THE IMPACT OF THE COST OF CONSTRUCTION MATERIALS ON REAL ESTATE VALUES

THE IMPACT OF THE COST OF CONSTRUCTION MATERIALS ON REAL ESTATE VALUES

ABSTRACT

This study examines the impact of the cost of construction materials on real estate value with particular reference to commercial properties in Makurdi. In attempt to achieve this aim, the researcher identify the impact of the cost of construction materials on real estate value, evaluate factors affecting cost of construction materials in the study area, identify the causes and effects of high cost of construction on real estate values and proffer solutions on how to minimize cost of construction materials in the study area.  The research adopted the survey design which offers the opportunity to gather information through the use of questionnaires, personal interview and observation. A structured questionnaire was administered to the respondents which comprise the tenants/landlords of Tonimas and Eje Plaza. Data were presented and analysed using simple statistical tools. The study revealed that the there is a steady increase in the cost of construction materials and that this increasing cost have a significant effects on real estate value. The research also shows that majority of the construction carried out used a combination of locally and foreign sourced building materials while others construction work sole depends on foreign sourced or imported building materials which mostly result in higher construction cost. The study recommends that the government policy on production of building material should be enhance to ensure that building material are readily available for use. Research and development into local building materials should be encouraged by the government, fund should be provided for such research in the fiscal budget.

CHAPTER ONE

1.0       INTRODUCTION

1.1       BACKGROUND OF THE STUDY

The first stage of the construction project cycle is the understanding of what the scope and requirement is and how it can be satisfied. This includes deciding on the size, materials, quality of facility required, and project management technique with high profile and certified professionals (contractors) experience skilled and unskilled labour. The cost benefit analysis is the prerequisite for all development projects.

Globally, the construction sector is inundated with high cost in the delivery of building projects. This experience has brought about loss of clients’ confidence in consultants, added investment risks, lack of ability to deliver value to clients, and disinvestment in the construction industry (Mbachu and Nkado, 2004). It is of essence that the objectives of a building contract are met to the contentment of the parties involved. Cost, time and quality are significant, interrelated and interdependent targets for achieving the objectives/goals expected of project construction (Ashworth, 1999, Gould, 2002). Thus, it is crucial to keep up a proper balance between the three so that project outputs are realised on time, within the financial plan and with the requisite quality (Akinsola and Potts, 1998). However, it is an admitted fact that in Nigeria, the majority of construction suffer undue time extensions and /or additional cost to the client and /or inadequate quality of work (Oluwole, 2008b).

High cost of construction can be either avoidable or unavoidable. High construction cost due to design plan or project management problems are avoidable because they could have reasonably been foreseen and prevented (Shanmugam et al., 2006). However, there are some unavoidable costs such as those due to unanticipated events which cannot reasonably be prevented. Construction cost may add value to projects when extra work is done with the intention of producing a better output. High cost may also add value when they involve work that was omitted from design plans but clearly needed to be done. However, some high cost may not add value and represent wasted money if they do not result in a better product.

Construction cost of a project refers to the actual ‘actual cost incurred’ to the client during construction of a building project (Janaka, 1992). Higher construction is the difference between the value originally envisaged for the project and the value reflected in the final certificate. Higher cost occurs from overspending the allowances, making changes and encountering unforeseen problems. Proper planning can greatly reduce cost overruns.

The growing need for construction of all types coupled with a tight monetary supply has provided the construction industry with a big challenge to cut cost.

According to Mendelson and Greenfield (1996) the remaining part of the twentieth century would involve corporations, institutions and government in a race to survive. The attendant dwindling economic fortune of nations economies around the World have geared up the participant in these sectors (the client in particular) to take up the challenge of ensuring efficient use of their resources to obtain value for money in terms of performance.

The total cost of construction in normal circumstances is expected to be the sum of the following cost: Materials, Labour, Site Overheads, Equipment/Plant, Head office Cost and Profit but in many parts of the world particularly in Nigeria, there are other costs to be allowed for.

