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Contracts review and the rot in roads infrastructure

By Jude Njoku & Favour Nnabugwu
No nation can effectively develop its public infrastructure when it is deeply steeped in the rot of contract review as apparently institutionalised in Nigeria today.

It is a common belief  mong Nigerians that contracts awarded by all the three tiers of government are blatantly inflated or more pleasantly put, reviewed upward to the point of incredulity.

Although, Nigeria’s Federal Ministry of Works has witnessed a renaissance under the leadership of Mike Onolememen, an architect, and seems to have waved goodbye to the era of  uncompleted and abandoned projects, the issue of upward review of contracts which oftentimes doubles the initial contract sums, has remained a sore which has refused to be healed.

Nigeria has recently become a huge construction site and this is impacting positively on the nation’s economy. It has elevated the ability of transporters and allied operatives in the various genres of industrial and economic activities in Nigeria to access the remotest parts of the country within the shortest time possible.

Some of the projects have however become synonymous with upward reviews and this has cast a dent on the achievements so far recorded.

Why contract for Abuja -Lokoja Road reviewed upwards

Vanguard Features VF  recalls that the Senate Ad-hoc Committee on Subsidy Reinvestment and Empowerment Programme, SURE-P recently decried the 170 percent rise in the Abuja-Lokoja highway contract. The road project which was awarded for N42 billion in 2006 has risen to N116 billion. Angered by this development, the Committee Chairman, Abdul Ningi summoned the contractors handling the project  and  Onolememen to appear before it.

Onolememen, Minister of Works
Onolememen, Minister of Works

The four contractors are Dantata & Sawoe Construction Company Ltd for section one (Zuba junction to ShedaVillage), RCC Nigeria Ltd for section two (Sheda junction to Abaji Road), Bulletine Construction Ltd for Section three (Abaji to Kotonkarfe) and Gitto Construzioni Generali Nigeria Ltd for Section four (Kotonkarfe to Lokoja).

Ningi frowned at the upward review of the contract and queried the Ministry for allowing it.

Decrying the increasing cost of road construction in Nigeria, Ningi stated that what obtains in Nigeria does not happen in other African countries.

Onolememen in his explanation told the Committee that the original contract was awarded without the requisite designs. He blamed the review on the project consultant whom he said, did not take appropriate technicalities into consideration before approving the road design.

“This was because, government at that time awarded the contract without giving time to the parties involved to do proper planning and design. This led to inadequate quantities, improper detailed specification design and insufficient site and geotechnical sub-soil investigations,” he said.

The Minister said the construction work on these four major roads and two bridges have reached advanced stages and expressed optimism that the Abaji- Lokoja road would be inaugurated by the end of next year.

“It was discovered that extensive unsuitable under-laying soils ranging from swampy Fadama, high water table, fine water chalk, clay and black cotton soils in some sections of the proposed new carriageway were not given adequate precautionary measures at the time the contract was awarded. This resulted in the failure and collapse of some sections of the new road, thereby creating the need for detailed sub soil investigation, removal of unsuitable materials, additional extensive surface, sub-surface drainage and use of specialised materials. These new understandings under the President Jonathan’s administration also necessitated the upward review of the rates so that a good job could be delivered to Nigerians,” he said.

The project was initially intended to be completed in two and half years but five years going as at 2010, the project was still docile as a result of poor funding. He stated that the government only released N26.3billion in five years out of the total N42.55 billion.

Other factors that hit the project negatively, he explained included astronomical rise of the costs of construction materials like cement, reinforcement, bitumen, diesel and cost of labour. Apart from the Abuja -­Lokoja Road, numerous other roads in the six geo-political zones have had their contracts reviewed upwards.

Ibadan- Ilorin Road, others also reviewed upwards

The Ibadan-Ilorin Road project for example, was originally designed to be executed in 1994 by AIC Limited at the cost of $210 million (that was N4.689 billion, at N22.33 to a dollar then). It was to be an African Development Bank, ADB, financed project, but the Federal Government rejected the ADB facility. The contract was subsequently awarded in three segments: Ibadan–Oyo, which is 45 kilometres was awarded to PW Construction Company for N15 billion; Oyo to Ogbomoso, another 45 kilometres was awarded jointly to PW and Reynolds Construction Company, RCC, Limited, for about N15.2 billion while the 45-kilometre  Ogbomoso–Ilorin was awarded to RCC in 2001 for N15.7 billion. Two years later, the joint venture, JV, companies, that is, PW and RCC asked for 37 per cent variation in cost. Government however conceded 15 per cent variation, which was rejected by the JV partners. This led to the cancellation of the contract. But six months later, RCC alone got the same contract, (Oyo–Ogbomoso section), for N47.5 billion.  A British firm of quantity surveyors reportedly submitted that the middle section of that road was inflated by about £130 million or N32.5 billion. Now, the entire road is costing N78.4 billion or $490 million. It has also taken about 13 years instead of 33 months. This road is one of the major links between the South-west and the North. It is also somewhat a signature of the pattern of road construction, particularly by the Federal Government of Nigeria, where lack of funding causes delay in project implementation and encouragement of contract variation with likely underhand dealings and eventual poor job delivery.

