Govt tasks quantity surveyors on high costs of construction
DISTURBED by delays and direct cost overruns in projects, the Federal Government has called on construction economists to intervene and bring to bear their expertise in budgetary planning of capital projects in ensuring that the high cost of executing construction, which ranks among the highest in the world is addressed in the country.
The Minister of Lands, Housing and Urban Development, Mrs. Akon Eyakenyi who made the plea at the opening of the 2015 National Project Cost Reduction Summit, with the Theme “Value for Money Imperatives for Project Costing in Nigeria”, organized by the Quantity Surveyors’ Registration Board of Nigeria (QSRBN), said the present administration is determined to find a veritable solution to the challenge.
She noted that it is the duty of every professional regulatory body to monitor the ethical disposition and conduct of their members so as to guard against collusion and connivance with unpatriotic elements in inflating the costs of projects.
“This is even, more imperative, given the Federal Government’s current promotion of Public-Private Partnerships (PPPs) as an alternative procurement process whereby international PPPs often give investors the liberty, to engage consultants from any part of the globe, competence and diligence having become the key elements in engaging professional firms and not necessarily the nationality” she said.
The minister who urged the board to cooperate with key national institutions and anti-corruption agencies such as the Bureau of Public Procurement (BPP), Economic and Financial Commission (EFCC), Independent Corrupt Practices (and other related offences) Commission (ICPC) and the National Bureau of Statistics (NBS) in their efforts to wipe out corruption from our system
She pointed out that quantity surveyors have a big role to play in finding solutions to this problem to achieve value for money and cost-efficiency in the implementation of projects in both the public and private sectors of the national economy.
Eyakenyi reiterated that experts such as quantity surveyors hold the key to unraveling the mystery behind high project costs, especially those ones not derived from inflationary factors within the economy but which arise from factors other than market forces. Take, for instance, the common practice whereby contractors attempt to mitigate perceived risks associated with projects for which they are bidding by translating those risks into monetary values, which are invariably transferred to the overall project costs. Some of such risks include design, funding, high interest rate, security, foreign exchange, fluctuation etc. All these risks have huge impact on the cost of projects in Nigeria. It is therefore imperative to design templates for determining cost bands and ranges for various types of projects so as to instill sanity in the planning and preparation of capital budgets”.
Eyakenyi observed that as access to credit and resources shrink globally as a result of the current worldwide economic realities, the quest to achieve higher rates of value-for-money is now uppermost in the calculations of investors and governments alike.
The minister commended that board for its concern for financial probity and quest for value for money in the conceptualization planning and execution of projects.
Earlier, the president of the Board, Mallam Husaini Dikko noted that even as the cost of construction in Nigeria is high, most projects are left abandoned and uncompleted because of poor project planning and management.
He said, “Opinions have been expressed that cost of construction in Nigeria is one of the highest in the world. Equally, it has been noted that there is total absence of value-for-money in Nigeria’s project development matrix. The salient posers that come to mind whenever construction costs are mentioned are: are we making judicious use of the scarce resources of our country? Do we pursue transparency and accountability in the management of these resources? What are the parameters that dictate the cost at the design stage? What are the techniques for cost management of construction projects? What makes the cost of construction in Nigeria one of the highest in the world?.
Pointing out that it is the position of QSRBN that value for money should be a central issue in our public expenditure policy, Dikko stated that Value- for-money principles promote efficiency in the allocation of resources, stressing that it is all about maximising the impact of each kobo spent on any project to improve the lives of the citizenry.
The minister says that experts such as quantity surveyors hold the key to unraveling the mystery behind high project costs, especially those ones not derived from inflationary factors within the economy but which arise from factors other than market forces.
According to him, “Value for money does not mean we only do the cheapest things, but we need to get better understanding of what is driving our costs and make sure that we are getting the desired quality at the lowest possible price. To the extent that costs of construction projects in Nigeria are not checked, they will pose a negative impact on the economy of Nigeria and the consequences are better imagined”.
Identifying corruption as a major challenge in Nigeria , Dikko said quantity surveyors must join the fight against corruption and bring sanity into the system, adding that value-for- Money principle is a major tool for fighting corruption in the construction industry.
He observed that sustainable national development couldn’t be achieved when the activities and actions of economic agents are mired in corruption and corrupt practices.
“We are familiar with such claims like “Government has spent these billions of Naira on capital projects and infrastructure in this sector of the economy, or that certain billions of Naira have been spent on a given road in certain sections of the country. Such public officials often announce these with fun fare and sense of accomplishment without regards to whether work done and what is on the ground justify such huge expenditure. That is to say that nobody cares to know whether value for money was achieved on such projects”.
Dikko who canvassed that Cost Auditing be applied to every capital project in Nigeria as a matter of policy, observed that while project Audit as promoted by the Bureau of Public Procurement (BPP) seeks to ensure that “Due Process” has been followed using a check list of processes/strategies, it does not provide the required fight against high project cost in Nigeria.
He said: “Cost Auditing is one way of determining whether “Value- for- Money has been achieved in the development of public infrastructure in Nigeria. We recommend very strongly that Nigeria must therefore embrace Cost Auditing as a critical leg in the public procurement value chain. This shall not only apply to Federal Government projects but also to projects executed by State Governments where the level of cost inflation is even relatively higher.”
He called on the Independent Corrupt Practices (and related offences) Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) to as a matter of urgency set up Project Cost Auditing and Monitoring departments in their respective organisations if they are to be effective in executing their respective statutory mandates. “When such departments are created, they should be staffed by registered quantity surveyors as cost management experts in the construction industry”, he added.