Finalyear

CHAPTER ONE

1.0 INTRODUCTION

The construction industry plays a crucial role in the socio-economic development of any nation. It contributes significantly to GDP, provides employment, and supports infrastructural growth (Olanrewaju & Anahve, 2016). However, cost overruns have been a persistent challenge in the construction sector, affecting project performance and overall economic stability (Akinsiku et al., 2019). In Ebonyi State, Nigeria, the situation is no different, as many construction projects experience significant cost variations that lead to delays, contract disputes, and, in some cases, project abandonment (Okereke & Achumba, 2021). The need for a comprehensive framework to evaluate and improve cost performance in construction projects is, therefore, essential for sustainable development in the state.

Several studies have examined cost performance in construction projects at both national and international levels. However, there remains a gap in understanding the specific factors influencing project cost performance in Ebonyi State, considering its unique socio-economic and infrastructural dynamics. This study aims to develop a framework for assessing the cost performance of construction projects in Ebonyi State, Nigeria, by identifying key determinants and proposing strategic measures to mitigate cost overruns.

1.1 BACKGROUND OF THE STUDY

Cost performance is a fundamental aspect of construction project management that determines the financial success or failure of a project (Ali & Rahmat, 2010). It is influenced by various factors such as inflation, material costs, labor availability, design changes, and contractor efficiency (Memon et al., 2011). Poor cost performance leads to budget overruns, delayed project completion, and reduced investor confidence (Kaming et al., 1997). In Nigeria, the construction industry is particularly vulnerable to cost inefficiencies due to economic fluctuations, poor contract management, and weak regulatory oversight (Ojo et al., 2020).

Ebonyi State, located in southeastern Nigeria, is undergoing rapid infrastructural development with numerous public and private construction projects. However, reports indicate that many of these projects face significant cost-related challenges, including under-budgeting, unforeseen expenses, and inefficient project execution (Eze et al., 2022). Several construction firms struggle with financial planning, leading to project stagnation or substandard output (Nwachukwu & Emoh, 2011). These issues underscore the necessity for a robust framework that integrates cost estimation models, risk management strategies, and effective financial planning techniques to enhance project cost performance.

Previous research has explored various models for managing construction costs, including the Earned Value Management (EVM) system, Activity-Based Costing (ABC), and parametric cost estimation (Love et al., 2016). However, the applicability of these models within the context of Ebonyi State remains unexplored. Understanding local construction dynamics, regulatory frameworks, and economic conditions is crucial in developing a tailored framework for cost performance assessment.

This study seeks to bridge this gap by analyzing cost performance determinants and proposing an adaptable framework to enhance the efficiency and financial sustainability of construction projects in Ebonyi State. The research findings will serve as a valuable reference for policymakers, construction managers, and stakeholders involved in project execution and cost management.

1.3 STATEMENT OF THE PROBLEM

The construction industry in Ebonyi State has been plagued by persistent cost overruns, delays, and budgetary inefficiencies. Many construction projects exceed their initial estimated costs due to inadequate planning, inflation, poor contract management, and unforeseen expenses. These cost overruns not only affect project timelines but also lead to disputes between contractors and clients, project abandonment, and financial losses.

Despite the critical role that cost performance plays in successful project execution, there is currently no standardized framework for assessing and managing construction costs in Ebonyi State. Existing models are either poorly implemented or do not adequately account for the unique economic and regulatory environment of the state. The lack of a structured approach to cost performance assessment has resulted in frequent project failures, loss of investor confidence, and wastage of public and private resources.

Thus, there is an urgent need for a comprehensive framework that incorporates local construction dynamics, risk mitigation strategies, and efficient financial planning to improve cost performance in construction projects. This study aims to address this issue by developing a practical and adaptable cost performance assessment framework tailored to the specific challenges faced in Ebonyi State.

1.4 AIM
The aim of this study is to develop a framework for determining the performance of construction project costs in Ebonyi State, Nigeria.

1.5 OBJECTIVES

1. To identify the key factors affecting construction cost performance in Ebonyi State.
2. To analyze the impact of cost overruns on project completion and quality.