AN EVALUATION OF THE RISING COST OF BUILDING MATERIALS AND IT’S EFFECT ON HOUSING DELIVERY IN NASARAWA
(A STUDY OF TAMMAH).
ABSTRACT
High prices of building materials had
form a crucial constraint to improving construction procurement in
Nigeria. The influence of the macro-economic indicators on this problem
cannot be ruled out. This study therefore investigates the impact of
macro-economic indicators on the prices of building materials with a
view to enhancing construction project procurement and delivery.
Questionnaires were administered to respondents which included the
Architects, Quantity Surveyors, Builders, Engineers, Bankers/Economist.
The study established that inflation, exchange rate, import, interest
rate, money supply and demand for money have a significant effect on the
prices of building materials. Demand for import, inflation rate,
government economic policies, level of foreign currency demand and level
of foreign currency supplied were identified as causing a change in
exchange rate while factors affecting inflation rate were variation in
the value of the naira, demand for goods, changes in real incomes
lending interest and import tariffs. On the other hand, factors causing a
change in interest rate were government economic policies, demand for
money, inflation rate, deregulation of interest rate. It was found that a
high relationship existed between exchange rate, inflation rate and
interest rate and the prices of building materials. The study
recommended reduction in import duties, bringing exchange rate to the
barest minimum, reduction in interest rate on banks loans while
government should maintain stable inflationary trend.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Building materials have been playing an
important role in the construction industry – they are those materials
put together in erecting or constructing structures, no field of
engineering is conceivable without their use (Akanni, 2006; Udosen &
Akanni, 2010). Building materials contribute immensely to the quality
and cost of housing, from what is used in the foundation to the
materials for roofing and finishes, while the building materials
industry is an important contributor to the national economy of any
nation as its output governs both the rate and the quality of
construction work.
The cost of building materials poses a
significant threat to both the construction industry and people aspiring
to own houses (Anosike, 2009; Mekson, 2008; Mohammed, 2008; Njoku,
2007); for example, a bag of cement, which is valued at Ν1,350.00 in
2006, goes as high as Ν1,850.00 in 2009 (Anosike, 2009) depicting about
37% increment; the bag goes as high as Ν2,000.00 in 2012 during peak
season (field survey 2012). Supporting this view, Jagboro and Owoeye
(2004) earlier established that increase in the prices of building
materials has multiplier effects on the industry while Idoro and Jolaiya
(2010) affirmed that many projects were not completed on time due to
the cost of materials, which have been on the increase. Besides timely
completion, high prices of building materials form a crucial constraint
to improving housing conditions in the low-income earning countries,
Nigeria inclusive (United Nations Centre for Human Settlement [UNCHS],
1993).
In spite of the past studies on the cost
of building materials in Nigeria, little is publicized about the
implications of the rise in cost on development of commercial
properties, most literature (Jagboro & Owoeye, 2004; Mekson, 2008;
Njoku, 2007; Oladipo & Oni, 2012) has concentrated on identifying
the causes with little emphasis on the implications; hence, the research
seeks to provide information on implication of the rising cost of
building materials on commercial property development.
A common finding of studies is that cost
is affected by a large number of factors essentially demand and supply.
However, Ogunsemi (2002) submits that in Nigerian Construction Industry
in the recent past, many projects have been subjected to cost and time
overruns. Considering the relationship between construction industry and
the national economy, it becomes necessary that the cost of
construction be within the reach of the average citizen. However, some
economic indicators are very significant to the overall cost of
construction. Some of these indicators include; exchange rate of local
currency to other currencies in the world, inflation rate and interest
rate charge on loan among others.
Ogunsemi (2010) opined that building
materials form the main factors that restricts the supply of housing and
ascertained that they account for between 50-60 percent of the cost of
buildings. Thus, Adedeji (2002) rightly observed that one main barrier
to the realization of effective housing in Nigeria as revealed in
successive government efforts has been the cost of housing in the
country. He argued that in the early periods, shelter in Nigeria was
easily affordable as building materials were sourced from the immediate
environment at affordable costs. Technology also was readily available
with commensurate simple techniques. But contact with the outside world
through interregional and international training of professionals in
foreign countries as occasioned by colonization, brought changes to
tastes and hence outlook to house forms. These changes rendered the
undeveloped local building materials inadequate while there was an
increased demand for exotic ones.
