Impact of environmental factors on building project performance in Delta State, Nigeria

Peer review under responsibility of Housing and Building National Research Center.

Abstract

The concept of construction project development may be impaired without a good knowledge and successful management of the impact of environmental factors influencing the performance of such projects. This study aims to assess the impact of environmental factors on building project performance in the Delta State, Nigeria. The instrument used for the data collection was structured questionnaire and the target population consisted of clients (government and private developers) and four groups of professionals who were architects, builders, quantity surveyors and engineers. The tools employed were Mean Score, Spearman correlation, Kendall’s coefficient and Chi-Square. Twenty-nine variables were identified as factors having an impact on building project performance and they were categorized under clusters; political, legal, construction technological and resources, economic and financial, socio-cultural and physical. The result of the Spearman correlation analysis of time and cost overruns with the identified factors affecting project performance revealed that the clusters of Economic and financial and Political had significant relationship with time overrun on p-values of 0.004 and 0.011, respectively, while the cluster of Social and cultural had significant relationship with cost overrun with a p-value of 0.007. The research recommended that stakeholders should take cognizance of the variables under these three clusters for proper management and prevention of cost and time overruns.

Keywords:

• Building project
• Impact
• Project performance
• Environmental factor
• Delta State

Introduction

The Nigeria construction industry is a wide range of loosely integrated organizations that collectively construct, alter and repair a wide range of different buildings and civil engineering projects. In a major review of project management theory, Bennett [1] established that the environment interferes with planned progress of construction projects. The less predictable the environment and the greater its potential effects, the more it must be taken into account in managing the development of construction projects.

The project environment in many developing countries like Nigeria present special challenges for project managers that almost presupposes extensive cost and time overruns even before a project commences. These challenges arise mainly from inherent risks such as political instability, excessive bureaucratic contract procedures, and lack of adequate infrastructure such as transportation networks, electricity supply, and telecommunications systems. In recognition of these unique problems, previous research studies have suggested that there is a need to develop appropriate management tools and techniques specifically tailored to the project environment of developing countries (Faniran et al. [2]). The project environmental factors that have been generally identified include; political, legal, institutional, cultural, sociological technological resource, economic, financial, and physical infrastructure (Walker) [3]. According to Ajayi et al. [4], the four most important external environmental factors in decreasing order include community issues, weather conditions, economic situation (boom or meltdown) and government policy.

Project performance, according to Cheung et al. [5], can be measured and evaluated using a large number of performance indicators that could be related to various dimensions (groups) such as time, cost, quality, client satisfaction, client changes, business performance, health and safety. Generally, performance dimensions may have one or more indicators, and could be influenced by various project characteristics. For example, Iyer and Jha [6] identified many factors as having an influence on project cost performance, these include: project manager’s competence, top management support, project manager’s coordinating and leadership skills, monitoring and feedback by the participants, decision-making, coordination among project participants, owners’ competence, social condition, economic condition, and climatic condition. Coordination among project participants, however, was identified as the most significant of all the factors, having maximum influence on cost performance. The studies of Love et al. [7] examined project time–cost performance relationship, and their results indicated cost as a poor predictor of time performance. The identification of these environmental factors and the measurement of their severity would provide useful information that would greatly reduce cost and time overrun in project execution. The Niger Delta region comprises six states among which the Delta State seems to have some environmental variables that are different from other geo-political regions in Nigeria and therefore became imperative to assess the impact of these variables on project performances.

Literature review

Construction project and performance

Success of construction projects depends mainly on success of performance. Many previous researches had studied the performance of construction projects. Dissanayaka and Kumaraswamy [8] remarked that one of the principle reasons for the construction industry’s poor performance has been attributed to the inappropriateness of the chosen procurement system. Thomas et al. [9] identified the main performance criteria of construction projects as financial stability, progress of work, standard of quality, health and safety, resources, relationship with clients, relationship with consultants, claim and contractual disputes, relationship with subcontractors, reputation and amount of subcontracting. Chan and Kumaraswamy [10] stated that construction time is increasingly important because it often serves as a crucial benchmarking for assessing the performance of a project and the efficiency of the project organization.

