Day: September 20, 2017

Causes of Abandonment of Projects in Nigeria and Avoidance Strategies (from the Perspective of the Consultant)

Causes of Abandonment of Projects in Nigeria and Avoidance Strategies (from the Perspective of the Consultant)

The Nigerian Institution of Civil Engineers (A Division of The Nigerian Society of Engineers) 3 – Day National Workshop on Strategies for Avoiding Abandoned Projects in Nigeria 21st – 23rd October 2003 CAUSES OF ABANDONMENT OF PROJECTS IN NIGERIA AND AVOIDANCE STRATEGIES (FROM THE PERSPECTIVE OF THE CONSULTANT) – By Engr. N C Okide 1. 0Introduction Abandonment of projects has become a national menace in Nigeria’s infrastructural development. The purpose of this paper is to look at the causes for such abandonment and to discuss avoidance strategies from the perspective of the consultant.

Projects are usually abandoned in Nigeria due to one or a combination of the following causes: – 1. Improper project/contract management 2. Lack of risk analysis and management on the project. These causes as well as the strategies to avoid them are discussed in greater details in the subsequent sections of this paper. 2. 0Improper Project/Contract Management Project management is defined as professional services involving the establishment and monitoring of overall implementation strategy on a project from the design stage through to construction and commissioning stages.

Hence an effective project manager must understand the client’s business, the purpose and nature of the project and it’s impact on the client’s business in addition to understanding the business of managing projects. Fulfillment of this objective requires both vision and skill on the part of the Project Manager. Most project managers in Nigeria do not fully understand and appreciate the magnitude of this role, hence leading to project abandonment in most cases. Project management in the construction industry essentially involves the following services: – ?Project Initiation and Planning Planning and Monitoring Design Services ?Planning and Monitoring Construction Works ?Cost Control and Monitoring ?Procurement and Commissioning To enable the most favorable overall procurement approach to be adopted, the project strategy must be carefully considered at the earliest stage. In fact, the formulation of a project strategy by the client/project manager is the first building block to a successful and cost effective scheme. For an effective project/contract management, which would ensure that the project is not abandoned in future, the following procedures need to be followed: – . 1Definition of Project Objectives/Project Manager’s Responsibilities The project objectives must be clearly defined by the client/project manager so that all parties in the management team clearly understand these. They are as listed below: – ?Outline Project Description (short description of the project). ?Client’s Requirements (bullet point list of all client’s requirements/aspirations in terms of purpose, cost, time, quality, customer/user perceptions/response etc. ). ?Brief/Scope of Works (outline description of the client’s brief and scope of works on the project). Programme (outline programme description giving any key/critical dates to be met and reasons why, where appropriate, e. g. funding application deadline dates, dates where project will be affected by changes in legislation, building opening dates relating to school/university terms, scheduled events etc. ). ?Cost (budget limit and outline structure of cost plan). ?Approving Authorities (state any particular approval procedures in addition to the usual local authority planning approvals). The responsibilities of the project manager in the construction industry will normally consist of the following activities in a project: – )Briefing by the client b)Management and co-ordination of the project, including other consultants c)Collection of data and site information, and the carrying out of necessary investigations d)Design and analysis e)Preparation of drawings f)Preparation of bills of quantities, specifications and tender documents g)Tendering h)Supervision of construction i)Commissioning of project. The true project management or prime agency commission in the construction industry is where the client appoints the project manager to carry out all the professional disciplines. The project manager then appoints other members of the design team.

However, in practice, there could be other variants or forms of engagement where the client appoints each member of the design team but nominates one the parties to act as the project manager for co-ordination and control purposes. In either type of engagement, the coordination of the design team and the monitoring of progress are ultimately the responsibility of the project manager. It is essential that suitable fees are agreed and paid, as and when due, to the project manager/consultants otherwise this could lead to sharp practices that might result in project abandonment in the future.

