ABSTRACT
The prevailing unpredictable and erratic price fluctuations of materials and less satisfactory practice of compensation are the major hindrances in the growth of the Nigerian construction industry. The rate of fluctuation claims on prices of materials is alarming. This leads to disputes in most building projects and usually affects the cost, time and even quality performance of building projects. Fluctuation in the cost of building materials poses a significant threat to both the building sector and people aspiring to own houses. The study assessed influence of materials price fluctuation on performance of building projects in Abuja, Nigeria by examining the causative factors and its effect on projects performance, the impact of materials price fluctuation claims on cost and time performance of building projects and established strategies for minimising the effects of materials price fluctuation. The study adopted a survey design approach using quantitative data. Data were collected through well-structured questionnaire administered on 189 respondents; also 23 archival data on material price fluctuation claims on completed building projects in the study area were obtained. The collected data were analysed using Percentages, Relative Important Index (RII), Mean Item Score (MIS) and Pearson Correlation Moment. Result reveals that the main factors responsible for material Price fluctuations are; Exchange rate of national currency, Cost of transportation, Inflation of building materials price, Cost of energy (electricity, gas). The result reveals further that materials price fluctuation claim positively correlates with total project cost and time with coefficient strength level (r value) of 0.95 and 0.62 respectively. It is recommended that drastic steps should be taken by the Government to stabilise exchange rate, reduce cost of energy, regulate cost of production, and contractors should also have appropriate planning, maintain current information, payments within stipulated time and understanding of project requirement. The study will help building construction contractors in making a logical contingencies decision on material prices.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background to the Study
Project performance can be assessed by the level of cost, time and quality of projects delivered to clients. Envisaging the performance of project is essential in order to guarantee acceptable standards and ensure quality. Therefore, it is important to be accustomed with the technique leading to evaluate building project performance (Iwaro & Mwasha, 2012).
However, price fluctuations of construction materials in today’s unstable market make it difficult to carry out construction projects due to substantial losses of estimated profits which hinder the growth of the construction industry (Ayodele, 2011). The market price fluctuation and deficiencies of construction inputs are greatly hindering the growth of the construction industry, swift increases and falls in prices lead to failure to complete projects within the predetermined margin of time, quality, and planned cost (Zewdu & Aregaw, 2015).
Kasimu (2012) attributed that the consequences of integrated planning and implementability and fluctuation in market price of the inputs required for the construction are the primary problems of the construction industry. Anjiba and Adu (2018) cites a lack of ability to access sufficient working capital and poor workmanship and engineering competence as a major factor affecting the efficiency of projects in Nigeria. Aside from that, there are a range of difficulties including; high inflationary patterns which create an unpredictable market environment, poor organisation practices, weak organisation structures and difficulties in accessing project finance (Badu et al., 2012). Infrastructure plays a very important role in the growth process of an economy. In fact, development economists have considered infrastructure to be a precondition for industrialisation and economic development (Owolabi-Merus, 2015). Improving infrastructure is key to reducing poverty, increasing growth and achieving the Millennium Development Goals (MDGs). The need for infrastructure development is indeed crucial for developing countries, especially Africa. The lack of modern infrastructure has been regarded as an impediment to economic development and a major constraint (Jerome, 2011).
Building materials play a crucial role in enhancing sustainability of buildings and contributing to economic wealth of the nation (Akadiri, 2011). Karana et al. (2010) indicated that stable market condition, in respect of the expertise involved in the building construction process, determines the strength, functionality and quality of the building. The prevailing unpredictable and erratic price fluctuations of materials, labour and equipment and less satisfactory practice of compensation are the major hindrances in the growth of the Nigerian construction industry; thus, the situation makes project owners sustain losses and suffering that could result therein (Iya & Aminu, 2014).
The study looked into the possible causes of material price fluctuation, the effect of materials price fluctuation factors on project performance, the impact of materials price fluctuation claims on the cost and timeliness of construction projects in Abuja, Nigeria and establish strategies for minimising the adverse effects.