Cheung et al. [5] identified project performance categories such as people, cost, time, quality, safety and health, environment, client satisfaction, and communication. It is obtained by Navon [11] that a control system is an important element to identify factors affecting construction project effort. For each of the project goals, one or more Project Performance Indicators (PPI) is needed. As obtained by Stewart [12], human factors played an important role in determining the performance of a project. Ugwu and Haupt [13] remarked that both Early Contractor Involvement (ECI) and Early Supplier Involvement (ESI) would minimize constructability-related performance problems including costs associated with delays, claims, wastages and rework, etc. The most important practices relating to scope management as obtained by Ling et al. [14] are controlling the quality of the contract document, quality of response to perceived variations and extent of changes to the contract.

Performance problem in construction industry

The failure of any construction project is mostly related to the performance problems and there are many reasons and factors which are attributed to such problems. The studies of Ogunlana et al. [15] stated that the construction industry performance problems in developing economies can be classified into three layers as; problems of shortages or inadequacies in industry infrastructure (mainly supply of resources), problems caused by clients and consultants and caused by contractor incompetence/inadequacies. According to Okuwoga [16], the performance problem is related to poor budgetary and time control. Samson and Lama [17] also remarked that performance arises in large construction projects due to many reasons such as: incompetent designers/contractors, poor estimation and change management, social and technological issues, site related issues and improper techniques and tools. Navon [11] stated that the main performance problem can be divided into two groups: (a) unrealistic target settings (i.e., planning) or (b) causes originating from the actual construction (in many cases, the causes for deviation originate from both sources).

Samson and Lama [17] found that the traditional performance measurement systems have problems because of large and complex amounts of information with the absence of approaches to assist the decision maker to understand, organize and use such information to manage organization performance. Navon [11] remarked that traditional project performance control is usually generic (e.g., cost control techniques). It relies on manual data collection, which means that it is done at low frequency (normally once a month) and quite some time after the controlled event occurred (i.e., not in real-time) and moreover, manual data collection normally gives low-quality data. The study of Ling et al. [14] in China revealed that architectural, engineering and construction (AEC) firms may face difficulties managing construction projects performance because they are unfamiliar with this new operating environment. Kim et al. [18] stated that international construction projects performance is affected by more complex and dynamic factors than domestic projects; frequently being exposed to serious external uncertainties such as political economical social and cultural risks, as well as internal risks from within the project.

Construction environment

The construction environment according to Youker [19] is the aggregate of surrounding things, conditions or influences. Akinsola et al. [20] describe this environment as all external influence on the construction process. Thus, the environment includes virtually everything outside the project; its technology, the nature of its products, customer and competitors, its geographical setting, and the economic, political and even metrological climate in which it must operate. Bennett [1] in a major review of project management theory established that the environment interferes with the planned progress of construction projects. The less predictable the environment and the greater its potential effects, the more it must be taken into account in managing the development of construction projects.

A review of the results of hundreds of World Bank projects by Youker [19] indicated that success or failure often depends on factors in the general environment outside the control of the project manager. The review pointed out that in the management of projects, a good understanding of the different features and factors within the environment that can have an effect on the project is essential. This can form a basis for analysis for overcoming or mitigating their effects on project performance.

Project managers, in addition to their traditional functions, must set up a process to scan the environment, to identify potential problems, and to try to establish power relationships that can help in the management of the key actors and factors on which successful implementation depends. The study of Youker [19] also revealed that some factors within the environment pose greater challenges to projects, management, and organizational structure than others. These factors should form the focus for the management of the projects environment. While an analysis of the key elements of the environment may not necessarily solve all problems, some of which are truly structural, they can provide a basis for establishing reasonable project objectives and also give an early warning of potential problems. Clients who initiate projects must put in place appropriate management, organizational structures, systems, and procedures for overcoming the effects of the environment.

Project environmental factors

The factors identified by Walker [3] and Hughes [21] as constituting environment of projects are political, legal, institutional, cultural, sociological, technological resources, economic, financial, and physical (infrastructure). Both studies directed attention to some factors within the environment that pose greater challenges to projects, management and organizational structure than others and suggested that these factors should form the focus for the management of the projects environment.

