COMPARATIVE ASSESSMENT OF COSTS OF TRADITIONAL AND PUBLIC PRIVATE PARTNERSHIP INITIATIVES IN PROCUREMENT OF HOUSING PROJECTS IN NIGERIA

Abstract

The recent economic recession in Nigeria has led to drastic reduction in budgetary allocation for government funded projects, housing inclusive. As a result, alternatives method of procuring public projects such as Public Private Partnership (PPP) are being considered by the government in order to enhance timely delivery of projects within acceptable cost. Based on this, this study assessed the costs of housing projects procured through traditional method (TDM) and PPP initiatives in Niger State, Nigeria, with a view to providing cost effective housing system in the country. The study adopted a case study of selected housing projects procured via these two routes within 2014 to 2016 and cost data were gathered from Federal Ministry of Power, Works and Housing. Construction participants involved in the delivery of these selected projects were sampled using questionnaire survey to determine the factors influencing the cost performance of these housing projects. Data analyses was carried out using descriptive and inferential statistical approach such as Percentage, Mean item score, Ttest, Mann-Whitney U-Test, and Gap Analysis. The reliability of the research instrument was also tested using Cronbach’s Alpha test. Findings revealed that there is no significant difference between the initial and final cost of construction of housing projects procured through both methods. However, on the average there exist a 9.1% and 5.3%deviation of final cost from initial cost both the traditional and PPP methods respectively. The major factors influencing the cost performance of traditionally procured housing projects can be categorized under the external factors, client factors, and labour and equipment factors. Most important factors under these groups are; economic conditions, unforeseen ground conditions, cash flow/finance and payment of completed work, financial difficulties of client, shortage of technical personnel (skilled labour), and high cost of labour. For PPP the key factors can be found under the material factors, and external factors. Key factors under these groups include; fluctuation of prices of materials, late delivery of materials, economic conditions, unforeseen ground conditions and political conditions. Also external factors are key to factors in achieving good cost performance as they are often seen as reflex factors which can be difficult to control. The study further recommends proper financial monitoring and control of cost for housing projects procured through these methods, especially the traditional method which showed a higher cost overrun. Also construction participants should take advantage of the PPP method of procurement in order to deliver cost effective housing projects as it gives lesser cost overrun. Adequate precautionary measures such as proper site investigation before the commencement of projects, proper feasibility and viability studies etc., can be put in place to check these external factors and also cushion their effect on the cost delivery of housing projects. In the case of the traditional procurement option, clients should ensure that the finance to cover for the proposed housing project is in place before the award of such contract. In the same vein, developers seeking to execute housing projects via the PPP route should also be properly evaluated to ensure that they have the financial capability to handle such projects.