ABSTRACT
This research work looks at Due Process Application in
the procurement of construction projects in Nigeria. It gives a brief
background of the introduction of due process generally in the Nigerian public
sector and specifically in the construction industry.
This research goes further to highlight the gains made
by the introduction and application of due process in construction projects.
This was achieved by interviews and administering of questionnaires, which
focused on the awareness/understanding of the concept of due process by project
participants in the Nigerian construction industry.
This project also looked at the effectiveness of the
application of due process procedure in the Procurement of construction
project, since it’s adoption. It further asserts that ‘application or
non-application’ of due process procedure or mechanism affects project
delivery.
This research finally recommends that due process
procedure should strictly be complied with and further extended to other tiers
of Government, which are the State and Local Government. In doing this the
gains so far made in the procurement of construction projects in the public
sector would be fully harnessed.
TABLE OF CONTENT
Pages
Title page
i
Certification
ii
Dedication
iii
Declaration
iv
Acknowledgement
v
Table of Content vi
List of Tables
vii
List of Figures
ix
Abstract
x
CHAPTER
ONE: INTRODUCTION
1.1 Background
to the Study 1
1.2 Statement
of the Research Problem 7
1.3 Aims and
Objectives of the study 8
1.4 Research
Questions 8
1.5 Research
Hypotheses 9
1.6 Scope and Limitation of Study 9
1.7
Definition of Terms 10
CHAPTER
TWO: LITERATURE REVIEW
2.1 Conceptual
Clarifications 11
2.2 Due Process and Procurement in the Nigerian
Public Sector 14
2.3 Due Process
Mechanism 15
2.4 Condition
of Public Procurement in Construction before Reform in Nigeria 17
2.5 Procurement Reform in Nigeria 18
2.6 The “Due Process” Reform 19
2.7 Prequalification 20
CHAPTER THREE: RESEARCH METHODS
3.1 Introduction 22
3.2 Research Design 22
3.3 Population of the
Study 23
3.4 Sampling Techniques 23
3.5 Sample Size 23
3.6 Research Instrument 24
3.7 Validity of Instrument 24
3.8 Reliability
of Instrument 24
3.9
Procedures for Data Collection 25
3.10 Procedure for Data Analysis 26
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Introduction 27
4.2 Questionnaire Administration Reports 27
4.3 Respondent’s
Profile 28
4.4 Test
of Hypotheses 35
4.5
Discussion of findings 36
CHAPTER
FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1
Introduction 38
5.2 Summary 38
5.3
Conclusion 38
5.4
Recommendations 39
5.5 Contribution to Knowledge 39
5.6
Area for Further Research 39
References 40
Appendices
LIST OF TABLES
Table 1: Reliability
Statistics 25
Table 2: Descriptive result of response to
questionnaire administered 27
Table 3: Respondents gender
profile 28
Table 4: Respondents age
distribution profile 29
Table 5:
Respondents Highest Educational Qualification profile 29
Table 6:
Respondents Professional Background Profile 30
Table 7:
Distribution of respondents according to Work Experience 30
Table 8:
Mean scores
of the level of awareness/understanding of due process in
the procurement
of construction project by project participants in Nigeria 31
Table 9: Mean scores of the
effectiveness of due process application in
the procurement of
construction project in Nigeria 32
Table 10: Mean scores
of the challenges/barriers towards effectiveness of due
process application in project
procurement procedure 34
Table 11: One-Sample Test awareness of the
application Due Process in the
procurement of construction project by project participants
in Nigeria 35
Table 12: Correlation
between Due Process Procedure and Project Delivery 36
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
The
construction industry activities include procurement of goods and services as
well as the execution of a variety of physical structures and infrastructure
(Ayangade, Wahab and Alake 2009), using different procurement methods. The activities of construction industry has
helped in contributing to Gross Domestic
Product (GDP), Gross fixed capital formation and creation of high level of
employment to the changing professionals (Wahab, 2005). In industrialized countries, the building
industry is responsible for up to 22.00% of the GDP and employs up to 12.00% of
the total labour force, but in Nigeria, it is responsible for 16.00% of the GDP
and employs up to 20.00% of the labour force (Akindoyeni, 2004). The construction industry has many features
which set it apart from other process industries and which accentuate the need
for professional engagement. Various
methods have been used for procuring building and other infrastructural
facilities in the country. One of the
changes and new trends, which now influence the procurement system in the
country, is the increasing fragmentation of the stages involved in construction
process (Bamisile, 2004).
