1.1 Introduction
Construction industry in Nigeria had been a major source of employment for 70% of labour force in the country, thus it controls the capital flow, as well as labour resources, which has cost implications. Adequate management of these resources is considered an important aspect of project works; it determines to a large extent the overall success of project works. They described cost management system as a process that should be carried out throughout the life cycle of a project, from the inception to final completion and final payment to the contractor. In the light of this, the timeliness and cost effectiveness of various operation and decision carried out will determine to an extent the magnitude of cost that could be saved on the project (Kerzner, 2005; Ogunsemi and Jagboro, 2005).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Construction industry has complexity in its nature because it contains a large number of parties such as clients, contractors, consultants, stakeholders, shareholders, regulators and others. Construction projects in the Gaza Strip suffer from many problems and complex issues in performance, such as cost, time and safety (Shaban, 2008). Client satisfaction is therefore a fundamental issue for construction participants who must constantly seek to improve their performance if they are to survive in the global marketplace. However, client satisfaction has remained an elusive issue for a majority of construction professionals (Cheng et al., 2005).
Due to the demand for built products from foreign investors and the growing economy, Vietnam’s construction industry, experience strong growth. While some of the construction projects are successfully executed, others faced difficulties (Bui &Ling, 2010). Despite the availability of various control techniques and project control software many construction projects still do not achieve their cost and time objectives (Oluwale & Sun, 2010).
Most third world countries face acute endemic housing problem that over the years has raised both national and international concerns. Habitat and World Bank, for example, fund many housing schemes worldwide in addressing the housing issue. Likewise, governmental and non-governmental institutions foster and orchestrate self-help campaigns directed at reducing inherent housing deficiency in these poor nations. However, a growing number of unfinished buildings in such countries seem to overshadow the efforts and thus pose many questions as to what is behind the failure in providing such a highly needed commodity. One may wonder whether such a failure has anything to do with architecture, attitudes and practices of the people or is it just a thing to be pegged on socio-economic platform of the society (Mirema & Mhando, 2005). Construction cost is one of the most important criteria of success of projects throughout the lifecycle of the project and is of high concern to those who are involved in the construction industry. In order to manage construction project successfully various procurement strategies have been introduced. In spite very rarely projects are completed within estimated budget (Abdullah et al., 2010).
There are various factors that need to be considered by the contractors in order to make the decision to tender or not. The decision is highly related to the specific project and macro environment. It is hard to make a decision in a limited time by the management team. The decision generally is made on the basis of experience, intuition and guesses. (Egemen and Mohamed 2007, p.1373)
There are many researchers that have discovered the factors that affect the tender/ no tender process. Unfortunately, there has not been any similar research projects carried out in Nigeria. Furthermore, during the global economic recession, construction related activities are decreased significantly. Construction contractors‟ original tender/ no tender decision making criteria may be changed.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to assess the Factors affecting Construction Cost in building project.
1.3 Statement of Problems
Investigation revealed that designing and implementing an effective tender is a huge challenge for most contractors who seek government contracts in Nigeria. A study conducted by Obuji (2003) in some West African countries including Nigeria, revealed that some small scale contractors are not favoured during a tendering process by prospective clients because, they neglect various factors that affect the success and failures of submitting a tender for a contract. Some contractors do not structure and draft their tenders in an appropriate manner; hence their chance of being contracted is reduced.
Construction industry has complexity in its nature because it contains large number of parties as clients, contractors, consultants, stakeholders, shareholders, regulators and others. Construction projects in Nigeria suffer from many problems and complex issues in performance because of many reasons and factors. This project is very important to identify and to evaluate the main factors affecting contractors’ tenders in construction projects in Nigeria. The practices concerning with Tenders such as time, cost, project owner satisfaction and safety checklists will be analyzed in order to know the main practical problems of contractors who do not win tenders as well as practical solutions to help enhance the chances of our indigenous contractors in Imo state in winning Federal government and foreign contracts.
1.4 Aim and Objectives of Study
The aim of the study is to analyze and assess the local factors that account for the success or failure of tenders submitted by contractors when applying for a construction project in Imo State. In achieving this aim, the following specific objectives were laid out as follows:
- To identify the challenges faced by contractors when applying for contracts in Nigeria;
- To assess the factors that affect contractors tender for construction project;
- To establish the influence of leadership style on performance of construction projects in Nigeria; and
- To establish the influence of quality management on the performance of construction projects in Nigeria.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Are there factors that affect contractors tender for construction projects?
- What challenges do contractors in Nigeria face when submitting tenders for projects/contracts?
- How does time management influence the performance of construction projects in Nigeria?
- What effect does the leadership style have on the performance of construction projects in Nigeria?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: There is no significant relationship between factors that affect contractor tender and contractor chances in winning a construction project
- H1: There is a significant relationship between factors that affect contractor tender and contractor chances in winning a construction project
1.7 Significance of Study
This research will help contractors become aware of what the factors which need to be considered when they intend to submit tenders for different projects. This research will also provide the information that would be used by any contractor to create a competitive bidding strategy.
This study will also give a clear insight into the various ways in which profit and efficiency from contracts and contracting can be increased and how the challenges facing contract tendering can be properly tackled.
The study also gives a clear insight into the various factors affecting tenders and their effects on contractor’s efficiency and chances of winning a contract in Nigeria. The findings and recommendations of the researcher will help in building a strong and better contract policy and tendering guideline for contractors, especially small scale contractors in Imo State other construction companies in Nigeria.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The scope of the research is focused on the assessment of the factors that affect tenders for construction projects, using construction companies and private contractors in Imo State as case study. Results and recommendations may not be used to generalise other construction companies or contractors in other parts of Nigeria, as the researcher could not cover a wider scope due to financial and time constraints.
Based on the findings of this study other possible researchable areas may include studies on the various effects of other aspects of contracts such as contract laws in Nigeria and contract management and control.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Tender: According to Simmons (2002), a tender refers to an offer (usually by a contractor or a vendor) to undertake a job or supply goods.
Contract: Erikson (2002) defined Contract as an agreement that creates an obligation binding upon the parties thereto.
Contractor: According to Simmons (2002), a contractor refers to an organization or individual that contract with another organization or individual (the owner) for the construction of a building, road or other facility.
Construction/Projects: In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking. Normally, the job is managed by a project manager, and supervised by a construction manager, design engineer, construction engineer or project architect (Marshall, 2001)
Construction: according to Wikipedia's encyclopedia construction is designed as a process of assembling of infrastructure and consists of building up of several activities into final project.
