CAUSES AND EFFECT OF ABANDONED PROJECTS IN NIGERIA

AKOGUN, Scientific Research and Impact, 3(4): 65-74, January 2013 Available online at http://scienceparkjournals.com/sri (ISSN 2315-5396) © 2014 Science Park Journals

Full Length Research Paper

CAUSES AND EFFECTS OF CONSTRUCTION PROJECTS ABANDONMENT IN ILORIN METROPOLIS, NIGERIA IBRAHIM, T. AKOGUN DEPARTMENT OF ESTATE MANAGEMENT, SCHOOL OF ENVIRONMENTAL STUDIES, MOSHOOD ABIOLA POLYTECHNIC, ABEOKUTA

Accepted 22 October 2014

ABSTRACT:

Despite the dearth of financial resources for project execution in Nigeria, a lot of money has been wasted on construction projects which prior to completion were abandoned by various property developers. Abandoned worksites are countless nationwide as they are found almost everywhere. No one however has attempted to track down precisely, how many construction projects, the causes and effects of such project abandonment. The theme of this project is to X-ray its causes and effects in the study area, with a view to examining the resultant problems on occupiers of properties within the vicinity. The sample for the study was taken from Kulende Housing Estate, Ilorin by simple random sampling. Primary data were gathered by physical observation of the concerned properties, and questionnaires administered on occupiers of neighbouring houses within the estate. The data collected were analysed by frequency distribution tables and percentages. It was discovered that most of the sites were abandoned because of high cost of constructions, lax attitude of contractors and developers. The main effects of project abandonment identified by the study are social problems, dangerous animals and fear of sudden collapse of the structure. Abandonment of construction project is not good for the economy as it results in waste of resources among other effects which are hydraheaded in nature. Keywords: Construction Project; Abandoned Project; Project Abandonment, Abandoned construction site.

______________________________________________ * Correspondence: email: [email protected]

INTRODUCTION An abandoned project is an uncompleted project in a time frame of a contract (Sani, 2008). It occurs at the construction stage which is a very critical phase to determine the success or failure of the project. Abandonment of construction project have much negative impacts on the owners, contractors, consultants, blue collar workers and residents near the project. The economy of any nation cannot be said to be in good shape without a meaningful development in many sectors especially the real estate sector. Government at the three tiers have embarked on one type of project or the other to make life more meaningful for their people but whether these projects were well conceived and completed or not is another issue entirely. Property development abandonment has been the bane of infrastructural development. The government and private sectors have failed to complete many projects as scheduled and put into proper use. Therefore, it is imperative to identify the reasons behind this, and find a lasting solution to the problem of project abandonment. It is hoped that findings and recommendations arising from the research will be useful to the policy makers, corporate bodies and private individuals. It will also serve as a guide towards preventing waste of human and financial resources through prudent resources management. The objective of this study is to investigate the causes and effects of construction projects being abandoned. The investigation bothers on the causes of the abandonment and impacts it has on the immediate environment.

LITERATURE REVIEW Abandoned construction project is a natural problem in construction industry. This means that issues of abandoned construction project are not unexpected but can be preventable. In fact there are risks of delay in every project and it may be difficult to avoid, unless there is proper planning with all parties involved in the project delivery. Bramble and Callahan (1987) stressed that an abandoned construction project is an uncompleted project in a time frame of a contract. The delay in a construction project always happens when construction and progress work at a project site is stopped for 6 months or more and continuously either in a time frame of a contract or out of a time frame like in a sale and purchase agreement. The delay in a construction project also occurs if the developers agree that they are not capable of executing the project. The development and growth in a country depend on the performance and progress of construction projects. So, the management of construction project is important in ensuring that the project is completed within the shortest timeframe. There are five phases in a construction project viz: pre-design phase, design phase, tender phase, construction phase and occupied phase. Delay problem starts from the construction phase (Abdrahman et al., 2006). Arditi et al. (1985) observed that construction industry is linked to and depends on other sectors which are at „input‟ and „output‟ levels. The „input‟ for the construction industry is bought from other sectors while the „output‟ is used by those sectors. So, the effect of delay or abandonment of a construction project have impacts not only on the construction industry but also on other sectors within the country‟s economy (Dlakwa and Culpin, 1990).