Until 1999, Nigeria had practically institutionalized
corruption as the foundation of governance.
Hence institutions of society easily
decayed to unprecedented proportions as opportunities were privatized by the
powerful. This process was accompanied, as to be expected, by the intimidation
of the judiciary, the subversion of due process, the manipulation of existing
laws and regulations, the suffocation of civil society, and the containment of
democratic values and institutions. Power became nothing but a means of
accumulation and subversion as productive initiatives were abandoned for purely
administrative and transactional activities. The legitimacy and stability
of the state became compromised as citizens began to devise extra-legal and
informal ways of survival. All this made room for corruption. (BPP website).
There
was therefore an urgent call for Procurement Reforms and enthronement of Due
Process in the Nigerian public Sector. It is as a result of
this, that due process was established in 2001.
Nigeria
nation has lost several trillions of Naira on poorly executed contracts, bad
workmanship, collapsed structures, delayed and abandoned projects, and the
multiplier economic and social benefits derived from such projects are
unachievable (Ajator, 2004). The
problems of capital development program from the era of military dictatorship
were characterized by full paid ghost projects, poorly executed or even
abandoned projects.
Since
the early 80s, Nigeria has been confronted with a magnitude of economic
problems. These economic problems include stagnant growth, rising inflation,
unemployment, food shortage and mounting external debt. Nigeria therefore like
most other nations, has been battling with how to achieve its major economic
objectives. These objectives include full employment, price stability, economic
growth and healthy balance of payments. It has not been easy for Nigeria to
realize the above objectives. The root of all these problems is corruption
(Oguonu 2007).
Over
the years in Nigeria, the public procurement system has been described to be
characterized by non-compliance with the principles of tendering process in the
selection of contractors that have the financial, technical and managerial
know-how to execute projects to time, cost and quality ends. The increasing
reports on the abuse of public procurement system in the three tiers of
government in Nigeria have led to huge losses of resources in various public
projects [BMPIU, 2005]. Oboirien, 2005 showed that the country might have lost
billions of money over the years as a result of abuse of procedures, inflation
of contract costs, lack of transparency, competence based competition and merit
as the fundamental criteria for the award of public contracts. There was also
the problem of influence peddling, sycophancy, and use of primordial
considerations. These abuses led to abandonment of government projects, non-
value for public treasury, high cost of procurement and others.
Obasanjo
(2004) rightly observed that Nigeria had practically institutionalized
corruption as the foundation of governance. Hence, institutions in the society
easily decayed to unprecedented proportion as opportunities were privatized by
the powerful. Power became nothing but a means of accumulation and subversion
as productive initiatives were abandoned for purely administrative and
transactional activities. The legitimacy and stability of the state
became compromised as citizens began to devise extra-legal and informal ways of
survival. All this made room for corruption.
There
was therefore an urgent call for Procurement Reforms and enthronement of Due
Process in the Nigerian public Sector. In 2001, the Federal Government issued
New Policy Guidelines for procurement and award of contracts in Government
Ministries/Parastatals (Circular F. 15775 of 27th June, 2001).
In
the President Obasanjo political dispensation, the Budget Monitoring and Price
Intelligence Unit (BMPIU), also known as Due Process was inbuilt into the
capital budgetary system, so as to ensure that projects started are completed
within stated criteria.
Due
process implies that governmental activities and business can be carried out
openly, economically and with transparency without favouritism and corruptible
tendencies (Ezekwesili 2004). The essence of this is to ensure that rules and
procedures for procurement are made in such a way as to be implementable and
enforceable. It is hoped that this Due Process should put an end to “the
Business as Usual Syndrome” in Nigeria.
