The Federation of Construction Industry has raised concerns over the slow pace of road projects across the country, saying inadequate funding by the Federal Government has contributed to the loss of about 41,000 jobs in the construction sector within two years.
FOCI President, High Chief Vincent Barrah, disclosed this at a press briefing held after the organisation’s 70th Annual General Meeting, which focused on the theme, “The Competitive Advantage of Construction in Nigeria.”
Barrah said the termination, suspension and delayed payment of contracts awarded to construction companies had taken a heavy toll on employment, with about 1,000 senior staff and 40,000 junior workers reportedly losing their jobs during the period under review.
He warned that the impact extends beyond the affected workers, as thousands of families and businesses that depend on the construction industry are also feeling the consequences.
According to him, FOCI is one of the largest employers of labour in Nigeria after government, with millions of people benefiting directly or indirectly from activities in the construction sector. He said the low level of activity among contractors over the past year was therefore a major concern.
Barrah identified the gap between annual budget provisions and actual cash releases as one of the biggest challenges facing contractors.
He explained that many infrastructure projects are awarded without adequate multi year funding, leading to delayed payments, accumulation of certified debts and reduced construction activity. In some cases, projects are suspended altogether.
He said many contractors currently handling government projects are either unable to work or are operating far below capacity because payments for completed and certified work have not been made.
The FOCI president also criticised the termination of contracts by the Ministry of Works, arguing that inadequate funding was often responsible for delays in project execution.
He maintained that contractors cannot reasonably be expected to continue financing capital intensive infrastructure projects when the necessary funds are not released by the employer.
Barrah said delays, suspension or abandonment of projects should not automatically be blamed on contractors when funding obligations have not been met.
He further identified difficulties with contract price adjustments as another major issue affecting construction companies. According to him, existing mechanisms do not always respond quickly enough to major changes in inflation, foreign exchange rates and the cost of construction materials.
He said prolonged approval of contract variations can leave contractors working with rates that are far below prevailing market prices, making it difficult to complete projects under the original terms.
Barrah noted that construction costs are influenced by several factors, including the price of materials, labour expenses, geographical location and soil conditions, meaning each project has its own unique cost structure.
He therefore called for contract reviews and adjustments to reflect current economic realities, saying this would make it easier for contractors to execute projects effectively.
The depreciation of the naira has further increased the cost of construction, with cement, steel, bitumen, diesel, equipment, spare parts and other essential inputs recording significant price increases.
FOCI said the rising costs have made some contracts awarded several years ago commercially difficult to execute at their original rates, adding to the pressure already facing contractors and workers across the industry.