TYPES OF DELAY Abandoned construction projects are always connected with a time frame. When the time becomes too long, the project becomes an abandoned one. However, work may resume on site anytime the problems that led to the abandonment are resolved. Four types of delay have been identified in construction industry. They are discussed as follows. Excusable Delays: Excusable delays are delays beyond the control of the developer or contractor. This type of delay is not caused by people involved in a construction project but results from acts of God (Evans, 2004). This situation makes those involved in a construction project fail to follow the requirements of a contract. So, the contractor can apply to extend the time of the project. Syed et al.

(2002) identified the situations in excusable delays to include natural disasters such as floods, storms and earthquakes, extraordinary rain, riots, refusal to work as a protest and insufficient construction materials. This type of delay is justifiable (Bramble and Callahan, 1987) on the ground that it is beyond the control of the developer and contractor. Compensable Delays: Compensable delays fall within the excusable delays category. The delay is caused by controlled factors which are direct responsibilities of the developer (Evans, 2004). It happens when the developer fails to carry out his responsibility within the time frame. Nevertheless, the contractor is qualified to get compensation from the developer if the action of the developer or consultant lead to their failure to complete the project within the time frame (Abd. Rahman et al., 2006). The developer‟s action in this regard include delay in decisions taking, delay in giving instructions to start work, changes in the scope of work or design, delay in giving construction drawing and delay in progress payments. The contractor can get two types of compensation such as cost compensation and time compensation. Non-Excusable Delays: Non-excusable delays occur as a result of the failure of the contractor to observe the contract obligations (Bramble and Callahan, 1987). They cannot claim any cost compensation or time compensation. The situation that causes non-excusable delays are late arrival of construction materials, tools, machines and workers to the project site. Others include limited work offers, lax coordination, planning and management, insufficient construction materials and workers, work spoilage and delays by sub-contractors (Syed et al., 2002). Concurrent Delays: Concurrent delays happen when two or more types of delay are occurring at the same time and affecting the critical path of project. Evans (2004) stated three types of concurrent delays: excusable delays, non-excusable delays and compensable delays. This type of delay involves both the developer and contractor. Concurrent delays are difficult to trace because the developer cannot claim compensation from the contractor which is known as Liquidated Ascertain Damages (LAD) and the contractor also cannot claim compensation from the developer.

CAUSES OF ABANDONMENT OF CONSTRUCTION PROJECT Delay factors of construction project differ between one project situation and another. There are internal and external delay factors in construction projects (Woudhnysen and Abley, 2004). The internal factors are communication effectiveness problem and lack cooperation with a project management staff. External factors are related to socio-cultural aspects, value and belief. Delay factors of construction project are time, materials and weather. Odeh and Battaineh (2002) identified project or contract, developers, consultants, contractors and construction materials as the factors that cause abandonment of construction projects. Time: Time is a conspicuous delay-causing factor in construction projects. The time can be expressed in terms of hours, days, weeks, months or years. Abd. Rahman et al. (2006) stressed that delays in projects are caused by time factor when the project is not completed in time. So, the project risks abandonment when the time becomes too long. This matter was agreed by Chan and Kumaraswamy (2001) in their research about construction time at Hong Kong. They identified four factors that is, project scope, complexion of the project, surrounding of the project and management factors that affect construction time. This is shown in Figure 2. Cost: High cost of material, labour, etc acts as delay factors in construction project. The cost problems may surface at any of the stages in construction project. Weather: Unpredictable weather factor may delay construction project. Manavazhi and Adhikari (2002) mentioned that construction materials may not be supplied to project site when it is raining. This is to ensure that the construction materials are always dry and suitable to use on site. This situation may cause construction works to be postponed until the weather is good. Construction Materials: Construction materials insufficiency will also cause a delay in construction project because it will affect the totality of the work progress on site. The problem of construction materials management include unskilful blue collar worker, insufficient blue collar worker and construction materials deficiency (Ogunlana and Promkuntong, 1996); increase in price of construction materials, no construction materials in the market, difficulty in get construction machinery, high rental price of machinery, the condition of project site and bureaucracy (Okpala and Aniekwu, 1988).

