INFLUENCE OF MATERIALS PRICE FLUCTUATION ON PERFORMANCE OF BUILDING PROJECTS IN ABUJA, NIGERIA

Abstract

The prevailing unpredictable and erratic price fluctuations of materials and less satisfactory practice of compensation are the major hindrances in the growth of the Nigerian construction industry. The rate of fluctuation claims on prices of materials is alarming. This leads to disputes in most building projects and usually affects the cost, time and even quality performance of building projects. Fluctuation in the cost of building materials poses a significant threat to both the building sector and people aspiring to own houses. The study assessed influence of materials price fluctuation on performance of building projects in Abuja, Nigeria by examining the causative factors and its effect on projects performance, the impact of materials price fluctuation claims on cost and time performance of building projects and established strategies for minimising the effects of materials price fluctuation. The study adopted a survey design approach using quantitative data. Data were collected through well-structured questionnaire administered on 189 respondents; also 23 archival data on material price fluctuation claims on completed building projects in the study area were obtained. The collected data were analysed using Percentages, Relative Important Index (RII), Mean Item Score (MIS) and Pearson Correlation Moment. Result reveals that the main factors responsible for material Price fluctuations are; Exchange rate of national currency, Cost of transportation, Inflation of building materials price, Cost of energy (electricity, gas). The result reveals further that materials price fluctuation claim positively correlates with total project cost and time with coefficient strength level (r value) of 0.95 and 0.62 respectively. It is recommended that drastic steps should be taken by the Government to stabilise exchange rate, reduce cost of energy, regulate cost of production, and contractors should also have appropriate planning, maintain current information, payments within stipulated time and understanding of project requirement. The study will help building construction contractors in making a logical contingencies decision on material prices.