‘There is need for reforms in construction industry’
The Nigerian Institute of Quantity Surveyors (NIQS) is seeking the introduction of forensic audits for very large and complex completed projects within six years of delivery. Why the audit?
The idea of forensic audit is not new in our industry; it is frequently done in the United States of America, United Kingdom and Australia. What it means is that after the completion of a project, you go back and review the project papers starting from what concept and size of project that were originally approved and compare this to what has been delivered by the contractor. You also review all Change Orders and ensure that all changes especially work omissions got the necessary approvals and also their attendant cost savings /reductions are applied to the Contract figure. Please note that sometimes works may be omitted from the contractor’s schedule by the design consultants, when this happens the consultants are under obligation to compute the savings attributable to such work omissions. Where there are more than one professional involved in a project (building projects with architects, engineers, quantity surveyors) cost savings from work omissions are difficult to suppress or conceal from the client. But where there is only one professional overseeing the project (Roads, bridges, dams and other civil engineering projects) such cost savings become easy to conceal and may not be applied to reduce the contract figure. Forensic audits will bring all such possible cost saving concealments out!
The audit could also be for many other important reasons such as for lessons learnt or mistakes made on a particular project that Government should want to learn from and ensure it is never committed again. Basically for our case in Nigeria, it’s essentially to curb corruption. It takes two to tango. When there is that realization that your project records may be opened for inspection and review long after the completion and if found culpable the contractor may be requested to refund any concealed cost savings all by himself, then the contractor will not readily collude to cheat the government on government projects. Forensic audit is usually coordinated under the Ministry of Finance for instance, different from the project Ministry. They will engage a Contract Auditor who could be a consultant architect or quantity surveyor, or engineer, but especially quantity surveyors who have the in-depth knowledge of valuations and final accounts, contract procedures etc, to check if all due processes were followed during the construction, all necessary approvals were gotten. If things weren’t right, he will identify or point out such areas where the clients should have gotten credit (or much greater credit) in the project. Once a contractor knows that the books will be opened in future he won’t participate in corrupt practices.
There has been corruption in the construction industry and some projects are largely inflated and sometimes substandard. What’s your suggestion on how to stem corruption in construction and infrastructure development projects in Nigeria?
In Nigeria, inflated Federal Government projects have drastically abated. That doesn’t happen frequently anymore because of the Bureau of Public Procurement (BPP). They go through the project papers before they’re awarded. They check for value for money essentially, so with this you can be sure that inflated federal government contract is not readily possible anymore.
BPP is currently doing this work very well and the man at the helms of affairs- Mal. Mamman Ahmadu is doing such a thorough job. However, on the other issue of substandard. Substandard work worries come in during the execution of the works and this was one of the reasons for our recent visit to the BPP. My institute during the visit stressed that BPP should not limit their oversight to the evaluation of project documentation done prior to contract award only, but that the BPP must extend their oversight to cover projects during their execution.
Also, there must be different layers of oversight to ensure value for money and that substandard materials are not allowed to be passed on to the Federal Government on projects, especially on roads and civil engineering works. Where the same designers are the same and only professionals doing the oversight functions alone, fraud in the sense of passing on substandard works with lesser value for money is highly possible. That’s why my institute is saying there should be more than one professional overseeing civil engineering construction projects under the Federal Ministry of Power, Works and Housing. Quantity surveyors should be allowed to prepare the bills of quantities, the tender documents as well as the contract documents, whilst the civil engineers should do the Engineering designs. We should have both the engineers and the quantity surveyors supervising and overseeing the quality of jobs, that way substandard materials or works will not easily be passed unto the government in construction procurement.
Quantity surveyors are sponsoring a bill on health and safety in building, civil engineering and construction. What’s this all about?
It’s a peculiar set of procedures and rules for undertaking building, civil engineering and construction. This bill is meant to serve many purposes, one is to ensure safety of lives on our construction sites by ensuring that contractors provide necessary and requisite safety training, procedures, materials and equipment on sites.
What currently operates now is that, there is a little or no incentive to provide ample health and safety procedures or facilities on construction sites in Nigeria. Contractors currently rely solely on the provision of insurance only as means of catering for any fall out in respect of health and safety of the works and the workers on site. To compound this, by the National Joint Industrial Council (NJIC) rules and agreement with the Construction workers, construction companies’ liability for any death of site workers is a compensation of a meager N300, 000, the coffin and transportation of the corpse to the hometown of the deceased. All these will cost less than N500, 000 which is a far cheaper option for a contractor than to buying safety and health equipments that my cost tens of millions of Naira. So this Bill that my Institute is pushing is to compel contractors to treat lives of Nigerian workers more cautiously and safely. Every Nigerian life matters and is more valuable than money!
As a typical example, imagine there is a project of 10-18 storey building where anybody can mistakenly fall down at the edge of an upper floor and therefore you need to do scaffolding all around the building, you need to have ambulance stationed, but many contractors will rather run away from providing these because they are very expensive to provide and will affect their profitability. Furthermore there is currently no law to compel them to do so. In other developed countries these laws have been made to compel safety on construction sites. The NIQS is just saying let’s have these similar internationally recognized construction safety laws to apply in Nigeria. It is time we should treat Nigerian lives more seriously.