The construction cost of a building project is always a primary concern for the vast majority of construction clients/owners. Cost is said to have a direct relationship with quality which can also be expressed by a popular saying ‘you get what you pay for.’ There’s also a popular quote by John Ruskin that says ‘it is unwise to pay too much, but it is worse to pay too little’. Regardless of Ruskin’s advice, cost is a critical factor in most building projects as some owners will always seek a low price. Low price and maximum price competition, however, often have negative impacts on quality standards and achieving best value for money overall.

Managing building costs is a challenging task for a design team, as well as for construction managers, contractors and consultants. Owners would often demand that their design and construction teams respect their financial and economic objectives and that they control costs during project delivery. This expectation is found in both the public and the private sectors in all client industries, locations, and financial situations. Owners expect that a budget prepared early in a project would be accurate and that the project will be completed to the required scope, quality and performance within that budget. The research will appraise the impact of construction cost on quality value of commercial properties in Makurdi.

1.2       STATEMENT OF THE PROBLEM

The demand for more construction of all types, coupled with a tight monetary supply has provided the construction industry with a big challenge to cut costs. The problem of high contract costs of all aspects of construction is becoming obvious. Consequently, substantial increases are being observed in projects. This substantial increase has brought about loss of client confidence in consultants, added investment risks, inability to deliver value to clients, and disinvestment in the construction industry, the aforementioned scenario necessitate this research to examine the impact of the cost of construction materials on real estate value.

1.3       AIM AND OBJECTIVES OF THE STUDY

The aim of the study is to find out the impact of the cost of construction materials on real estate value.

The objectives of the study are as follows:

1. To identify the impact of the cost of construction materials on real estate value  
2. To evaluate factors affecting cost of construction materials in the study area.
3. To identify the causes and effects of high cost of construction on real estate values
4. To proffer solutions on how to minimize cost of construction materials in the study area. 

1.4       RESEARCH QUESTIONS

The following research questions shall guide the researcher towards achieving the aim and objective of the study:

• What are the impact of the cost of construction materials on real estate value?  
• What are the factors affecting cost of construction materials in the study area?
• What are the causes and effects of high cost of construction on real estate values?
• What are the solutions on how to minimize cost of construction materials in the study area. 

1.5       SIGNIFICANCE OF THE STUDY

The result of the this research “impact of the cost of construction material on real estate value” would enable Clients, Contractors, Consultants and Estate Valuers  give an economic approach to construction work such that they would be able to identify the dominating factors leading to high construction cost in Nigeria.

The application of the solutions proffered to minimizing construction cost would restore client’s confidence in consultants, reduce investment risks, and generally boost the viability and sustainability of commercial property in real estate market in Makurdi and Nigeria at large.

The research contributes to the wealth of knowledge thus, will serve as a research material for researcher / students who are interested in study the impact of rising cost of construction on quality and value of commercial property. 

1.6       SCOPE AND LIMITATIONS

The scope of this research is limited to identification of the impact of cost of construction materials on quality and rental value of commercial properties in Nigeria with a particular interest in Makurdi town. The study is limited to commercial properties in the Makurdi town because there is easy access of information in Makurdi by the researcher.

LIMITATIONS

A study of this nature cannot be done without some problems and as such it was considered by many factors namely time, finance and data.

• Time factor was the major constrain couple with multiplicity of other classroom work and lecture requirement were a set back to the research.
• Un-cooperating attitude of some respondents as they were busy to attend to the researcher.
• In accessibility of adequate information from research respondent due to illiteracy among them, some find it difficult to understand some question they were asked.
• Finance was also a limiting factor in the course of the research.

1.7       DEFINITION OF TERMS

Cost: Oxford Advance Learner’s Dictionary (6th edition) define it as the amount of money that you need in order to buy, make or do something.

Building: Business dictionary define building as the permanent or temporary structure enclosed within the exterior walls and roof.

Materials: English oxford dictionaries define materials as the  substance of which a thing is composed or made.

Building Materials: this is any material which is used for construction purposes.

Property: a thing or things belonging to someone; possessions collectively.

Development: this is a process of developing or being developed.

Property Development (The Collins English Dictionary,2014): the business of buying land and buildings and then making improvements to them so that their selling price exceeds the price paid for them.  