Economic and financial

The economic and financial aspect zeroed on the level of general economic activity, as well as the resources available to carry out the work and it includes the economic competition of various degrees around the appointment of all the parties of the building project. Financial limits always seem to exist on building projects according to Obalola [22] whose study clarified that financial environment forces are distinguished from economic ones on the basis that economics is to do with the deployment of resources, whereas financial limitations are strictly to do with money.

A challenging task for any project manager is to ensure that a project is financially viable within a fluctuating economic environment (Odeh and Battaineh [23]) and since periodic economic cycles significantly affect the activities of the construction industry, accurate forecasting of economic trends both local and global is important (Oladapo and Olotuah [24]).

Construction technology and resources

Technology is an aspect of the environment that should be considered in developing strategic plans. Oladapo and Olotuah [24] maintained that the appropriate construction technology can be measured by the availability of locally made plant and equipment, skilled manpower resources, extent of local material resources and the degree of utilization of such local construction resources. However, the construction industry in Nigeria following the oil boom in 1970/71 was characterized by the development projects which required the construction technology and resources of developed countries. The lack of technological know-how and the shortage of managerial manpower were considered to be one of the major problems and constraints facing the nation. The situation as at 1980 was described thus: “lack of basic knowledge of production methods and design techniques for machinery constitute a serious constraint to rapid industrialization of the country. The situation is aggravated by acute shortage of managerial manpower”. As at today, the country still remains a net importer of technical manpower, virtually most spare parts are imported and most investment in research and development are made abroad, except those sponsored by the government in public owned institutions.

Political

Political environment is concerned with government policy and the effect of political decisions upon construction projects. The significant roles played by the government in the construction industry are mostly clients, regulators of the national economy, and regulators of the construction environment such as laws that guide ethics and construction practices and many others. This inferred that governments can significantly increase or decrease the demand for construction services through budgetary measures and monetary policies. In its capacity as regulators of the construction environment, governments influence the development and building approval processes and enforce compliance with Acts and Regulations. As observed by Mansfield et al. [25], governments may also invoke their powers to initiate or stop projects on political, social and environmental grounds. Political stability, national unity and good political leadership are thus crucial to national development. Thomas and Martin [26] believed that no project exists in a vacuum but is rather subject to an array of influences from regulatory control to political and industrial intervention and opined that managers of the construction project will take cognisance of the political aspect that can produce an uncertain environment such as unstable government, unpredictable shifts in the economy and unexpected changes in consumer demand.

Legal

The legal environment facing organizations is becoming more complex and affecting businesses more directly. It has become increasingly difficult for businesses to take action without encountering laws and regulations. The construction operates within the covers of planning and environment regulations, codes of practice, safety regulations, licensing, insurances and taxation laws. These laws, codes and regulations are generally well defined, making it possible to predict their impact on construction projects with reasonable accuracy. However, Martin and Thomas [26] observed that changes to industrial, safety, taxation and environmental laws are not uncommon and problems may arise when the law changes during the life of a project.

Legislation affects client’s activities directly, through factors such as safety, planning law, and building regulations as it influences the contractual relationships within projects. Oladapo and Olotuah [24] also pointed to the attention of stakeholders that the legislation in Nigeria is based on the British model, has been an ex-colony and that the Standard form of Building Contract issued by the Joint Contract Tribunal (JTC) in Britain was modified for use in Nigeria. The onus is on the managers of construction works to get acquainted with Planning regulation and Land Use Acts legislation which are parts of the legal environment.

Physical factors

The physical environment within which a construction project is sited may impact considerably on its development as construction projects are always affected by physical influences. The geographical location of a project, ground conditions and weather patterns are the most common examples of physical influences. They are unpredictable and as such management actions have not been able to prevent their occurrence. Nevertheless, Martin and Thomas [26] opined that managers of construction works will take significant consideration of physical effects when planning the management strategies to avoid extremes which can take advantage of available resources.

Socio-cultural factors

The socio-cultural dimensions of the environment consist of customs, lifestyles, and values that characterize a society (William [27]) while population demographics, rising educational levels, norms and values, language and attitudes toward social responsibilities are examples of socio-cultural variables (Engobo [28]). These variables have the potential to influence or affect organizations that operates within the society.

