1.1 BACKGROUND OF THE STUDY
The construction industry is an important part of the economical backbone in manycountries (Ngai et al., 2002), often accounting for between 7-10 percent of the GrossDomestic Product (Winch, 1996, Voordijk et al.,
2000). Furthermore, constructionproducts and processes have a large
impact on safety, health and environmentalaspects (Bayliss et al.,
2004). Since all human beings in modern societies are directlyaffected
by its processes and/or products, the importance of a
well-functioningconstruction industry is beyond doubt (Cheung et al., 2001, Ngai et al., 2002,Eriksson, 2007).
In many countries the construction industry has,
however, attracted criticism forinefficiencies in outcomes such as time
and cost overruns, low productivity, poorquality and inadequate
customer satisfaction (Latham, 1994, Egan, 1998, Ericsson,2002, Chan et al.,
2003). Practitioners, researchers and society at large have,therefore,
called for a change in attitudes, behaviour and procedures in order
toincrease the chances for construction projects to be successful and
result in improvedend products (Love et al., 2000, Dubois and Gadde, 2002).
Increased complexity, uncertainty, and time
pressure in construction projects haveincreased the need for cooperation
among different project actors (Anvuur andKumaraswamy, 2007).
Traditionally, relationships are, however, very competitive
andadversarial in the construction industry (Cheung et al.,
2003), which to a large extentis due to the customary procurement
procedures potentially causing many problems inall stages of the buying
process (Eriksson and Laan, 2007). Therefore, in order to
takeadvantage of collaboration, procurement procedures is one key
improvement area andcan contribute substantially to project success
(Cheung et al., 2003, Eriksson, 2007).
A change of procurement procedures is, however, impeded by clients’ habitualbehaviour (Laedre et al.,
2006). Although procurement procedures need to be tailoredto enhance
the fulfilment of different project objectives (Cox and Thompson, 1997,
Love et al., 1998, Wardaniet al., 2006), clients
tend to choose those procurementprocedures they have a habit of using,
regardless of any differences between projects(Laedre et al.,
2006). In order to enhance change, an increased understanding of
howdifferent procurement procedures affect different aspects of project
performance isvital. Earlier research efforts in this area have been
limited to the investigation of howa single or a few specific
procurement alternatives affect one or two projectobjectives. In order
to achieve successful governance of construction projects aholistic and
systemic approach to procurement procedures is crucial (Cox
andThompson, 1997, Eriksson and Pesämaa, 2007, Eriksson, 2008b). Since a
systemicperspective on the effect of procurement procedures on
different aspects of projectperformance is lacking in the construction
management literature, this research effortaims to fill this
theoretical gap that has potential to bring important
Different studies have confirmed the use
ofvarious types of procurement methods for projectdelivery in Nigeria.
Studies of Ogunsanmi, Iyagbaand Omirin (2003), Ojo, Adeyemi and
(2006), and Dada (2012) all confirm the use ofTraditional, Design
and Build, ProjectManagement, Construction Management,
Labouronly,Direct Labour and other types such asAlliancing, Partnering
and Joint Venturesprocurements in the Nigerian constructionindustry.
The use of these procurement methodscan significantly affect the
performance of mostprojects.
1.2 STATEMENTOF THE PROBLEM
The Nigeria construction industry is modeled after the British
system being our colonialmaster, although, since independence in 1960,
it has incorporated the styles of other Europeancountries, such as
Italy, Germany and France (Mansfield, 1994). This industry is of
paramount importance foremployment and economic growth (Ogunsemi,
2004). The Nigerian construction industry forms nearly 70% ofthe
nation’s fixed capital formation Federal Office of Statistics
(FOS)(2004), yet its performance within the economy has been,
andcontinues to be, very poor due to cost overruns resulting to
abandonment of projects. For example, the Nigerian construction
industry’s contribution toemployment has remained consistently at 1.0%
over the last decade against the World Bank’saverage observation of
about 3.2% in developing countries (Idrus, 2008). The traditional
design-bid-buildsystem of procurement is still dominant in the Nigerian
construction sector and this may likelycontinue to be the trend. In
addition, the Nigerian construction sector comprises the
clients,contractors, subcontractors, suppliers, and key professional
actors responsible for design andsupervision of projects. The
professionals includes architects, engineers (structural and
services),and Quantity Surveyors. There are professional bodies that
regulate the activities of theseprofessionals.
Delay in project execution is a major problem in the Nigerian
construction industry. Thisoccurs both in small and large projects.
Virtually, all the projects executed over the years inNigeria were
faced with problem of delay in delivery. Odeyinka and Yusuf (1997)
observed thatseven out of every ten projects suffer delay in Nigeria.
Nigerian construction industry is facedwith problem of cost overrun.
