IMPACT OF THE PUBLIC PROCUREMENT REFORM ON PUBLIC BUILDING PROJECTS DELIVERY IN NIGERIA

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1 IMPACT OF THE PUBLIC PROCUREMENT REFORM ON PUBLIC BUILDING PROJECTS DELIVERY IN NIGERIA Shwarka S. M 1 and Anigbogu N. A 2 1 Department of Buildg, Kaduna Polytechnic, Kaduna, Nigeria 2 Department of Buildg, University of Jos, Jos Nigeria worldwide and creasgly procurement reforms are considered as unique means of achievg lower costs for frastructure delivery and value for money. Thus the Nigerian Public Procurement Reform is expected to result significant improvement situation and foster the realisation of the Government developmental target of beg among the top twenty economies of the world by the year This paper analyses Nigeria. The impact of the Public Procurement Reform is hypothesized to depend on crucial factors such as planng practices for public buildg projects, adoption of appropriate procurement options, contractor selection practices and the enthrong of best ethical standards by public buildg practitioners. Actual project performance data were compared on public buildg projects delivered prior and after the commencement the procurement reform. In addition, a sample survey comparg opions of key practitioners on the impact of the reform on public buildg project delivery was carried out, and the result of the pilot study shows there is no significant difference between the mean response of contractors, consultants and construction impact on irregularities associated with public buildg projects delivery Nigeria. Inadequate project/budgetg plans by the client and the project team identified as the most constrag factors the attament of desired impact on public buildg projects delivery. The outcome of this study would provide empirical ground that assists decisions on the sustaability of the procurement reform Nigeria, whose experience might be applicable the rest of the developg world and may provide relevant clues to assist other countries. Keywords: impact, buildg performance, procurement reform. INTRODUCTION All over the world, public procurement is beg subjected to reformg, restructurg or to new rules and regulations the bid to brg about substantial improvement governance. Accordg to Hunja (2001), effective and efficient procurement policies are important assessg the performance of governments. However, Hunja (2001) poted out that there is no sufficient evidence by which successful procurement reforms can be measured due to lack of analysis and available formation on return on vestment on procurement reforms which has made the formulation of proposals Shwarka S.M and Anigbogu N.A (2012) Impact of the Public Procurement Reform on public buildg projects delivery Nigeria In: Smith, S.D (Ed) Procs 28 th Annual ARCOM Conference, 3-5 September 2012, Edburgh, UK, Association of Researchers Construction Management,

2 Shwarka and Anigbogu for new multilateral laws procurement difficult. There is therefore need for research to shed light on the success or otherwise of public procurement reforms a range of developg countries and to provide case evidence and national experience that will form reform strategies and ternational rule makg. In the same ve, Evennet and Hoekman (2005) observed that work on the performance of national public procurement systems have not been well documented, the sense that focus tends to be primarily on legal compliance with required laws and implementation procedures, with little focus on quantifyg performance on havg applied the processes aimed at enhancg competition, transparency, and combatg corruption (Evennet and Hoekman 2005). Evennet and Hoekman (2005) added that much tends to be claimed for the benefits of the procurement reforms, but there is little analysis whether these benefits were actually realized after the reform itiatives occurred. Few Studies have been made on the Nigerian Public Procurement Reform. While Olatunji (2008) examed the Due Process Policy Model, Ayangede, Wahab and Alake (2009) vestigated the Due Process as a procurement method and its legal and stitutional framework. Aduda (2007) evaluated the levels of compliance with some of the provisions of the Budget Monitorg and Price Intelligence Unit. This study relates with aforementioned studies because the Due Process Policy and the Budget Monitorg and Price Intelligence Unit were the itial stitutional arrangements of the Public Procurement Reform Nigeria and were based on fundamental prciples of the Public Procurement Act, 2007 even before the enactment of the Act. However, this study goes further as a pioneerg study to evaluate actual impact of the Public Procurement Reform from the perspective of public buildg projects delivery. The set objectives of Nigerian Public Procurement Reform and its provisions/procedures are considered to be sound and capable of achievg desired impact if well implemented (Transparency International 2008). These provisions have been implemented Federal Mistries, Departments and Agencies procurg buildg projects Nigeria for nearly a decade now. This duration is considered long enough for the impact of the reform to appear, and this is considered vital for either justifyg or impugng the benefits of the Public Procurement Reform on public buildg projects delivery. This study therefore is an empirical analysis of real data of a representative sample, of projects performance statistics before and after the troduction of the Public Procurement Reform with the aim of identifyg the difference the procurement reform has made. the Procurement Reform The challenges of the construction dustry Nigeria have not been different from that of many other developg nations. Most of these difficulties relate to lack of fiscal transparency and public accountability, addition to the adequacy of resources for providg public frastructures. For example, Nigeria, prior to the re-emergence of the democratic governance 1999, public buildg projects delivery has been subject to several irregularities which resulted frequent projects failure. These cluded poor project planng, sufficient budgetg plans, unnecessary project fragmentation, itial bids flation and over voicg, gross change orders durg project execution, adoption of appropriate procurement methods, contract allocation as opposed to competitive tenderg, proliferation of competent contractors the tenderg process and deterioratg ethical standards of public construction 970