Developer: The developer may delay in giving project site to a selected contractor. This situation affects the construction time of a project. Beside this, the developer‟s decision on the right construction materials and design to use, variation order and delay in progress payment. Sani (2008) mentioned that the desired variety of developer and changes in developer‟s desire may cause delay in construction project. Odeh and Battaineh (2002) mentioned that participation of the developer in construction processes caused delay in project execution. Contractor: Ogunlana and Promkuntong (1996) emphasized that contractors have three main problems in a construction project. Problems related to surroundings of construction industry is a problem of practice deficiency (Bramble and Callahan, 1987), construction machinery, facilities, construction materials deficiency (Okpala and Aniekwu, 1988) and communication problem. For contract, developer or consultant, the problem is related inaccurate information about a project and varying order by developer. Beside that, the developer and consultant may also fail in their responsibility. The third problem is the contractor‟s problem. This is agreed by Al-Khalil and Al-Ghafly (1999) when they said that “cash flow and monetary was a delay factors in construction project at Saudi Arabia especially for medium and big projects”. This situation is caused by contractor not proficient in handling monetary issues (Barrie, 1992) and their lateness in receiving progress payment from the developer. Other problems caused by contractor are lateness to construction site, project management weakness (plan, control and manage) (Bramble and Callahan, 1987; Mansfield et al., 1994; Ogunlana and Promkuntong, 1996), failure to start the work as scheduled, problem with sub-contractor, professional deficiency or construction technology and deficient working experience. This scenario makes a situation very difficult and can lead to eventual abandonment of projects. Consultant: The delay factors caused by consultant are delay in making decisions about construction issues, delay in confirmation of works, design problem and weakness in giving instructions. Worker: The delay factors caused by blue collar worker i.e. proletarian, are usually arise because they lack discipline and skilled in construction works, do not follow leader‟s instruction and lax attitude of the worker. Other factors which may force a project to stop include insufficient resources, dispute and natural disaster. Projects could also be abandoned due to lack of adequate resources. For instance, a nation with monolitic economy like Nigeria could abandon a project if the price of oil falls at the internal market. The pace of any gigantic project development in the country largely depends on the revenue generated by the oil sector. Because the nation‟s economy is tied to oil, whatever happens to oil in the international market will have an impact on the completion of a project embarked upon by the government. Property could also be abandoned by government, corporate body or individuals due to dispute. At times, there may be litigation on an ongoing project or a completed one. Such a project could be abandoned unless and until the dispute is finally settled. Land dispute is a major cause of property abandonment. When land speculators sell land illegally, buyers of such may be told to vacate the land while the project on the land is abandoned. Natural disaster could also lead to property abandonment. There are instances where residents in an area which is prone to disaster that endangers human life and properties were advised to vacate the area. If the majority of the reasons discussed above are checked, the problem of project abandonment will reduce tremendously. From the foregoing, many factors can cause abandonment in construction projects. The prominent ones are time, cost, weather, construction material, developers, contractors, consultants and blue collar workers. Other factors also include insufficient resources, dispute, and natural disaster.

EFFECTS OF ABANDONED CONSTRUCTION PROJECT Abandoned construction project have negative effects on the developer, contractor, blue collar workers, the government and surrounding of the housing area (Sani, 2008). Developer: The effect of an abandoned construction project on the developer is the objectives of the project is not realized, they can‟t sell or occupy the project in time. The developer loses money and wasted his time and other resources. The developer may become bankrupt if the borrowed money is not repaid. His reputation is also at stake if he terminates the contract. Contractor: Bramble and Callahan (1987) mentioned that delay in project execution may lead to eventual termination of the contract. So, contractor will lose the project and this situation gives a bad reputation to the contractor because he may fail in his obligation and responsibilities. So, the contractor will endure increase in tools/equipment rent, increase in maintenance cost, transportation,