Ogunsemi and Jagboro(2004) noted that one of the most seriousproblems
the Nigerian construction industry is faced with is the project cost
overrun, withattendant consequence of completing projects at sums
higher than the initial sum. Therefore,working with realistic project
estimate is necessary at the outset of a project work, which
wouldeliminate uncertainty and as well provide a platform for project
success. Idrus and Sodangi (2008) also observed that the last decade
has however exposed the declining level of clients’ satisfactionfrom the
built facilities as a result of poor quality performance in addition
to the perennialproblems of time and cost overruns in the Nigerian
The Nigerian construction industry continues to occupy an
important position in thenation’s economy even though it contributes
less than the manufacturing or other serviceindustries,. This industry
plays an important role in the economy, and the products of
itsactivities are so vital to the achievement of national socio-economic
development goals ofcreating job opportunities and social amenities
and infrastructures (Anaman, 2007).
1.3 OBJECTIVES OF THE STUDY
The main aim of this study is to examine procurement systems and
it impact on cost management and delivery. Specific objectives of the
- To identify various procurement systems commonly used by quantity surveyors in Owerri.
- To examine challenges encountered when employing various procurement systems for construction projects.
- To examine the impact of procurement systems on construction cost.
1.4 RESEARCH QUESTIONS
To guide the study and achieve the objectives of the study, the following research questions were formulated:
- What various procurement systems commonly used by quantity surveyors in Owerri?
- What are the challenges encountered when employing various procurement systems for construction projects?
- How do procurement systemsaffect construction cost?
1.5 RESEARCH HYPOTHESES
- Ho: Variations in procurement systems do not affect construction cost.
Hi: Variations in procurement systems affect construction cost.
- Ho: Challenges encountered when using procurement systems contribute do not contribute to construction cost overrun.
Hi: Challenges encountered when using procurement systems contribute to construction cost overrun.
- Ho: There is no significant impact between procurement systems and construction cost management and delivery.
Hi: There is a significant impact between procurement systems and construction cost management and delivery.
1.6 SIGNIFICANCE OF THE STUDY
This study will be of importance to personnels in the construction
industry and the general public because it would not only clarify but
also create awareness of the extent to which inadequacies in cost
management and procurement systems can adversely affect project
performance. The study will also help contractors, clients, consultants
and all parties involved in construction projects about ways of
improving their current method of cost management and control.
The study will also be of great benefit for other student
researchers’ who may want to venture into the same subject matter.
Having gotten results-both empirically and theoretically, the study
will serve as a foundation for future research studies.
1.7 SCOPE OF THE STUDY
The study will cover some selected contractors from Owerri. All
findings and recommendations from the study may not reflect the true
view of the traditional roles and changing roles of quantity surveyors
as the researcher could not cover a wider area due to financial and
1.8 DEFINITION OF TERMS
- Procurement: This is the acquisition of goods, services or works from an outside external source.
- Procurement System: Procurement system’ is a
contemporary term, which isknown to many practitioners and researchers
of theconstruction industry by different terms; these includeterms
such as project approach, procurement methods,procurement delivery
methods or project delivery.
- Project Procurement: Project procurement has
been described as an organized methods or process and procedurefor
clients to obtain or acquire construction products.
- Open tendering: This is a procedure that
allows practically any contractor to submit a tender for the work. This
procedure involves either the client or consultant (on behalf) of the
client placing a public advertisement giving a brief description of the
- Selective tendering: It consists of the
client drawing up a short-list of contractors that are known to have
the appropriate qualifications to carry out the work satisfactorily.
- Negotiated tendering: This method is applied
in several or different contexts, but the essence is that tenders are
obtained by the client inviting a single contractor of his/her choice
to submit a tender for a particular project.
- Non-traditional procurement systems: This
is a diversified contemporary procurement system that not only
considers design and construction, but also considers financing,
operating and facility management.
- Construction: In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking. Normally, the job is managed by a project manager, and supervised by a construction manager, design engineer, construction engineer or project architect.
- Deliverable: Deliverable is a term used in project management to describe a tangible or intangible object produced as a result of the project that is intended to be delivered to a customer
(either internal or external). A deliverable could be a report, a
document, a server upgrade or any other building block of an overall
- Project management: this is the discipline of planning, organizing, motivating, and controlling resources to achieve specific goals. A project
is a temporary endeavour with a defined beginning and end (usually
time-constrained, and often constrained by funding or
deliverables),undertaken to meet unique goals and objectives, typically
to bring about beneficial change or added value.
- Time: This is a dimension in which events can be ordered from the past through the present into the future, and also the measure of durations of events and the intervals between them.
- Cost: A cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost.
- Cost overrun: occurs when the final cost of the project exceeds the original contract value at the time of completion.
- Good cost performance project: Project in which the cost overrun of the project does not exceed 10 percent of the initial budget.
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