The selection of inadequate or inexperienced project manager and consultants on a project could lead to the later abandonment of that project. 2. 2Project Organisation and Procedures The project manager must at inception prepare a project organisation chart, detailing roles and responsibilities of all the project team members as well as the names of organisations involved for the project delivery. The project or contract management procedures to be adopted for a successful completion of the project are as follows: – 2. 2. 1Procurement

Describe for the whole project or part of the project the proposed or agreed procurement approach, including: – ?Method of appointment of consultants e. g. negotiation/ tender/ architectural competition, including reference to any client requirements in this regard such as the use of organisations from approved lists, need for liaison with client’s purchasing and procurement departments. ?Preferred generic procurement route e. g. design & build, traditional or construction management, relating these to key client’s objectives, where appropriate. ?Likely contractual form, with a note on specific amendments required to standard forms (e. . JCT, FIDIC etc. ). ?Proposed contractor selection process e. g. open tender invitation, negotiation with short-listed contractors, framework agreements etc. Methods of evaluation/guidelines to be used e. g. lowest price/ best value and approach to scoring. ?Clarify who is responsible for tender assessments and recommendations. ?If the client has a particular procurement process, detail these, possibly by means of a flow chart. 2. 2. 2Communications (including IT/CAD Systems) The coordination of the design and construction teams and the monitoring of progress is the major responsibility of the project manager.

It is important for him to recognize this from the very beginning of the project and to make suitable arrangements to carry out this duty. His first task must be to establish a procedure for proper communications on the project. All contractual communication on the project must be in writing. The communication system to be used for the project must be clearly defined in a design code to be produced for the project, including e-mails, CAD systems etc. Formal project communication could be carried out through: – ?Monthly project board meetings; ?Weekly client briefing meetings at the concept stages; Weekly or fortnightly consultant’s team meetings at the scheme and detailed design stages; ? Project review meetings at concept, scheme, tender and construction stages; ? Monthly or fortnightly site meetings at the construction stage; ? Fortnightly contractor/sub-contractor meetings at the construction stage. 2. 2. 3Design Management The project manager needs to define roles and responsibilities for design of the work or work packages. He is to ensure that the person/organisation responsible for design co-ordination as well as the client’s representative for approvals on the project are made clear.

Where appropriate and where possible, the project manager should clarify the split of design responsibility between consultants and contractors. The key design stages and process flow diagrams are to be set out as appropriate. The importance of appropriate and well-managed design process to the successful execution of a project cannot be overstressed. Having established the services required from the design consultants it will then be necessary for the client/project manager to establish agreements with these consultants for the work to be carried out.

In general, it is recommended that the standard forms of professional Agreement are used, but care must be taken to avoid gaps in responsibility. The issue of uniformity in the presentation of drawings and other documents need to be addressed such as sheet sizes, scales, numbering system and distribution. It is generally considered important by site management that only one size of drawing sheet should be used for working drawings (maybe A1 or A3 sheets). The scales used should be common to all consultants.

Great attention must be paid to general and dimensional co-ordination of drawings between the consultants to avoid any confusion on site as well as to structure/service clashes. It is important that the Project manager maintains proper record files of all correspondence, drawings and other deliverables on the project and to ensure correct distribution of information to the relevant parties at the appropriate time. 2. 2. 4Change Management Appropriate management of the implications of change is important at all stages of the project.

In the early stages significant changes that affect the project strategy, budget, scope of work, master programme, agreed concept or primary design criteria need to be managed. Later, as the design develops, change management needs to be broadened to encompass more particular changes. In all cases, an understanding is required of the impact of the proposed change on the following: – ?Budget/cost including any re-design work ?Programme ?Risk ?Health & Safety ?Quality ?Construction Contract Where appropriate, a formal change control procedure should be detailed.

For larger, more complex projects this will probably be implemented at an earlier stage than for small projects. Where no formal client sign-off system is proposed, it may be appropriate to include assessment of the impact of change as a standing agenda item in design team meetings and client meetings. The Project Execution Plan should clearly state: – ?Who is responsible for change management (e. g. Project Manager or designated change manager) ? Who may initiate a change request? ?Process/procedure to be followed. ?Time allowance for assessment and authorisation of change requests ?

Mechanism for notifying the team of changes and initiating them 2. 2. 5Construction Management The approach to contract administration and construction quality control should be clearly specified for the project. The cost focused contract management for satisfactory project delivery entails the following: – ?Obtain tenders on the clients’ behalf and oversee the production of a report that recommends the successful contractor. ?Compile the contract documentation for signature by client and contractor. ?Give the client an independent review of the contractor’s programme and monitor progress against it.

