ASSESSMENT OF PAYMENT DELAY IN CONSTRUCTION PROJECTS IN AUCHI EDO STATE, NIGERIA

Abstract

The construction industry in recent times has been characterised by cost and time and cost overrun which are mostly caused as a result of payment delay. Delay in payments of work done by clients on construction projects are considered to be a factor of significant concern. It causes severe cash flow problems to contractors and this can have a devastating effect down the contractual payment chain. The research work assessed payment delay in the Nigerian Construction Industry with focus on the causes and effects of payment delay and the techniques to mitigate the occurrence of payment delay. The sources of data for the research were primary and secondary with information gotten by use of well structured close ended questionnaire and information from the physical planning unit of Auchi Polytechnic Auchi. The questionnaires were administered on the professionals in the physical planning unit, contractors and consultants who were involved in the twenty (20) selected projects. This was also followed up by interview with the key professionals in the physical planning unit of Auchi Polytechnic. The data were analysed using percentile, mean score, factor analysis, content analysis and linear regression. The result of the analysis revealed the causes of payment delay as: slow coordination and seeking of approval from concerned authorities, late preparation of interim valuation, inflation and increase in interest rate in repayment of loans. The causative factors of payment delay were subject to factor analysis and the factors were reduced to eleven (11) factors; national economic factor, construction process factor, decision induced delay, lack of coordination induced delay, lack of public relation induced delay, political induced factor, interaction factor, fluctuation factor, bankruptcy and variation factor with mean score of 4.14, 3.82, 3.69, 3.69, 3.51, 3.45, 3.43, 3.41, 3.34, 3.22 and 3.09 respectively. The effects of payment delay were: time overrun with mean score 4.56 followed by dispute, cost overrun and slowing down of work with mean scores of 4.44, 4.44 and 4.33 respectively. The relationship between payment delay and cost and time overrun showed that payment delay had a significant effect on time overrun while the effect on cost overrun was low. The most effective techniques to mitigate the payment delay were identified as; better prepared contract with mean score of 4.33, proper feasibility studies on the project, and imposing penalty of interest on late payers and certification and payment being subject to careful strategy and planning with mean score of 4.22, 4.11 and 4.00 respectively.