Nigeria’s Construction Industry Records 73% Over Budgeting Projects

A recent survey by one of the world’s leading associations for project professionals, Project Management Institute (PMI), has revealed that 70 per cent of construction projects experience scope creep, and 73 per cent of such projects ended over budget.

In an interview of more than 40,000 global Project Management Professional (PMP) certification holders in the construction industry, it also found that 72 per cent of construction projects often experienced project delays.

In another research, titled “Most critical factors responsible for cost overruns in Nigeria building construction industry,” the Federal University of Technology’s Oluyemi-Ayibiowu, B. D., Aiyewalehinmi, O. E and Omolayo, O. J, found that cost overruns are a major problem facing the local construction industry.

They noted that cost overruns led to numerous negative effects such as project delay, abandonment and poor-quality delivery.

Based on their data, the six most severe factors of construction cost overrun were identified as: risk and uncertainty related factors (89.5per cent); lack of financial power by clients (88.5per cent); weak regulation and control (88.2 per cent); project fraud and corruption (82.6 per cent); variation of prices (81.3 per cent) and indiscriminate change in design/works (80.1 per cent).

It is, therefore, not surprising that construction, which contributes 13per cent to the global Gross Domestic Product (GDP) and is the biggest, has not been performing well, having clocked only one per cent yearly growth over the past two decades.

That’s not all; according to PMI’s Pulse of the Profession report, the sector’s wasteful expenditure sits at $127 million for every $1 billion spent on projects. This amounts to over $1.6 trillion wasted yearly due to capital projects not being delivered on time or within budget.

The Federal government’s plans to spend over N3.50 trillion on infrastructure and human capital development in 2022 is a clear indicator of its farsightedness. For the construction industry its work is cut out if it wants to participate meaningfully in these projects – firstly accelerate its rate of technology adoption and secondly focus on upskilling employees, particularly project managers responsible for scoping, scheduling and budgeting.

“Construction is a demanding industry subject to the vagaries of weather, supply chain disruptions, and a host of other often uncontrollable variables. It requires a well-versed project manager to bring the work in on time and within budget,” according to PMI Business Development Lead, Africa, George Asamani.