How Mobilisation Fees Fuel Corruption In Nigerian Construction Contracts – Adetola | Independent Newspapers Limited
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How Mobilisation Fees Fuel Corruption In Nigerian Construction Contracts – Adetola

fashola, minister for housing, power and infrastructure
Posted: May 12, 2016 at 2:02 am   /   by   /   comments (0)

Nkasiobi Oluikpe


Lagos – As the Federal Government intensifies its war on corruption, a chartered quantity surveyor has identified construction contracts as one of the biggest source of corruption in the country.
Speaking as a guest at a lecture organised recently by the Department of Physical Planning and Works of Bells University of Technology, Ota, Francis Oluwole Adetola, managing Partner at FO.AB Partnership, pointed out that corruption was the biggest threat to Nigeria’s economic and social development.
While defining a contract as a legally binding relationship and a mutual agreement between two parties, Adetola revealed that a fraud occurs when at least one party deliberately misrepresents the terms of the contract by deceit.

Explaining further, he said that fraud occurs when any of the parties involved uses the operation or execution of the contract for his personal gains outside the terms of the contract.

Adetola, who is a procurement economist, said that mobilisation fees have become the easiest instrument to perpetrate fraud in Nigeria; “contractors love it because it is the easiest form of fraud mechanism”.

He argued that the present structure, wherein the professional independence of the quantity surveyors as a professional group is not guaranteed, is fraud and corruption laden.
In Nigeria, he said: “Construction contracts are embarked upon, when the awarding authorities of such contracts know that enough fund have either been budgeted or appropriated for the duration of such contracts.
He identified bid rigging, bribes and kickbacks, over-invoicing, use of substandard materials and payment falsifications, as some other ways through which frauds are perpetrated in the country; adding that frauds are also perpetrated though billing and payment for work not executed.
Other areas through which frauds are perpetrated, he noted, are collaboration of government officials with suppliers/subcontractors on one hand and manipulation of provisional sums and contingency, on the other hand.

The managing partner of FA.OB Partnership stated that payment methods, quantity verification, quality specification and execution are done in such a way as to encourage and perpetrate frauds in Ministries, Departments and Agencies (MDAs) at all tiers of government in Nigeria.
He stressed that the root of the problem is the way the MDAs in charge of construction procurement in Nigeria were created.

“No single department has ever been created for quantity surveying for cost and value management purposes in any federal or state ministry in the country”, he said.
The procurement economist identified target areas for fraud in construction contracts as payment methods, quantity verification, quality specification and execution, over-specification of design and materials.

Others are variation instructions intended not to be executed, deliberate over-measurement and pricing of work to be carried out, outright fraud, approval of unascertained claims and over-valuation/under-valuation of work executed for payment.

Adetola stated that Nigeria has received $400 billion (N80 trillion) in aid since 1960 (about N1.5 trillion per annum, and that almost the same amount ($380 billion) of government money has been stolen from the government coffers.

Meanwhile, the national president of the Nigeria Institute of Civil Engineers (NICE) Robbie James Owivry, has disputed the statement by saying that Adetola, being a quantity surveyor, does not understand the situation.

“A surveyor does not do construction, so he will not understand that mobilization fee enables the contractor to harness the resources with which to commence a project to the site. Mobilisation fee also portrays the readiness/seriousness of the client to commence the project. So, how does that fuel corruption”, Owivry said

Also agreeing with Owivry is the former Lagos State chapter chairman of the Nigeria Society of Engineers and former Lagos State chapter chairman of the Nigeria Institute of Building (NIoB), Tunde Jaiyesimi, who questioned where Adetola got that idea from.

“For a quantity surveyor to tell you that in those days, you deliver your job before getting paid, I don’t know where he got that from. Advance payment has always been with us. It has been abused in the past, especially by politicians; they all have the feeling that because it is government’s money, they can eat it. What you call advance payment is to assist the builder to deliver on time.

“I have never seen a private construction project where money is given out and the job not delivered. If he says it aids corruption, he may be right because we all know how we play politicians in this country. It is just the abuse and there are ways of ensuring that it is not abused. You can involve the bank and insurance companies, and get performance bond. But to say that in the past there were no mobilization fees, I don’t think it is correct”, he said

The national president, Nigeria Institute of Structural Engineers, Oreoluwa Fadayiom on his part stated for anyone to say that mobilisation fees fuels corruption is a sweeping statement which needs to be qualified; he countered that it is more of the system.

“The system makes it difficult for you to operate normally and drives you towards being corrupt. The system itself wants something out of it from you as a result, they box you in a tight corner that you have no option than to say, ‘what else can we do’.

“If you go by the word ‘mobilisation’ it is something to get the contractor to start work. But if you look at the system, where you start work with a respectable sum of money. And you work for one month, and a certificate is expected to be raised in 14 days and your payment expected to be made within another 14 days. If your certificate and payment takes three months in coming, would you want to tie your money down.

“Because people know that government will not pay on time, they would actually want to have their money upfront. So instead of asking for the nominal amount that is needed for moving you to site, you find people asking for 80% as mobilization. This is because they know that may be the last money they will be getting”, Fadayiom said.

He explained that thereafter, nobody will be keen to know whether the job was executed or not because the man that gave the contract would have collected his 40 per cent upfront.

“If the person who gave you the job collects his bride of 40 per cent, how much are you left with to do the job, as a result you are forced to cut corners. If you have gone to collect money from the bank and you are not paid by the end of the day, what will you do? These are the problems. If everybody does what he should do, there will be no problem.

“Government takes from you but refuses to give to you, they never honour their words.  If for instance, you are supposed to pay tax, and for certain reasons you did not pay it. After the grace period, government will penalise you, charge you interest and insist on collecting all of these sums before you can do any other thing. But if it is the other way round and you ask them to pay interest, they will just look at you and throw you paper somewhere. They never honour their words and never does anything right, as a result, they frustrate the entire professions in all ramification, that is the reason why you find people asking for a huge sum for mobilization”, he said
Freddy Ogugua Esenwa (Jnr.), head of the Department of Physical Planning and Works of the university, however, noted that the lecture was organized by the department as its contribution to finding solutions to the myriad of challenges that face Nigeria as a nation.