Summary
The Lagos state could be seen to be one of the most densely populated states in the country of Nigeria. According to the National census of 2006, it is seen that out of the total population of 140,003,542 in Nigeria, there is a population of around 9013,534 people in Lagos; it is the urbanized part of Nigeria with a Population density of 2594 persons per sq. km. The urban areas of Lagos Island are densely and thickly populated with around 8000 persons /sq km.
According to the United Nations study conducted in 1999, the population of Lagos would be around 24.5 M by the year 2015 and it would be on the list of the 10 most populated countries of the world.
It is seen that construction projects in Nigeria especially in Lagos State are plagued with delays and operational slowdowns in construction projects. This is a prevalent and widespread aspect of building construction in the state of Lagos and is often the cause of time and cost overruns in the meeting of projects. It is often seen that most of these overruns are caused not only by the contractors or engineers who are responsible for the building constructions but could also be caused by the employers or owners/promoters of the project who make regular changes and improvements which cause the delays. These delays could also be caused by frequent changes in designing and construction activities associated with building projects. The construction projects in governmental contracts are often more delay-causing than private constructions since the aspects of testing, approval, inspections are also involved and could impact the regular scheduling of the work according to plans and procedures. It is seen that Variations Orders (VO) could impact the cost and time elements of contracts, which may, or may not be due to the fault of the contractors. It is seen that the aspect of time of completion is quite critical since it is necessary that the time of project completion would have implications on costs. When there are time delays due to the fault of contractors, which are within acceptable parameters, which result in higher costs that could be justifiable and could be acceptable and delineated in the agreement, it is okay. The time lags should also be justifiable and could be due to delays in seeking governmental approvals and sanctions for projects. In the context of Lagos State, it is seen that often a lot of delays occur in the completion of projects that result in an increase in time and cost delays. Again, it could be seen that where the delays occur due to non-availability of materials, labor or other intrinsic factors, it is needed that the VO should be passed on to contractors after seeking permission from Engineers who could certify the work. However, it also needs to be seen that where delays are caused by neglect on part of contractors, the cost overruns need to be borne by the contractors and not by the promoters or owners.
This study seeks to consider the impact of VO in contractual claims on building projects In Lagos state. It is seen that the methodology that could be used for this study could be Through Questionnaire surveys seeking to find out the potential effects of variation orders in building contracts.
The main people who would be the respondents in this survey would be the Developer Agencies. Further, the methodology that could be used could also be in terms of face-to-face interviews with project participants who could be able to provide invaluable information regarding this study.
Background of the study
This study has been undertaken to assess the costs and the time impacts of variation orders on construction projects in Lagos, one of the main urbanized areas in the country of Nigeria. It is believed through the United Nations Report on urbanization that by 2015, the population of Lagos would touch 24.5 million
It is seen that housing has been a major area of weakness in Lagos due to unplanned and haphazard growth in this country. It has been a major challenge due to demand-supply mismatch and it is believed that except in well-known areas like Marina and Racecourse, there has been early unplanned growth of housing to cater to the needs of a burgeoning population, mainly slums and tenements areas. It was left to the Lagos Executive Board for Development (LEBD) to clear the slum areas and rehabilitate the population from the island to the mainland of Lagos. It has been seen that in 1972, Ikeja Area Planning Authority (IAPA) merged with LEDB and Epe Town Planning Authority, Lagos to form Lagos State Development & Property Corporation (LSDPC) which is the forerunner of building projects in Lagos today. (Infrastructure, Services, and Housing).
A study of the background of Lagos seems to suggest that the early 1970s were a boom period for construction and it was not uncommon even for ordinary middle-class people to own houses. However, after that, the economy witnessed high rates of inflation, which affected the cost of building accessories and inputs; because of this reason, people began to prefer rented houses and living standards became so high that for an average Lagos citizen, subsistence became a key factor and there was no scope for further investment opportunities
Lagos’s land laws were not robust enough to deal with unscrupulous dealers. Although the land use Decree 1978 passed on all unused land to the State, this was hardly being implemented and private parties used to manipulate transactions in order to make it appear as existing before the Decree and thus circumventing the land acquisition laws.
In the present context, it is seen that there is no allocable land available within the Lagos metropolis through the Land Use and Allocation Committee (LSDPC, 1983). Today, land for development is purchased from private parties. Wealthy landlords sometimes rent land for the building of temporary housing while they wait for its land values to appreciate in the near future when they could sell it off at handsome profits.
