COST MANAGEMENT AND PROJECT SUCCESS RATE IN NIGERIA OIL AND GAS INDUSTRY

Abstract

Effective cost management is a main stem of project management and the most important tool sought by contractors to achieve profit. The study examined the relationship between cost management and project success rate in Nigeria and the various measures put in place to control and manage the cost of projects. It covered the period between 2005 and 2014. The study employed descriptive research design and purposive sampling technique to obtained information from the 292 employees using questionnaire. Cost management was investigated in term of its extent of application, human resource cost, equipment cost, financial cost and material cost using regression and correlation analysis. The results showed that, the labour, material, equipments and financial costs significantly have impacts on project success rate in Nigerian oil and gas industry. This is as shown in quality of project ( F (4,287) 283.826); delivery period ( F (4,287) = 220.002); and budget estimate ( F (4,287) = 236.722); all valued being significant at 0.05 level and therefore concluded that the entire key officers and employees of the Oil and Gas companies selected viewed that the cost management has positive effect on the delivery period of oil and gas projects in Nigeria to the extent that effective cost management and successful delivery project depend on the financial capability of the clients to fund the cost of project. The study recommended that much focus should be placed on the major effect of cost management in order to reduce the cost of construction, enhance construction performance and generate confidence within the oil and gas industry. There should also be proper coordination and communication among various parties such as project engineer, project planner and project director etc working on the project in order to have effective cost management, control problems that may arise and reduce any avoidable delay.