Beyond safety, the Bill also stipulates procedures that eliminate building collapse. It puts a lot of responsibilities on the developer to ensure adequate health and safety is in place on his projects. It also put more responsibilities on project managers and designers to ensure that they advice the developer on health and safety. Part of the responsibility of the developer is that he must engage “competent” consultants, specifically for heath and safety to preview the project before construction. During construction, the contractor must have a dedicated health and safety officer who ensures the workers are safe and secure. The bill is very comprehensive; we made researches across the world. This is something similar to what operates in UK and Singapore; it was fine-tuned to work for Nigeria.
There is limited landmass in major cities in relation to the rising population, which is militating against physical development in some states. Do you think State governments should adopt vertical physical development, particularly for housing? If yes, why?
Yes. Nigeria to an extent still has a lot of landmass. It is only in places like Lagos, that this situation is really confronting us. In Lagos, it is high time we start going high-rise. You can see even with the little bit of vertical, that was done by the Lagos State Government under Chief Lateef Jakande, when we had some four storey building estates developed (which is the maximum number of floors you can build without a lift) he was able to accommodate so many families. He was able to reduce accommodation problems in Lagos. Something similar must happen or else we will continue to have expensive land, concrete jungles and poor environment. Lets compare this to the United Kingdom that has limited landmass, but they still have dedicated lots of greenery and wood. If they had not gone vertical, they would have spread all over the land. See our own Ikoyi, Lekki and Victoria Island that we used to have gardens are now concrete jungles. Our planning laws have been too relaxed in this sense. That’s why we in the private sector are saying that there is need comprehensive reforms in the construction industry. In all spheres of the industry, be it in physical planning, architecture, cost control, engineering services, we need to do overhaul of the industry. In providing mass housing, we are still using the same old solutions. We need to find alternatives, and the institute is soon going to be proposing some fiscal policies to the government, which will not require the authorities pumping further money into the housing sector. We need to be more creative in finding these solutions. For instance, big companies such as Dangote or Shell, let part of their taxes be in the form of production of pre-approved designed houses for the government. Let them build houses. We give them the number of houses they can build in a year. Then, the government can say the tax thereafter will be two or five per cent of their turnovers. It will be a win-win situation. Once the company knows, it needs to provide 1,000 houses in a year and it puts in the necessary machinery to produce and deliver the houses so it can gain tax reliefs. This will be a kind of foolproof solution to housing problems in Nigeria.
Do you think that contract procurement under the present administration, has been favourable to professionals, especially in transparency and accountability exigencies?
Contract and public procurements have not been favourable to professionals. Professional consultancy practices are not being patronised. Our indigenous contractors with our local professionals be it in design or in actual construction are not being patronized and encouraged. Who else can encourage us in our country, if not our governments? That’s why I join our professionals and other institutions, to question the government, to look more favourably in exposing our professionals and giving them challenging opportunities to develop. Let them not think that some projects are too big for us to handle.
Most private developers don’t utilize the services of quantity surveyors, thereby flouting building regulations, which stipulated that cost of a building must be rigorously calculated in the building process. What have your institute done to ensure enforcement of such regulation to check economic consequences?
It is valid point that developers should engage quantity surveyors before getting building approval. But it should be limited to certain size of buildings. For statutory planning approval, we will suggest that any building that is susceptible to collapse, that is for developments above two storey building, government should ensure that the prospective developer has obtained and is aware of the cost that he is going into it so that during the construction the owner does not start looking for ways of cutting down the cost and bringing everybody in that project workers and even statutory supervising agencies to jeopardy.
Part XI, Section 65, Subsection (1-8) of the Insurance Act on Insurance for Public Buildings, makes it mandatory for every public building to be insured against the hazards of collapse, fire, earthquake, storm and flood. Is it appropriate to use market value in indemnifying the insured? What is the place of quantity surveyors in all this?
Yes, it is appropriate to use cost of replacement as basis for insurance for buildings or infrastructure. In this regard, the quantity surveyor is the best person to provide such “Valuation for insurance purposes”. If its valuation for market value; that is the estate surveyors’ job. Insurance professionals and brokers understand this.
With the increase in the rate at which buildings that are occupied now collapse, Lagos Government has begun audit and recertification of existing buildings in the state. Do NIQS support this new process?
To me, it’s a right step in the right direction. It obtains in serious countries. The federal and state governments have the duty to protect the citizens. Part of that duty is to ensure buildings that are occupied are safe and there is healthy environment for people to live in. Governments have been shying away from that responsibility. For Lagos State, towing the line, we commend them for such innovation. So long its not abused because we always have Nigerian factor. Mark you, It is only when a building is under suspicion of safety by showing obvious signs of stress that government should have a look at it. The government is required to carry a test or give a notice that the house is under disrepair and mandate the owner to rectify it. Any blanket notice asking “all property owners” to undertake the test or recertification is an abuse of the process and meant to extort money.
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