All said and done, Lagos is still the major manufacturing city not only in Nigeria but also on the western coast of Africa. It is a strategic seaport, both in Nigeria and on the west coast of Africa, with sizeable import and export trade both domestic and foreign. The city of Lagos is the most significant point for the telecommunications industry, and the most reachable city in Nigeria by land, air, and sea. It has thus endeared itself to a large cross-section of multinational companies in Nigeria.
The background of this study needs to consider the fact the impoverishment of the middle class is now endemic and more and more people are caught in this dragnet and finding it difficult to make both end meet. This is especially true in Metropolitan Lagos, where people find it extremely difficult to live with just one source of income. Even basic amenities like electricity, water and housing are premium available in the country with a burgeoning urban population and reducing income levels for the people of this region. Even the growth of modern methods has not been enough to increase the quality of life of people in this region of Africa which has tried to pull away from heartland Africa but has had only limited success in its attempts.
Statement of Problem
The main problem with housing in Lagos has been a widespread concentration of urbanized population needing more and more housing projects in order to provide houses for the population. This assumes greater significance since nearly 2/3 of the estimated 12 million (8 M) population of Lagos live in slums. (Environmental & Social Impact Assessment).
Due to the paucity of housing accommodation, it is seen that in the context of Lagos, massive bidding contracts have been undertaken by both the Government, the public and private sector in order to improve the situation and ensure housing facilities for all citizens.
The normal procedure for bidding for contracts is through the submission of tenders against Bidding proposals which also need to comply with the terms and conditions of bidding. The bidder has to prepare and submit the Designs, Drawings, Technical and Commercial Bids as per the requirements of the clients. In addition to the original design and drawings provided by the bidder, he shall also provide, if need be, an alternative set of designs, drawings Technical and commercial bids. However, it is clear that the company shall, or shall not have to accept the variation bid, at its discretion. It is further seen, in this study, that, at the option of the employer, he may reject any variation, deviation, or alternative bid, in the event he finds that it is in excess of the requirements of the bidding which may result in unsolicited benefits for the company. In case, the employer does not wish, the variation bid may not be considered, and only the original bid would hold well during the bid acceptances.
However, it has been during the course of this study that the contractor needs to inform the project manager within the earliest available opportunity of the species likely future events, or situations that may adversely affect the quality of work, increase the time needed to complete the work. On his part, the project manager may require that the contractor furnish an estimate of forecasted effects of future events or situations that may impinge upon the completion date. According to the survey undertaken, it was seen that this estimate to be provided by the Contractor needs to be furnished as soon as could be possible.
In the case of variation by the contractor, the Project Manager shall provide a fresh quotation within a reasonable time, in most cases within a week to the Project manager, giving the new cost estimates for the work. However, if there are no quantitative changes in the Bill of Quantities, the same rates could be used for the fresh quotation, however, if the quantities are such that they do not match with the BOM, then it becomes necessary for the contractor to provide fresh rates taking the variations into account.
However, in some cases, it is seen that, considering the urgency of the work requirements and the fact that quotations cannot be given without delay, the project manager, at his discretion, may deem it to be a competitive event.
This study also considers the aspect of compensation work not being able to receive additional payments if, the fact that variations would be necessary is known to the contractor through an early warning system.
Research Question
How do costs and time factors and overruns of variation order (VO) impact construction projects in Lagos?
This Research Question assumes importance because, it has been seen through empirical studies, that there are inordinate delays in the completion of housing projects in Lagos country which results in large cost and time overruns. Whether these overruns are avoidable or not, or could have been better managed through early warning systems (EWS) is a major area of debate, given the fact that most of these projects are funded through outside sources, including International Aid Agencies and Financial Institutions.
This study has also made forays into aspects of whether additional payments could be justifiable by the contractor due to more work done by him.
The situations in which additional payments could be justified could be:
- When modifications are carried out by the other contractors, which affect the concerned contractor also, resulting in cost and time delays, which results in additional costs for the contractor, for which he needs to be repaid.
- The project manager may have made unreasonable changes which necessitated changes in work scheduling and consequent cost overruns.
- The delay has been caused due to the fault of the employer.
- It is sometimes seen that sub-contractors (appointed by the employer) are not able to execute the sub-contract which results in setbacks for the main contractor.