administration, clerical and others rental. Contractor must endure the claim from monetary institution, increasing prices of construction materials, worker‟s salary and wages, manage expenditure on site office, overtime claims and other costs. Workers: The abandoned construction projects also have negative effects on labourers and artisans like bricklayers, carpenters, welders etc in that they lose income and work. So, they must find another work to earn income. The Government: The local and state government has expended some money to provide services such as access roads, electricity, water and security on the sites with the area. It is expected that such monies are to be recovered through various forms of taxes levied on owners/occupiers of the properties when completed. If the project is not completed such taxes cannot be imposed and thus resulting in loss of expected revenue which might have been included in the state budget. Surrounding of Housing Area: The effects of abandoned construction project to the surrounding houses include defectiveness of aesthetic view to a housing area, breeding and spread diseases and become criminal den. This situation exposes the occupiers of the houses nearby to unsafe and comfortable living condition. This situation makes such nearby properties difficult to let or sell because people will prefer other areas the guarantee safety and comfortable living. This is causes the market price of properties in that area to be lower than similar properties elsewhere. THE STUDY AREA The creation of states in 1967 and 1976 brought about sudden rural-urban migration leading to accommodation problems in the newly created state capitals throughout the federation (Ilorin inclusive). The pace of residential property development could not keep pace with accommodation demand and this resulted in sky-rocketed rents on the available houses. The government introduced various policies and programmes in attempt to bring down the rent and to increase housing supply to meet demand especially for the middle and low income class. The Rent Control Edict was introduced but this did not achieve the desired result. Then the Low Income Housing Programme was introduced whereby the federal government acquired plots of land throughout the federation in 1979 to build low cost housing estates for the low income groups in local government headquarters and state capitals throughout Nigeria. By this policy, the federal government acquired 162.92 hectares of land at Kulende, Ilorin to build low income housing units of mixed types out of which 250 units were initially completed (phase 1) for low income group. Phase II was later surveyed, serviced with roads and electricity, and allocated to private developers while phase III at various levels of construction were retained and later sold to the public. Till today, most of the houses at various levels of construction are not sold yet probably due to the cost of demolition, reconstruction, etc which may repel buyers. In addition, some of the sold plots were developed by various private allottees and abandoned at various stages. These buildings now constitute nuisance to the neighbouring houses and facilities. The abandoned projects scattered throughout the estate are countless in phase III, and today pose danger as they stand. Majority standing at roof level, some at window level and some at DPC level for not less than 25 years. Their condition is very weak and at risk of collapse at any time as they carry extensive (vertical and lateral) cracks. They also harbour dangerous animals while most of them are overgrown with trees and grasses.

RESEARCH METHODOLOGY The population for the study is the occupiers (landlords or tenants) of completed properties in Kulende estate and the managers in charge of the estate. A sample of 60 occupied properties was selected by simple random sampling method for questionnaire administration. The officers of Kwara State Investment and Property Development Company in charge of allocation and management of houses in the estate were also interviewed. Secondary data were sourced from relevant textbooks, conference and journal articles and internet sources. The data collected were analysed by frequency tables and percentages for simplicity and clear understanding.

Effects of Abandoned Construction Projects on the Surroundings

APPENDIX Table 1: Effects of Abandoned Construction Project Research Aspect Effects Surroundings/project site

Smell at project area

Social problems

Spread of diseases

Dangerous animals

Fear of sudden collapse

Difficult to

Frequency

Percentage

Defect the beauty

60

100.00

Bushy

56

93.33

No smell

47

78.33

Bad smell

13

21.67

Stealing cases

60

100.00

Adolescent hang out place

51

85.00

Dating place

44

73.33

Robbery problem

60

100.00

Drug addict place

58

96.67

Mosquito breed problem

47

78.33

Diarrhoea problem

8

13.33

Other diseases

0

0

No diseases

33

55

Reptiles like snakes, etc

52

86.67

Mammals like Lion, etc

0

0

Insects: flies, mosquitoes

53

88.33

Others

44

73.33

None

16

26.67

Yes

49

81.67

No

11

18.33

Purchase

23

38.33

Sell

33

55.00

Let

18

30.00

SOURCE: Field Survey, 2011.

The identified effects of abandoned construction project on the houses nearby which were examined and analysed, are presented in this section. The factors are grouped under seven research aspects viz: effect on outlook of the housing area; odour (smell) at a project area; social problem; spread of diseases; sale, purchase and rental difficulty of houses; presence of dangerous animals and risk of sudden collapse. Table 1 (in the appendix) shows that all (100%) respondents observed that abandoned construction projects impair the beauty of the housing area while another 56 (93%)

