THE CHALLENGES OF REDUCING LABOUR COST IN NIGERIA BUILDING INDUSTRY (A case study of osun state)

THE CHALLENGES OF REDUCING LABOUR COST IN NIGERIA BUILDING INDUSTRY (A case study of osun state)

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ABSTRACT

The aim of this research was to identify and rank, according to relative importance, factors affecting high cost of labour in Nigerian building industry. Structured questionnaires comprising of various pre-selected factors were used for data collections. Using a five-point likert scale, consultants and building contractors expressed their views on the relative importance of pre-selected factors on high labour cost. A total numbers of forty questionnaires (40) where prepared and administered and thirty five (35) were received. The data presented were derived from the responses of the respondent through the use of administered questionnaire it also highlighted the summary of the findings. It was found that the labour cost is too high, the labour cost is range between 30-40% of the total construction cost. The scarcity of tradesman in Nigerian Building Industry is believed to be the major problem and causes of high labour cost.

CHAPTER ONE

BACKGROUND OF THE STUDY

1.1    INTRODUCTION

The growing need for construction of all types’ coupled with a tight monetary supply as provide the construction industry with a big challenges to cut labour cost.The Nigerian construction industry is one of the major industries that contribute significantly to socio-economic development, through the design and construction of infrastructure.

The cost intensiveness of these construction projects require adequate management of all the resources employed for overall project success. Cost is the foremost consideration in project delivery and is regarded as one of the most important criteria of project success. (Memon, 2010). The need to focus on cost assessment stems from the fact that, client in Nigerian construction industry are usually compelled to pay for unbudgeted increase in project cost at every degrees. Ogunsemi and Dagboro (2011) attributed such increase in project cost to poor cost anticipation and allocation.

The task of forecasting project cost is part of project planning and an incorrect forecast will inevitably lead to ineffective use of resources (Ujene, 2012). The resources that constitute cost element comprise material, labour, plant and machinery costs. The attendant dwindling economic fortune of nations economics around the world have geared up the participant in these sectors (the client particular) to make up the challenge of ensuring efficient use of their resources to obtain value for money in terms of performance.

The total cost of construction in normal circumstances is expected to be the sum of the following cost, material, LABOUR, site overhead, equipment, head office cost and profit but in many part of the world particularly in Nigerian building industry the cost of LABOUR has occupied almost 30-40% of the construction cost.

This study focus on a group called “tradesman” (craftsmanship and related work) and will be referred to as “LABOUR”. The tradesman is the craftsmen or craft operative who is skills in a particular trade. This trade may be plumbing, masonry (bricklaying, electrical, painting, woodwork (carpentry), metal work (iron bending) or other related works. LABOUR has one of the components of the housing delivering system constitutes of the second largest single component or resource input required by the building industry. The labour force in the building industry has been described as exceptionally important and having a higher level skill. (Jinadu 2004). However studies have shown that labour in the building industry is scarce, because few trainees are ready to endure the tenure of training as an artisan since everyone wants cheap money. (Onibokun 2002). In addition, available data revealed that the three major supply categories of labour: the vocation education (formal training), the traditional vocational training (apprenticeship system) and the on-the job training (informal training) have not been able to produce adequate labour supply.

Mbachu and Nicado (2004) have obvious negative implication for the key stakeholders in particular, and the industry in general. To the client, high cost of labour implies added costs over and above those initially agreed upon at the onset, resulting in less returns on investment. To the consultants, it means inability to deliver value- for- money and could tarnish their reputation and result in loss of confidence reposed in them by the clients.To the contractors, in implies loss of profit through penalties for non- completion caused by the excessive cost on labour and negative word of mouth that could jeopardize his/her chance of winning further jobs, if at fault.

The work investigated and reported on the other cost to be allowed for, which are the basic cause of high labour cost in the building construction industry; also it proffered solution to how labour cost can be minimized or controlled.

1.2    STATEMENTOFTHEPROBLEM

The demand for more construction of all types, coupled with a tight monetary supply has provided the construction industry with a big challenge to cut the labour costs. The problem of high labour costs is becoming obvious. Labour accounts for between 30-40% of the construction cost. Consequently, substantial increases are being observed in projects.Agboola (2012)

This substantial increase has brought about loss of client confidence in consultants, due to the excessive cost of labour, inability to deliver value to clients, and investment in the construction industry. There is therefore an overwhelming need to investigate this problem if the lost confidence is to be restored at all.

1.3 AIM AND OBJECTIVES OF THE STUDY

The aim of the study is to examine the cause of high labour cost and suggest/ proffer solutions to how cost of labour can be minimized.

The objective of the study are as follows:

(1)     To identify the main cause of high labour cost and the effect of cost in construction

(2)     To determine the labour cost and know the various sources of labour

(3)     To suggest/proffer solutions on how to minimize high cost of labour in Nigeria building industry.

1.4 RESEARCH HYPOTHESES

To test the hypothesis:

1(a). Ho: contractors and client do not generally agree on the severity rank of the effect of high cost of labour in Nigeria Building Industry

1(b).HI: Contractor and client generally agree on the severity rank of the effect of high cost of labour in Nigeria Building Industry.

2(a) Ho: Clients and consultants do not generally agree on the severity rank of the effect of high cost of labour in Nigeria building industry.

2(b) HI: Clients and consultants generally agree on the severity rank of the effect of high cost of labour in Nigeria Building Industry.

3(a) Ho: Consultant and the contractor do not generally agree on the severity rank of the effect of high cost of labour in Nigeria Building Industry.

3(b) HI: Consultant and contractor generally agree on the severity rank of the effect of high cost of labour in Nigeria Building Industry.

1.5 SIGNIFICANCE OF THE STUDY

An assessment of the study would enable clients, contractors and consultants to give an economic approach to construction work that they would be able to identify the dominating factors leading to high cost of labour in Nigeria building industry.

The application of the solutions proofed to minimizing the cost of labour would restore client’s confidence in consultants.

1.6 SCOPE AND LIMITATION

The scope of this research is limited to identification of essential causes of high cost of labour and suggest/ proffering solutions on how to reduce labour cost in Nigeria building industry.

Target respondents for this study are the principal actors in the construction industry namely: the client, the consultant and the contractor.



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