The study of Engobo [28] revealed that Delta State communities shared most of the aforementioned variables as it comprises mainly Igbo (Anioma people), Urhobo, Isoko, Ijaw and Itsekiri and in the management of construction projects within the communities, “Pidgin English” which is an adulterated form of the English language is commonly used for oral communication among the illiterate workforce. Also the incessant kidnapping of expatriate construction workers, militancy and the demand by the groups of unemployed youths for illegal fees popularly called “settlement” which usually causes delays ranging from days to weeks on construction activities are examples of the lifestyles.

Thus, William [27] and Engobo [28] signaled that managers and supervisors of construction work within this region need to adopt appropriate leadership styles in the management of projects to avoid unnecessary time and cost overruns.

Institutional

The construction industry professionals in Nigeria have constituted institutions which are established by an Act or a Decree and are also recognized by the Government. Oladapo and Olotuah [24] viewed that the experiences gathered in the course of many years of professional practice can be borrowed during research processes.

Research methodology

To identify the environmental factors affecting the performance of construction projects in the Delta State, Nigeria, a questionnaire survey was conducted. The questionnaire was piloted by a survey of experts who are conversant with the region to determine whether the questions were unambiguous and substantially captured those factors perceived to be affecting project performance in the area. Following the comments received from the experts, five groups of respondents (Clients, Builders, Architects, Engineers and Quantity Surveyors) and twenty-nine (29) factor variables were identified and the questionnaire was amended before use.

Sample size

The statistical sample size ‘η’ of the respondent was calculated from the region’s population of clients (47) and professionals, (76) respectively. The formula given by Sediary [29] was used as:$\eta =n^1/[1+(n^1/N)]$where η = sample size; n¹ = S²/v²; N = total population; v = standard error of the sampling distribution = 0.05; S = maximum standard deviation in population at a confidence level of 95%, S² = (p) * (1 − p) = (0.5) * (0.5) = 0.25. Therefore, η for clients = 32 and professionals = 43 given a total sample size of 75.

Ranking of environmental factors

The ranking of each environmental factor affecting the performance of construction projects was estimated from the mean interval score (MIS) statistics of the respondents:

Agreement in ranking

Kendall’s coefficient of concordance for ranks (W) was used to calculate agreements between the groups of the rankers of the 29 factors being considered.$\text{Kendall}’\text{s}\text{coefficient of concordance}:W=\frac{12S^2-3p^{2}n{(n+1)}^2}{p^2(n^3-n)-\mathit{pT}}$where S = ∑R² = sum-of-square statistics over the row sums of ranks R_i; p = number of group of rankers which is 5 in this case; T = correction factor required for tied ranks; n = number environmental factors considered as affecting project performance (29). Thus, Kendall’s coefficient of concordance W = 0.4186 (calculated).

Test of significance

Friedman’s χ² statistic was used to test Kendall’s coefficient of concordance W for statistical significance. According to Siegel and Castellan [30], Chi square and probability are not calculated in the usual way when sample size of judges is small i.e. p ⩽ 7; instead, direct probability is obtained from a table of critical values.

The rule of p ⩽ 7 applies in this case as our p = 5 and to test the significance, the Chi-square statistic was computed as: χ² = p(n − 1)W.

Thus, χ² = 58 (calculated value) and for n = 29 at 95% confidence level, χ² = 42.56 (from the table of critical values).

Results and findings

Project environmental factors

The results of Friedman’s χ² statistics test of the Kendall coefficient of concordance (W) on the opinions of the respondents when the size of the group of judges are small i.e. p ⩽ 7 was 58. The value of χ² with twenty-nine factors (n = 29) considered at a 95% confidence level was found to be 42.56 from the table of critical value. Comparing these two values, it can be concluded that there was a significant degree of agreement among the respondents since the calculated value is greater than that from the table of critical values.

Table 1 indicated the ranking of project environmental clusters while Table 2 was an expanded table indicating those factors that were categorized under the various clusters in Table 1. Economic and financial cluster was ranked as number one with the mean interval score value (MIS) of 3.35. This signified the view of the respondents about the variables under this cluster. The factor of unexpected price rise of materials had the highest MIS of 4.0 in this cluster. The oil rich nature of the State may be responsible for this occurrence.