Aims and Objectives
This study has a number of objectives. In the first place, it seeks to find out the benefits accruing due to the use of VO in construction contracts. As with all facets, the VO also has merits and demerits. It is seen that the main benefits of VO could be:
- Changes could be institutionalized that could effect necessary alterations, rectifications and modifications in the construct without having to make conspicuous or large changes in the contract; it also circumvents the need for seeking a fresh contract in place of the old one, instituting the VO. Therefore, the main aspects of changes that VO could make are with respect to the blueprints, drawings and design at the initial stages. When work has already commenced, certain portions may be kept aside to be taken up at later stages, or after VO has been affected. What is important is that through VO’s it is tried as far as possible to adhere to the deadlines of completion of building on time and within allocated budgets. Thus VO serves the primary function of making the structure in line with both legal and aesthetic requirements in that building construct need to conform to state laws regarding technical specifications, quality of products and raw materials used in the construct and other rules and regulations binding it. It could also be seen that often architects do not draft their designs at the preliminary stages, since they are well aware that there would be major alterations at later stages, which may even negate the need for any preliminary design or structure representations. It is often seen that clients are sometimes reasonable about their needs as a result of which redundant, time-consuming and expensive reworking and VO need to be carried on, in order to make the construct according to the client’s requirements and modifications.
- Another benefit of VO’s in this context would be in terms of a long-term and robust construction, which is necessary to withstand the effects of time for long.
Therefore, it becomes necessary to make necessary alterations and modifications sometimes even without the need for VOs in order to seek conformity with predetermined standards and practices.
The other benefits of VO in the context of building constructions could be seen in terms of:
- Improve quality standards of the construction by following Guidelines and Norms
- Effect reduction in terms of costs and overruns by maintaining delivery guidelines
- It is seen that VO often intercepted work scheduling and final delivery since time spent for VO would add up to delay in the final buildup of the constructs and their delivery. While justifiable VO could be maintained it often happens that a lack of coordination and understanding between the architect, promoter, development agency and client needs to be achieved and unanimity of decisions needs to be affected. Variation Orders could be expensive and time-consuming and may even create more problems than solutions in certain instances.
- It is necessary that value analysis seeks to realize harmonious balances between costs, functionalities and durability aspects between a project and the satisfaction of its constructs.
- Another aspect of VO impacts on construction could be seen in terms of optimizing client value addition and making constructive improvements to the structure. (Ndihokubwayo and Haupt).
Research Methodology
The research methodology that would be used for this study would comprise of two segments; in the first segment, it would be necessary to conduct a questionnaire survey with the directors and board members of 50 development companies in Lagos, with equal representation from both public and private sectors, in order to assess the aspect of VO in construction contracts in Lagos.
It is believed that nowadays most of the construction projects in Lagos are conducted by private sectors in consortium with international funding agencies, like World Bank, IMF, UNDP, and other quasi- international bodies who are engaged in developmental projects in the world, especially in Third World Countries. This is mainly because the economic situation of African countries, especially Nigeria including Lagos, is alarming, with a burgeoning population and not enough infrastructure, in terms of sanitation, housing, clean drinking water and other essential aids for human survival.
The methodology would also consider the use of face-to-face interviews with officials of government departments, in order to ascertain how the aspects of this issue would impact cost and time overruns in construction projects in this country.
It has been seen from the interactions with the respondents that most costs overruns due to non-performance of contractual construction obligations and also time-lapses, due to delay in executing work according to the planned schedule forms a major deterrent in effective project management.
Significance
Port city of Lagos has from a fishing and agricultural settlement to become a late 21st Century metropolis. This growth has included the appearance of a plethora of ports, manufacturing estates, business houses, small-scale industrial activities, and the achievement of the multiple statuses of the administrative, commercial, cultural and economic capital for both Nigeria and Lagos State.
The changes have also involved both massive population changes that have led to the urban concentration of people and higher density in these areas. (Baker, P.194).
Thus it is seen that greater population pressures could give to need for a greater need for providing housing to the people, especially those who live in low-cost tenements. The study has shown that often a large number of families are forced to stay in a single house, share kitchen and sanitary facilities, and are thus susceptible to a multitude of health hazards and diseases, not only for themselves but also for their immediate families. Lack of proper employment opportunities and incomes due to inflationary and regional imbalances are also contributory factors to the appalling conditions prevalent in the city of Lagos, especially in the low-income areas, where there are needs for the betterment and a greater need to improve the quality of lives of the Nigerian people residing in these areas.
Scope
The scale of this study has taken into account the factors that impact how VO could impact upon building contract finalization.
For one aspect it is seen delay may occur in final delivery due to the intervention of VO in building construction work and this may also enhance project costs. There are two types of costs which are necessary and which are superfluous. Necessary modifications become necessary because of inherent defects in workmanship and need to be resolved to get the Work Certified from the Inspector, or Project Engineer. Sometimes lack of certification could stop or abort the project and all funds could be wasted. However, assuming that WC has been obtained, it is necessary to maintain the pace and regularity of building construction work, since it would affect the future growth of the construction. It needs to be understood that a stoppage or delay at one stage could trigger off a set of events that could cause losses and cost escalation due to VO interventions. However, if modifications are superfluous and could be avoided, it is in the best interests of the construct that this is done since VO have the effect of bringing inordinate delays in projects delivery and greatly enhances costs and commitments on the part of the owner.
