APPLICATION OF DUE PROCESS IN EXISTING PROCUREMENT METHODS IN NIGERIA
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APPLICATION OF DUE PROCESS IN EXISTING PROCUREMENT METHODS IN NIGERIA
ABSTRACT
This study looks at the use of Due Process in the procurement of construction projects in Nigeria. It provides a brief history of the implementation of due process in the Nigerian public sector, with a focus on the construction industry.
This study goes on to illustrate the benefits of introducing and implementing due process in building projects. This was accomplished through interviews and the distribution of questionnaires focusing on project participants in the Nigerian construction industry’s awareness/understanding of the idea of due process.
This project also investigated the efficacy of using due process procedures in building project procurement since its implementation. It goes on to say that the ‘application or non-application’ of due process procedures or mechanisms has an impact on project delivery.
This study concludes that due process procedures should be rigidly followed and expanded to other tiers of government, namely the state and local governments. In doing so, the gains realised in the procurement of public-sector building projects would be fully realised.
CHAPITRE ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The construction industry’s activities include the acquisition of goods and services, as well as the execution of various physical structures and infrastructure (Ayangade, Wahab, and Alake 2009). Construction industry operations have contributed to GDP, gross fixed capital development, and the establishment of high levels of employment for changing professions (Wahab, 2005).
In industrialised countries, the construction sector accounts for up to 22.00% of GDP and employs up to 12.00% of the entire labour force; however, in Nigeria, it accounts for 16.00% of GDP and employs up to 20.00% of the labour force (Akindoyeni, 2004).
The construction industry has numerous characteristics that distinguish it from other process sectors and emphasise the importance of professional involvement. Various strategies have been utilised in the country to obtain building and other infrastructural facilities.
One of the modifications and new trends influencing the country’s procurement system is the rising fragmentation of the stages involved in the construction process (Bamisile, 2004).
Nigeria has essentially institutionalised corruption as the foundation of governance until 1999.
when a result, when opportunities were privatised by the powerful, institutions of society degraded to unprecedented dimensions. As expected, this process was accompanied by intimidation of the court,
subversion of due process, manipulation of existing laws and regulations, suffocation of civil society, and containment of democratic principles and institutions.
As constructive initiatives were abandoned in favour of solely administrative and transactional operations, power became nothing more than an instrument of accumulation and subversion.
Citizens began to invent extra-legal and informal means of survival, undermining the legitimacy and stability of the state. All of these created opportunities for corruption. (Source: BPP website).
As a result, there was an urgent clamour for Procurement Reforms and the implementation of Due Process in the Nigerian public sector. Due process was created as a result of this in 2001.
Poorly executed contracts, poor craftsmanship, collapsed structures, delayed and abandoned projects have cost Nigeria billions of Naira, and the multiplier economic and social advantages obtained from such projects are unattainable (Ajator, 2004).
Capital development challenges during the military dictatorship era were characterised by fully paid ghost projects, badly executed or even abandoned projects.
Over the years, the Nigerian public procurement system has been regarded as characterised by non-compliance with bidding process principles in the selection of contractors with the financial, technical, and management know-how to complete projects on time, on budget, and with high quality.
The increasing reports of abuse of the public procurement system in Nigeria’s three tiers of government have resulted in massive losses of resources in various public projects [BMPIU, 2005]. Oboirien (2005) demonstrated that the country may have wasted billions of dollars over the years as a result of procedure abuse, contract cost inflation, lack of transparency,
competence-based competition, and merit as the primary basis for awarding public contracts. Influence peddling, sycophancy, and the utilisation of primal considerations were all issues.
These abuses resulted in the cancellation of government projects, low value for the public budget, and high procurement costs, among other things.
Obasanjo (2004) correctly stated that corruption had become effectively institutionalised in Nigeria as the cornerstone of governance. when a result, when possibilities were privatised by the powerful, institutions in society degraded to unprecedented proportions.
As constructive initiatives were abandoned in favour of solely administrative and transactional operations, power became nothing more than an instrument of accumulation and subversion.
Citizens began to invent extra-legal and informal means of survival, undermining the legitimacy and stability of the state. All of these created opportunities for corruption.
As a result, there was an urgent clamour for Procurement Reforms and the implementation of Due Process in the Nigerian public sector. The Federal Government announced New Policy Guidelines for Contract Procurement and Award in Government Ministries/Parastatals in 2001 (Circular F. 15775 dated June 27, 2001).
During President Obasanjo’s presidency, the Budget Monitoring and Price Intelligence Unit (BMPIU), also known as Due Process, was created within the capital budgetary system to ensure that projects begun are completed within specified time frames.
