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AN ASSESSMENT OF THE NIGERIAN CONSTRUCTION INDUSTRY’S READINESS TO ADOPT VALUE MANAGEMENT PROCESS IN EFFECTIVE PROJECTS DELIVERY

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AN ASSESSMENT OF THE NIGERIAN CONSTRUCTION INDUSTRY’S READINESS TO ADOPT VALUE MANAGEMENT PROCESS IN EFFECTIVE PROJECT DELIVERY CHAPTER ONE INTRODUCTION 1.1              Background to the Study

Value management practice is not new; its origin could be traced back to the days of World War II when it was introduced into the American manufacturing industry even though it was then referred to as Value Engineering (Cheah and Ting, 2005). Value Engineering was introduced to the construction industry by the United States Department of Defense and Navy in 1960. According to Kelly et al (2004), value management practice has been adopted by several countries including United Kingdom, China and Australia. Value management is a structured, organized team approach to identifying the functions of a project, product, or service with recognized techniques and providing the necessary functions to meet the required performance at the lowest overall cost (SAVE International, 2001). Although some schools of thoughts tend to distinguish value management from other relevant terms such as value engineering and value analysis, it is more widely accepted that the term value management can be used to represent other related value methodologies (Shen and Liu, 2003).

The construction industry plays a vital role in Nigeria’s economic growth and development. It is also responsible for a large portion of total fixed capital investments (Omole, 2000). However, the Nigerian construction industry can easily be described as the ‘sleeping giant’ within its continental neighborhood in terms of service delivery and satisfying the needs of its clients (Kolo and Ibrahim, 2010). The Nigerian Construction Industry is also responsible for employing approximately 8 million people, having a population of approximately 140 million and this represents approximately 20% of Nigeria’s workforce (National Bureau of Statistics, 2006 cited in Kolo and Ibrahim, 2010), perhaps, making it the largest employer of construction labour in Africa. Despite


its massiveness, Nigerian construction industry has severally been described as being unable to deliver (Kolo and Ibrahim, 2010). Furthermore, many clients experience difficulties at the very earliest stages of the construction project life cycle in producing a robust project strategy, not least a ‘brief’ (Latham, 2004). Dallas (2006) notes that a successful project of any type requires that the outcome is clearly defined (requirements) and communicated to those delivering the project (the team). The researcher further noted that value management addresses this element. The utilisation of value management brings substantial benefits for promoting sustainable construction principles. The principles and techniques of value management can provide the required quality to realise an optimal whole life cost and life-cycle assessment during the process of developing a project (Al-Yami and Price, 2006a). Al-Yami and Price (2006b) in another research stated that Value Management approach offers a crucial method for the client to achieve a better built environment and good chance to encourage upgrading in the construction process. They further stated that the essence of optimal usage is strongly related with the philosophy of Value Management, which is applied to satisfy value for money in building and infrastructure projects. Value management is a very good tool for breaking existing perceptions, to force people to take a fresh approach to problem solving and assisting in setting out tasks and objectives with value for money at the front of their thinking (Male, 1998).

1.2              Statement of Research Problem

The Nigerian Construction Industry is characterized with lack of capacity to deliver optimally as a result of poor service delivery which creates dissatisfaction amongst clients according to Omole(2000) and Ajator(2004). In 2007, the Federal Government of Nigeria stipulated that procurement of public assets and services must be through the application of value for money standards and practices in order to improve


service delivery. Value Management has been adopted by public sectors in many countries in order to optimize public projects, to ensure that they achieve their objectives and to achieve value for money invested. However, the Nigerian construction industry is yet to fully embrace value management techniques despite its advocacy. It is in view of this that the study was carried out to assess the readiness of the Nigerian Construction Industry with a view to achieve value for money in project delivery by finding out if the requirements for its adoption are in place.

1.3              Need for the study

To improve service delivery through the application of value for money standards in the Nigerian construction industry as contained in the Public Procurement Act (PPA) 2007, there is the need to adopt value management as it is at the forefront for achieving and enhancing value for money. However, two years after the Federal Government Act, Oke and Ogunsemi (2009) observed that value management has not been fully embraced in the Nigerian construction Industry. Kolo and Ibrahim (2010) conducted a theoretical research where they recommended an empirical-based research to determine how adoptable value management is in the Nigerian construction industry. Thus, the need to investigate the readiness to adopt value management in Nigeria becomes of paramount importance so as to provide an understanding as to why value management is yet to be fully embraced and also provide a guide on the necessary steps for its adoption in the Nigerian Construction Industry.

1.4              Aim and Objectives 1.4.1        Aim

The aim of this research is to assess the readiness to adopt value management in the Nigerian Construction Industry with a view to improve service delivery.


1.4.2        Objectives

The objectives of this study are:

i)         To identify the requirements for the adoption of value management.

ii)       To appraise the understanding of professionals in the Nigerian construction industry on value management.

iii)      To appraise the perceived barriers to adopting value management.

iv)      To determine the industry’s readiness to adopt value management.

1.5              Scope and Limitation 1.5.1        `Scope

The study assesses the readiness of the Nigerian construction industry to adopt value management based on the Quantity Surveyor’s perspective. This is because a research conducted by Ellis, et al. (2005) demonstrated that quantity surveyors from leading UK quantity surveying firms were found to demonstrate ability and skills necessary to act as facilitators in value management processes. Adetola (2001) also stated that the re-directioning of the QS practice in Nigeria is more of value and wealth generation through cost and financial engineering rather than preparation of bills of quantities and financial statements. Moreover, Quantity surveyors have been linked to the discipline of value management right from its inception (Oke & Ogunsemi, 2009). Recently, the Nigerian Institute of Quantity Surveyors and the Quantity Surveyors Registration Board of Nigeria are giving special attention to ensuring value for money in construction projects through awareness in Workshops and Seminars since Quantity Surveyors are the professionals saddled with the responsibility of cost optimisation in construction projects which plays a role in value management. It is in line with this that the study considered Quantity Surveying firms. The areas covered are Abuja, Kaduna and Kano.


1.5.2        Limitation

Data from case studies on value management within Nigeria is sparse. This is because it is a relatively new concept in Nigeria. Therefore, this is an imposed limitation to the research work. There is the tendency to receive biased information from the respondents which is common to any self-assessment exercise. This may affect the validity of the results. To mitigate the effect, experienced professionals were involved to obtain quality and reliable responses.


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