EFFECT OF cost OF CONSTRUCTION AND PROPERTY DEVELOPMENT
EFFECT OF COST OF CONSTRUCTION AND PROPERTY DEVELOPMENT
building costs and property development in Nigeria have become a severe issue, since the cost of materials has risen to the point that it is difficult for a normal Nigerian man to begin on a building or property development project.
As a result, the purpose of this research is to identify the consequences of construction costs on Nigerian individuals. And look for ways to cut this expense by a significant percentage.
The survey design approach was utilised to carry out this study work, and a total of seventy (70) respondents were used, and the data gathered was analysed using the SPSS package.
Property development is a complicated activity that involves numerous actors with different goals, all functioning within the context of the building cycle and its connection with the business and financial cycles.
Before committing to acquiring property and executing a building contract, developers must first assess the market to determine the profitability of a project and get finance and planning consents (Wilkinson & Reed, 2008).
A construction cost estimate is the amount anticipated to complete a construction project. It is the estimated cost of completing a construction project. It is an estimate of the cost of a project based on data available at the time of projection.
According to Business Dictionary (2013), a cost estimate is a “approximation of the probable cost of a product, programme, or project computed on the basis of available information.” As a result, the more information provided on a project, the more accurate the estimate. It is significant in a variety of ways.
The goal of this document is to gain insight into the nature of the property development process and construction costs in order to inform a later stage of this research that will seek a better understanding of the factors that will encourage developers to embark on dense residential and commercial developments near Nigerian transit hubs.
This research paper provides a quick summary of the stages of property development. The initial evaluation phase is then thoroughly investigated, as is the expense of building.
1.1 BACKGROUND OF THE STUDY
The expanding demand for all sorts of building, combined with a limited financial supply, has presented the construction sector with a significant cost-cutting issue.
According to Mendelson and Greenfield (1996), the remainder of the twentieth century would be a race to the bottom for corporations, institutions, and government. The accompanying falling economic fortunes of nations economies around the World have geared up participants in these sectors (particularly the client) to take on the challenge of assuring efficient use of their resources in order to gain value for money in terms of performance.
In normal conditions, the entire cost of construction is supposed to be the sum of the following costs: materials, labour, site overheads, equipment/plant, head office cost, and profit; however, in many regions of the world, particularly Nigeria, extra costs must be considered.
According to Mbachu and Nkado (2004), these expenses have evident negative consequences for key players in particular, and the industry in general. To the client, high cost means additional costs above and beyond those agreed upon at the outset, resulting in worse returns on investment.
The additional costs are passed on to the end user in the form of higher rental / leasing rates or prices. To the consultants, it means an inability to give value for money, which might destroy their reputation and result in clients losing faith in them.
If the contractor is at fault, it indicates a loss of earnings due to fines for non-completion, as well as unfavourable word of mouth that could jeopardise his/her prospects of receiving future work.
The proposed work will investigate and report on the additional costs to be provided for, which are the primary elements influencing building cost and property development in Nigeria, as well as give options for reducing construction costs.
1.2 STATEMENT OF THE PROBLEM
The desire for increased construction of all types, combined with a constrained monetary supply, has presented the construction industry with a significant cost-cutting issue. The issue of excessive contract costs in all sectors of building is becoming more apparent. As a result, significant increases in project costs have been recorded.
This significant increase has resulted in a loss of customer trust in consultants, increased investment risks, an inability to offer value to clients, and disinvestment in the construction industry.
1.3 PURPOSE AND OBJECTIVES OF THE STUDY
The study's goal is to determine the impact of building costs on property development in Nigeria and to propose ideas for reducing construction costs.
The following are the study's objectives:
1. Determine the primary impact of construction costs in Nigeria.
2. To assign a severity ranking to the factors among clients, consultants, and contractors.
3. To ascertain the agreement ranking elements among clients, consultants, and contractors.
4. To provide strategies for reducing construction costs in Nigeria.
5. To showcase the Nigerian property development process.
1.4 RESEARCH QUESTIONS
During the course of this study, the researcher devised certain research questions that will aid in gathering data for a better understanding of this project's research work, which are as follows:
1.Do contractors and clients in Nigeria typically agree on the severity of the effect of construction costs?
3.Can you describe the process you used to develop your project?
4.Does the high cost of construction and property development deter most Nigerians from undertaking projects?
5.What is the average cost of developing and constructing your property?