IMPACT OF PAYMENT DELAY ON COST AND TIME PERFORMANCE OF BUILDING PROJECTS IN KOGI STATE, NIGERIA.

Abstract

Construction industry is considered an important sector for the development in Kogi State. To eliminate poor payment practices and to assist continuous uninterrupted construction, some countries have drawn up construction – specific statutory payment security acts / legislation. This paper presents findings of a research conducted amongst Kogi State contractors with the aims to examine the causes of payment delay on cost and time performance of building projects with a view to establishing /developing strategies to mitigate their effects. The sources of data for the research were primary and secondary with genuine information from ministry of works and housing Lokoja, Kogi State. The questionnaires were administered on the selected professionals in the ministry of works, consultants, and contractors who were directly involved in the execution of the (56) selected projects of which (51) were prototypes structures that cut across 21 L.G.A. This was also followed up by interview with the key professionals in the ministry of works and housing Lokoja. The data were analyzed using percentile, mean score, factor analysis, and linear regression. The result of the analysis clearly revealed the causes of payment delay as: equipment availability and failure, clients failure to generate income from banks, changes in drawing, clients ineffective utilization of funds, project management problem, improper supervision and financing cost, cost overrun and contract failure, poor cash flow because of lack of proper process implementation, lack of knowledge and experience on the field commencing work to suit the needs of politician haphazardly. The research finding shows that impact of payment delay can create cash flow problem, stress and financial hardship on the contractors and that some reactions to payment delay adopted by the contractors may have adverse effects on their own business. Amongst the most appropriate solutions to overcome the problem of payment delay on cost and time performance of building project in Kogi State, Nigeria faced by local contractors include; a right to regular periodic payment, a right to a defined time frame for payment and a right to a speedy dispute resolution mechanism.