3 Procurement practitioners. Accordg to Ayangade, Wahab and Alake (2009), these anomalies resulted high project time and cost s, job abandonment, improper contract determation, conflicts and litigations, defective job performances and buildg collapses. Olatunji (2008) stated that contractor selection was not based on value and merits of bid but on tender price and itial lowest bid. The consequence was that Nigeria ranked highest worldwide the cost of public projects execution (Budget Monitorg and Price Intelligence Unit, 2005). This made the need for the procurement reform Nigeria to become pertent. The contual adequacy of frastructural facilities to meet the needs of the Nigerian economy coupled with the poor fiscal realities necessitated the dire need for optimal utilization of scarce resources appropriated for the public buildg projects delivery. Furthermore, with globalization and advances formation technology, citizens began to demand for greater accountability and efficiency from government and the demands and expectations of the global economy on improvg transparency and competition government procurement added the need to align and harmonize ommission for International Trade Law (UNCITRAL) model and the World Bank guideles. Thus the Public Procurement Reform was troduced to improve service delivery generally the public sector through focussg on prciples and procedures procurement that would place the country firmly on the path of economic growth. In the public buildg sector, the reform is expected to promote a sustaable built environment through the application of competition tenderg, effective planng and budgetg for projects and the promotion of global best practices and ethical standards order to achieve value for money on public buildg projects. RESEARCH QUESTIONS 1. How has the Public Procurement reform impacted the factors that were responsible for frequent public buildg projects failure Nigeria? 2. How has Public Procurement Reform impacted public buildg projects budget? 3. What are the constrats the attament of desired impact of the Public Procurement Reform on public buildg projects delivery? METHODOLOGY A sample survey research design that volves the comparison of available data on completed public buildg projects before and after the troduction of the Public Procurement Reform because the study seeks to establish the counterfactual. This method has been adopted by impact evaluation experts such as Baker (2000) and White (2009) to establish how dicators behave with a program compared with how they would have been without the tervention. The period 1995 to 2002 is used as the pre reform era, while the period 2003 to 2010 is used as the reform era. A total of forty public buildg projects the Federal Capital Territory were used the study. Twenty projects completed before the troduction of the public procurement reform and twenty similar projects completed after the ception of the reform. The purposive samplg method was adopted due to the difficulty obtag data on completed projects. Time, cost, and q and as such variables on projects performance. Projects duration and cost performance were used to study the impact of procurement reform. In addition to comparisons of 971

4 Shwarka and Anigbogu actual project performance statistics, the study also compares opions on the impact of the reform on public buildg projects delivery of key public buildg practitioners, namely contractors, consultants and construction professionals engaged with fifteen Mistries, Departments and Agencies selected through a simple random samplg the FCT. The Likert type scale was employed evaluatg responses. DISCUSSION OF RESULTS Table1: Performance Data of Public Buildg Projects Pre Reform Era ( ). Projects I.D. F.D I. Sum billions F. Sum billions Cost Delay % cost PFMB 04 Ph.1 Fed.Sec % time NTA, Area 11, Garki Foreign Affairs HQTRS Karshi General Hospital Sch/orphanage, Karu P.Fencg, Gwagwalada No.1BR 3No. 2BR, Kubwa Ph. 1 1 No.1BR, 1No 2BR Life camp 1No 2BR S/D& No.3BR Gwagwalada 2BR Karshi Hospital BR Karshi No. 4BR S/D Duplex, Area 11, Garki. 1No 3BR.S/D Apo BRS/D Duplex Gwarpa Badagry 3BRS/D Duplex at Gwarimpa Master 1 Blk of 4units of 3BR duplex, Wuse II (OAU) No. 2 BR terrace flats at Karu 2BR S/D Kado No 1BR Security Qtrs. Asokoro

