Cost Control and Multilateral Financing

of Engineering Projects in Nigeria



Dr. Reuben A. Okereke, Tobechi B. Ejekwu, Victor O. Ohamma

Department of Quantity Surveying
Imo State University

Owerri, Nigeria




The construction industry being solely responsible for economic growth of the nation will base on the government’s fiscal policy and budget the formulation of its own policy plan on how to carry out development within that budget and equally give the nation a healthy developed environment. Besides, the overall aim of cost control and management is to make sure that scarce resources are utilized to the optimum benefits of the main parties to a construction contract. That means that design and execution of a project should produce maximum value for money. Given therefore, the high cost rate of money for construction resources and high interest in this dwindling, deregulated and depressed economy, it is pertinent that efficient costing should be a very strong element in project design and implementation. The study evaluated cost control techniques and multilateral financing of engineering projects in Nigeria. The economic aspects of construction are complicated by the fact that the functions of design and production are generally separated. At the design stage, the designer will usually not know the methods and equipment available to the contractor who may ultimately build the project, and who is directly responsible for the materials used, which for most buildings account for about two-thirds of the total cost of the project.

The need to have cost data available from the earliest stages of the design has encouraged the development of methods of “cost planning” and the wider application of such techniques if cost is to become as it should be, an integral part of design. All these should be geared towards effective cost management and control as a solution to project abandonment.

Management is a leading factor in any investment. Prosperity breeds mismanagement. Paradoxically, management is the single factor which forces an upturn in a recession. Management is the single factor which separates prosperity and recession. It is the resources well managed or mismanaged today that makes for tomorrow’s prosperity or depression. The economic depression we are now facing is more out of mismanagement of resources than lack of resources. The key to the success of our construction investment industry is professional management. There is urgent need for innovations in the cost management of our construction resources for viable products. The vital question however is whether the Project Manager being the construction cost planner is economizing enough the variables that affect the cost of construction which are supposed to be under his control in other to bring down cost of construction to a tolerable level. This is the main focus of the study to unveil the management philosophy, practice and inputs to be affixed in evaluating and monitoring construction cost in order to reduce project abortion and abandonment, which are caused by project cost overruns.


In Nigeria, many construction Projects development have failed owing to the various technical and financial pressures of cost limit, quality and value optimization. Jagboro and Banalola (2005) wrote that the interim report of the Presidential panel on contracts at the wake of the present democratic government in Nigeria confirmed a staggering amount of over four hundred and fifty billion naira for project which can be classified as failed contracts, spanning from 1979 to 1998. The main reason for this is not far-fetched as many of the professional firms involved in project administration lack adequate management inputs in both quantitative and qualitative terms.

Another reason for this high rate of projects abandonment and failed contracts in Nigeria, is that in most government projects, the mobilization fee which is given to the contractor is reimbursed to those who awarded the contract as “bribe” usually of huge sums of money and this thereby increases the cost of the project, affects the quality of job executed by the contractor and will also leave the project either unexecuted or abandoned. This is because the money meant for the project execution have been diverted into individual pockets (Osemenam, 2004).

However, the design of building and other infrastructure is predicated on different contributors exhibiting various professional skills with a view to obtaining an optimum design solution. These inputs are based on the understanding of design and execution parameters ranging from functionality and usefulness of the project, aesthetics and appearance, safety of the structure, quality of workmanship, cost and financial matters and most importantly clients satisfaction with the project on completion. Business everywhere is faced with everyday challenges for survival and the need to adapt is very important. Appointing the project manager at the right time and seeking his professional advice for cost matters is a very key problem in the Nigerian construction delivery.

Finance is the application of a series of economic principles to maximize the wealth or overall value of a firm (business) i.e. to make the highest possible profits at the least risk (Nikbakht, 1990). Finance has developed many sophisticated approaches to provide financial managers with tools for solving difficult business problems: managing working capital, maintaining financial records, interpreting balance sheets/income statements. Currently finance has extended its practice horizon to budgeting scarce resources effectively and to design, source and invest funds in the assets or projects that yield the best risk/return trade-offs often termed “financial engineering”. Financial records analysis provides a means of flexible judgment for making the right investment decisions at the right and most advantageous time. Financial managers have responsibility to find the best and least expensive sources of funds and to invest these funds into the best and most efficient mix of assets. In doing this, they seek/find the mix of available resources that will achieve the highest return at the least risk. Financial managers/cost engineers consider the effects of changing supply, demand, and price conditions and other general fiscal/monetary policy directions (i.e. micro/macro-economic factors) in designing funding and operating conditions of their projects, specifically in determining when it is best to issue stock, bonds, or other financial instruments.


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How to cite this paper: Okereke, R. A., Ejekwu, T. B., Ohamma, V. O. (2020). Cost Control and Multilateral Financing of Engineering Projects in Nigeria; PM World Journal, Vol. IX, Issue IV, April.  Available online at https://pmworldlibrary.net/wp-content/uploads/2020/03/pmwj92-Apr2020-Okereke-Ejekwu-Ohamma-financing-engineering-projects-in-nigeria.pdf



About the Authors

Dr. Reuben A. Okereke

Owerri, Nigeria




Q.S. Dr. Reuben A. Okereke, PhD QS & Sust. Dev., MSc. Const. Mgt., MSc. Env. Res. Mgt., FRQS, FIIA, FAPM, ACArb, CIPM, MAACEI., is a multi-talented and erudite scholar. A versatile professional with academic qualifications in Quantity Surveying, Project Management, Construction Management and Environmental Resource Management. His Quantity Surveying professional experience of almost three decades spans through his employment with consultancy and construction firms in Lagos, Nigeria, work as Project Manager in the Bank for eight years, services as in-house consultant Quantity Surveyor for several years for the Imo State University Owerri, Nigeria, experience as Consultant Quantity Surveyor in private practice as well as several years of teaching in both the University and Polytechnic. He is currently serving his second term as the head of department of Quantity Surveying, Imo State University, Owerri, Nigeria. He can be contacted at  raphicaben2013@gmail.com


Tobechi B. Ejekwu

Owerri, Nigeria



Tobechi B. Ejekwu is a registered member of the Nigerian institute of Quantity Surveyors. He obtained his first degree in Quantity Surveying from the Imo State University Owerri, Imo State University, Nigeria with Second Class Upper Division. He bagged A Master’s Degree in Quantity Surveying from the same University with Upper credit. He is currently studying for a PhD in Quantity Surveying with interest in Life Cycle Costing of residential Buildings. He is currently a Lecturer in the Department of Quantity Surveying, Imo State, Owerri, Nigeria. He is an experienced Quantity Surveyor with industry footprint in many high profiled projects. Tobechi can be contacted at tobejekwu@gmail.com.


Victor O. Ohamma

Owerri, Nigeria



Victor O. Ohamma is a Probationer member of the Nigerian institute of Quantity Surveyors. He obtained his first degree in Quantity Surveying from the Imo State University Owerri, Imo State, Nigeria in 2009. He bagged Master’s Degree in Quantity Surveying from the same University with Upper credit. He is currently studying for PhD in Quantity Surveying with interest in achieving sustainable energy in Nigeria through photovoltaic (PV) technology; problems and prospects. He is an experienced Quantity Surveyor with industry footprint in many high profiled projects. Victor can be contacted at likemindz4good@yahoo.com