Due process requires that governmental activities and business be conducted honestly, economically, and transparently, free of favouritism and corrupting inclinations (Ezekwesili 2004).
The goal is to guarantee that procurement rules and processes are designed in such a way that they are both implementable and enforceable. It is hoped that the Due Process will put an end to “the Business as Usual Syndrome” in Nigeria.
According to Adesugba (2004), an office of the BMPIU, also known as Due Process (D.P), was established in June 2003 to provide extra support to the government’s anti-corruption campaign. BMPIU was led by a financial specialist,
Mrs. Obiageli Ezekwesili, and staffed with professionals in financial regulations, project management, and corruption prevention to achieve the goal for which it was established.
The apparent professional inability of Nigerian project planners, designers, and administrators to provide capital projects value has called into question the legitimacy and significance of construction experts and contractors.
Since the fiscal year 2002, the Nigerian government has made reservations on the import of advisory fee scales in capital project delivery (Awosemusi 2002) and has implemented the Due Process Compliance (DPC) procedure in the design and implementation of capital budgets/projects (Ezekwesil 2002).
The purpose of the BMPIU is to ensure full compliance with all government contracts’ guidelines and processes for the procurement of capital and minor capital projects, as well as connected goods and services.
According to Ezekwesili (2003), the BMPIU’s aims are as follows:
1. To improve the procurement process’s honesty, accountability, and transparency.
2. To establish if Due Process was followed in the procurement of services and contracts.
3. To set and maintain pricing guidelines and benchmarks for all government suppliers.
4. To ensure that only budgeted-for projects are approved for implementation.
5. To harmonise and improve existing government policies and practises on public procurement.
6. Monitoring project implementation during execution in order to provide information on performance output and compliance with requirements and targets.
According to Lock (1989), the goals of contract / project performance or management can be summarised into three categories. A successful project is one that is completed on schedule, within budget,
and to a technical or performance standard that meets the end user’s expectations. The Due Process Certificate assures that the given criteria are met by the contractor who will execute any project, as well as the original government Ministry and Public Institutions.
Kharbanda and Stallworthy (1989) indicated certain criteria for selecting the contractor to include in order for any project to receive Due Process Certificate readiness to implement:
i. Proposed cost incentive and liability arrangement
ii. The project cost in local currency and the total investment required for the project
iii. Appreciation and knowledge of the job site’s local conditions.
iv. Personnel quality appointed to carry out the project, with a special emphasis on the project manager
v. Project-specific terminology
vi. Organisation of the project and relationships with local subcontractors
vii. Technical proposal quality and substance
viii. Recent experience in the design and implementation of similar projects by the contractor
ix. Capability to provide technical support to the owner
x. Project completion timeline
The criteria listed above, while not exhaustive, are comparable to those used by the Due Process Unit (DPU) in contract procurement, regulation, certification, monitoring, implementation, assessment, training, and advisory.
It is worthwhile to investigate whether or if this DPC has had a beneficial or negative impact on the performance of publicly implemented projects since its beginning.
Nigeria implemented public procurement reforms in response to a World Bank Country.
The Procurement Assessment Survey, undertaken in 1999, demonstrated a link between poor/weak public procurement procedures and corruption, as well as the far-reaching detrimental implications on national development, particularly in the area of infrastructure development.
Nigeria. The Assessment Report revealed that 60k was lost to unethical practises for every N1.00 spent by the government and that an average of ten billion US dollars ($10b) was lost annually due to fraudulent practises in the award and execution of public contracts through contract cost inflation,
lack of procurement plans, poor project prioritisation, poor budgeting processes, lack of competition and value for money, and other types of procurement manipulations.
To address the aforementioned deficiencies, the Federal Government launched the Public
Procurement Reform is part of the Economic Reform Agenda, which aims to reestablish due process in the procurement process.
Contracts with the federal government are awarded and executed. This resulted in the creation of the Budget.
In 2001, the Monitoring and Price Intelligent Unit (BMPIU, often known as Due Process) was established to implement the
The Federal Government’s Public Procurement Reform Policy focuses at reducing open abuses to a minimum.
In Nigeria, recognised norms, methods, and standards govern the award and execution of public sector contracts.
As public demand grows for the reforms to be sustained and institutionalised,
A Public Procurement Bill with legal underpinning was proposed in 2003/2004 by the Leadership of
BMPIU, which was then presented to the National Assembly. Following it, the Public Procurement Bill was introduced.
enacted by the National Assembly on May 30, 2007 and later signed into law by
President Yar Adua on June 4th, 2007. (From the BPP website)
The duties performed by the Bureau of Public Procurement (BPP) are now often referred to as Due Process. As a result, the issue application of existing due process procurement methodologies in Nigeria.
