1.1 Introduction
The construction industry is one of the backbone of the economy of countries (Cheung, Lam, Leun & wan, 2002). According to Oladapo (2003), describes the construction industry in Nigeria as a regulator of the economy of the nation. In this respect, the importance of a healthy construction industry in such countries is beyond doubt. Construction procurement defined by Enekwechi (2003) as the identification and design of funds for project delivery and further explained that it is the contract arrangement suitable for the delivery of the project (Enekwechi, 2003).
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 is the world's largest and most challenging industry. The industry is highly a dynamic sector and plays a very important role in the development of a country. However, construction industry, faces chronic problems such as poor productivity, poor performance of time and cost etc, as reported only 37.2% of projects were completed within their predetermined cost. This was as a result of lack of investigation on construction labour productivity and cost performance.
Butler (1986) in Anthil and Wood-Head (1990) defined productivity as ‘the rate between output and input' and industrial productivity as ‘the arithmetical ratio between the work product and he total resources used. Borcherding and Liou (1986) defined productivity as ‘the relationship between input and outputs'. Based on this view, Construction productivity can be dealt with as the measure of value of construction works in relation to the total cost of labour, plant and materials actually used in the execution of the work.
Labour is one of the basic requirements of the construction industry and is usually related to manpower. In other words, labour productivity was defined by Drewin (1982) as the ‘amount of goods and services provided by a productive factor (manpower) in the unit of time'.Gido and Clement (2003) mentioned that cost performance is an effective technique in project management effort expended and it is used to measure the efficiency of total cost to budgeted cost. It is found that it is important to study more details on cost performance of building and it is agreed by Ashworth (1994) that ‘cost studies of building consist of the application of techniques and expertise of economies to construction projects'. Also, it is to ensure available resources are used efficiently to increase the level of productivity in construction work.
In the construction industry, site workers, account for approximately 40% of the cost of project thus a relationship is established between labour productivity and cost performance. In Nigeria's construction industry for instance, companies are currently applying various non-financial incentives schemes aimed at operative productivity, this has significantly improved cost efficiency. If the concept of productivity of labour is properly understood, appreciated and facilitated, there will be an improvement of cost performance of projects. This will in effect, enhance workers out-put and further contribute to cost performance. It is in the light of this, that this research study on the Influence of labour productivity on the cost performance has been embarked upon. Many factors affect the accuracy of building construction projects’ cost estimating which should be considered in the early stage of the estimating process. Some factors can incorrectly increase the estimated costs and the possibility of contractual disputes between the various parties involved. Other factors can help the estimator to decrease the unnecessary cost of an item and hence lead to successful tendering in a very competitive market.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Influence of Estimating Practice on Cost Performance of Building Projects.
1.3 Statement of Problem
Many factors are responsible for the influence of labour productivity on cost performance in project. These factors when not put in place could bring about reduction in level of productivity and consequently affect cost performance of projects. There has been lack of investigation into labour productivity and cost performance which is probably due to the low level of awareness of the merits of such investigations. This problem has overtime denied construction works of its ideal cost and if un-attended to, it might in the nearest future overshadow the important potentials of improved labour productivity.
Another problem that has been identified is that of inconsistency in the level of labour productivity. This has subsequently affected cost of the project. It is therefore imminent for this problem to be assessed and solved so as to institutionalize a consistent standard for construction projects.
Low level of motivation and incentives such as welfare packages, awards to best worker, award to longest serving staff all, serve as a dependable instrument for improving labour productivity. But this has not been found in construction industry. Finally, this study was embarked upon to ascertain how improved productivity would influence cost performance. This study seeks to provide solutions to the above identified problems.
1.4 Aim and Objectives of Study
The aim of the study is to scrutinize the Influence of Estimating Practice on Cost Performance of Building Projects. In achieving this aim, the following specific objectives were laid out as follows:
- To identify factors affecting the accuracy of the building construction projects cost estimating process.
- To identify the estimating practices used by cost consultants, appraise the critical factors influencing estimating practice used.
- To determine the influence of estimating practice on cost performance.
- To measure the effects of the factors that severely affects the accuracy of the cost estimates.
- To determine the most significant productivity factor influencing cost performance
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:
- What are the factors affecting the accuracy of the building construction projects cost estimating process?
- Is there any significant factor affecting the accuracy of the cost estimates?
- What productivity related factors influences cost performance?
- What is the most significant productivity factors influencing cost performance?
- What is the relationship between labour productivity and cost performance?
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 correlation between estimating practices and the performance building works estimate for all category of buildings studied.
- H1: There is a significant correlation between estimating practices and the performance building works estimate for all category of buildings studied.
Hypothesis Two
- H0: There is no relationship between estimation practice and cost performance of a building project
- H1: There is a relationship between estimation practice and cost performance of a building project
1.7 Significance of Study
Research work such as this is not merely done to fulfil an academic curriculum. It is expected that it should be a concerted effort to broaden or add to an existing knowledge on a particular subject, or more so establish a logical and important fact as a new contribution to the line of profession. Productivity of labour and cost performance of construction projects is as important to construction and national economic growth as it is vast and complicated. It is therefore imminent that further studies and researches be carried out to consolidate the already existing knowledge of it.
Construction clients, contracting organizations, specialist, consultants and suppliers, individual professional contractors, lecturers and students in the construction and allied field would find the study very useful as it will contribute to their own effort to optimize their level of involvement in construction activities. Based on the results and findings of this research work, construction stakeholders, would be able to appreciate and control the parameters involved in the productivity and cost performance concept of construction projects.
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 study focuses on the Influence of Estimating Practice on Cost Performance of Building Projects in Nigeria using Akwa Ibom State building projects as a case study.
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.
- 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).
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