LATE AND NON PAYMENT ISSUES IN THE NIGERIAN CONSTRUCTION INDUSTRY-CONTRACTORS’ PERSPECTIVE IN ENUGU STATE
ABSTRACT
The construction industry plays an important role in Nigerian soci-economics development. It is both growth-imitating, and growth-dependent. The industry establishes buildings and infrastructure works required for socio-economic growth. The success of economic development will further lead to increase in disposal incomes, thereby generating demand for additional construction activities. However, there remains a chronic problem of delayed and non-payment in the payment in the industry affecting the entire project delivery chain. The Nigerian construction industry operates the outdated and inefficient payment practices which were inherited from our colonial masters. The security of payment problem is common to many commercial relationships, but the construction industry presents a peculiar problem, because payment terms are on credit, rather than on delivery.
The growing affluence and higher quality expectation of purchasers and consumers spurs developers to stipulate longer defects liability period and higher retention amount. This study therefore focuses on the causes, effects and reactions of indigenous contractors to late and non-payment issues and to identify ways to mitigate the problem. The research focused on contractual payments from the employer to the contractor. To facilitate the study, fifty questionnaires received from the filed survey of relevant construction companies were analyzed using mean item score, while two hypotheses were tested using the chi-square. Findings from the study indicate that the main factors causing for Late and non-payment in the construction industry identified are: Delay in certification, employer’s poor financial management, local culture/attitude, underpayment of the certified amount, and short of current year budget.
The finding show that Late and non-payment create cash flow problem, stress on constructors, high cost of projects abandonment and some reactions to late and non-payment encountered by contractors may have adverse effects on their own business. The findings show that late and non-payment create cash flow problem, states on constructors, high cost of projects and abandonment and some reactions to late and non-payment encountered by contractors may have adverse effects on their own businesses. Among the most appropriate solutions to overcome the problem Late and non-payment faced by indigenous contractor’s include; a right to regular period and defined time-frame for payment; a right speedy dispute resolution mechanism, and a right to suspend work. In the main, the professional bodies, Government and other stake holders should study and amend the existing standard form of contract to provide protection and promote balanced allocation of risks and fair contract to all related parties. Finally, the findings of the research may assist the relevant parties in addressing the problems associated with late and non-payment in an effective manner, to the benefit of all.