Again, in a ‘rich-poor state like Lagos, where successive military governments since 1983, have milked the country’s resources dry for self-aggrandizement, the prospects of Economic growth is a misnomer. ”Lagos exists in a world of affluent and hyper-developed cities that have lesser populations. And the developed cities are appropriating talents using well developed infrastructural facilities, unlike Lagos that has the decaying urban infrastructure and a people with talent that are trapped in a dehumanizing cycle of poverty and misery.” (Packer).
Limitations of the study
There have been major limitations in this study in that the scope of the study has been restricted to apartment dwellings for face-to-face interviews of respondents besides the discussions with private and public officials which has not been very forthcoming. In a sense, the information gained from respondents has not been complete since only 65% of respondents were available for discussions, and most of them feigned ignorance or lack of knowledge on many aspects governing housing constructions in Lagos.
Moreover, it has remained contestable whether VO is the cause of delays in housing projects in the State or the result of it. Many respondents have viewed VO as necessary adjuncts for building construction in order to ensure standards and professional conformity with Building Codes and legal constraints surrounding building construction in Lagos.
Since the scope of this study needs to be broadened, it is necessary that a larger study encompassing the various ramifications surrounding VO and its overall impact on the construction industry in Laos needs to be made. The study needs to concentrate on the empirical studies rendered in this context and how the present study would reinforce beliefs and notions, including validating tested ones and negating others.
Definition of terms
(Procurement: Smaller Works – Section IV: Conditions of Contract: Conditions of Contract: Definitions).
- Completion date: The date of completion of the works as certified by the Project Manager, in accordance with sub-clause.
- Contract: The agreement between the employers and the contractors to fulfill, finalize and maintain the work
- Contractor: Person, institution or body whose proposal for carrying out the work has been accepted by the employer.
- Drawing: Technical calculations and other data furnished to or approved by Project Manager
- Employer: Party who employs the contractor to fulfill the work.
- Intended Completion Date: The Project Manager shall postpone the Intended Completion Date if a compensation event occurs or a Variation is issued which makes it not possible for Completion to be achieved by the Intended Completion Date without the Contractor taking steps to speed up the remaining work, which would cause the Contractor to incur additional cost.
Conclusion
According to the subject of Variation Orders (VO) in the context of building contracts in Lagos has both positive and negative aspects. The positive aspects could be seen in the study as creating a good quality house that fulfills the needs of the owner and is also deemed to be a sound investment in the event of a future sale. It could also be seen in terms of the fact that the builders could be able to offer a better house to the owners in accordance with their needs and budget. When VO is necessary it needs to be carried out, even without the need for formal instructions from the Project Manager.
However, the main aspects would be in terms of planning, organizing, forecasting and scheduling a housing project by use of the best project management principles and practices that could draw out the best from the concerned people- the promoters, architects, engineers, developers and builders.
While the cost of projects may tend to rise with occurrences of VO, and the question of fines for the developers cannot be ruled out, in the final analysis, it would be seen that the housing project would justify the extra cost and benefits that would accrue if the due implementation of necessary VO were undertaken and effected.
But the aspect that needs to be seen in the case of Lagos is that there is a crying need for low-cost and multipurpose dwelling houses and condominiums in this country that could, at least, provide succor and shelter to its teeming millions who do not have adequate shelter. It is necessary not only for the private entrepreneurs to come forward, but it is the responsibility of the Lagos Government and also the Nigerian country government to ensure that housing is given a high priority in the economic schemes of the country and is mandatorily made available to the common people of the country
The inhabitants of the country have long suffered the indignity and suffering arising out of inadequate housing and other infrastructural facilities in this country and it is high time that the Government and relevant agencies take immediate action to solve this long-standing issue.
Appendix 1
Works Cited
Infrastructure, Services, and Housing. 1997.
Environmental & Social Impact Assessment. (2005). LOGOS State Government.
Baker, Jonathan. Small Town Africa: Studies Rural-Urban Interaction: Urbanisation and the land question in Lagos. Seminar Proceedings No. Web.
Packer, George. The Megacity: Decoding the chaos of Lagos. The Nigerian Village Square. 2006. Web.
Procurement: Smaller Works – Section IV: Conditions of Contract: Conditions of Contract: Definitions. The World Bank. 2008. Web.
Ndihokubwayo R., and Haupt T. C. Uncovering the Origins of Variations Orders. Web.