The Economics of Public Procurement on Infrastructure Projects Delivery in

Developing countries: A case study of Central Bank of Nigeria

By

Shuaib, M.R. Quantity Surveying Programme, School of Environmental Technology, Abubakar Tafawa Balewa University Bauchi,

Nigeria.

Central Bank of Nigeria (CBN) can be seen as one of the biggest construction clients in Nigeria.

Total Contract value of CBN capital projects between 2005-2014 is over 1 billion USD

Procurement strategy

Design Precedes Construction

Consultants appointed by the client

Contractor engaged based on consultants recommendation

Bases on which Bureau of Public Procurement and National Council on Public procurement was established

Served as a legislation guide on how public funds should be expended

These laws provides room for proper delivery of projects covering conceptualization, planning , design and its implementation

They also give opportunity(s) for award of contract with due diligence and procedure.

All procuring entity (PE) to adhere to the public procurement Act provision.

PP-Act 2007 is set to achieve the following objectives:

Economy and Efficiency

Competition – providing level playing ground for all strata of bidders

Achieve Value for Money

Enhance Transparency

The purpose of this paper is to observe and explore the efficacy of CBN’s traditional procurement success on capital projects based on the provision of procurement Act of 2007.

CASE STUDY ‘A’ CBN Branch office project Katsina, Kastina State, Nigeria.

CASE STUDY ‘B’ CBN Branch office project Abakiliki, Ibonyi State, Nigeria.

Could the success or otherwise of these projects be associated with the choice of the procurement method used?

Are there other factors that could be tied to the achievement or otherwise of the projects objectives?

Is there efficiency in the implementation process of the PPA 2007 laws and guidelines on these projects?

The method used in this research was Focused Group Discussions (FGDs) where data was collected and analysed using funnel approach starting from the general to specific.

The level of confidence was determined as one from the discussions held amongst the supply chain participants on CBN projects.

Textbooks, PPA 2007 document, academic journals articles and reports on procurement were some of the primary source of data obtained.

Ensued discussions with stakeholders on each projects covering:

CBN traditional procurement method

Compliance to PPA 2007 principles and guidelines

Why CBN projects are not completed within time and budget.

CBN BRANCH OFFICE PROJECT ABAKILIKI, IBONYI STATE.

To provide quality banking structure and easy access to banking services

Awarded in November 2010

Completion period 104 weeks (November 2012)

Contract sum - N 7,1billion (33million Euro)

Project status - Ongoing

Time overruns to date - 92 weeks

Actual progress to date – 71%

Projected completion date – May, 2015

Projected time overruns – 130 weeks

No major additional work on the project

At Pre-contract stage, the following information were made available prior to tender action.

Drawings were substantially completed, but many issues on services were not detailed.

Bill of quantity

There was advertisement, prequalification exercise, tendering procedure before award.

At post-contract stage, the following issues were identified as major setbacks.

Delay in all clients supply items

Inability of the contractor to work according to programme of work

Incomplete services drawings even upon engagement of the PC Items subcontractors

Lack of requisite knowledge, skills and experience of the specialist subcontractors

CBN BRANCH OFFICE PROJECT KATSINA, KATSINA STATE, NIGERIA.

To provide quality banking structure and easy access to banking services

Awarded in February 2006

Completion period 104 weeks ( February 2008)

Contract sum - N 4.409 billion (20 million Euro)

Project Status - Completed and handed over

Time overruns – 12 months

Approximate Cost overruns – N1.0m (4.5m Euro)

Drawings were completed before tender.

Bill of quantity was also completed

There was advertisement, prequalification exercise, tendering procedure before award.

At post-contract stage, the following issues were identified as major setbacks.

Delay in all clients supply items

Inability of the contractor to work according to programme of work

None of the two CBN projects achieved its set objectives

The projects were efficiently conceptualized, properly planned and adequately designed but implementation was faulty.

Late engagement of PC item subcontractors

Delay in delivery of client’s supply items to site

There was compliance to public procurement principles in terms of:

Conceptualization, proper planning and adequate design of both projects.

Advertisement, prequalification and tendering process and award.

There were level ground for different strata of contractors who bid for the contracts.

But Implementation was faulty

Cost and timely completion have not been achieved hence, value for money.

On the whole, the core objectives of the public procurement Act 2007 was partially achieved on both projects.

Thank you.