TIME AND COST PERFORMANCE LIABILITY ALLOCATION IN THE BUILDING PROCESS

TIME AND COST PERFORMANCE LIABILITY ALLOCATION IN THE BUILDING PROCESS

Abstract:

The subject of this thesis is construction risks and the allocation of any loss incurred as a result of their occurrence amongst parties to a contract. This is with the broad aim of improving on the achievement of cost and time t a r g e t s for a project, hence, reducing cases of abandoned projects in Nigeria. To this end, the following objectives were pursued. The identification of those factors that cons t i t u t e risk, examination of the roles of the conditions and types of contract in the allocation of these r i s k s , and the determination of a reasonable proportion of allocation among the parties to a contract. In pursuance of the objectives of this thesis, a pretested questionnaire was administered in conjunction with personal interviews of consultants in the construction i n d u s t r y. The survey covered Lagos, Oyo, Kacluna, Bauchi and Borno States. Seventy-six percent (76%) of respondents argued that poor achievement of cost and time targets in building projects can be attributed to non-compliance with the conditions of contract which is the main vehicle for allocating construction r i s k s . The major reason advanced for this situation is that the conditions of contract as presently constituted does not reflect the Nigerian construction environment. The need to review the conditions of contract to take into proper consideration, those risks oi particular relevance to the Nigerian construction environment was emphasised. This thesis has identified risks that often adversely affect construction projects when they occur. Proportions of allocation amongst the parties to a contract that are anticipated to effectively provide for any loss incurred as a result of the occurrence of these risks were subsequently proposed. The likely benefits when the proportions of allocation are implemented include the minimization of litigations and conflicts among the parties to a contract and the achievement of more competitive and realistic tenders from contractors. The responsibility for a percentage of the loss caused by the occurrence of an externally arising risk factor by each of the parties to a contract, ensures the utilization of their incentive to mitigate losses. Their commitment to the successful completion of the project is thus assured.

TIME AND COST PERFORMANCE LIABILITY ALLOCATION IN THE BUILDING PROCESS