The story of the Abuja Airport Expressway and Outer Northern Expressway, ONEX, project is similar to that of Ibadan–Ilorin Road. The project involved the expansion of the expressway to 10 lanes and the rehabilitation of the existing roads. It was awarded at a cost of N257 billion to Julius Berger, JB, Dantata and Sawoe, and Gitto Construzioni Generalli, CGC, Nigeria Limited. But the contracts were allegedly inflated.

The dualisation of Lokoja–Benin Expressway, estimated at nearly 250 kilometres was awarded at a cost of N65 billion in November 2012. This was an extension work of the ongoing Abuja to Lokoja Expressway.

These are not the only roads where the cost raises concerns. The dualisation of the Kano–Maiduguri Road, formerly a single lane road, was awarded in 2006 under former President Olusegun Obasanjo at the cost of N172 billion. But in 2011, when the contract was supposed to have been completed, it was re-awarded at a cost of N285 billion. Currently, the 553km road is at 50 per cent completion.

Similarly, the recent flag-off of the reconstruction of the 127.8km Lagos–Ibadan Expressway awarded at a cost of N167.8 billion, to Julius Berger and RCC has elicited mixed reactions from Nigerians. While JB is to handle construction work from the Lagos end to the Sagamu interchange, RCC will take charge from there to the Ibadan end. This road, built over 35 years ago, is said to account for about 50 per cent of the economic transactions being conducted in the country, and it is believed to be the busiest road in West Africa and possibly Africa, with a volume of traffic estimated at 250,000 average daily traffic.

Another road under construction with huge economic importance is the East–West Road, a 338km dual carriageway linking Warri, Ughelli and Patani in DeltaState to Eket and Oron in AkwaIbomState through Kaiama in BayelsaState, Mbiama, Ahoada, Port Harcourt and Ogoniland in RiversState. This road, now to cost N347 billion, was originally awarded at the cost of N138.9 billion in 2006 under President Obasanjo. So far, sections one and Two of the road, which were awarded to Setraco Nigeria Limited in 2006 at N138.9 billion, were reviewed upwards to N245.7 billion. Section 1 of the road was initially awarded for N64 billion, but was reviewed to N112 billion following “redesigns and insufficient materials from the bill of quantities.”

Section Two of the road project had an original amount of N74.7 billion was later reviewed upwards to N133.7 billion.

Onolememen
Onolememen

The third section of the road, which is 99 kilometres was awarded to RCC at N56 billion, an amount that was reviewed from an initial N44 billion. About 115km out of the 338km of the dual carriageway has been completed to asphaltic binder level while 220 kilmetres earthworks had also been done. The pace has been a source of concern to those who wonder whether the contractors will meet the December 2014 date.

A construction expert’s view

Reacting to this development, the Chairman of the LagosState chapter of the Nigerian Institute of Quantity Surveyors, NIQS, Mr. Olayemi Shonubi explained that upward review of contracts would not have arisen if the contracts were well packaged from onset and both parties respected the terms of the agreement.

Mr. Shonubi posited that in the last three years, prices of construction materials and foreign exchange have been fairly stable, hence there should be no reason for the rash of upward review of contracts as being currently witnessed in Nigeria.

The construction cost expert who noted that the only unstable factor is the cost of transportation of bitumen from the refineries, opined that the only reason why a contract should be upwardly reviewed is the inability of the government to fulfill its contractual obligations to the contractor. “Assuming the contract duration is 20 months and due to no fault of the contractor, the  completion deadline is extended, maybe because the Government is not releasing funds as and when due, the contract will be reviewed upwards because for every additional month the contractor spends on site, the government must pay,” he said. Noting that contractors dwell on claims to make their profits, he warned against making room for them to exploit this lapse.

The Lagos NIQS chairman who picked holes in the statement credited to the Minister of Works that the contract for the Lokoja-Abuja road was awarded when the design had not been completed, explained that these upward reviews would have been avoided if the expertise of quantity surveyors was utilised in costing the projects when the contracts were originally packaged.

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