Commercial Property: The term commercial property (also called commercial real estate, investment or income property) refers to buildings or land intended to generate a profit, either from capital gain or rental income.

1.8       HISTORICAL BACKGROUND OF THE STUDY AREA

Makurdi is the capital of the state Benue in Nigeria. The city is located in central Nigeria along the Benue River and holds the base for the Nigerian Air Force’s MiG 21 and SEPECAT Jaguar aircraft squadrons. As of 2007, Makurdi had an estimated population of 500,797. The major ethnic groups are the Tiv, Idoma and Igede. Makurdi is home to Benue State University and the Federal University of Agriculture.

Makurdi is located on the banks of Benue River, a major tributary of the Niger River. It is also located on the main narrow gauge railway line running north from Port Harcourt, although this is not currently working. There are regular bus services linking Makurdi to neighbouring towns.

Makurdi is the Capital of Benue State, it was established in the 20^th century, and its total population was recorded to be 300,377 in 2006.  Starting from 1927, Makurdi started gaining popularity however, in 1976; the town became the capital of Benue State even until now. Makurdi is essentially an administrative centre with very limited industrialization occurring in it. River Benue divides the town into north bank and south bank. Two bridges further connect both the north and south banks to each other: the railway bridge which was constructed in 1932, and the new dual carriage bridge was constructed in 1978. Makurdi is a colonial town Just like Jos City, it was developed during the colonial period; initially, the capital of Benue province was not Makurdi, it was somewhere toward Gboko.  According to Daniel Otega, (A rural geography coordinator on the History of Makurdi )“ A rich migrant once settled very close to the river Benue Bank, he was surrounded by local villagers who did not have  knowledge about monetary value. This man was the only person who had access to money at that time and he was very rich, for the reason, the villagers usually come to him to collect money and then exchange it with other goods. Since then, they started calling him “mme- kurdi” which later became the name of the town “Ma-kurdi”, pronounced as Makurdi until today.

Location

Markurdi is located on the south bank of River Benue, where the railway line running from Port Harcourt stretches to the present government house, which was formally a residence for majority of engineers working there. The geographical coordinates of Markurdi town are 7⁰ 44¹ 0”N, 8⁰ 32¹ 0”E.

Transportation

Roads, railway, water and air are the common means of transportation routes that connect to Makurdi town with other towns and states; the major north route is the straight road that links Makurdi, Lafia and Jos Plateau road. The south routes are linked by Makurdi, Otukpo, Enugu, Yandev, Adikpo and Calabar roads. This Makurdi Rail Bridge provides the only rail link between the northern and eastern parts of Nigeria; though the railway is not currently working, it used to serve as a port from which goods, including locally grown sesame seeds and cotton were transported to Lagos State and to the Niger River delta ports.

Makurdi Airport has the Nigerian Airways and other private airlines provide air links between Makurdi and the rest of the country. The beautiful beaches of River Benue can be exploited to provide good sites for relaxation. The river itself provides tourist opportunities for fishing, boating swimming and scientific research. The Makurdi Moratorium that houses a variety of animals including some rare species also serves as another feature of tourist attraction.

Urban growth

In 1984, an industrial estate was built to provide urbanization with facilities and road networks; there was an establishment of coca cola deport and Benue State breweries along Gboko road. In 982 Agro mining food processing unit owned by a private individual for mining of rice was also created in Markurdi hence, there are printing press, small-scale industries, beautiful science, high commercial activities, hotels, banks, hospitals and recreational centres all over Makurdi town. Some institutions also exist such as Benue State University, Fidei polytechnic, Federal University of Agriculture, University of Mkar, and Benue State Polytechnic etc.

Makurdi is the biggest urban centre in Benue State, the present Makurdi has grown up to 348,990 in number, and other towns found in Benue were formed in the late 20^th Century, which means that there is no town that is more than 100 years. There is an expansion of urbanisation, which has attracted administrative staff and population increase hence, native authority has gain popularity due to the growth of Makurdi town. There is a major development of new towns which were not there before on the way that leads to Gboko toward PKO, the southern parts is fast developing , while the northern parts is not as developed as the southern parts. The Jukun are the predominant settlers in the north bank, on the hills that used to be the colonial residence towards where the government house is presently located.  When viewing the landscape, you can see that Makurdi is  just like Garden city, the trees are lavishly planted to modify the micro climate of this area, but the low lying area of this town are covered with flood.