complained of bushy abandoned sites. The surroundings of the project become refuse disposal point for 13 (22%) respondents. This situation creates unattractive view to a nearest housing environment. However, 47 (78%) respondents had no bad smell problem in the housing area.Abandoned sites constitute major social problems to the occupiers of the housing estate. All 60 respondents (100%) experienced stolen and robbery cases directly or indirectly, 51 (85%) reported that abandoned project sites become hang out place for adolescents, 44 (73%) reported a problem of dating place, while 58 (97%) stated drug addict place. 47 (78%) respondents observed there is problem of mosquito breeding, 33 (55%) respondents said there are no problem of diseases spreading in their housing area while only 8 (13%) respondents stated that there are diseases like diarrhoea problem. Problems of dangerous animals present in the abandoned project sites were also reported. 52 (87%) reported the presence of reptiles like snakes; 53 (88%) reported insects like flies, mosquitoes; and 44 (73%) reported that there are some other dangerous animals. However, nobody reported the presence dangerous mammals like lion.The fear of sudden collapse of abandoned structures is another problem reported by 49 (82%) while only 11 (18%) expressed no fear of the risk of sudden collapse. Another problem discovered is with marketability of the projects. 33 (55%) reported that it is difficult to sell, 18 (30%) reported that it is difficult to let while 23 (38%) stated that it is difficult to purchase such abandoned properties. These views were also corroborated by the officers of Kwara State Investment and Property Development Company.

Analysis of the Factors that Caused Abandonment

Table 2: Causes of Project Abandonment Research Factors Options

Frequency

Percentage

Cost

Yes

54

90.00

No

6

10.00

Yes

58

96.67

No

2

3.33

Yes

5

8.33

No

55

91.67

Yes

49

81.67

No

11

18.33

Yes

36

60.00

No

24

40.00

Yes

7

36.67

No

53

63.33

Yes

5

8.33

No

55

91.67

Yes

19

31.67

No

41

68.33

Construction materials

Whether

Contractor

Developer

Consultant

Labourers

Time

SOURCE: Field Survey, 2011.

Eight non-mutually exclusive factors were examined under the causes of abandoned construction projects. The factors are time, cost, construction material, weather, developer, contractor, consultant and blue collar worker. The respondents were required to select a factor which they perceived to be responsible for the abandonment of the projects near their sites. Analysis of the result is presented in Table 2 (in the appendix). Eight factors were investigated under the causes of abandonment of projects. The analysis shows that 54 (90%) respondents agreed that cost is responsible for the abandonment of construction projects while only 6 (10%) respondents did not agree. 58 (97%) respondents agreed that construction materials deficiency was the cause for terminating projects while only 2 (3%) respondents did not agree with this. Only 5 (8%) respondents indicated that whether was the cause of abandonment while a substantial 55 (92%) respondents did not agree. 49 (82%) respondents stated that project abandonment was caused by contractors while only 11 (18%) respondents did not agree. 36 (60%) respondents stated that developers caused the abandonment while 24 (40%) respondents did not agree with this. 22 (37%) respondents said consultants caused the abandonment while 38 (63%) respondents did not agree with this statement. Only 5 (8%) stated that blue collar workers caused the abandonment while the majority 55 (92%) respondents did not agree. Only 19 (32%) respondents observed that time factors caused the abandonment while the majority 41 (68%) respondents said no to this statement.

CONCLUDING REMARKS From the discussions above, the main causes of project abandonment are revealed. They are costs associated with construction, building materials, contractors and developers while whether, blue collar workers, time and consultants are of little relevance to project abandonment. The study also revealed that the main effects of project abandonment on the immediate environment are unattractive view, bushy surrounding, stealing and robbery cases, adolescent hang out and dating places, mosquito breeding problems, difficult marketability, hiding places for dangerous animals like snakes and insects and risk of sudden collapse of dilapidated walls. Abandonment of construction project is not good for the economy as it results in waste of resources. The negative effects on the occupants of the nearby buildings are hydra-headed. So, urgent steps must be taken to reduce or stop the practice of project abandonment. One of the greatest problems militating against property development which also aid project abandonment is high cost of building materials and labour. It is therefore suggested that the federal and state governments should encourage local industries to produce building materials at reduced cost. If building materials and other components are produced locally, the cost will reduce and the problem of property abandonment will also reduce. There are numerous instances where people start some projects and abandon them halfway because of cost of building materials. Therefore if government can take bold step in ensuring that prices of materials come down, it will assist the property sector in no small measure. The developers should ensure that their projects are both feasible and viable before embarking on construction. Where the project could not be financed from equity savings, credit sources must be arranged perfectly prior to construction. By this finance problems will be solved. The contractors and consultants should act more carefully and honest with their clients. They should endeavour to complete projects within time frame of the contracts to avoid cost and time overrun. It is also suggested here that the government should encourage the developer by granting tax concessions on developments, provision of credit facilities, security and infrastructures on site.

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