Analysis of the Impact of Feasibility/viability Study on Capital Project Development in Nigeria
Chapter One
RESEARCH OBJECTIVES
- To explore feasibility and viability appraisal techniques used by Contractors of capital projects in Owerri Urban.
- To assess awareness and usage of formal feasibility and viability appraisal techniques by Contractors in Owerri Urban.
- To evaluate the impact of feasibility and viability appraisals on the development of capital projects in Owerri Urban.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
Examples of construction projects include highways, tunnels, bridges, water mains, dams, sewage systems, water treatment plants, power generation plants and pipeline networks. Infrastructure projects can be classified as large construction projects that utilize vast amount of resources in terms of money, materials, labor, equipment and time (Salman et al., 2007; Kulkarni et al., 2004; Morley, 2002). Massive expenditures on infrastructure projects need to be weighed against the expected benefits resulting from these projects to the public and the national economy. Therefore, economic feasibility studies need to be conducted prior to the construction of infrastructure facilities.
The economic feasibility study of a project is an estimate of the potential profitability of that project, or a study that measures the expected benefits from a certain project relative to its cost (Johnson and McCarthy, 2001; Wong et al., 1999). Owners, decision makers and financial institutions build their decisions to proceed with and/or finance any project based on the results of the feasibility study of that project (Abou-Zeid et al., 2007; Vancas, 2003). Ensuring the validity of economic feasibility studies of infrastructure projects is a vital step in ascertaining that decisions related to the construction of infrastructure facilities are based on consistent and standard procedures that avoid the use of misleading or inadequate information.
THEORITICAL FRAMEWORK
Theoretical framework for the study is based on cost-benefit analysis of a construction project. Inability of the quantity surveyor to properly ascertain if a project is viable can lead to loses or project failure. Therefore a major theoretical approach that will be used for the study is to examine the cost-benefit of a construction project.
Cost-Benefit of Construction Projects
Variation or deviation from the original project plan could be described as a major cause of project failure. Project monitoring and control could only effect corrective actions to bring deviated project plans on course, but failed to take cognizance of identifying and analyzing the root causes of such variations.
Also project monitoring and control are not final cost and time effective to implement. This study therefore intends to fill these gaps created by project monitoring and control. Oberlender (2000) reports that there is a tendency for some designers to make changes during design in order to please clients without regard to the effect on these changes on the project final cost and schedule. He also says that changes can be catalogued as either project development or scope growth. Project development relates to changes that are needed to accommodate the scope as currently defined scope growth relates to changes that alter the projects original scope; the scope that was approved before starting the design process.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
This chapter explains the various methods employed in developing the research instrument, collecting data for the study and procedures followed by the researcher to delineate information and fact finding. Such procedures are further structured under the following sub-headings:
- Research design
- Population of Study
- Sample and Sampling technique
- Instrumentation
- Validity and Reliability of Research Instrument
- Administration of Instrument
- Method of Data Analysis
RESEARCH DESIGN
The survey research design is adopted in this study using a descriptive survey in which various risk management practices among quantity surveyors will be examined.
POPULATION OF THE STUDY
The population of study covers quantity surveyors duely registered in Owerri Municipal, Imo state.
SAMPLE AND SAMPLING TECHNIQUE
In carrying out this research, simple random sampling was carried out. The researcher made use of fifty (50) randomly selected quantity surveyors in Owerri, Imo state.
The Surveyors selected for this study were selected from the list of registered firms by a simple toss of the coin. The name of all the quantity surveying firms were written on slips of paper and carefully mixed in a bowl. The firms were randomly picked, after which a coin was tossed, and a firm was picked if a desirable result was achieved, after which the bowl was carefully mixed again
CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION OF RESULTS
Introduction
This chapter deals with the presentation and the analysis of primary data obtained by the researcher through the administration of structured questionnaire. The data are presented using tables, frequency distribution and simple percentage to enhance quick understanding of the result achieved.