Economic activities

Generally, Benue State is known as an agricultural catchment area, it cultivates more of cash crops, fruit crops and food crops hence, it is commonly called “The food Basket of the Nation”. This rich attributes can easily be noticed while traveling from Jos to Benue State. In addition, the State logo and other physical features give important insight on the type of occupations that the state is dealing with.

Climate and Vegetation

Based on Koppen’s Scheme of Classification, Benue State lies within the AW Climate and experiences two distinct seasons, the wet/rainy season and the dry/summer season. The rainy season lasts from April to October with annual rainfall in the range of 100-200mm. The dry season begins in November and ends in March. Temperatures fluctuate between 23 – 37 degrees Celsius in the year. The south-eastern part of the state adjoining the Obudu-Cameroun mountain range, however, has a cooler climate similar to that of the Jos Plateau.

The vegetation of the State consists of rain forests which have tall trees, tall grasses and oil palm trees that occupy the state’s western and southern fringes while the Guinea savannah is found in the eastern and northern parts with mixed grasses and trees that are generally of average height.

Benue’s topography is mainly undulating plains with occasional elevations of between 1,500m and 3,000m above sea level. The state’s main geologic formations are sandy-loam shelf basement complex and alluvial plains. These together with its location in the transition belt between the north and south ecologies and a favourable rainfall pattern account for its support for a wide variety of crops.

IMPACT OF COMMUNITY DEVELOPMENT ON COMMERCIAL PROPERTY

IMPACT OF COMMUNITY DEVELOPMENT ON COMMERCIAL PROPERTY

Abstract

Road construction is a socioeconomic activity in most urban centers, it is long piece of ground specially prepared with a hard level surface for people, vehicles to travel upon, a greater part of the nations resources. Since 1941, a lot have been spent in road construction, maintenance, expansion and rehabilitation spread through the nations which is one of the factors affecting property value, for this reason the research is aimed at examining the impact of road construction, expansion and rehabilitation on property value with a particular interested in Osogbo town, in Osun state.  Literatures on the topic were reviewed with proper citation. 100 questionnaires were administered. The data obtained were analyzed using tables and description. It was found that there was notable increase in property value after road construction and it has impacted the community positively, government have been encouraged to levy betterment tax on occupiers / owners of the commercial properties. It was recommended that road should be constructed to other nearby town so as to improve property value and foster business relationship in the area.

CHAPTER ONE

1.0       INTRODUCTION

Community development has been one of the most significant social forces in the process of planned change during the last three decades. In the past change has occurred without plans or guidance, but today the increasing trend towards planned change enabled large segments of people to participate in the planning and change creating programs which affect their lives. Community development as an instrument of change has become a controversial topic and one hopes this will change the attitudes of policy makers.

The United Nations defines community development as “a process where community members come together to take collective action and generate solutions to common problems.” (UN, 2014). It is a broad concept, applied to the practices of civic leaders, activists, involved citizens, and professionals to improve various aspects of communities, typically aiming to build stronger and more resilient local communities.

Community development is also understood as a professional discipline, and is defined by the International Association for Community Development as “a practice-based profession and an academic discipline that promotes participative democracy, sustainable development, rights, economic opportunity, equality and social justice, through the organisation, education and empowerment of people within their communities, whether these be of locality, identity or interest, in urban and rural settings (Alison and Marilyn, 2011).

Community development seeks to empower individuals and groups of people with the skills they need to effect change within their communities. These skills are often created through the formation of social groups working for a common agenda. Community developers must understand both how to work with individuals and how to affect communities’ positions within the context of larger social institutions.

Community development has gained universal recognition in the last three decades as a substantial force for inducing planned change. Rapid technological advances have resulted in a series of inescapable social realities, and community development can help adapt to these new realities. Community development provides the possibility of altering by democratic means at times antihuman directions of technology, urbanization towards more human ends and property development.