5 Procurement Table 2: Performance Data of Public Buildg Projects Post Reform Era ( ). Projects Completion of Shagari Complex Asokoro I.D. F.D I. Sum billions F. Sum billions Cost Delay % cost % time NASS, Ph.III, Part II PFMB Plot 4 Phase II at Federal Secretariat 225 bed G. Hospital karu 6blks of classrooms, JSS Wuse, zone 6 Fencg Orphanage Homes Gwagwalada 13 No. 2BR Shere Galuyi 10 No. 2BR Shere Galuyi 9 No. 2BR at Shere Galuyi 8No. 1BR,1 No.3BR Apo 6No.2BR Apo No.1BR, 5No. 2BR and 1No. 3BR, Apo. 1No. 4BR, 2No.3BR, 4No. 2BR 3No.1BR Wasa No. 1BR, 3No. 3BR No. 3BR Wasa 4 BR duplex Gwarimpa II 4No. 2 BR terrace flats Karu 6No 3BR flats of storey at Wuse Zone 5 Installation of meters Kado Estate 2 No.Rms, old parade ground Area 10 Garki Police Stn. Kubwa Table 3 presents the means of data collected on both cost s billions of naira and time s. 973

6 Shwarka and Anigbogu Table 3: Group Statistics Cost Overruns Time Overruns 974 Performance N Mean Std. Deviation Std. Error Mean Pre reform Post reform Pre reform Post reform In table 4, the column F shows the value calculated by the ratio of two sample variances, the column Sig. shows the calculated significance or probability P-value used terpretg the results. Where Sig. value is less than or equal to 0.05, it means that there is no more than a 5%, probability the observations were solely due to chance and the association between the two study durations is considered statistically significant. The column T refers to the t- statistic values and the column Df shows the degrees of freedom. Table 4: Independent Samples Test Cost Over run Time Over run Equal variances assumed Equal variances not assumed Equal variances assumed Equal variances not assumed t F Sig. T Df t-test for Equality of Means Sig. (2- tailed) Mean Diff. Std. Error Diff. Lower Upper , probability value is statistically significant (0.021 < 0.05) thus the variances are unequal and the row of data equal variances not assumed is used. The second row of column labelled sig. (2tailed) shows there is no statistically significant difference between the two eras because the significance level is 0.295, (p >0.05), hence there is no statistically significant difference between the means of data on cost s the two eras. Similarly, to test if there is significant difference the means of data collected on probability value is not statistically significant (p >0.05), thus equal variances are

7 Procurement assumed. The column labelled sig. (2 tailed) shows the null hypothesis is also supported, p = >0.05). Thus the mean scores on data on time s on public buildg projects both the pre and post reform era are not statistically significantly different. This fdg is not surprisg as it is supported by a comparison of opions of key public buildg practitioners on the impact of the procurement reform on it can be seen that there is disagreement that the public procurement reform has had an impact on delayed payments for executed works, frequent fragmentation/phasg of projects, over voicg/itial bids flation, gross contract variations/cost s and project delays/time s. However, it has had an impact on use of competent documentation, and poor works quality performances and the rash/improper abandonments and determation of contracts. S/N Item x Remark 1 Impact on delayed payments for executed works 3.0 Disagree 2 Impact on frequent fragmentation/phasg of projects 3.2 Disagree 3 Impact on use of competent contractors and unprofessional 4.0 Agree 4 Impact on poor project documentation 3.5 Agree 5 Impact on over voicg/itial bids flation 3.4 Disagree 6 Impact on poor works quality performances 3.8 Agree 7 Impact on gross contract variations/cost s 3.2 Disagree 8 Impact on project delays/time s 2.7 Disagree 9 Impact on rash/improper abandonments and determation of 3.7 Agree contracts 10 Impact on cessant collapse of public buildgs 3.5 Disagree Grand Mean 3.4 Delivery Sum of Squares Df Mean Square Between Groups With Groups Total F Sig. 0.05and the calculated F ratio is less than the Critical value 3, therefore we accept the Null hypothesis that there is no statistically significant difference the means of Contractors, Consultants and MDAs response to the impact of the reform the means, the Scheffe post hoc test was employed and the analysis is presented table