Accordingly, Arayela (2002) posited that
the modern building industry lays much emphasis on sophisticated
building materials and techniques that are expensive and energy
consuming. Though, housing delivery efforts have evidently been
inhibited by prohibitive costs of building materials, this problem
cannot be reasonably and reliably overcome by merely resorting to the
use of locally available materials without due considerations to the
applicable initiative, the cost of processing and sustainability of the
local materials. One of the most important components of a sustainable
building is the material efficiency. Correct selection of building
materials can be performed by taking into account their complete life
span and by choosing products with the minimal environmental impacts.
For instance, González and Navarro (2006) estimated that the selection
of building materials with low environmental impacts can reduce carbon
dioxide (CO2) emissions by up to 30%. The use of renewable and recycled
sources is widely encouraged as the life-cycle of a building and its
elements can be closed (Chwieduk, 2003).
The major factor that greatly affect the
selection of building materials are their costs and social requirements
such as thermal comfort, good mechanical properties (strength and
durability), aesthetic characteristics and an ability to construct
quickly. Ideally, the combination of all environmental, economic and
social factors can give a clear description of a material, and thus
helps in a decision making process regarding the cost of the materials
suitable for buildings (Abeysundara, et, al.,2009) . Nigerians would
continue to pay more for accommodation in major cities until the cost of
building materials is subsidized through probably through tax
reduction. The instability in the price of building materials was
posited as a direct result of high taxes which in turn impacts on the
cost of accommodation in major cities across the country. According to
Arayela (2002), many completed housing estates had remained unoccupied
because of the high rental and sale prices attached to them as against
the meager income of the average Nigerian workers. He also added that if
government can revitalise our industrial base, the cost of building
materials will come down and many more people would be able to build
houses. He therefore urged the Federal Government to provide tax relief
for local manufacturers and importers of building materials in order to
reduce the high cost of accommodation in major cities.
Consequently, the general consensus is
that one key reason for high cost of construction in Nigeria is high
cost of building materials which are largely imported materials. This is
so because several factors affect imported materials’ prices such as
foreign exchange, freight, inflation, import duties and so on.
Similarly, Oruwari, Jev and Owei (2002) also concur that the rising cost
of building due to materials has made it impossible for people to own
affordable houses in Nigeria. It can therefore be inferred that local
building materials are not well utilized in Nigeria. This project
therefore, is an attempt to evaluate the rising cost of building
materials and it’s effect on housing delivery in Nasarawa, with a
particular interest in Tammah.
1.2 STATEMENT OF RESEARCH PROBLEM
The building construction industry has
special features that are not usually encountered in other industries.
When conditions in the field tend out to be more complex, especially the
rising cost of building materials. Rising cost of building materials,
delays and other problems tend to be proportionally monumental (Gould,
et al, 2002). Cost is one of the primary measures of a project’s
success. This is true for housing development and delivery in developing
countries like Nigeria because, housing developments are executed with
very scarce financial resources which are sourced from personally
savings, loan from banks, mortgage financing etc. A building project is
considered successful if it is completed within the stated budget, on
schedule, conform to user expectations, meet specifications, and achieve
quality of workmanship and with minimized construction aggravation
therefore this research becomes necessary to evaluate the rising cost of
building materials and it’s effect on housing delivery in Nasarawa – a
study of Tammah.
1.3 AIM AND OBJECTIVE
Aim
The aim of this study is to evaluate the
rising cost of building materials and its effect on housing delivery in
Nasarawa, a case study of Tammah.
Objective
To achieve the aim stated above, the following objectives were pursed:
- To identify the building materials in Nasarawa
- To identify over the years, the trend of the cost of building materials.
