ANALYSIS OF CONVENTIONAL PROCUREMENT STRATEGIES AND THEIR APPLICATION IN NIGERIA CONSTRUCTION INDUSTRY

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

 

CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

2.0   LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

 

 

 

 

 

 

 

Abstract

The success of performance of public sector projects in Nigeria is tied to the impact of procurement strategy or policy used in providing the building. Procurement policies significantly influence the success of construction projects since they are designed to provide solutions to specific project needs or conditions. The Nigerian construction industry was analyzed with particular emphasis on public sector procurement. The general performance of public sector projects in Nigeria was broadly assessed and quite unfortunately the literature review has criticized public sector procurement in Nigeria of been inefficient for efficient project delivery. Equally the respondents to the survey data obtained from the questionnaire distributed and oral interview conducted suggest that projects are affected by the procurement strategy adopted for project delivery. A significant number of the questionnaire respondents believe that performance of projects could be improved using alternative or hybrid procurement strategies. Recommendations were proffered in order to mitigate or reduce completely the challenges and complexities faced by public project procurement schemes in Nigeria

 

CHAPTER ONE

INTRODUCTION

• Background of the study

Strategies for the procurement of building projects have not changed significantly in the last 25 years, though time and cost overruns are still prevalent throughout the industry (Smith and Love, 2001). In a response to reduce the incidence of time and costs overruns, the disputes that may often arise, and the likelihood of project success, alternative forms of procurement method such as partnering and alliancing have been advocated (Love et al. 1998). Not all forms of procurement method, however, are appropriate for particular project types, as client objectives and priorities invariably differ (Skitmore and Marsden, 1988; Love et al. 1997). The objectives and priorities of a client need to be matched to a procurement system. To do this effectively, it is essential that the characteristics of various procurement systems and selection methods available are understood by clients and their advisors before a procurement method is selected. In this report, the characteristics of the most common procurement systems and methods are presented. In conjunction with this research work the reader should also refer to the material developed by the New South Wales Government (2005) ‘Procurement Methodology Guidelines for Construction’ and the Western Australian Department of Housing and Works ‘Local Government Procurement Guide’ (2006). Procurement has been seen to be process of obtaining or buying supplies of something like fixed assets (land, building, etc) especially for individual and government. The variants of procurement methods available today metamorphosed from the need to improve construction project delivery, that is, project completion within budget and time. According to Daniel, the emphasis of procurement methods is on optimizing all parameters involved in project delivery namely, time, cost and quality. Procurement of projects within these constraints has continued to be a challenge to the design team, the contractors, and managers of investments. Traditionally, construction projects starts with the client’s brief on which designs are based. The Architect and engineers prepare designs, in collaboration with quantity surveyor who advises on the cost implications of design variables. Tender process afterwards produces the contractor for the execution of the work. On the award, the successful contractor executes the work as designed under the supervision of the consultants. Thus, the approach separates the design, tendering process and construction as separate tasks. This separation of activities also led to sequencing of activities in which design is completed before construction commences. This became the ‘traditional’ sequence and it is now referred to as Design-Bid-Build. Other variants of procurement method not following this format became the ‘non-conventional’ procurement method. According to Daniel, new concepts of project delivery have been developed to compress the time required to realize a constructed facility which focuses on simplifying the project delivery process, with emphasis on optimizing the parameters (e.g. quality, cost, time of completion, meeting market needs, and safety among others). Researches have also established that the major requirement of time and cost reduction in project delivery have resulted in the evolution of the several variants of procurement method, and at present, there are more than a handful of procurement methods, all with the major aim of meeting a quality product delivery at economical cost and time. In non-conventional procurement methods, the grounds are gradually shifting from just meeting clients’ needs into apportionment of risk, as the contractors are gradually taking their stance as business organizations with the aim of making optimum profits at the minimum risk, and this has led to the development of integrated methods of procurement which are hybrids of both traditional and non conventional procurement methods. The study identified the rationale behind the development of an integrated process as to improve project efficiency that has being constrained by separated conventional processes, that is bringing the teams of designers, contractors, and suppliers together through series of projects; continuously developing the product and supply chain; eliminating waste in the delivery process; and innovating and learning from experience.

Therefore, procurement strategies has become a fashionable term with our construction industry, practitioners and researchers determines the overall framework and structure of responsibilities within the process, it is also a key factor contributing to the overall client satisfaction and project success.