The questionnaires were segmented into two sections; sections A and B. the section A was concerned with the biographic data of the respondents. The section B were centered on the questions raised in the questionnaire to elicit the respondents’ responses. It therefore follows that the presentation based on the responses of the respondents will be done in two sections in this chapter. Thus, section A will involve the presentation and analysis of the biographic data of the respondents, while section B is on the presentation and analysis of the respondents’ responses. From the Fifty (50) questionnaires distributed to the respondents, 50 copies were retrieved. This represents 100% response rate. The responses are presented in the table below:
CHAPTER FIVE
SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION
SUMMARY OF FINDINGS
. This research project is designed to analyze the impact of feasibility/viability study on capital project development in Nigeria using Owerri as a case study and looking at how construction practitioners, specifically the quantity surveyors in the Nigerian construction industry have made use of feasibility/viability appraisal for success of construction of capital project.
This research also identify how feasibility/viability appraisal can be carried out and implemented in the Nigerian construction industry and also the potential barrier and challenges in the executing a proper feasibility/viability studies specifically from the quantity surveyor’s point of view. These challenges have become symptomatic in the numbers of failed projects. The fieldwork of this project was carried out using fifty (50) randomly selected quantity surveyors in Owerri, Imo state.
The research questions used touched on the following:
- It explores feasibility and viability appraisal techniques used by Contractors of capital projects in Owerri Urban.
- Assessing awareness and usage of formal feasibility and viability appraisal techniques by Contractors in Owerri Urban.
- Examining the success or failure of the feasibility and viability appraisal methods by Contractors in Owerri urban.
- Evaluating the impact of feasibility and viability appraisals on the development of capital projects in Owerri Urban.
The main instrument used for the study was the questionnaire. The instrument used to collect the data touched on the three research questions and two hypothesis. Beside the fifteen questions on the questionnaire, there were others which asked about sex, qualification, age, work experience of respondents.
RECOMMENDATIONS
It is envisaged that the following recommendations will aid Nigerian quantity surveyors and other professionals in the Nigerian construction industry in appreciating the importance of carrying out a proper feasibility/viability appraisal while embarking on capital project construction. Based on the outcome of this research, the following suggestions are put forward:
- There should be in increased awareness on advantages of proper feasibility/viability appraisal technique amoungst quantity surveyors and other professionals in the Nigeria construction industry during construction of capital project.
- Quantity surveyors and other construction professional in Nigeria should always ensure that they get themselves acquainted with newer and modern methods of feasibility/viability techniques from time to time..
- Government should enact laws and policies that will encourage the doctrine of carrying out a proper feasibility/viability appraisal by the practitioners (Quantity surveyors and other professionals in the construction industry) to reduce the cases of failed project construction.
CONCLUSION
The importance of proper feasibility/viability appraisal technique while embarking on construction project in Nigeria cannot be overemphasized but research of this nature, which covered such a small area could not be claimed to be exhaustive.
Efforts were made, however, to direct attention to some of the factors that aggravated the challenges in the carrying out a proper feasibility/viability appraisal in capital project construction. These factors had been looked at from different viewpoints. Advantages of proper feasibility/viability appraisal has also been enumerated to ensure success of capital projects in Owerri and in Nigeria in general.
From the data collected and analyzed, it became evident that most of the respondents agree that feasibility/viability appraisal study as improved the performance of contractors and other construction professionals in Owerri which has contributed positively to the success of capital project development in Nigeria.
REFERENCES
- Anthony, D. “Characteristic of various Economic studies” Appraisal Journal Vol. XXX vi No3. (July, 1966) pp.329-338
- Black, H.A et el, Accounting in Business decisions Theory, method and use,engle wood Cliffs, newjersey, prentice Hall (1967) p.5
- Benigo, Ebitimi E. “Enterpreneurship and Nigeria Financial system” A lecture paper presented to the UNN Aluminum AssociationPort Harcourt (July 1990) p.3
- Crase Kamep HJ.A “A Guide of feasibility analysis”Chicago, society of real estate appraisers (1970) pp/ 2-5
- Gibrattar Associates, Feasibility report on Maize and Garri processing plant, Enugu prepared for favoc enterprises, Owerri (1990) p.10
- Lamdi, Adeleke “production of cold water starch, Business times,Lagos (19/7/78) P.1
- National directorate of employment creating more job opportunities, Enugu forth dimension publishing company ltd (1987) pp 1.4
- Nweze, Austin U. The impact of smuggling on the feasibility and viability of a project the Graduate accountant 12thedition journal of association of accountancy students, universe of Nigerian, Enugu campus 91983) pp. 34-36
- Nwoko, Chenedum,” Feasibility studies and the accountant: the graduate accountant vol.111 No.6 department of accountancy UNEC (1986) p.34 – 37
