in to make quick money (Ikaetal., 2012). This implies that there are so many contractors that are not technically and managerially competent. This makes procurement and contractor selection processes an onerous task to perform by the client. Yet, without a proper and accurate method for selecting the most appropriate contractor, the performance of the project will be affected denying the client value for money (Cheng &Heng, 2004).

          The procurement system basically comprises five common process elements; project packaging, invitation, pre-qualification, short-listing and bid evaluation (Hatush&Skitmore, 1997). The importance and concern given to procurement methods in the industry are based on two reasons. Firstly, the procurement of construction projects involves a series of processes that are interrelated and sequential. Therefore, effectiveness and efficiency of the processes have considerable impact on the success or failure of projects (Idoro, 2006).

          Secondly, several procurement methods are available for a developer to adopt in procuring a project and some are more appropriate for a particular project, hence, the project developer sometimes faces major challenge in selecting one method out of many others. Alhazini and McCaffer (2000) maintained that each project has its own characteristics and requirements, and for a project to be successful, the procurement method must address the technical features of the project alongside the clients' and contractors' needs. This reflects a very crucial importance of procurement methods and the contractor selection criteria for the delivery of construction projects.

          Consequently, one of the most difficult decisions taken by the clients in the construction industry is in the selection of contractors especially in public project with competitive bidding (Zavadskaet al., 2004). This is because construction project is characterized by risks and uncertainty; incompetent contractor increases the chances of time and cost overruns, substandard work, disputes, or even bankruptcy (Hatush, 1996). Thus, one of the ways of ensuring that a contractor is qualify to execute the assigned project in accordance with client and project objectives is to assess the contractor's capabilities at the prequalification stage and tender evaluation stage. Moreover, given the high number of competitors nowadays, successful execution of bidding process is very crucial (Alsaediet al., 2019).

          Pre-qualification as a pre-tender process is used to investigate and assess the capabilities of contractors to carry out a contract satisfactorily. The current practice of pre-qualification according to Public Procurement Act (PPA), 2007 of the Federal Republic of Nigeria (FRN, 2007) involves a screening procedure based on a set of selection criteria. Fundamentally, selection criteria are sets of factors considered in the selection of contractor for a project. For pre-qualification to be useful, however, it is necessary to know how these different criteria are likely to affect the main project objectives or Project Success Factors (PSFs) in terms of time, cost and quality. It has been reported in the past that, such knowledge was lacking in public procurement, as most client (and consultant) pre-qualifiers are more concerned with the process rather than with undertaking any serious study of the relationships (Hatush,1996).This may be as a result of the long-term confidence in the pre-selection process, and the fact that final selection is made predominantly on the cost elements of tenders (Ogunsanmi, 2013).

          In a related development, Akatsuka (1994) observed that the lack of post-construction evaluation which suggests that owners do not really feel that pre-qualifying contractors is important.However, with the spate of development, researchers are now interested in these relationships and it had received attention in the field as project delivery on schedule and within budget nowadays is observed to be less than expectation. Thus, Olatunji (2008) also reported that the economic resources often wasted in cost and time overruns, substandard work and shoddy workmanship, client-contractor-practitioner’s acrimonious relationships and non-performance of projects as envisaged by clients and end users is huge as a result of the wrong choices of contractors.Okoreet al. (2017) stated that in the recent past efforts were made towards delivery of projects on schedule and within the budget.Therefore, in order to ensure that, project is completed successfully; the client must select the most appropriate contractor. It is based on this background that the present study seeks to examine the model impact of contractor’s capacity on construction project delivery in Nigeria.

1.2 Statement of the Problem

          The main aim of the 2007 Public Procurement Act is to ensure that quality public projects are delivered on time, within budget, without acrimony (FRN, 2007). However, for a contractor to be able to deliver a project on time, the contractor must be well prepared; technically ready, managerially sound and financially stable. To ensure that such contractor is selected, proper selection and procurement process is required. This involves procurement systems that basically involve pre-qualification and bid evaluation (Mathonsi&Thwala, 2012).

          According to Ali (2011), for a project success, a contractor has to be carefully selected based on availability of knowledge, capacity and experiences; this ought to be considered before the tendering stage in order to ensure that an appropriate contractor is selected. But studies have shown that, despite pre-qualification exercise and the final selection, most clients are still faced with some challenges as some contractors have been reported to demonstrate incompetency and failed to deliver on scheduled and/or within the budget.

          Sidik (2010) asserted that there is no commensurate improvement in construction project success despite all the procurement and contractor selection methods adopted. Eriksson (2013) also discussed the issue further observed that the absence of competent contractors as a result of in adequate selection process is the key factor responsible for weakness of construction performance and need to be urgently investigated. In the same way, the industry has been criticized for its high costs, inefficiency, ineffectiveness, and delays in project due to the procurement process and the selection criteria being adopted (Adesanya, 2014).