Procurement strategies and their application is of important in our construction industry. Construction projects are time consuming undertakings which are considered successful if delivered on time, to an appropriate budget and to a quality desired by the owner [1]. In recent times, apart from the above mentioned indicators of project success, health and safety, and environmental performance have also become important aspects of project performance. Many literatures and studies of the construction industry have analyzed projects and tried to identify factors affecting project performance. Though the factors found are numerous, a lot of the studies “indicate that procurement related factors have significant effects on construction project performance” [2].Procurement systems have evolved globally with innovations in process improvement and service delivery. However, these trends have been largely ignored by developing countries. Nigeria has shown a significant regression in procurement processes in comparism to the heavy investment channeled into the sector. “Though different studies have confirmed the use of various types of modern procurement methods for project delivery in Nigeria” [2], the “traditional procurement route which has been widely criticized as an ineffective procurement route is the most often used” [3].In view of the above, this research seeks to assess the impact of procurement strategies used on construction project performance through the evaluation of public sector construction project‟s and investigating the impact of procurement practices on the projects performance. Nigerian construction industry : The role the construction industry plays in an economy cannot be overemphasized. The Nigerian construction industry has served the Nigerian economy significantly with the creation of direct and indirect employment nationally. From the 80‟s till present day, the industry has grown to about 125 times its former size but this growth when put in perspective leaves a lot to be desired. The construction sector accounted for 1.4% of the Nigerian gross domestic product (GDP), in comparison to 1981 where the industry accounted for 5.8%. This decline is mainly due to the country‟s GDP growing 495 times in the same period Despite the construction industry having had an impressive growth rate of above 10% over the past few years, Nigeria still has only 30% of its 193,200 km road network paved. The general infrastructure and amenities in the country has been described as abysmal when compared to the investment that has gone in to the sector [4].Government funding for new and existing projects has increased steadily [4]. Projects like the national rail revival, renovation of all airports, power station construction and many others have ensured the construction industry remains vibrant. However, unless the effectiveness of the industry is improved the industry will continue to stagnate. Analyzing the factors restraining the industry from achieving the required growth will be crucial in helping improve the performance of the construction projects. Public sector construction in Nigeria :The performance of the Nigerian public sector procurement has been reassessed in recent times through various professional bodies and government schemes. The establishment of the bureau of public procurement and even the re enactment of the procurement act in 2007 have not improved the level of performance of the industry. Research undertaken to assess the Nigerian procurement sector by have showed weak correlation between methods of procurement used and project performance. With many professionals advocating for use of new procurement methods, there is a need to question the impact if/any of using modern procurement strategies. This research intend on analyzing how effective the procurement strategies used in Nigeria are and the impact measure the impact it has had on performance of projects.

However, one must not be carried by which ever method of procurement strategies proposed for a construction project, the major issue is the different types of procurement are contractual obligations, responsibilities and line of communication between the parties. One thing to remember is that which ever method that is used, the statutory duties of the professionals are always distinct and mandatory. Hence the engagement of a builder in the procuring contract is statutorily required and highly recommended whichever procurement strategy that is adopted.

1.2   STATEMENT OF PROBLEM

The general aim of study is to ascertain by reviewing, evaluating and identifying how procurement strategies can be applied in our Nigeria construction industry. Therefore, this issue raised the researcher’s interest to know how procurement strategies can be applied in our construction industry particularly Nigerian economy.

1.3   PURPOSE OF THE STUDY

The following list below is the core reason and purpose of this study which will be accomplished by the researcher.

1. To determine what are the procurement strategies;
2. To know its application in our Nigerian construction industry;
3. To know the statutory duties of a builder in construction industry;
4. To know what is construction industry.

1.4   RESEARCH QUESTION

The research work is guided with same research question, which will be administered and distributed among the researchers area of study which are the respondents to this research work.

1. What are the procurement strategies?
2. Where can they be applied in Nigerian construction industry?
3. How can we know the statutory duties of a building in our construction industry?
4. What is construction industry?

1.5   STATEMENT OF HYPOTHESIS

The researcher formed some of the hypothesis which will be tested to support this study. The hypothesis will be tested at 0.05 level of significance using the t-test method.

The research hypothesis are as follows.

H₀: The application of conventional procurement strategies is not significant to the Nigeria construction industry

 

H₁: The application of conventional procurement strategies is significant to the Nigeria construction industry

H₀²: there is no significant relationship between procurement strategies and the efficiency of Nigerian construction sector

H₂: there is a significant relationship between procurement strategies and the efficiency of Nigerian construction sector

1.6   SIGNIFICATION OF THE STUDY

It is hoped that the findings of the study will help the construction industries in Nigeria reflect upon various variables that influence the conventional procurement strategies. In so doing, they could investigate the possibility of introducing those variable to their industries which may consequently lead to reducing the cost.

The findings of this study are therefore expected to provide new knowledge about the factors behind conventional procurement strategies with respect to Nigeria construction industry.

1.7   JUSTIFICATION OF THE STUDY

I want to justify this research work based on the objectives and the significance of this research work, what is within its coverage, this research work is with no doubt necessary to be carried out. Because if done will greatly analyze conventional procurement strategies variable and its application to the construction company in Nigeria.

1.8   SCOPE AND LIMITATION OF THE STUDY

This research work covered a population study of 200 respondents from Enugu, Enugu state. More to that, this research work will be considering the conventional procurement strategies and its application to the construction company. One research hypothesis will be tested in light of the study, a descriptive method of data analysis will be was employed in the study.

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.9   Definition of Terms

Procurement are the procedures used by the procuring entity to acquire goods, services and works.

Negotiation simply refers to the mutual discussion and arrangement of the terms of a transaction or agreement for the purpose of arriving at a common understanding of contract essentials (e.g., technical requirements, schedule, prices, and terms).

Construction

Construction is the process of constructing a building or infrastructure. Construction differs from manufacturing in that manufacturing typically involves mass production of similar items without a designated purchaser, while construction typically takes place on location for a known client

 

 

Strategies

Strategy “art of troop leader; office of general, command, generalshipis a high-level plan to achieve one or more goals under conditions of uncertainty.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

 

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