Cost variations on construction projects must be eliminated

There is no doubt that the 21st Century world has complex construction challenges that require industry stakeholders armed with the best practices. However, sometimes we should just let common sense solve our challenges.

The story of Hazina Towers building’s extension is a classic example of when common sense is hindered.

After receiving a court injunction on the works, how come the contractor was left on site for several months pocketing Sh20 million a week on extended preliminaries, office overheads and idle plant and equipment?

Isn’t it common sense that the works should have been formally suspended due to the court injunction and contractor requested to vacate site? The only additional cost would have been payment for demobilisation from site on suspension of work and re-mobilisation later on.

Away from that, soil investigation before commencement of construction work has become an essential part of construction primarily to eliminate surprises. However, the knowledge of the soil condition before ground breaking, despite being an obvious common sense issue, is still often overlooked by many developers, burning their fingers in the process.

WITHDRAWAL OF PROJECT

In June 2017, I was consulted by a client to advice on a piece of land they wanted to acquire in Runda. The seller indicated the soil type to be red soil and the face outlook justified it as so, a beautiful piece of land, until we carried out soil investigation. The soil type was actually clay.

The land owner had imported red soil and laid a top layer throughout the land then proceeded to plant grass to further deceive the buyer. This dubious practice of using red soil to back fill land and deceive buyers is now rampant in most parts of Nairobi. This is because red soil land fetches more money.

There are several projects across this city that have stalled or exceeded the budget as result of encountering soil conditions not originally envisaged in the project costing.

For instance, a four-metre black cotton soil encountered during construction may necessitate the need of a semi-basement that wasn’t in the original plan. This can be a significant cost variation that throws-off balance the project initial feasibility. In other instances, this may certainly result in withdrawal of project financing by a finance institution on change of scope grounds. I am privy to some stalled projects as result of bank finance withdrawal expressly due to soil condition issues.

In other instances, the unknown soil condition at the time of ground breaking has been exploited by professionals to cover for cost variations due to negligence.

Many may not have realised it, but the bill of quantities normally has a majority of the substructure (foundation) work quantities as provisional items. This, in layman’s language, means these quantities will be determined during construction.

There is a tendency to lump up project cost variations due to professional negligence on substructure items that were provisional in the costings, especially if the client is a novice in construction matters. In fact, this can sometimes be a loophole for collusion to rob a client.

You may now begin to understand why some government projects go ridiculously over budget. The provisional clause does it all.

This practice of substructure work costs being provisional, in my view, needs to stop. While I appreciate that soil investigation may not entirely eliminate the uncertainty, it will no doubt largely reduce surprises during construction.

No one saves or borrows money from a bank to fund provisional construction costs; I don’t think any bank would even fund such a project.

As a developer, always insist and be willing to spend additionally on soil investigation to eliminate any avenues of cost variations and in case variations occur, ask questions and hold relevant professionals accountable.

Careless cost variations on projects must be eliminated; let us begin with the foundation work.