          It was also observed by Othman (2016) that a large number of projects have been delayed and a lot have failed due to lack of proficiency and inability of the contractors which is as a result of the absence of adequate selection criteria used for the selection of contractors. This is seen as a vital issue in relation to the achievement of construction projects. Delays in project completion time and increase in cost of construction projects are closely related to specifications and contractors’ qualification such as financial, technical, experience, contract type, variation between the contractor’s bid price and the next lowest bidder’s price which have been associated with the capacity of the contractor (Omranet al., 2012).

          Similarly, in Nigeria, large numbers of projects have failed because of lack of competence and ability of the contractors to deliver promptly (Ajayi, 2010). This may have been due to the absence of appropriate selection criteria which allows selection of incompetent contractor. To improve and enhance the operations of the Nigerian construction industry, it is necessary to understand the key factors affecting the construction industry and its associated operations. From the foregoing, it is clear that there are unsatisfactory approaches in both private and public sectors in contractor selection methods which are considered most important factors that impacts on construction project success in Nigeria construction industry. Considering the foregoing, the research problem observed is based on the fact that, there has been an overwhelming challenge on the use of the best practices for the selection of contractors in the construction sector in Nigeria; therefore this study assessed the modelling impact of contractor’s capabilities on construction project delivery.

1.3 Obectives of the Study

The goal of the study is to determine the modelling impact of contractors’capacity on construction project delivery in Nigeria.

1. To determine the roles contractors on the delivery of construction project.

2. To determine the major factors militating against the delivery of construction project in Nigeria

3. To identifythe skills of the contractor that promote adequate work delivery in Nigeria

4. To investigate if there exists a significant relationship between contractors’capacity and construction work delivery in  Nigeria

1.4 Research Questions        

          The following questions guided this study;

1. What are the roles of contractors in the delivery of  construction project?

2. What are the major factors militating against the delivery of construction project in Nigeria?

3. What are the skills of contract that promote adequate construction delivery?

4. What is the significant relationship between contractors’capaciity and construction work delivery in  Nigeria?

1.5 Research Hypotheses

Hypothesis 1

H0: Contract’s capacity has no significant impact on construction project delivery in Nigeria.

H1: Contract’s capacity has a significant impact on construction project delivery in Nigeria.

Hypothesis 2

H02: There are no factors militating against the delivery of construction project in Nigeria.

H02: There are factors militating against the delivery of construction project in Nigeria.

Hypothesis 3

H0: There are no contractor’s skills that promote adequate construction delivery.

H1: There are contractor’s skills that promote adequate construction delivery.

Hypothesis 4

H0: There is no significant relationship between contractor's capacity and construction project delivery in Nigeria

H1: There is a significant relationship between contractor's capacity and construction project delivery in Nigeria

1.6 Significance of Study

          It is obvious from these numerous studies that the subject matter is of a serious concern to the construction industry all over the world; this also reflects a niche on the inadequate use of thecontractor selection criteria in the construction industry in Nigeria as it is obvious that some contractors have failed to meet up with procurement agreement. This study therefore is undertaken to assess the influence of contractor capacity on construction project delivery in Lagos with a view to improving contract administration.         The study is crucial as it will contribute to the knowledge entity, a deliberate and definite approach to an enhanced usage of the selection criteria for contractors in building projects.

          The findings of this study will benefit both the industry and the research community. With respect to the industry; clients will be better positioned to understand the details of what is to be considered during pre-qualification and selection in order to optimize and select the best contractors for a project.

The knowledge gotten from this work will make clients (especially Federal Government) and consultants to improve on their assessment and selection performance. Also, contractors will gain an increased understanding of the major factors affecting the bidding decision process.

1.7 Scope of the Study

          This research work was designed to assess the imapct of contractor capacity on construction project delivery in Lagos State, Federal Capital Territory because of the high concentration of public buildings.This work was limited to only public projects as private projects werenot included, The study was restricted to professionals in the construction industry namely; Architects, Builders, Quantity Surveyors, Contractors and Clients in the public sector that adopts multi-criteria process and those that adopt the lowest bidder process.

1.8 Operational Definition of Terms

Procurement: Procurement is defined as the act of obtaining by care or effort, acquiring or bringing out. In building and civil engineering works, it is generally understood to involve all the processes of acquiring, from the design through the construction, financing and sometimes operation until the client acquires what is required (Hibberdet al., 1991).

Contractors capacity: Contractors capacity are the skills a contractor possessed that makes him carry out his activities perfectly.

Contractor Evaluation: Contractor evaluation is the process of investigating or measuring project-specific attributes (Faridah, 2007).

Contractor Selection: Contractor Selectionrefers to the process of aggregating the results of evaluation to identify optimum choice (Faridah, 2007).

Bid Evaluation: Bid Evaluationis used to denote the procedure for strategic assessment to tender bids submitted by contractors (Wahab, 1986).

Open Tendering: A procurement procedure in which any qualified contractor may submit bid at tender (Brynjarsdóttir, 2016).

Closed Tendering: is a procurement procedure in which any qualified contractor may request to participate in the tender and whereby only those invited to tender may participate (Brynjarsdóttir, 2016).