A Study on the Trends in Building Cost in Nigeria (a Case Study of Two Bedroom Bungalow) (2002 – 2012)
Chapter One
AIMS AND OBJECTIVES OF THE STUDY
Aim: The aim of this study is to access the trends in building cost in Nigeria from (2002-2012).
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.
CHAPTER TWO
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.
FACTORS AFFECTING BUILDING COST
Some of the factors affecting building cost in Nigeria are identified as follows:
- Government Policies: This is one of the most significant factors influencing the cost of building in Nigeria
- 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.
- 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).
CHAPTER THREE
CASE STUDY
The case study is on a two bedroom bungalow of an approximate floor area of 161m2 constructed in Kubwa-Abuja.
To determine the trends in building cost for the period of 10 years (i.e. 2002 – 2012).
The cost indices of the building are calculated and graph are plotted to show trends in various work sections in the building.
A table is also constructed to show the percentage increases in the building cost from 2002 – 2012.
The cost or prices of an item in the bill of quantities are obtained from reputable firms and from a published source.
To determine the trends in building cost for the period of 10years (2002 – 2012)
CHAPTER FOUR
ANALYSIS AND FINDINGS
This chapter presents an analysis on trends in the cost of building 2bedroom bungalow in Abuja Nigeria. Where the information leading to the write up of the project were collected.
The analysis was based on the graphs drawn up from the elemental cost of the 2bedroom bungalow and the questionnaire distributed to the reputable firms of quantity surveying, civil and building contractors and the material suppliers. A total number of twenty one questionnaires were distributed but only fourteen responses were received.
CHAPTER FIVE
SUMMARY AND CONCLUSION
SUMMARY
It emerged from the examination of the prices of building materials between 2002 – 2012 that there has been a definite increase of between 126% and 383% in the prices of building materials, and that reinforcing steel, copper and cement which were at the top of the spectrum experienced rapid changes and significant increase in prices within the last five years.
Further, the study established that the respondents perceived the top three volatile building materials to be steel, copper and cement in order of volatility. It therefore appears that the respondents’ examined have an accurate knowledge of volatile building materials.
It also emerged from the study undertaken that the key factor perceived by the respondents to cause increases in building material prices is transportation followed by crude oil prices, while market conditions, manufacturers’ profiting, exchange rates and import duties were perceived to be of lower impact. However, further interrogation of the data suggests that there are differences in the perception held by the built environment stakeholders, based on their respective position in the company.
Suggesting that company owners, directors and management staff in the construction industry, have differing opinions of the factors that affect price increases in the construction industry. That is, the factor considered to have very high impact on building material prices by the company owner is not viewed in the same category by the directors and managers, and vice versa.
The study also established that there are no differences in the opinions held by the respondents of the factors perceived to affect building material prices based on the type of company in which they work or on their years of experience in the construction industry. Implying that the respondents’ perceptions could not be differentiated on the basis of the company in which they work or, on their years of experience.
The study findings established that there is a correlation between the factors perceived by the built environment stakeholders to affect building material prices and the actual economic indicators determined by statistical analysis. Implying that built environment stakeholders apparently have an accurate knowledge and are also aware of the factors that affect the prices of building materials. It can be inferred from the study findings that the factors that cause the prices of volatile building materials such as steel, copper and cement to rise rapidly are transport costs, crude oil prices, labour and energy costs. The identified materials minus copper are dense and therefore necessitate high freight costs.
Also, these materials require and consume a lot of energy during their extraction and manufacturing processes.
Conclusions
It can be concluded that the prices of building materials specifically cement, copper and reinforcing steel are increasing rapidly in Nigeria and that the built environment stakeholders are aware and are well-informed about the building materials that are subject to volatility, and the factors including transport costs, crude oil prices, labour costs and energy costs that affect building material prices.
Suggesting that if the problems of increasing building material prices is going to be solved in the Nigeria construction industry, particular attention has to be paid to factors such as transport costs, crude oil prices, labour costs and energy costs and also to highly volatile building materials such as steel, copper and cement.
In order to provide lasting solutions, and bring about stable building material prices and avoid a scenario of continuous price increases, the following measure is proposed to counter the problems of transportation and rising fuel prices, since transportation costs which include the transportation of raw materials to the factory and of the distribution of the finished products from the factory to the end user, it is recommended that the Nigeria government develops existing infrastructure to include highspeed freight trains and durable highways, which would bring about the raw materials being transported to the factories efficiently and the effective distribution of the finished products to suppliers and end-users.
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