Table 1 Ranking of project environmental clusters.

Project Environmental Clusters	Clients		Q/Surveyor		Architects		Builders		Engineers		Weighted All
											Average
	MIS	R	MIS	R	MIS	R	MIS	R	MIS	R	MIS	R
Economic and Financial	3.08	2	3.32	2	3.28	1	3.43	1	3.63	1	3.35	1
Construction technology and Resources	2.73	5	2.60	6	2.82	5	2.94	3	2.42	6	2.70	6
Political	2.72	6	3.15	5	2.89	4	2.74	4	3.25	2	2.95	4
Legal	2.94	3	3.30	1	3.04	2	2.52	5	3.06	5	2.97	3
Social and Cultural	3.10	1	3.16	4	3.04	2	3.00	2	3.10	4	3.08	2
Physical factors	2.87	4	3.29	3	2.89	4	2.31	6	3.13	3	2.90	5

Table 2 Expanded ranking of project environmental factors.

Project environmental factors	Clients		Q/Surveyor		Architects		Builders		Engineers		Average
	MIS	R	MIS	R	MIS	R	MIS	R	MIS	R	MIS	R
Economic and Financial
Inflation rate	3.17	9	3.00	16	3.33	7	4.29	1	3.08	17	3.37	6
Inadequate working capital	3.25	26	3.27	13	2.89	18	3.57	4	3.33	10	3.26	9
Foreign exchange rate	2.17	26	2.36	26	1.89	27	2.29	24	3.33	10	2.41	27
Unexpected prices raises for labor	3.33	7	3.45	7	3.89	4	3.43	3	3.75	4	3.57	4
Unexpected prices raises for materials	3.42	5	4.30	2	4.00	2	3.86	5	4.17	2	3.95	2
Access to capital	3.17	9	3.55	6	3.67	5	3.14	11	4.08	3	3.52	5
Construction technology and Resources
Shortage of labor	2.00	28	2.18	27	2.78	19	3.14	7	2.08	27	2.44	26
Shortage of plant/scarcity of equipment parts	2.92	14	2.45	25	3.22	10	3.14	7	2.17	26	2.78	20
Importation of materials and equipment	3.58	2	3.45	7	3.33	7	2.43	23	3.25	19	3.21	10
Strike by the labor force	2.33	25	2.00	29	1.56	28	2.57	18	1.92	29	2.08	28
Late delivery of materials and equipments	2.83	15	2.91	18	3.22	7	3.43	5	2.67	23	3.01	16
Political
Instability in Governance	3.17	9	3.73	4	3.00	15	3.14	7	3.50	7	3.31	8.4
Political agitation	2.58	19	2.82	21	3.00	15	2.57	18	3.25	14	2.84	17
Policy instability	2.75	17	3.45	7	3.00	15	2.57	18	3.33	10	3.02	15
Legislation	2.50	22	3.00	16	2.78	19	2.57	18	3.00	18	2.77	21
Election	2.58	19	2.73	22	2.67	23	2.86	11	3.17	16	2.80	19
Legal
Planning regulation	3.50	4	3.45	7	3.11	13	2.29	24	3.33	10	3.14	12
Types of contract	2.50	22	3.27	13	3.22	10	2.71	16	3.50	7	3.04	14
Attitude of judiciary	2.83	15	3.18	15	2.78	19	2.57	18	2.33	25	2.74	22
Social and cultural
Civil conflicts or disturbance (e.g. youth restiveness and militancy)	4.25	1	4.82	1	4.22	1	4.14	2	4.42	1	4.37	1
Beliefs/Customs	3.08	12	3.36	12	3.11	13	2.86	11	3.00	18	3.08	13
Hidden obstruction	2.75	17	2.82	19	2.78	19	2.86	11	2.92	20	2.82	18
Access to social amenities (e.g. med-care)	3.00	13	2.64	24	2.56	24	2.29	24	2.50	24	2.60	23
Literacy level	2.42	24	2.18	27	2.56	24	2.86	11	2.67	22	2.54	24
Physical factors
Climatic condition/Weather	3.58	2	3.64	5	4.00	2	3.14	7	3.67	5	3.61	3
Natural disaster (e.g. storm, fire, and land slide)	1.67	29	2.73	22	1.44	29	1.57	29	2.08	27	1.90	29
Unfavourable site conditions	3.33	6	3.45	7	3.56	6	2.71	16	3.58	6	3.33	7
Unexpected geological condition	2.58	19	2.82	19	2.22	26	2.00	28	2.83	21	2.49	25
High water table	3.17	8	3.82	3	3.22	10	2.14	27	3.50	7	3.17	11