- To Identify the types of housing development within the study area (Tammah)
- To access the effect of rising cost of building material on housing delivery.
- To identify the problem associated with the rising cost of building materials on housing development in Tammah.
1.4 RESEARCH QUESTION
- What are the types of building materials used for housing development in Nasarawa?
- What are the trends of the cost of building materials?
- What are the types of housing development property within Tammah?
- Does rising cost of building material have any effect on housing delivery?
- What are the problems associated with rising cost of building material on housing development?
1.5 SIGNIFICANCE OF THE STUDY
This research work is significance to the
government for decision making, student, practicing estate surveyors
and valuers, investors, researcher.
In addition, the study will enable
property developer know how to go about their investment in real estate
despite the challenges of rising cost of building materials and
construction in general
Lastly, this research work will help to
determine the factor influencing, commercial housing delivery which is
an essential pre-requisite to successful development as well as
stimulating interest in the students to coregent further research on the
topic.
1.6 SCOPE OF THE STUDY
The study addresses the evaluate the
rising cost of building materials and it’s effect on housing delivery in
Nasarawa. The scope of this research is restricted to Tammah a suburb
in Nasarawa town, this is to enable the research have an indepth
evaluation.
Some obstacles encountered in the course of carrying out this research were as follow:
- Time factor was the major constrain couple with multiplicity of other classroom work and lecture requirement were a set back to the research.
- Un-cooperating attitude of some respondents as they were busy to attend to the researcher.
- In accessibility of adequate information from research respondent due to illiteracy among them, some find it difficult to understand some question they were asked.
- Finance was also a limiting factor in the course of the research.
1.7 OPERATIONAL DEFINITION OF TERMS
Building: according to
merriam-webster dictionary is define as a usually roofed and walled
structure built for permanent use (as for a dwelling).
Cost: Oxford advance learner’s dictionary (6th edition) defines it as the amount of money that need in order to buy, make or do something.
Building Materials: This is any material which is used for construction purpose e.g. timber, rods, cement etc.
Property: According to Collins dictionary a property is a building and the land belonging to it.
Development: This can be
describes as a progressive transformation of the society or a
deliberate action to bring about change in a large scale.
Property Development: (The Collins English Dictionary, 2014) This can be define as an improvements in land.
1.8 HISTORICAL BACKGROUND OF THE STUDY
Nasarawa local government area of
Nasarawa state was established in 1976 during the military regime under
the leadership of General Muhammed administration.
The local government are covers an estimated area of 154 square kilometers.
It has thirteen (13) wards and consists
of six departments which is responsible for carrying out the activities
of personnel, social, primary health care, agriculture and natural
resource. The state derives it name from the local government of
Nasarawa. The local government head quarter is between latitude 8.8
degrees east of Karu. They also share boundary with Toto local
government area, Federal Capital Territory and Benue.
The local government has a population of
60,210 by the 2006 census through other contest in the law court. It has
multiethnic like Afo, Agatu, Gwan-dara etc.
TOPOGRAPHY
From an elevation of about 1,500 to 1,000
meters, the Nasarawa descends in a series of step to the wide Benue
through the northern part of the low lands forms a continuous plain
about 50 kilometers wide which gradually slopes from the foot of the
Nasarawa towards river Benue.
The western part of the northern low land
is an area of transaction, only part of it can be regarded as belonging
to the Benue plains.
CLIMATE
Nasarawa has two seasons, which includes:
- A dry season without or with little rain from November to March.
- Wet season from April to October
The main annual rainfall is 1-300km
THE PEOPLE AND THEIR OCCUPATION
The major ethnics groups are Hausa, Afo,
Gwari, and Gwandara. The earliest inhabitants were predominantly farmers
and some of them are fishermen they use river for their routine
fishing.
Besides, they were also engaged in
rearing of cattle, black dying and weaving. Meanwhile, trading is one of
their major occupation as a result of the establishment of the Federal
Polytechnic.
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