1.2 Statement of the Research Problem
The prevailing unpredictable and erratic price fluctuations of materials, labour and equipment and less satisfactory practice of compensation are the major hindrances in the growth of the Nigerian construction industry; thus, the situation makes project owners sustain losses and suffering that could result therein (Iya & Aminu, 2014). Price fluctuation of materials in erecting building structures according to Oladipo and Oni (2012) affects housing cost and the economy resulting to low GDP. Kasimu (2012) attributed that the primary construction industry’s problem can be divided into two major categories. The first is related to integrated planning consequences and implement ability, the second problem is related to market price fluctuation and deficiencies of the inputs needed for the construction. Hatamleh et al. (2018) added that materials price changes can have an impact on clients, contractors and the project itself, Among the different stake holders involved in the building sector, contractors are the ones at the front line to play the largest role in realising projects. Hence, on due course of their operation they are the ones to first face the problems and challenges encountered within the industry.
The rate of fluctuation claims on prices of materials is alarming. This causes disputes in most construction projects, affecting project timeliness, cost and even quality output. This constant claim may therefore be as a result of inadequate understanding of the strategies for minimising the adverse effects of materials price fluctuation. These concerns provide the basis for this study. The research would therefore, increase awareness among the project parties in the Nigerian construction industry.
1.3 Research Questions
To give direction to this study and achieve its objectives, the following research questions are asked:
i. What factors contribute to material price fluctuation in building construction projects?
ii. What are the effects of material price fluctuation factors on cost, time and quality performance of building projects?
iii. What impact do fluctuation claims have on building project time and cost performance?
iv. What strategy could be adopted to minimise the adverse effects of material price fluctuation on building projects?
1.4 Aim and Objectives
The aim of this research is to determine influence of materials price fluctuations on project performance with a view to minimising the resulting effects.
The objectives set towards achieving this aim are to:
i. Examine the factors responsible for material price fluctuation in building construction projects.
ii. Examine the effects of material price fluctuation factors on cost, time and quality performance of building projects.
iii. Determine the impact of materials price fluctuation claims on time and cost performance of building projects.
iv. Establish strategies for minimising the adverse effects of materials price fluctuation.
1.5 Scope of the study
This study covered material price fluctuation on the performance of building projects in Abuja, Nigeria, using quantitative research approach. Abuja was chosen since it is one of the urban cities in Nigeria that has a good number of construction activities, high concentration of built environment professionals including Architects, Quantity surveyors, Structural engineers and Builders. The study focused on small, medium and large building construction projects in Abuja that have used a significant amount of materials.
1.6 Justification for the Study
Building materials price fluctuation have resulted in dramatic performance of building projects in Nigeria. In this regard, efforts were made by several researchers to address the implication of material fluctuation. For example, Haruna et al. (2018) conducted a study on building materials price fluctuation in Adamawa state, Nigeria and noted that fluctuation in the cost of energy, the naira exchange rate was many of the elements for the unstable building materials cost in Nigeria.
Abiodun et al. (2017) identify influencing factors on performance of construction contractors in Akure, Nigeria and concluded that material prices escalation, Inadequate supply of materials and the project team leader motivating skills are the major factors. Anjiba & Adu (2018) Evaluate fluctuation claim risk on projects cost performance in the south region of Nigeria and concluded that a direct relationship exists between fluctuation cost and cost variation in the region as a result of changes in the basic prices of materials and labour.
However, none of the aforementioned authors have identified the influence of materials price fluctuation on performance of building projects. There has been no known research work seeking to identify the influence of materials price fluctuation on performance of building construction projects in Abuja, Nigeria.
This research gap will create awareness and provide understanding and guidance on the effective way to minimise the adverse effect of material price fluctuation and dispute in building construction due to material price fluctuations. The recommendations of this study, if appropriately employed would benefit the Quantity Surveyor in estimating and the construction industry at large. The study will also improve the performance and skills of contractors in the industry.
This material content is developed to serve as a GUIDE for students to conduct academic research
INFLUENCE OF MATERIALS PRICE FLUCTUATION ON PERFORMANCE OF BUILDING PROJECTS IN ABUJA, NIGERIA
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