Community development in forms of road construction, electricity, pipe born water, urban housing is socio–economic activity which brings opportunities as a result of improvement in the general activities of people which facilitate business activities and enhances the value of commercial properties.

Commercial properties are important in physical and economic development of towns and cities all over the world. Commercial property and land values tend to increase in areas with expanding community developments /  infrastructure, and increase less rapidly in areas without such improvements, rapid and continued rise in housing and prices are expected  in cities with community development, rapid economic and population growth (Gold Berg, 2017) man, nations, town regions and the world itself would be severely limited in development without community development, which is a key factor for physical and economic growth (Oyesiku, 2012).

Community development usually has three major elements: (a) community members’ well-being or welfare involving both material sufficiency and non-economic aspects of living such as health and education; (b) resource development, involving increased production and efficiency; and (c) organizational development, involving the maintenance and creation of social and economic structures through which members of the community may channel their energies for the betterment of community living (Baker, 1989:48). The ultimate goal of community development is therefore, to develop members’ capabilities and potentials to affect their well-being and quality of life through maximizing resources utilization to benefit them socially and economically. This could only be achieved through effective management of community development programmes as well as having highly committed and well-trained professionals not only in the technical disciplines but also in the community capacity building. The paper focuses on community capacity building as a community development process.

Similarly, commercial activities like retail, wholesale business, has attracted consumers and ancillary service providers. This partly caused increase in demand for commercial space and its effects on commercial property values within a community. There have been increase in rental values of commercial properties within a developed community., therefore this study seeks to examine the impact of community development on commercial property.  

1.       Statement of Problem

Poor road network is one of the factors affecting property values. It makes a village town or state to be backward in economic growth and development. It is the socioeconomic impact of the road construction on property values that necessitate this study.  What are the impact of road construction, expantsion and rehabilitation on property value?

1. Aim and Objectives

The aim of this study is to examine the impact of road construction, expansion and rehabilitation on property rental values in Osogbo. In other to achieve the above aim, the following objective shall be pursued.

1. To examine the state of the available road network in the study area.
2. To asses the supply of commercial property in the study area.
3. To examine the rental value of commercial property in the study area before and after road construction.
4. To determine the extent to which road construction has affected property values.
5. To recommend the way forward.

1. Research Question
2. What is the nature of available road network in the study area?
3. What is the growth rate of supply of commercial property in the study area?
4. What are the values of property from 2010 – 2015?
5. To what extent has road construction has affected property values?
6. What way can road network be increase?
   1. Significance of the Study

This study focus on the impact of road construction on commercial property rental value. Accessibility is the most important element that enhance property values. This research will encourage government to provide good road network as it has positive impact on commercial property rental values.

The greater the accessibility of a location the comparative advantage to commercial property users, and the greater the comparative advantages to the demand for more property in the study area and finally this research will also serve as a requirement for the award of degree in course of study.

1. Scope and Limitations of the Study

This research is confined to the study of impact of road construction, expansion and rehabilitation on property value in Osogbo, the research covers property value found within Osogbo metropolis.

1.6       Historical Background of the Study Area 

The early history of Osogbo is essentially the legendary account of the spirit-world; it is the history of the early people whom we call the spirits and fairies. This is in line with Yoruba traditions, which use mythical stories to explain the origins of the ruling families of an early Yoruba state.

Osogbo according to Yoruba oral history had been founded as early as Oduduwa period. Oso-igbo, the goddess of Osun River, was the Queen and original founder of Osogbo. She was credited with many important achievements, which helped to establish the settlement.

Osogbo the capital of Osun lies on coordinates 7°46′ North 4°34′East with an area of 47kmsq. According to the 2006 Population and Housing Commission Census, the city has a population of 156,694 people. Osogbo shares boundary with Ikirun, Ilesa, Ede, Egbedore and Iragbiji and is easily accessible from any part of the state because of it’s central nature. It is about 48km from Ife, 32km from Ilesa, 46km from Iwo, 48km from Ikire and 46km from Ila-Orangun.