Where there are a number of general contractors or trade contractors, coordinate their activities through a hierarchy of programme tailored to meet the client’s needs. ?Manage variations to the contract scope. ?Instruct change, wherever the client demands it. Pre-estimate the cost and time implications of any instruction before its issue, so that clients can make a well-informed decision to proceed with change. ?Evaluate the cost of change due under the particular contract form. ?Certify interim and final payments to contractors either by measurement or by milestone attained. ?Use risk management techniques throughout the construction period. Manage time and cost contingency allowances ?Manage the interfaces between trade contractors and multiple general contractors on major projects. 2. 2. 6Cost Management Cost management is an integral part of the management of the project development process to ensure that the project is realised within the available budget and is not abandoned. The primary elements of cost management are: – ?Clear definition of the roles and responsibilities in relation to cost planning, development and reporting for each stage of the project, including responsibilities for valuation of work on site. ?Cost plan for each part or section of the project. A mechanism to provide early warning of the divergence from budgets from the cost plan owner to the project manager. ?A mechanism to ensure close tracking between design development and the status of the cost plan (this may involve having defined times for conducting cost checks of the design e. g. monthly or at the end of each design stage) ?Identification and costing of risk ?Management of cash flow Where appropriate e. g. for more complex projects, include organisation diagram showing the relationship of organisations and individuals responsible for the various cost planning, development and monitoring roles.

Where possible indicate the structure of the cost plan or plans and where more than one for more complex projects the relationships between them. If a particular IT systems or programme is to be utilised, this should be mentioned, together with any procedures for the project participants to link into the system. Where possible identify the procedures to be adopted, and approvals required to allow release of contingencies to the cost plan. Describe how the cost management function relates to change management. Identify any particular early warning procedure on cost that may be required (e. . early notification of raising of a formal change request in relation to a particular element of the project) Define the frequency of cost reporting required for each stage of the project, together with any particular formatting requirements for these reports, to enable harmonisation with client financial structure. The cost report should: – ?Set out the cost plan for the current and previous reporting period together with reasons for change. ?Set out current estimate of final cost ?Show the drawdown of contingency against anticipated drawdown at this stage of the project. Indicate the anticipated cash flow required. ?Estimate anticipated contractor claims ?During the construction stage relate actual valuations to planned valuations together with brief descriptions of the reasons for deviations. •Show clearly the split between committed and uncommitted expenditure. 2. 2. 7Safety Management In the context of construction projects, safety management covers the following areas: – ?Management of the design to enable safe construction [covered by the implementation of the Construction Design and Management (CDM) Regulations 1994] ?Management of safety on site

The CDM regulations place clear duties on clients and their agents, designers, planning supervisors and principal contractors in relation to the consideration of health and safety in design, the provision of adequate resources to do so, and the documentation of this process. The regulations place responsibility for health and safety on site on the main contractor. Provided the project objectives are clearly defined and the organisation and procedure to achieve them are duly implemented, contracts would not be abandoned midway but would be managed to a satisfactory conclusion in line with the budget and programme. . 0Lack of Risk Analysis & Management on Projects All projects involve an element of risk. The lack of risk analysis and management on most projects in Nigeria has led to the several cases of abandoned projects in the country. Risk Management is a process for formalising what is generally good management practice and common sense. It is a practical tool for every member of the Project Team, from Client down to sub-contractor. All members can use it to help achieve the project objectives, minimise the impact of change, maximise opportunities and prioritize their efforts to address the most important issues.

Risk Management should be a core process in the effective Project Management of any project as it impacts on all aspects of the successful attainment of the project goals. It enables a proactive approach to be adopted for managing the risks on a project, rather than a reactive one. The usual risk management approach is to identify and assess the risks involved for various options under consideration and then set procedures for the management of the risks associated with the chosen option throughout the life cycle of the building/civil engineering project. This helps to ensure the objective of minimum life cycle costs is achieved.

