Leadership (Abuja)
George Okojie
20 September 2007
As the nation's various reforms are focused on tackling problems militating against sustainable development, stakeholders in the construction sub-sector of the economy have fingered advanced payment pitfalls as one of the factors responsible for the insufficient progress towards fulfilling the Millennium Development Goals in the country.
This is because most contractors have developed the notion that once they are paid mobilisation fees they are customarily obliged to show gratitude to those that assisted them in winning the contract, as well as sort out their pending social and political obligations, thereby depleting the nation's housing stock.
Ways of addressing this retrogressive trend in the housing and construction industry formed the basis of discussion at a forum tagged "Management and Administration of Advance Payment" organised by MIT Consult on Monday in Lagos.
In his presentation, the managing director of Marvic Engineering and Technical Company Limited, Alfred Offiah said it has become systemic for contractors to divert funds paid to them for other personal effects, pointing out that such payments was a mere demonstration by the owner that he is serious about the project.
Offiah whose paper dwelt on advance payments and methodology said "the contractors are coerced into parting with a sizable amount of money they may not have properly figured out into the budget for the contract. It is also this notion that drives some contractors into taking more traditional chieftaincy titles, marrying more wives, buying more expensive cars and generally living a less realistic life rather than using the money on the project."
He observed that most clients fall victims of such misappropriation of funds by the contractors because they do not do sufficient work in screening contractors before inviting them to bid for work or awarding them contract, even when it is clear that such contractor lacks adequate technical, financial and managerial competence to execute the work.
According to him, "in spite of the precautions that owners are advised to take prior to selecting a contractor, the risk of contractor failure is still real. Even in the United States of America (USA) more than 80,000 contractors failed between 1990 to 1999, leaving a trail of unfinished private and public construction projects with liabilities exceeding $21.8 billion. It is, therefore, expedient that owners of projects and contractors face the fact," he said.
As for Matthew Dapo of Dapo & Partners, a Quantity Surveyor, he traced the issue of advance payment to the early 1970s when the government used it as a means of assisting local, indigenous contractors to participate and compete with the foreign construction companies, in the execution of construction work in the country.
His words, "it must be placed on record that these advance payments have been abused and misused in the past leading to abandonment of many laudable projects. These abuses resulted from poor administration of advance payment due to the payments being handed directly and in bulk to the contractors without adequate control measures being put in place to ensure that the payments made in advance work is applied to work for which it was intended.
"With proper monitoring and control by the Quantity Surveyors, the advance payment will be properly applied and the expected result achieved. The role of a Quantity Surveyor is to ensure and confirm that such monies have been properly applied to the work before the other part of the fund is released.
While putting records straight on the issue of collateral security for advance payment bond, Dapo said that despite the fact that banks require a collateral security for risk and obligation the practice of demanding for a collateral from contractors negates the cardinal objectives of advance payment meant to assist the contractor, who he said might not be in the position to get such collateral.
"With prudent planning and management , bank guarantees could be used to finance and increase housing production. There are many approaches to this bank guarantee financing for housing production which are in use, but it must be well structured and it is important to choose the cut-off point of the bank guarantee to avoid ending up with uncompleted houses which may cause more problems that it set out to solve," he added.
He said even governments and major construction industry clients have lost huge sums of money due to poor management of advance payment and bonds, adding that claims in bonds and guarantees given to contractors from time to time gives room for criticism.
Speaking from a legal perspective, Mr. Goddy Okpamen said the most important aspect of any contract is the drafting of the documents, since whatever goes wrong at the drafting state destroys the intention of the parties.
"It is the substratum of any document to express the intention of the parties. If the drafting fails to give adequate protection and safe guards, such a contract is already doomed and its implementation will be dismal. It is, therefore, imperative that drafting of any document albeit advance payment and performance bonds that are intended to create legal obligation should be left to persons with the technical skill to do so," he said.
LASG, Okobaba Sawmillers Sign MoU On Relocation
At last the Lagos State government appears to have found a permanent solution to the immeasurable level of pollution emitted by the Okobaba Sawmillers on daily basis on the environment, if the Memorandum of Understanding (MoU) between the state government and the Okobaba Saw millers Association is anything to rely upon.
