Impact of Payment Delay on Public Building Projects in Edo State, Nigeria

Authors: Idowu AO, Simon-Eigbe BO, Eshiemokhai TI

DOI Info: http://doi.org/10.5281/zenodo.6725444

ABSTRACT

In recent years, the construction sector in Nigeria has been plagued by cost and time overruns, which are primarily the result of payment delays. Payment delays by customers on construction projects are a major source of concern because they produce serious cash-flow problems for contractors, which have a catastrophic effect further down the contractual payment chain. The causes and implications of payment delays in public construction projects in Edo State were investigated in this paper. Primary data was collected using well-structured closed-ended questionnaires presented to professionals in the Edo State construction industry. Percentile, mean score, and relative important index were used to analyze the data. Slow coordination and getting consent from concerned authorities, followed by late preparation of interim valuation, inflation, and an increase in interest rate in loan payback, were among the causes of payment delays identified by the analysis. Time overrun was identified as the most common result of payment delay, followed by dispute, cost overrun, and job slowdown. The most efficient strategy for combating payment delays in building projects was better contract preparation, followed by appropriate feasibility assessments and imposing interest penalties on late payers. It is also critical for stakeholders to do enough planning and improved feasibility assessments before the start of a building project, as this will help to prevent the likelihood of payment delays.

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