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Agenda, Opinion

Project Cost Reduction – The Role of Political Leadership(1)

Posted: May 5, 2015 at 12:08 am   /   by   /   comments (0)
.Esenwa

.Esenwa

Sir Freddy Ogugua Esenwa, a fellow of the Nigerian Institute of quantity Surveyors, In this paper he delivered at the 2015 National Project Cost Reduction Summit titled,  “Value for Money Imperatives for Project Costing in Nigeria”, recommends how political leaders can help reduce cost of projects in Nigeria.

Development projects are complex undertakings set in multicultural environments. The success of a project is determined not just by financial returns but also by its socio-economic benefits and welfare impacts. To realise the latter, it is imperative that development projects be properly planned, conscientiously executed and monitored. The management of projects should also take cognisance of the diversities of the project milieus.

However, in developing countries, projects are often designed as technical interventions with neither adequate institutional set-up nor due regard to the macroeconomic and political environments. Consequently, Project Managers, Advisers and Team Leaders frequently face a wide range of management problems. In Nigeria, many people have assumed the positions of Project Managers not on the basis of their technical skills and managerial experience but because of socio-political considerations and affiliations. The adversities associated with this tendency often manifest,inter alia, in ill-conceived or poorly prepared and managed projects. This is partly responsible for many of the unsuccessful and abandoned projects that dot the country’s physical landscape, as well as the failed corporate outfits that litter the economic vista.

The major flaws of project management in Nigeria have been identified to include poor costing, unrealistic scheduling of activities, inappropriate production methodology, inability to evaluate the recurrent cost implications of the project, unplanned and ineffective monitoring and evaluation mechanisms, red-tapism and excessive political interference.

Given the rapid rate at which projects have, over time, been abandoned, it is exigent that a new management orientation be evolved backed by legislation that would reform the procurement policy. Such should reduce wastage and ensure economic optimality, effectiveness and efficiency, in the use of resources through improved and successful project management. This summit on “Value for Money Imperatives for Project Costing in Nigeria’’ is predicated on these needs.

The paper is aimed at properly orienting the attitudes and broadening, improving and retraining the managerial knowledge and skills of Project Managers and Stakeholders, with a view to raising the rate of project success in Nigeria and providing the practitioners the hands-on skill to operate in an international environment. The specific objectives are to:

Enhance participants’ understanding of the significance, concept and scope of procurement systems and project management in relation to the major phases of the project cycle and expose participants to international procurement methodologies;

Examine the various constraints to effective procurement systems and project management in Nigeria, and acquaint participants with the various factors that affect project management success and sensitize participants to contemporary issues in procurement economy and methods of overcoming the constraints;

Afford participants opportunities to benefit from practical experiences in project management through the use of case studies on the role of cost management in the achievement of procurement economy; and

Provide a forum for experience sharing among participants on various policy issues in project and procurement management. Sensitise the participants on the role of political leadership in project cost reduction.

The fundamental economic problem is that resources are scarce; that is they are very limited in relation to numerous demands. From this arises the imperative for economy, optimality and effectiveness in resource mobilization, allocation and utilization. This need is a prime concern in economic management which borders on the design and implementation of appropriate policies and programmes for enhanced economic performance.

Development, encompassing growth, stability, equity and sustainability, in the context of structural transformation, is the essence of economic management. Projects are therefore crucial to national developmental objectives, hence subject to vagaries of political manipulations.

The term project has many related meanings. However, it consists of a plan, design, schedule or undertaking for accomplishing a purpose.

Project activities invariably involve process and sub-processes or are undertaken in phases and stages. Among the relevant activities are initiation, planning, execution, monitoring, control and closure (final account). These are not exhaustive but indicative. Also, although they are synoptic, they involve a wide array of activities.

Project Management encapsulates the entire gamut of planning and directing the process of development to enable it reach, in the best possible way and with the best possible result, the intended objective. It could also be seen as the application of knowledge, skills, tools and techniques to resources in order to meet or exceed stakeholder requirements from a project.

Yet another conception presents Project Management as the art of directing human and material resources throughout the life of a project by using modern management techniques to achieve predetermined objectives of scope, quality, time, cost, and participant satisfaction.

Towards the attainment of its purpose, project management has a variety of functions. Among them are the following, which are virtually the same as we have in general management theory:

The strategic plan, to establish relationships and evaluate the tensions and constraints between the mission, the clients and the socio-economic environment. The strategic plan should be developed from a consideration of alternatives and risks; and;

The performance plan, which is to define the scope of operations, the quality of output and cost/benefit standard. The performance plan must balance and relate the availability of materials and financial resources, technology, information, skills and time, with the products and services of the activity in order to produce specific outcomes. It must also establish progressive performance indicators.

Project Planning

In the construction industry, particularly in the Commonwealth Nations, the first requirement of good project management and implementation is thorough planning. The greater the numbers of unplanned departures from logical course, which inevitably occur in practice, the greater the risk of loss of control and possibly abortive work. In other words, to execute a project efficiently, no matter the supervision or monitoring that is put in place, it must be well planned ab initio. The organisation of a project is the prerogative and the duty of the contractor. Its implementation affects in details, the particular project and, in general the contractor’s reputation. Consequently, it follows that the crucial factor in efficient construction project prosecution is the contractor. Good planning and organisation will be of little use if construction begins before the contractor has prepared his programme on the basis ofcontinuous information from the architect and other consultants, the promised performance of the sub-contractors and has agreed this programme with the architect and the client. That is, initial coordination and planning by the consultants, sub-contractors and indeed the building team will determine whether a project will be successfully executed or not.

To commence construction before agreeing on a programme is normally contrary to the interest of the employer and detrimental to proper financial monitoring and control. Architects, other consultants, contractors and sub-contractors should attempt to chart their management projections on all projects in order to improve future planning and organisation in the light of past mistakes.

Procedure for Good Project Planning

Effective project management anchors on integrated leadership and the individuals’ perception of his responsibilities in the attainment of the organisation’s goals. The environment in which the various actors in project management operate must be conducive for the attainment of such goal

The complexities of the procedures involve the common stages, each having the objective of initiating and launching the next.

These procedures represent a logical sequence of action that has to be taken in order that good decisions can be made without prejudicing progress. The detailed activities at each stage are as described here under. These can be modified depending on the scale of the project to be undertaken.

Financial Control

It is essential to ensure that the budget is not exceeded without agreement. This will be facilitated if the appointed quantity surveyor prepares periodic financial reports that will show the effects of the adjustment of prime costs and provisional sums and authorised variations upon the anticipated final cost. Systematic cash flow can be achieved and prompt payment assisted if the dates of interim payments are agreed at the beginning of the project and the employer informed in advance. While it is recognised that some variations are necessary, particularly where the employer’s requirements change during the course of the building, it should be remembered that frequent changes of mind would not only delay the progress of the work, but can be expensive to the employer and affect the contractor’s cash flow by delaying the settlement of final account.

 

To be concluded tommorrow