A STUDY ON THE TRENDS IN BUILDING COST IN NIGERIA

1.0     INTRODUCTION

The dictionary definition of trends simply means “to move or extend in a specific direction” (Long Man Family Dictionary) also trends simply means “a general direction in which a situation is changing or developing” (Advance Learner’s Dictionary).

Leaning on, this definition of “trends” thus the subject matter “trends in building cost in Nigeria” can be described as a way to move or extend in a specific direction of building cost in Nigeria.

This trend in building cost is associated with the cost of erecting a building which includes the physical preparation and developmental cost.

The construction industry is very vital to the socio-economic development of a nation, this is because the affordability or otherwise of construction affect the confidence of the citizen in their existence in any nation.

One of the first and most fundamental aspect of human needs is shelter, therefore, it become necessary that the cost of constructing a given building project should be within the reach of the average citizens, (Dr. A.R Oladele 2007).

Over the years, the discovery of oil in Nigeria alongside with increasing population led to the increase in the demand for building in Nigeria.

Also the unscheduled changes of government in Nigeria lead to the formulation of policies from one government to the other which sometimes do not favour the construction industry.

These trends in building cost are caused by the following factors which include:

–                     Method of construction

–                     Limited number of manufacturers of building materials

–                     Employment of foreign expatriates

–                     Increment of wages

–                     Import tariff

–                     Fuel scarcity

–                     Bribery and corruption

–                     Second tier of foreign exchange

These reasons mentioned above are making a tremendous contribution to the increasing building cost which in turn posing a potential blockage to the chance of the less privileged ones to own a house or building and also went further to make it difficult for them to pay rent charged by the lessor  on a house.

Therefore, this project is aimed at highlighting various factors that influence these trends in building cost in Nigeria. And to come up with possible solution to curtail these treads through oral interview and questionnaires with parties involved also to asses the changes within the period of ten years (10 years) (2000-2010).

1.2                      STATEMENT OF THE PROBLEMS

–                     One of the challenges faced by the construction industry in Nigeria is the fluctuation of the prices of building materials which lead to upward and downward movement of building cost in Nigeria.

–                     Most average Nigeria citizens are of low income thereby making it difficult for them to own a building if these trends are not properly study to plan ahead of time for a given project.

1.3     AIMS AND OBJECTIVES OF THE STUDY

Aim: The aim of this study is to access the trends in building cost in Nigeria from (2000-2010).

OBJECTIVES

This project has the  following objectives:

–                     To identify the behavioural pattern of building cost within a given period of time.

–                     To determine the effects of these trends as it affect the society

–                     To identify the causes of trends and how it can be controlled in the society.

–                     To make probable recommendations on where appropriate.

1.4     SIGNIFICANT OF THE STUDY

–                     To ascertain possible ways of using cost comparison of different cost of building project in Nigeria.

1.5                      SCOPE AND LAMINATION

This thesis is to examine a general tendency on how cost of building changes in regards to time and in relation to plant, labour and materials.

The study is limited to the  comparison of the cost of a two bedroom bungalow over a period of ten years(10yrs)  through updating of some major building element obtained from bill of quantities from tender rates in relation to the trends from (2000 – 2010) using the cost index method of analysis.

1.6                      METHODOLOGY

The method adopted for this thesis includes: oral interviews, questionnaires and case study of two (2) bedroom bungalow.

CHAPTER TWO

2.1     LITERATURE REVIEW

Construction is an interrelated complex set of operations in which building and installation are erected.

The construction industry is that sector that is responsible for planning, designing, procurement, construction and delivery of buildings, civil engineering works and public works for government and private institution as well as individuals (Oladele, 2001). 

Massive construction in Nigeria takes effect when the oil  boom coincided with the aftermath biafram war reconstruction and rehabilitation period in the country. (Ofeogbu, 1998).

The excessive demand on the construction resources due to massive construction most especially during the oil boom has   contributed to high building cost (Oyewande, 1990). That is generally following the economics theory of demand and supply. High demand on building resources reflect in the high building cost.

However, this action seemed alright then especially since the oil provided the much needed financial backing, not as much thought was given to the long time effect of these policies on the nation future.

Yet this confidence was short lived as oil revenue crashed in the early 1980’s faced with a depressed economy and a crushing foreign debt. Also the post civil war period in Nigeria experienced a lot of boom in the construction industry while the structural adjustment programme (SAP) period gave a considerable shrink in construction activities.

As ailing nation economy continues, there was recourse for importation of building materials as the indigenous manufacturing companies will not cope with devalued currency. The importation of these building materials from overseas according to (Ayeni, 1991) is not solving the problems on ground that their price will be influence by extraneous forces. For example  in the importation of building materials, the freight and tariff added to the rates shoot up the cost of the building project.

  2.2            FACTORS AFFECTING BUILDING COST

Some of the factors affecting building cost  in Nigeria are identified as follows:

a)     Government Policies: This is one of the most significant factors influencing the cost of building in Nigeria

b)    The existence of several tiers of foreign exchange has contributed to the rapid devaluation of Nigeria currency, causing the exchange rate to fluctuate and at most time increased on the price of imported materials thereby contributing to the total cost of the building.

Government has build factories like cement factories, iron and steel factory as well as encourages foreign investors for the establishment of manufacturing and assembly companies of the building component in the country. These policies is aimed at making building materials available and affordable. 

(c)  Bribery and corruption: Bribery and corruption has taken its fold in the society in such a way that money and gift presented as part of the incentive in securing a project or manipulation of product all of which reflect on the final cost of the project. It has be observed that 10% of the project sum goes to the pocket of the top functionaries in government contracts. Also 5-10% goes to the supervising team to ensure prompt certification for payment at interim valuation period. About 45% of the present job cost of such is added to the construction work in Nigeria (Olassedebe, 1996). As a result, the contractor use a poor workmanship in execution of the work. (Ademoroti, 1988). 

(d)  Design Method: Building cost is affected by the design or construction method. If the client desire to use pre-cast concrete instead of insitu concrete or the use of system building instead of traditional types of construction.

The choice of the pre-cast or system building in the construction makes the building cost to be on a higher side if compared to the use of in-situ or traditional types of construction of building. 

(e)  Employment of Expatriates: Nigeria construction industry is like an international shopping centers that seemingly operates without any set of rules. All aspect of its operation were affected by the situation apart from infiltration of the industry by quacks expatriates, consultant and contractors who dominate major project in Nigeria. These foreigner were alleged to conspired among themselves to heavily inflate the cost of building project. 

(f)   Increase in Fuel Price or Shortage in Supply of fuel especially petrol and diesel used in plant and vehicles on site and by the supervising team, thereby affecting the cost of hiring and maintaining plant on site. This also affects the freight charged on building materials. The over head charged will also be affected and basically it will increased the building cost. 

(g)  Inflation: This applies to the cost of labour and material. It plays a substantial role in increasing the cost of a building in Nigeria. A very good example of inflation impacts on building cost happened early January – March 2001 where the cost of cement rose from N780.00 – N1100.00 resulting to 41% increase.