Speaking at the MoU signing ceremony in Lagos at the weekend, the Lagos State governor Babatunde Fashola said the willingness of his administration to partner with the private sector accelerated the process of the relocation of the saw millers that has posed problems to successive governments in the state.
He said the state government was determined to set up the saw millers in a new business settlement that would enhance their business, assuring that there would be rapid infrastructural development at the Abowa-Ikosi axis of the state where the sawmillers are being relocated.
He said estates would be built along that corridor and electricity supplied by the state government to service the factories and houses.
Governor Fashola said as a responsive and people oriented government, the state government has put the necessary machinery in place to compensate the owner of the land being acquired by the government, just as the enumeration of the economic crops in the area is ongoing to also compensate the owners.
He urged the sawmillers to hasten their relocation from Okobaba to their present location, as government intends to immediately embark on redevelopment of the area to generate revenue to set up the new settlements.
Meanwhile, a lot of Lagosians have commended the new administration in the state for relocating the Okobaba sawmillers to Abowa-Ikosi.
Before this agreement for the relocation, Okobaba had remained one of the stinking and most celebrated slums in the state.
Apart from the environmental pollution posed by the slum is the issue of fire incident. The fire from the saw dust hardly goes off. The smoke goes up to high heavens, posing health hazards to the residents.
It would be recalled that about 10 years ago, fire from the mill razed down the area including the home of one of the nation's former Attorney General and Minister of Justice.
It is a cheering news that the pollution from the Okobaba will soon be a thing of the past, given the MoU signed by both parties.
Speaking on behalf of the Okobaba Saw millers Association, the President of the association, Alhaji Ganiyu Onikeku promised to abide by the agreement reached with the state government.
Experts To Brainstorm On Personal Safety
Determined to safeguard lives and property in a nation where armed robbers are ubiquitous, even as burglars feast on other people's property, Buildwell International Company Limited (BICL) in collaboration with some internationally renowned experts have concluded plans to hold an International Workshop.
Tagged "Security Issues & Personal Safety In Facilities Management" [2nd Run - With Practicals & Equipment Demonstrations],the managing director of Buildwell International Company Limited , Engineer Afolabi Adedeji told newsmen on Tuesday in Lagos that the workshop scheduled for September 25 - 27, 2007, at the Lagos Airport Hotel in Lagos will among other issues proffer solution to the intractable problem of lack of safety in homes in the country.
The Buildwell boss said managers with executive responsibilities for Facilities Management and maintenance management, chief security officers (CSOs), chief maintenance officers (CMOs), political office holders, political appointment seekers, among others will for three days rub minds and seek solutions on how best to make Nigeria a safer place and reduce the perception of risk in doing business in Nigeria.
"Security in broad perspective could be described as an absence of fear. It may also be defined as an assurance or guarantee of the safety of life, property and investments. In this political transition year in Nigeria, it is not to be unexpected that we will continue to witness a lot of incidents in which politicians, high net worth individuals, company executives, government officials, foreign nationals, diplomats and key public figures as well as their premises, facilities and equipment are likely to be targeted for all sorts of attacks, so this issue becomes even more salient than ever before. The US Embassy as well as the British High Commission in Nigeria have already issued Travel Warning(s) to their citizens that may be planning to visit Nigeria at this time,"he said.
To this end, he said high caliber resource persons that would facilitate in the workshop includes, military officers, electrical & electronics engineers, renowned professors, economists, "SPY masters", private security service providers, entrepreneurs, and many more.
"These include Lt. Colonel Charles A. Bossman of the Nigerian Army, Engr. Oluseun A. Mabogunje, Mr. Bola Agboola of the Federal Radio Corporation of Nigeria (FRCN), Professor Reuben O. A. Iyagba and Professor Kayode Familoni (both of the University of Lagos, Akoka, Nigeria). Others are Dr. Sola Aina, Mrs. A. Mojisola Rufai, mni, Professor Josbert Thomas Kofi Duncan, Mr. Lalekan Bolutife Oluwadele, FCA, and a host of others," he said.
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