1.2 STATEMENT OF THE PROBLEM
There are several procurement methods utilised in the construction business to carry out various projects, all of which follow due process.
According to research, the majority of contracts issued by the government or its officials are obtained through corrupt means. Some of these contracts are granted to contractors who have agreed to pay a particular percentage of the original contract price to the procurement official. This encourages contractors to utilise subpar items, provide bad services, or even quit projects (Ayodele, Charles, Akinusi, and Marion 2010).
Nigeria has lost several trillions of Naira over the years due to poorly executed contracts, poor craftsmanship, collapsed structures, delayed and abandoned projects, and the multiple economic and social benefits received from such initiatives are incalculable.
It has not been simple for the country to achieve its entire economic ambitions. Corruption is at the basis of all of these issues (Ejiofor 2009).
Many people have become weary of doing business in Nigeria in recent years since the expense of doing business here is predictably higher than elsewhere. There appears to be a greater need now than ever to ensure that the rules and procedures put in place for any type of procurement demonstrate enough clarity of purpose in order for them to be implementable and enforceable (Nwaogwugwu 2005).
At several levels of government, due process criteria are established for each public project to be conducted. Regardless, there are some abandoned public projects due to selfish motivations. It is hence interesting to assess the extent to which due process is used for project procurement in Nigeria.
1.3 PURPOSE AND OBJECTIVES OF THE STUDY
The purpose of this research is to evaluate the implementation of due process in Nigeria’s existing procurement practises. The study objectives are as follows.
(1) To assess project participants’ understanding/awareness of Due Process in construction project procurement.
(2) To analyse the effectiveness of due process in the implementation of public projects in Nigeria.
(3) To identify issues or hurdles to the use of due process in the project procurement process in Nigeria.
1.4 RESEARCH QUESTIONS
The following research questions have been proposed based on the research goals.
(1) What is the level of awareness/understanding of Due Process in the procurement of construction projects in Nigeria among project participants?
(2) How effective is due process in the implementation of public projects in Nigeria?
(3) What are the obstacles and constraints to successful due process application in public procurement in the construction industry?
1.5 RESEARCH THEORIES
The following null hypotheses are proposed:
1st Hypothesis
H0: Project participants in Nigeria are unaware of the application Due Process in the procurement of building projects.
H1: Project participants in Nigeria are aware of the use Due Process in the procurement of building projects.
2nd Hypothesis
H0: Due process procedures have no major impact on project execution in Nigeria.
H1: Due process procedures have a substantial impact on project execution in Nigeria.
3rd Hypothesis
H0: There are no major problems or barriers to implementing due process in project procurement.
H1: Implementing due process in project procurement presents substantial obstacles and impediments.
1.6 THE SIGNIFICANCE OF THE STUDY
This research will help policymakers and other stakeholders understand the impact of the Due Process method on the delivery of public projects in Nigeria.
The evaluation of the Due Process application will aid in determining the benefits of its use from 2001 to 2013 in contract award, performance, and implementation utilising Due Process certificates.
Finally, this will provide additional light on the significance of due process as a requirement for project procurement employed for public project delivery.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
As it relates more directly to construction procurement, construction contracts, project delivery, monitoring, implementation, and assessment.
Architects, Quantity Surveyors, Civil/Structural Engineers, Builders, and Services Engineers, as well as construction organisations that have handled public project contracts, were sampled.
This study focuses on a project completed within five years that followed proper protocol.
1.8 DEFINITIONS OF TERMS
The Rule of Law
This is a method for guaranteeing strict adherence to the norms and processes for transparency, competition, and cost accuracy that should lead contract award within the Federal Government of Nigeria.
Unit of Due Process
The Presidential Unit in responsible of budget monitoring and price intelligence. It guarantees that project procurements are carried out in compliance with established criteria.
Methodology of the Due Process
The Due Process uses basic methods and criteria in project management, assessment, monitoring, and evaluation of government projects to ensure transparency, integrity, competence, competitiveness, and value for money in capital programme planning and execution.
Procurement
This is the process of creating, managing, and fulfilling contracts. It is an essential component of building projects that encompasses the overall pattern of decisions made by the client in project execution.
Compliance with the Due Process
The exercise and assurance that all parties involved in project execution adhere to these essential tools and criteria in the design and implementation of capital budgets/projects.
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