8 Shwarka and Anigbogu Table 7: Scheffe Post Hoc Test of Multiple Comparisons on Irregularities (I) Target Groups (J) TargetGroups Mean Difference Std, Error Sig. Lower Bound Contractors Consultants Consultants Contractors MDAs Contractors Consultants Upper Bound The Scheffe post hoc test of multiple comparisons also showed that there is no significant mean difference at the 0.05 level. The Study also evaluated why the impact of the public procurement reform has been undermed on public buildg projects delivery Nigeria with the aim of suggestg how constrats can be reduced. Table 8 presents the mean opion on the analysis of responses on constrats the attament of desired impact of the public procurement reform. 976 S/N Items 1 Weak monitorg/enforcement to ensure compliance by mistries, departments and agencies. 2 Inadequate project planng by the project team/sufficient budgetg plans by the Client 3 Lack of committed leadership with the procurg entities with political will to support the Reform. x Remark 3.6 Agree 4.3 Agree 3.9 Agree 4 Resistance to change faulty contractor selection criteria 3.6 Agree 5 General lack of Project Management competencies and a lack of multidisciplary teams by public buildg contractors 3.5 Agree 6 Poor ethical practices of public buildg practitioners 3.8 Agree 7 Lack of prosecution of defaulters that contravene the provisions of the Public Procurement Act. 4.2 Agree 8 Adoption of appropriate procurement methods 3.1 Disagree 9 Selection of lowest tender 2.9 Disagree 10 Inadequate usages of ICT for project communication, documentation and monitorg, cludg e-tenderg and e- payment payment Grand Mean Disagree CONCLUSION/RECOMMENDATION Public Procurement Reforms as poted earlier are troduced to provide a strong base to improve service delivery and foster economic growth. However, the fdgs of this Study revealed that the procurement reform has not been efficacious redressg cost and durations s and other irregularities public buildg projects Nigeria as there is no statistically significant difference from the situation that existed before the

9 Procurement procurement reform. The implication of this fdg is that if focus is not placed on improvg procedures that improve performance outcome, the reform would end like other past government policies with limited success. The Study also shows a greater consensus agreement that adequate project/budgetg plans by the client and the project team is the most constrag factors the attament of desired impact on public buildg projects delivery. This implies that the Mistries Departments and Agencies circumvent provisions of the Procurement Act which relate to proper project planng. Public buildg procurg entities must improve identifyg procurement needs by competent staff that is capable of makg realistic estimates. Contributory factors are the slow decision makg process by the client and fiscal constrats attributed to lack of full implementation of the capital component of the budget the past years. The use of open competitive methods of tenderg must be complimented with centive/discentive forms of contracts to solve the problem of delays projects execution. To ensure the sustaability of public procurement reforms, there must be full implementation of provisions of the Public Procurement Act to stitute prudence at all levels of government and establishment of a more effective stitutional framework for fightg and sanctiong corrupt practices REFERENCES Organisation. Ayangade, J A Wahab, A B and Alake, O (2009) An vestigation of the Performance of the 11(1), 1-7. D.C: The World Bank -Due Process Evennet, S J and Hoekman, M (2005) International Cooperation and the Reform of Public September 2005 London: World Bank. Hunja, R R (2001) Obstacles to Public Procurement Reform developg countries, WB94726 A(4), Washgton D.C: World Bank. Olatunji, O A (2008) Due Process and contractor selection for public works Nigeria th National Conference and Annual General Meet -16 July 2005, Abuja White, H (2009) Some Reflections on Current Debates Impact Evaluation Workg paper1, New Delhi: International Initiative for Impact Evaluation. 977