CHAPTER
ONE
INTRODUCTION
1.1. Background of the study
Project
cost controls in the Nigerian construction sector have always been under
studied. On the course of prosecuting a project, controlling the cost of these
projects would help in maintaining such projects from being too capital
intensive which may lead to the project being abandoned. For every project to
be successfully executed, its cost must have been analyzed and the cost from
start to finish noted so as to prevent unnecessary contingency spendings which
may hamper the complete execution of the project. Cost
control includes monitoring cost, task completion, and time. If total cost of a
project at a given time is over the cost baseline, cost control measures may be
necessary. Such project management actions may range from ensuring that only
tasks within the scope of the work are being performed to alerting stakeholders
of potential cost overruns. As a project manager, it is important,
professional, and ethical to identify and report on these issues as soon as
they are identified.
Organizations whether private
or government owned must complete projects on budget to achieve financial
objectives and save cost. Project managers applying cost control techniques
effectively can ensure that projects stay within projected budgets or are
allowed to exceed budgets in a controlled way for specific reasons. When an
organization implements appropriate project cost controls, it reduces risk and
receives the full benefits anticipated from project completion.
Controlling costs
means meeting a budget that is based on cost estimates. The two components of
such estimates are the scope of the work and the cost of each completed task.
The project plan details the requirements for the project, which you have to
translate into activities. A typical activity requires labor, materials and
equipment. Once you have defined the project scope in terms of activities and
divided the activity into its cost components, you can calculate cost estimates
using costs from historical sources, bids, industry norms and other projects as
a base.
1.2. Statement of the general problem
The increase in the
number of abandoned, uncompleted and under completed projects by individuals,
companies and even government has been a cause for serious concern. This high
rate of abandonment has inflicted our infrastructural development negatively
and may have dissuadedprospective investors from investing in our economy.
1.3. Aims and objectives of the study
The following will be
our aims and objectives for undertaking this study
Ø To examine the level
of implementation of project cost control in the Nigerian construction
industry.
Ø To know if adherence
to project cost control increases the profitability of Nigerian construction
industry.
Ø To know if project
cost control improves the Nigerian construction industry.
Ø To know if project
cost control reduces abandonment and under completion of projects.
1.4. Research Questions
Ø What
is the impact of project cost control on the Nigerian construction industry?
Ø Does
project cost control enhance the quality of constructions in the Nigerian
construction industry?
Ø What
is the impact of project cost control on the infrastructural development of
Nigeria?
Ø Is
there a relationship between project cost control and economic development in
Nigeria?
1.5. Research Hypothesis
H0:
Effective project cost control does not improve the quality of constructions in
the Nigerian construction industry.
H1:
Effective project cost control does improve the quality of constructions in the
Nigerian construction industry.
1.6. Significance of the study
This study will be of
great importance to project managers, government, researchers and captains of
industries seeing that it would unravel the implications and benefits of
ensuring project cost control in the Nigerian construction industry and the
economy of Nigeria at large.
1.7. Scope of the study
This
study is restricted to project cost control in the Nigerian construction
industry with EL-ALAN Construction Company (Nigeria) Limited as its
case study.
1.8. Limitation of the study
Financial constraint-
Insufficient fund tends to impede the efficiency of the researcher in sourcing
for the relevant materials, literature or information and in the process of
data collection (internet, questionnaire and interview).
Time constraint-
The researcher will simultaneously engage in this study with other academic
work. This consequently will cut down on the time devoted for the research
work.
1.9. Definition of terms
Ø Project:A
planned piece of work that is designed to find information about something, to
produce something new, or to improve something.
Ø Cost:the
amount of money that you need in other to buy, make or do something.
Ø Construction:the
process or method of building or making something, especially roads, building,
bridges etc.