Adesugba
(2004) opined that in order to provide additional boost to government
anti-corruption policy, an office of the BMPIU, otherwise known as Due Process
(D.P) was established in June 2003. To
realize the objective for which it was set up, BMPIU was headed by a financial
specialist, Mrs. Obiageli Ezekwesili and staffed with experts in financial
regulations, project management and corruption prevention.
The
seemingly professional failure of Nigerian project planners, designers and
administrators to give value to capital projects has cast doubt on the
credibility and relevance of construction professionals and contractors. Nigerian government since 2002 fiscal year
has reservation on the import of consultancy fee scale in capital project
delivery (Awosemusi 2002) and has instituted the Due Process Compliance (DPC)
exercise in the planning and implementation of capital budget /projects
(Ezekwesil 2002). The goal of BMPIU is
to ensure full compliance with laid down guideline and procedures for the
procurement of capital and minor capital project as well as associated goods
and services for all Government contracts.
The objectives of BMPIU according to
Ezekwesili (2003) are as follow:
1. To
introduce more honesty, accountability and transparency into the procurement
process.
2. To
determine whether or not Due Process has been observed in the procurement of
services and contracts.
3. To
establish and update pricing standards and benchmarks for all suppliers to
Government
4. To
ensure that only projects which have been budgeted for are admitted for
execution.
5. To
harmonize existing government policies / practices and update same on public
procurement
6. To
monitor the implementation of projects during execution with a view to
providing information of performance output and compliance with specifications
and targets.
Lock
(1989) opined that the objectives of contract / project performance or
management can be condensed under three headings. A successful project is one which has been
finished on time, within its cost budget and to a technical or performance
standard which satisfies the end user.
The Due Process Certificate ensures that the stated criteria are met by
who will be the contractor to execute any project and the originating
government Ministry and Public institutions.
For
any project to actually get Due Process Certificate readiness to implement, Kharbanda
and Stallworthy (1989) stated some criteria for choosing the contractor to
include:
i.
Cost incentive and liability arrangement
proposed
ii.
Local currency content of the project cost
and the total investment required for the project
iii.
Appreciation and knowledge of local
conditions at the job site.
iv.
Quality of personnel nominated to carry
out the project, with special emphasis on the project manager
v.
Long terms meant for the project
vi.
Project organization and relationship with
local subcontractors
vii.
Quality and contents of the technical
proposal
viii.
Contractor’s recent experience in the
design and construction of similar projects
ix.
Ability to provide the owner with
technical support services
x.
Schedule for project completion
The
above criteria which are not exhaustive are similar to that used by the Due
Process Unit (DPU) in contract procurement, regulation, certification,
monitoring, implementation, evaluation, training and advisory. It is worthwhile to inquire whether this DPC
has impacted positively or not on the performance of public executed projects
since its inception.
The
introduction of Public Procurement Reforms in Nigeria followed a World Bank
Country
Procurement
Assessment survey conducted in 1999 which established the link between poor/weak public procurement procedures and
corruption as well as its far reaching negative \consequences on national
development especially in the area of infrastructural development in
Nigeria.
The Assessment Report revealed that 60k was being lost to underhand practices
out of every N1.00 spent by Government and that an average of ten Billion US
Dollars ($10b) was being lost annually due to fraudulent practices in the award
and execution of public contracts through inflation of contract cost, lack of
procurement plans, poor project prioritization, poor budgeting processes, lack
of competition and value for money and other kinds of manipulations of the
procurement and contract award processes.
In
order to address the above shortcomings, the Federal Government initiated the
Public
Procurement
Reform as part of its Economic Reform agenda designed to restore due process in
the
award and execution of federal government contracts. This led to the setting up
of the Budget
Monitoring
and Price Intelligent Unit (BMPIU known as Due Process) in 2001 to implement
the
Federal
Government's Public Procurement Reform Policy aimed at minimizing open abuses
to
known
rules, processes and standards in the award and execution of public sector
contracts in Nigeria.
Following
the growing Public demand that the reforms are sustained and institutionalized
with
legal
backing, a Public Procurement Bill was articulated in 2003/2004 by the
Leadership of
BMPIU
and presented to the National Assembly. The Public Procurement Bill was
thereafter
passed
by the National Assembly on the 30th of May, 2007 and subsequently signed into
Law by
President
Yar Adua on the 4th of June, 2007. (BPP website)
Today
the duties carried out by the bureau of public procurement is popularly
referred to as due process.
