Effect Of Economic Trade Cycle On Final Cost On Construction Project In Lagos State

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ABSTRACT
Construction of Cost Control is a model that has not been achieving its main objectives of monitoring the cost of project so as not to exceed the budget. This research work aim to determining how the economic trade cycles has affected the cost control performance in construction industry and also to find the relationship between cost control performance and non-economic trade cycles variables.

To achieve these objectives, questionnaires were designed for the consultant quantity surveyors, Architects, Builders and Engineers who took part in the activities of the cost control projects in all the phases of economy under consideration.

This work analyzed the activities of cost control in different economic trade cycle from the era of oil boom till 2013 using the kruskal-wallis analyses. It was revealed that cost overrun was not as a result of economic instability alone, but also other non-economic factors such as unlimited clients demand and designers attitudes towards each project.

It concluded that all elements of cost overrun were not dealt with at once in each of the economic trade cycles in Nigeria hence aggregate cost overrun has always been experienced.

Recommendations were made which affect the pre-contract and the post-contract activities irrespective of the phase of the economic trade cycle, so that cost overrun could be eliminated and the cost control machinery could be effective whenever it was applied.

TABLE OF CONTENTS

Title page

Certification

Dedication

Acknowledgement

Abstract

Table of contents

CHAPTER ONE

1.0 Introduction

1.1  Background of the study

1.2  Statement of problem

1.3  Research Question

1.4  Aim of the study

1.5  Objectives of the study

1.6  Justification of the study

1.7  Scope and Limitation

1.8  Significance of the study

1.9  Hypotheses of the study

CHAPTER TWO

Literature review                                                                   

1.10  Keysian theory

1.11  Economic trade cycle

1.12   Fluctuation

1.13  Variation

1.14  Cost overrun

1.15  Final Cost/Account

1.16  cost Control

CHAPTER THREE

2.0   Research Methodology

2.1 Introduction

2.1  Population of the study

2.2  Sampling Technique

2.3  The procedure of data collection

2.4  Method of data analysis

2.4.1  Operationalization or measurement of variable

2.4.2 Test of statistics

CHAPTER FOUR

4.0 Data presentation and analysis

4.1Introduction

4.2 Analysis of Questionnaire

4.3 Data analysis

4.4Test of  Hypothesis

4.5 Discussion of findings

CHAPTER FIVE

5.0 Conclusion and Recommendation

5.1 Conclusion

5.2 Recommendations

5.3Suggestion for further studies

5.4 Bibliography

5.5 Appendix

CHAPTER ONE
INTRODUCTION

1.1BACKGROUND OF THE STUDY

The construction industry is a major segment and highest employer of labour in the economy (Ivor H.Seely, 1996). The construction in any country is the sector of the economy that plans, designs, constructs, alters, refurbishes, maintains, repairs and eventually demolishes building of all kinds.

The construction industry is also an assembly industry, assembly on site, the product of other industries and consist a very large number of self-employed work.

This means that every adjustment in the economy, the construction industry will be most affected segment. Nigeria a nation that has been having a stable economy in the recent time, could not have a stable construction cost and database activities will be drastically unreliable.

The trend of which has been the uncoordinated price of the cost of various construction materials, labour, hiring of plants and equipment as well as the overhead and profit to the contractors.

Example of this is the price of 50kg cement. A bag of cement that was sold for N420.00 in June/July 1998, N600.00 in July 2000, N1,200.00 in February 2006, N2,000 in November 2010 and now N1,800 in January 2013.

The increase is about 43% and 100% respectively. This is only one material out of multitude materials used in the construction industry.

Since the industry has no specific magic on its own to control the prices of materials used in this segment of the economy, there are some devices that are used to control the budget/estimate of the cost so as not to deviate in order to forestall abandonment.

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1.2  STATEMENT OF THE PROBLEM

Many pre-contract documents are not perfected before the contract is executed. This will lead to many adjustments and unreliable cost control method that detail the budget, most especially when the market is very unpredictable.

The introduction of statement such as “To Architects later specification or “To Engineer later specification”. In the Architects design or Engineers designs respectively, especially the service does not help matters at all in the cost control process of the post contract services.

This will lead to an introduction of “PC sum” or “Provisional sums” in the Bills of Quantities. This is a major area where the deviations between the budget and the final Account lie.

1.3 RESEARCH QUESTION

1. How does the economic trade cycle affect the cost control performance in construction project?
2. What are the relationships between cost control performance and non-economic trade cycle variation?
3. How does proportion of cost control performance account for economic trade cycle?

1.4 AIM OF THE STUDY

The aim of this research work is to find out the reasons for a cost overrun in construction projects in different economic trade cycle in Kwara state, despite all the various cost control activities that are applied.

1.5 OBJECTIVES OF THE STUDY       

The objective of this study are as follows:

• 1. To determine how economic trade cycle has affects the cost control performance in construction projects.

• 2.To find the relationship between cost control performance and non-economic trade cycle variable.

• 3.  To determine the proportion of cost control performance in economic trade cycles.

• 4. To determine how economic growth can influence within different phases of construction project

• 5.  To examine the fluctuations of various prices of materials which varies as a result of government policy decision which affect the life cycle of a project.

1.6 JUSTIFICATION OF THE STUDY  

The study considered the tools used in the cost controlling mechanisms in the construction industry. How the various tools should have been effective in controlling the project costs in a normal situation.

It will also study the areas that have the cost overrun on project costs in different cycle of economy. This is as against the studying of only the activities of cost control generally without taking care of each elements of cost overrun in different trade cycle.

1.7 SCOPE AND LIMITATION

This work analyzed the activities of cost control in different economic trade cycle in the construction industry basically in Lagos State. This research shall be limited to construction project within Lagos state.

1.8 SIGNIFICANCE OF THE STUDY

Having stated the problems at hand based on the uncontrollable market situation, which affects the economy and effects, is so much that Quantity Surveyor that are supposed to be the referee of the cost control in the construction industry are beaten to it. The industry with various ways of curbing the uncontrollable market trend has to control own budget.

This is why there are so many cost control processes in the industry. The process of cost control has been applied in various projects but the budget is always executed.

This research work shall analyzed different economic cycle in Nigeria and investigate the effect of this control activities in the construction industry. The study shows how the cost control activities had feared in different cycle of economy.

The relationship that exist between various elements that constitute the cost overrun of projects were analyzed to know the effect of each in difference cycle of economy with this analysis, How well to apply the cost control activities to curb the re-occurrence of cost overrun on project were deduced.

1.9 HYPOTHESES OF THE STUDY

This work based its assumption on the following hypotheses:

H_O: Relevance of cost control activities is function of economic trade cycle of the nation.

H_A: Various element of cost overrun respond differently to each phases of economy.

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