Osogbo is a commercial and industrial centre. This started in 1907, when the British Cotton Growing Association sited an industry for growing and ginning of cotton. The Nigerian Tobacco Company (NTC) built its first factory in Osogbo. In this same year, a major turning point for the city which helped in its industrial and commercial development occurred.  The railway tracks were constructed linking it to other parts of Northern Nigeria.  This attracted people from far and near.

The Ataoja of Osogbo is the traditional title of the King and he is the political and spiritual heads of Obas and Chiefs in Osogbo and Olorunda Local Government Areas.

Osogbo is famous for the annual Osun Osogbo Festival which attracts tourists from different part of the world.

1.7       Definition of Key Terms

1. Road: The Concise Oxford Dictionary defined road as specially prepared truck between places for the use of pedestrian, rivers and vehicles. It could also be a long narrow piece of ground especially prepared with a hard level surface for people, vehicles etc.
2. Property: Is a legal concept encompassing all the interests, right and benefit related to ownership. Properties consist of the right of ownership which entitle the owner to a specific interest or interest in what is a physical entity and its ownership Olusegun (2003).
3. Value: As the worth of something in terms of money or other goods for which it can be exchanged or quality of being useful or important. The word value does not have a specific and restricted meaning as it may mean different things to different people Olusegun (2003).
4. Commercial Properties: Immovable properties, land together with all the properties on it that cannot be moved with any attached rights paten business operation (Microsoft Encarta 2009 Microsoft Corporation).
5. Rental Value: As the rent which is an annual or periodic payment of money for the use of land or of land and building, rental value is the highest rent obtainable for a property in an open market at any given time Olusegun (2003).
6. Road Network: Road construction is defined by Lord Hale to be open passage of bring, which from the situation of the adjacent land, and its own depth and wideness with nodal link and connectivity, afford a secure place for the common ridding and anchoring of vehicles for human and goods. Zangand lund University (2004), sees road network to consists of large number of interwoven roads exhibiting many patterns ranging from star like to grid – like with irregular patterns becoming recognized.

ASSESSMENT OF CRAFTSMEN TURNOVER IN THE CONSTRUCTION INDUSTRY

ASSESSMENT OF CRAFTSMEN TURNOVER IN THE CONSTRUCTION INDUSTRY

(A CASE STUDY OF SELECTED CONSTRUCTION COMPANIES IN LOKOJA)

ABSTRACT

Turnover of construction craftsmen has been shown to have a negative impact on productivity and performance in the construction industry. This study gives an insight on the effects of construction craftsmen turnover in the construction industry. In the study, the main factors responsible for craftsmen turnover, the effect of craftsmen turnover on contractors’ performance and suggestions that will reduce the problem of turnover were determined. Four construction companies in the Lokoja Metropolis were selected by simple random sampling method. A total of 50 questionnaires were distributed between them and 46 of the administered questionnaire was responded to and returned.The data obtained were analysed with statistical tools such as standard deviation, mean and variance.Also pie charts, bar chart, column chart and line chart were used in presenting results. The four-point Likert scale was used to rank factors in order of their importance based on the relative Important Index (R.I.I) of the factors. The result shows that poor payment and benefits, poor treatment of workers and absence of advancement and promotion opportunities are the main cause of turnover while tribal differences and religious differences as regard cultural diversity are the main factors responsible for turnover. The study observed that craftsmen turnover has both direct cost and indirect cost effect on the performance of construction companies. Cost of hiring new employees, training of new workers and replacing old workers was shown to be the main direct cost effect on the performance of a contractor while indirect cost such as Project overtime, additional workload on remaining workers and reduction of project performance are the main effect of indirect cost. The study also shows that the problem of craftsmen turnover can be reduced by paying competitive compensation and benefit packages, fair treatment of workers and reward for dedicated workers are some of the best ways of reducing turnover while fairness, equal opportunity and respect for all and conducive workplace and cultural relation balance are ways of reducing turnover resulting from the cultural diversity of workers. The study also identified that motivation of craftsmen by increasing wages and salaries, promoting committed workers and training of craftsmen can be used to reduce the effect of craftsmen turnover.Based on the findings in this work, appropriate recommendations were being made to reduce craftsmen turnover in the Lokoja metropolis.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND

            The construction industry is an important sector of the national economy which is responsible for the provision of goods and infrastructures for the comfort of man. According to Ayangade, J.A.,et.al. (2009), the construction industry in Nigeria contributes 16% of the Gross domestic Product and employs about 20% of the working class population.Okongwu, S.E. (2010) explained that the construction industry comprises of different trades and as such provides employment opportunities to the workforce.