1.2 STATEMENT
OF THE PROBLEM
There
are various procurement methods used in carrying out different project in the
construction industry, of which due process is applied.
Analysis have shown that
most contracts awarded by the government or its officials are awarded through
corrupt means. Some of these contracts are awarded to contractors who have
agreed to give the procurement official a certain percentage of the original
contract amount. This encourages contractors to use substandard goods, render
poor services or sometimes project abandonment (Ayodele, Charles, Akinusi & Marion 2010).
Over
the period, Nigeria as a nation has lost several trillions of Naira on poorly
executed contracts, bad workmanship, collapsed structures, delayed and
abandoned projects, and the multiplier economic and social benefits derived from
such projects are unquantifiable. It has not been easy for the nation to
realize the full economic objectives. The root of all these problems is
corruption ( Ejiofor 2009).
In recent years, many people are wary of
doing business in Nigeria because; the cost of doing business here is
predictably higher than elsewhere. There seems to be more need, now than ever,
to ensure that, rules and procedure put in place for any form of procurement
show adequate clarity of purpose to make them implementable and enforceable ( Nwaogwugwu
2005).
There
are due process criteria set for any public project to be undertaken at
different government levels. Irrespective of this, there are still several
abandoned public projects due to selfish reasons. It is therefore worthwhile to
investigate the level and extent of the use of due process for project
procurement in Nigeria.
1.3 AIM AND OBJECTIVES OF THE STUDY
The
aim of this study is to assess the application of due process in existing
procurement methods in Nigeria. The following are the study objectives.
(1)
To examine the level of
understanding/awareness of Due Process
in
the procurement of construction
projects by projects participants
(2)
To assess the effectiveness of due process
in public project execution in Nigeria
(3)
To determine challenges or barriers of due
process application in project procurement process in Nigeria.
1.4 RESEARCH
QUESTIONS
Based
on the research objectives, the following research questions have been
proposed.
(1)
What is the level of awareness/understanding
of Due Process in the procurement of construction project by project
participants in Nigeria?
(2)
How effective is due process application
in public project execution in Nigeria?
(3)
What are challenges/barriers towards
effective due process application in public procurement as it relates to the
construction industry?
1.5 SIGNIFICANCE
OF THE STUDY
This
study is to assist the policy makers and other stakeholders on the effects of
the Due Process procedure in the delivery of public projects in Nigeria. The assessment of the Due Process application
will help to ascertain the gains of its use from when it was introduced in 2001
to 2013 in contract award, performance and implementation using Due Process
certifications. Finally, this will throw
more light on the importance of due process procedure as a prerequisite for
project procurement used for public project delivery.
1.6 SCOPE
AND LIMITATION OF THE STUDY
As
it is more directly related to construction procurement, construction contract,
project delivery, monitoring, implementation and evaluation.
Sampling
of the professionals will be limited to Architects, Quantity Surveyors,
Civil/Structural Engineers, Builders and Services Engineers along with the
construction firms that have handled public project contract.
This
study will focus on the project carried out within five years in which due
process procedure was applied.
1.8 DEFINITION
OF TERMS
Due Process
This
is a mechanism for ensuring strict compliance with the openness, competition
and cost accuracy rules and procedures that should guide contract award within
the Federal Government of Nigeria.
Due
Process Unit
The Unit under the Presidency charged with
budget monitoring and price intelligence. It ensures that project procurements
are implemented in accordance with laid down criteria.
Due
Process Methodology
The application of basic tools and criteria
in project management, assessment, monitoring and evaluation of government
projects to ensure transparency, integrity, competence, competitiveness and
create value for money in the planning and execution of capital program by the
Due Process.
Procurement
This is the process that creates, manages
and fulfills contracts. It is an integral part of construction projects and it
covers the overall pattern of decision made by the client in executing project
Due
Process Compliance
The exercise and assurance that these
basic tools and criteria in the planning and implementation of capital budget /
projects are adhered to by all the parties involved in project execution.
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