Discussion of “Construction Cost Factors in Nigeria” by John H. Nebiker

Abstract

The authors have presented a valuable contribution toward better understanding of the difficulties facing the construction industry in Nigeria and, for that matter, in many other countries, including major industrial nations. What is most tragic is that the resulting inefficiencies and other consequences can be ill afforded by less wealthy countries. The authors direct their attention to the high costs of construction. This discusser would also point out that the factors cited-shortages of materials, fraudulent practices, poor contract management, and so on-inevitably also lead to poor quality construction and delays. The costs associated with subsequent repairs, in addition to losses from denial of timely use of facilities, may dwarf the overruns in direct construction costs. It would be useful to conduct a follow-up study of the contracts investigated for such information, so that the financial dimensions of the problems can be given the fulI attention they deserve. It would also be interesting if the authors could relate the major factors identified as affecting construction costs with the actual sources of finance. For example, from the discusser's personal experience, there appears to be a marked preference by Nigerian and other contractors to work under contracts financed by multilateral development banks as opposed to those funded from other financial sources. The attendant bidding and contract stipulations of the banks, in addition to their required reviews, are intended to reduce the construction problems that result from uncertain funding and shortsighted interests. The World Bank, which lends annually over $24 billion to developing countries, of which some one-third is for construction, has been very concerned about the effectiveness of this investment. A recent in-depth review of its portfolio involving representatives from developing countries, including Nigeria, parallels a number of the authors' observations, stating: Procurement disputes between contractors and owners often drag on inconclusively and result in delays and friction. Independent consulting engineers are not always used and, when used, are not always independent. Many contracts do not contain incentives for early completion and penalties for delay. (World Bank 1992) One of the report's recommendations is to require its borrowers to use standard bidding documents issued by the World Bank for future procurement on contracts bid under the Bank's International Competitive Bidding procedures. For civil works, the standard bidding document now available incorporates the Federation Internationale des Ingenieurs-Conseils (FIDIC) Conditions of Contract for Works (1992). Another version to be shortly available for smalIer works is based in part on The New Engineering Contract (1993). The latter introduces the use of an adjudicator to accelerate the resolution of disputes. Many other contract conditions, together with the instructions to bidders, including bid evaluation procedures, should also promote better transparency, competition, and contract management. These standard bidding documents, as welI as others to be developed for turnkey and other specialized contracts, will be used by more than 100 borrowing country members of the World Bank, and it is expected that their publicsector procurement practices will be positively influenced. This would be in full support of the authors' recommendations to reduce construction costs by using weII-written specifications and by overcoming difficulties in communication. The authors have also noted the need for increasing the participation of domestic contractors in their country's development. The World Bank strongly supports programs to this end. Further, it encourages local engineering professionals to participate, with the view that project design, implementation, sustainability, and public sensibilities will benefit. The discusser is particularly pleased that ASCE has published this paper, thereby providing an international forum for presentation of a topic important to so many countries and peoples. The views expressed do not necessarily represent those of the World Bank.