The risk management process is designed to ensure that as far as is reasonable: – ?all significant hazards are identified, ?judgments are made as to hazard importance, ?risk exposure is understood and reduced to acceptable levels, ? cost effective risk control measures are implemented, and, ? control measures are reviewed and managed to ‘close out’. Experience has shown that Risk Management is most effective if it is aimed at specific risk minimisation targets and if it is introduced at the earliest stages of the project with all members of the project team being involved.

The process then continues throughout the design with reviews at key stages. The approach to the management of risk on any project is dependent on the client’s attitude to risk. Decisions as to whether to accept, offset or discharge risk are all influenced by this. It is essential to work with clients to ensure that the objectives and risk targets are clearly stated and understood. The benefits of the process should offset the cost of the Project Team’s time and could give a marked increase in efficiency.

Undertaking a Risk Management exercise has real and tangible benefits to the execution of major projects, including the following: – •Ranks the identified hazards that could impact on the project. •Focuses the project teams efforts on the important issues. •Gives a better overall understanding of the project, especially the priorities and concerns of the other parties. •Highlights issues of concern that may otherwise be overlooked. •Aids forward planning and highlights advisable contingency plans and strategies that can be formulated in advance of a “hazard” occurring, mitigating the impact on the project. Generates a priority action list for the Project Team. •Helps refine the cost plan and programme. •Helps contribute to safer construction. •Can generate the inputs required for a quality control plan and/or an environmental assessment report. •Provides a forum that encourages open discussion between team members and thereby assists team building. Particularly useful when it happens at an early stage in the project. Risk Management incorporates risk assessment, which in turn requires risk analysis.

A range of methods for risk analysis is usually employed ranging from simple quantitative to complex qualitative, depending on the demands of the function to be analysed. In all cases the risks are scrutinised by matrix analysis to determine whether the levels of risk are acceptable. In parallel with risk identification and classification, mitigation measures are developed in consultation with all parties. Finally, where considered vital, contingency plans are developed to implement in the event of the hazard manifesting itself.

Essentially, the Risk Management process involves 3 overall stages as follows: (i)Hazard identification and assessment, (ii)Risk mitigation and analysis, (iii)Monitoring and Control of the hazard during the project. An example of a list of prompt categories during the hazard identification process is included in the Appendix, but this can be tailored to suit individual projects. To reduce the menace of abandoned projects, all projects should undergo risk analysis/management. APPENDIX Workshop Brainstorm Hazards List HeadingChange / Uncertainty

PoliticalInternational & government policy, public opinion, change in ideology, legislation, old legal statutes, architectural tolerance, public relations PlanningPermission requirements, policy, land use, social impact, local regulations, utilities & service authority requirement /diversions, English Heritage, Royal Fine Arts Commission, other interested parties EconomicTreasury policy, client policy, taxation, cost inflation, interest rates, exchange rate fluctuations, demand, competition, obsolescence, letting Financial / LegalLeases, land purchase & swap, existing concessions & agreements, commercial obligations, funding, development plans, party wall agreements, margins, insurance, risk mitigation / share, bankruptcy EnvironmentalNuisance, permits, public opinion, pollution, environmental impacts and regulations Natural /Existing ConditionsFlood waters, weather, earthquake, fire / explosion, unforseen ground conditions, archaeological discovery, contamination, accuracy of as-built information, existing structures ConstructionProcurement strategy, performance requirements, planning and quality control, programme, labour and resources, standards, competence and financial stability of contractor, cost overruns, skill shortages, special skills restrictions to working hours, craneage & other restrictions, temporary works, supply restrictions, utilities, diversions, long lead times, access, working space, work at height, site welding, construction method, adjacent users, labour / union relations DesignAlterations to usage brief (end user requirements), change to clients brief, change to design standards / regulations, design adequacy, teamwork, co-ordination/interfaces, client sign-off, innovative design / materials HumanError, efficiency, incompetence, communications, culture, continuity of key staff CriminalSecurity, vandalism, theft, fraud, corruption SafetyRegulations (CDM / Health and Safety at Work), hazardous substances (COSHH), collisions, collapse, flood precautions, falls from height, confined spaces, emergency access, temporary works / access platforms Operations & MaintenanceEase of maintenance, reliability, life cycle costs, maintenance access, supply of spares, operational efficiency, planned opening dates