Evaluating the Impact of Risk on Contractor’s Tender Figure in Public Buildings Projects in Northern Nigeria

Abstract

It has become almost impossible to have projects completed within the initial cost and time in Nigeria; this is as a result of many factors the construction industry is being plagued with ranging from estimating risk to time and cost overruns. The construction industry is widely associated with a high degree of risk and uncertainty due to the nature of its operating heterogeneous environment. The paper aimed at evaluating the impact of estimating risk on contractor’s tender sum with a view of ensuring efficient delivery of projects in the Northern part of Nigeria. A survey was conducted using questionnaire and a total of four headings of risk factors were identified. Research findings showed defects in design, inflation, contractor’s competence and political uncertainty as well as changes in government had greatest impact on contractor’s tender figure whereas likely trend in wages rates over the period, excessive approval procedure in administration government department, unavailability of sufficient amount of unskilled labor and technical manpower and resources of the company were the most significant factors to be considered by contractors when estimating the pricing risk. The paper recommends that construction professionals should identify and adequately quantify project estimating risk factors. Adding a risk premium to quotation and time estimation has to be supported by governmental owner organizations and other agencies in the local construction sector. Competent contractors should be allowed to tender so as to see the incidence of these estimating risks as an important aspect that requires attention while evaluating contractor’s tender sum.