Social and cultural cluster ranked number two with an MIS of 3.1. The cluster contained five variables viz; civil conflicts or disturbance, beliefs/customs, hidden obstruction, access to social amenities (e.g. Med-care) and literacy level. Civil conflicts or disturbance is the most vital variable within this cluster with MIS of 4.4 as shown in Table 2. This might be the result of youth restiveness, kidnapping of expatriates and militancy that are rampant in the area.

The clusters of Legal, Political and Physical factors ranked third, fourth and fifth respectively with an approximate MIS value of 3.0 each. Factors such as planning regulations, instabilities in governance and climatic condition with MIS values of 3.1, 3.3 and 3.6 respectively should be given adequate attention. The unnecessary delays usually experienced during development approval processes, continuity in financing of projects whenever there is a change of government might have responsible for this impact.

Construction technology and resources ranked the sixth cluster with MIS of 2.7 in which the variable of importation of materials and equipment was given the highest MIS of 3.2. Most of the construction materials and equipments are imported because of the toxic atmosphere of the region due to the heavy presence of crude oil. Importation law and logistics might have been responsible for this impact among many others and this could serve as a clarion call to local manufacturers and materials researchers for the development of local materials which will be suitable for this region.

Project environmental factors and performance

The result of the correlation analysis of time and cost overruns with the identified factors affecting project performance in Table 3 revealed that the clusters of economic and financial and political had significant relationship with time overrun on p-values of 0.004 and 0.011 respectively, while the cluster of social and cultural had significant relationship with cost overrun with a p-value of 0.007. There higher correlation coefficients of 0.471, 0.421 and 0.643 respectively were responsible for this significance. It could be deduced that successful development of construction projects in this region may be greatly jeopardized without effective management of variables under these three clusters.

Table 3 Environmental factors and project performance.

Project environmental factors	Time Overrun			Cost Overrun
	C.C	p-Value	R	C.C	p-Value	R
Economic and financial	0.471	0.004	^⁎⁎	0.133	0.623	^⁎
Construction technology and resources	0.226	0.186	^⁎	0.082	0.763	^⁎
Political	0.421	0.011	^⁎⁎	-0.023	0.932	^⁎
Legal	0.248	0.146	^⁎⁎	-0.155	0.567	^⁎
Social and cultural	-0.087	0.146	^⁎	0.643	0.007	^⁎⁎
Physical factors	0.178	0.298	^⁎	0.145	0.591	^⁎

Note: C.C – Correlation coefficient; R – remarks.

* Insignificant.

⁎⁎ Significant.

Conclusion and recommendation

The identified variables categorized under six clusters of economic and financial, construction technology and resources, political, legal, social and cultural and physical factors, had been quantitatively analyzed and evaluated and their significant relationship with time and cost overruns had also been statistically established.

However, civil conflict or disturbance appeared to be one variable that had the most effect on building construction projects in the Delta State. This might be due to the incessant youth restiveness, attack on construction workers especially the kidnapping of expatriates and militancy that are rampant in the area. It might also be responsible for cost overrun in terms of financing exorbitant preliminaries often caused by meeting the greedy demands of the host community.

The results of this finding may be useful for Project managers who wish to carry out construction projects in the Delta State of Nigeria by taking cognizance of these variables especially those categorized under economic and financial, political and social and cultural clusters. It might also be useful in the proper management and prevention of cost and time overrun which is one of the major causes of clients’ dissatisfaction. The State Government may also look into creating an economic and political stability that is sufficient to rekindle confidence in investors.

Conflict of interest

None declared.

Notes

Peer review under responsibility of Housing and Building National Research Center.