Construction cost escalation and resource planning in Nigeria: A case study of public sector housing projects 1975-90

The main focus of this study is on the critical analysis of construction cost escalation specifics in Nigeria, using the public sector housing projects as an exploratory model. This is aimed at identifying the key factors and their relative significance in the overall cost escalation problem already established. The study starts with a general discussion on Nigeria and the construction industry, then moves on to consideration of the specific factor inputs into construction. The later part of this work is in the area of long term options in solving the perennial problem of construction cost escalation in Nigeria. The preliminary work involves a review of the literature in this area, which is used as a benchmark for this study. Compartmentalisation and categorisation of the problem were the initial main task, to bring the study into definitive and manageable scope. The study identifies two broad types of construction cost escalation as either 'normal' or 'avoidable'. The avoidable is further dissaggregated into resource related and non-resource related. While the non-resource related aspects of cost escalation (e.g. delayed payments, late instructions, underestimation of project budget, etc.) are equally significant, this work concentrates on the resource related aspect (e.g. labour wage spiral, materials costs, plant costs, profit / mark-up). The time scope of this study is sixteen years, 1975–90. The theoretical question on which this work is based is whether construction cost escalation in Nigeria is cost-push or demand pull. The structuralism school of development economics as a critique of the neo-classical and the keynesian, best explains the evidence presented. The study finds that construction cost escalation was due to a combination of demand pull and cost-push factors, with the former dominant in absolute terms. Furthermore, the low substitution effects of chronically abundant resource for chronically scarce resources is a constraint, coupled with underutilisation of capacity. The short run and the long run supply capacities are inelastic. The main tools of analyses are OLS multiple regression, input-output matrices, and Kendall's coefficient of concordance. The study finally came up with two alternative models of combined demand pull and cost-push effects on tender price movement over the period of study 1975–90. In such a historical cost escalation episode of multi-dimensional nature as this, an attempt to solve the problem must necessarily be multi-vocal, hence this study examined the demand and capacity gap situation facing the Nigerian construction industry over the period of study 1975–90. Due to the enormity of the cost of increasing capacity and the development implication of drastically reducing demand, the study recommended demand management in the short/medium term and resource planning in the long term. This study concludes with policy recommendations and areas for further research to complement this work and others.