            The production of goods and facilities require the services of construction professionals, craftsmen, artisans,Labourers and suppliers from various trades (Ayangade, J.A,et.al. 2009). To promote a sustainable growth and development, it is very important to invest in skilled workers (Russel, L., 2013). In a situation where economy is declining and the demand for labour is low, turnover cannot be considered as a problem, it can rather be a benediction to individuals, companies and the organization ( Arie, C.G and Erik, H.B, 2013).

            Turnover within and outside the organization is on rise and it is not the same in all organizations. This was supported by Shamsuzzoha, A.H. (2007) who stated that the rate at which workers leave differs from company to company.However, there are several reasons behind the movement of construction workers; they tend to leave an organization where they are unhappy or not satisfied with Job. According to William, B., et.al (2001), the wages of workers from different organization who perform similar jobs differs, workers that receives competitive pay will have greater tendency to stay compared to workers in other organization who are underpaid.According to Forgarty, et.al (2007),Poor management and indiscipline of individual offices of the organization increase employee turnover. Wei and Chen (2007) stated that it may be as a result of avoidable or unavoidable reasons. Unavoidable turnover of an employee may be as a result of death of an employee or organization policies; i.e Organization retrenchment exercise for workers, while avoidable turnover may be due to employee dissatisfaction on the Job.Tulascz (2001) pointed some of the reasons behind workers’ turnover as discontent with their direct supervisors, Job security, unfilled promises, unpaid bonuses, incompetent Leadership among others.

            Turnover of construction workers have an adverse effect on performance and productivity, it also reduces the profit realized by a company.Shamsuzzoha, A.H. (2007) explained that employee turnover is one of the factors that affect productivity which is fast becoming a serious concern.Derek (2006) stated that employee turnover directly affects the performance of an organization. This was also supported by the regression analysis of Muhammad, N.,et.al (2013) that employee turnover has a relationship with organization performance. The efficiency and performance of craftsmen is mostly dependenton the management of an organization. In situations where the turnover of skilled workers is high, productivity decreases. Contractors incur costs due toturnover; costs incurred may be cost of replacing, training of new workers and preparation of relevant documents. Training and motivation of workers in the construction industry have been recognized as some of the ways to reduce employee Turnover. Scott, B. (2007) explained that training contributes to the productivity of an organization, increases output which brings about an increase in the employee compensation and benefit packages and subsequently increases the tendency of a worker staying.

            Since several reasons behind the movement of employees have been identified by various researchers, it is necessary for management of organizations to find appropriate measures to reduce the rate of employee turnover. According to the Wall Street Journal (2004), hiring the right caliber of workers, paying competitive packages and the engagement of employees among others are some of the ways to reduce turnover. The SMEs according to Lisa, H. (2001) stated one of the various concerns that may prevent the implementation of productivity improvement as employee resistance to change. Turnover can be reduced if proper preventive strategies are taken by the management (Shamsuzzoha, A.H, 2007).As a result of the negative impact of turnover on performance and productivity, the Attract and maintain a skilled construction workforce research team (RT 135) was established by the Construction Industry Institute in 2014 to oversee the problem of turnover. Some of the recommendations made to contractors based on their findings are; paying a competitive wage and benefit packages, providing a conducive working environment, treating employees with respect and providing permanent employment opportunities.

