A comparative analysis of tender sums and final costs of public construction and supply projects in Nigeria

Abstract

Purpose

The purpose of this study is to investigate the relationship between tender figures, consultants' figures and final construction costs of construction projects under competitive bidding in the Nigerian construction industry, as guided by the due process policy, a national public procurement reform program.

Design/methodology/approach

A total of 13 construction professionals and public contract administrators were interviewed. Their views were reported intermittently as the secondary data collected on 137 projects; 95 of these were construction and 42 supply projects. The findings are then analyzed and discussed.

Findings

The study presents a number of regression models which can be used to predict the final cost and actual duration of construction and supply projects under the due process regime in Nigeria as functions of lowest bids, consultant estimates, successful bid, gross floor area, average bid, contractor's proposed contract duration and the consultant's proposed contract duration.

Practical implications

The models used, apart from being worthy benchmarks for future study, can be of immense use to developing countries with the intention of implementing the due process policy of Nigeria in their countries as the limitations of the reform are succinctly discussed. Moreover, with the growing prospect for heavy engineering projects, the study will be of use to intending international contractors willing to explore the Nigerian construction market, either by holistic participation or by forming partnerships or alliances with Nigerian domestic firms.

Originality/value

The paper presents one of the pioneering stochastic studies based on empirical data on construction and supply projects under the due process reform in Nigeria.

Citation

Olatunji, O.A. (2008), "A comparative analysis of tender sums and final costs of public construction and supply projects in Nigeria", Journal of Financial Management of Property and Construction, Vol. 13 No. 1, pp. 60-79. https://doi.org/10.1108/13664380810882084