 1.2 STATEMENT OF PROBLEM

            Understanding the problems associated with employee turnover and measuring their factors are very significant to the success of an organization. Many researchers have suggested reasons behind the movement of construction workers within and outside the organizationand this have been proved to be incorrect.Labour in the construction industry is an element which is not easy to manage and as such, it is the duty of the employer to ensure that everything is well coordinated and managed. The turnover cost research carried out by the Workforce Stability Institute (2000) explained that it is necessary to recruit and hire the right people to maintain a steady workforce on construction projects.  According to Shamsuzzoha, A.H. (2007), employee turnover is a terrible situation for companies which make the operation of an employer difficult to maintain. Employee turnover cause companies to incur some financial loss which will have direct and indirect cost on the organization ( Morrel, et. al, 2004). Direct cost according to the workforce Stability Institute (2000) are cost that can be determined and monitored which are mostly the prices paid to replace employees who leaves suddenly. Decreases in productivity and employee morale are indirect costs of turnover; they are also very important part of turnover. Hinkin, (2000) stated that indirect cost of turnover leads to decrease in productivity, project overtime and an increase in payment of those that are retained.

            The construction industry comprises of workers from different cultural background and this is becoming a challenge to the Nigerian construction industry. According to Kimberly, A. (2013), differences in language can lead to misinterpretation of events, backwardness as well as interruption if not properly addressed.

            Identifying the reasons, effects, and ways of reducing employee turnover will go a long way in enhancing productivity and performance of craftsmen in the Nigerian construction industry.

1.3 JUSTIFICATION

Turnover of craftsmen in the construction industry has received considerable attention from construction professionals and experts because of the setbacks posed on construction projects. Sigma (2005), explained that it is the most difficult challenge faced by an organization and the causes of craftsmen turnover rate is beyond the control of the employing organization. The present economic situation in the country where inflation is on the rise has also led to increase in the prices of construction materials. Consequently, it affects the performance of construction contractors. Craftsmen in the construction industries need to be motivated if the economy of the country must improve since the construction industry contributes to the GDP of the Nigerian economy.

Little attention has been paid to the cultural backgrounds of construction workers in the construction workers which is also a reason for craftsmen turnover. Cultural diversity must be put into consideration when determining the factors responsible for craftsmen turnover, it is important for organizations to determine the ways by which different workers from different cultural backgrounds can be united. Gadgets (2011)explained that some of the challenges faced by a diverse organization are the rate at which workers are leaving.However, there are many benefits from cultural diversity of workers if it is effectively managed.

 

1.4 RESEARCH QUESTIONS

The study will attempt to answer questions such as:

(i)  What are the factors responsible for craftsmen turnover?

(ii)What are the effects of craftsmen turnover on contractor’s performance?

(iii)  What are the suggestions that will reduce the problem of craftsmen turnover?

1.5 AIM AND OBJECTIVES

1.5.1 Aim

The aim of this study is to assess the effects of craftsmen turnover in the construction industries.

1.5.2 Objectives

The objectives of the study include;

1. To determine the factors responsible for craftsmen turnover.
2. To determine the effects of craftsmen turnover on contractors’ performance.
3. To proffer suggestions that will reduce the problem of craftsmen turnover.

 

1.6 SCOPE OF STUDY

            Based on the aforementioned objectives of the study, this work will be limited to the construction craftsmen in the construction industries. It will examine craftsmen such as Mason/bricklayers, Iron and steel workers, carpenters, roofers, electricians, plumbers andPainters in selected construction companies in theLokoja Metropolis.

1.7 DEFINITION OF TERMS

1. Turnover: This is defined as the rate at which employees leave anorganization and are replaced or the change or movement of employees within an organization or from one organization to the other.
2. Craftsman: Also known as an artisan is a skilled manual worker who produces items that may be functionally or aesthetically adequate.
3. Employees:A person who works for an organization in return for financial remuneration or other compensation.
4. Employers:A person or an organization that hires employees or workers. They offer wages and salary to the worker in exchange for the worker’ work or labour.
5. Motivation:A drive that initiates the mind of an employee towards a goal oriented
6. Training: The acquisition of knowledge, skills and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies.
7. Culture: This is the beliefs, values, behaviour and material objects that constitute a people way of life.
8. Cultural Diversity: This is the presence of people of different race, ethnicity, language, nationality, religion, and sexual orientation.
9. Productivity: This is the ratio of output to inputs in production; it as an average measure of the effectiveness of production.
10. Performance: This is the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost and speed.

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