SOURCE OF FINANCING FOR SMALL SCALE BUSINESS

SOURCE OF FINANCING FOR SMALL SCALE BUSINESS

Small Scale Business are privately owned corporations, partnerships, or sole proprietorships that are owned and managed with a small capital base.  They usually have fewer employees and/or less annual revenue than a regular-sized business or corporation. Examples of small scale business are guest houses, photographers, very small-scale manufacturing, and Internet-related businesses such as web design and computer programming.

What determine a small scale business is dependent on a number of factors which include availability, accessibility, cost of funds and condition to be met. Owuallah G. (1999), identifies five major source of financing for small scale business they include:

1. Family and friends:

According to Owuallah G. (1999), in his book “source of finance” said some businesses are family heritage thus funds are generated within the family circle. Wealthy family members also assist in time of crisis and financial needs. Friends also provide financial assistance in starting or expanding a business.

2. Personal resources:

This personal resources include personal savings, retained profit, cash flow and asset conversion.

3. Informal financial market:

According to Owuallah G. This fund groups and corporative societies are formed to promote and provide the economic, social and political interest of members. Also members in need of financial assistance can apply for loan.

4. Bank (commercial and merchant bank):

According to Owuallah G, Said due to recent adoption of universal banking in Nigeria, the dichotomy between these two has been removed, thus both banks advances involve in disbursing loan advances in form of overdraft, trade bill financing, factory etc.

5. Specialized funding facilities:

According to Owuallah G. Specialized funding facilities e.g. are NERFUND, the World Bank scheme for small business manages by CBN.

COMMERCIAL BANKS

COMMERCIAL BANKS

COMMERCIAL BANKS – The term Bank has been generally defined in the banking law of the country. This countries try to provide operation which governs banking business within the country.

A Commercial bank is a type of financial institution that provides services such as accepting deposits, making business loans, and offering basic investment products. (Wiki pedia)

Nevertheless, banking as defined by the Bank and Other Financial Institution Decree (BOFID), 1991 is the business of receiving deposit on current account, savings account and other similar account, paying or collecting cheques drawn by or paid in by customers, provision of finance or such other business as the governor of the CBN may by order published in the gazette designate as banking. (Section 61).

THE STRUCTURE OF COMMERCIAL BANKS

According to Agu A. (1988), in his book titled “Structure of Commercial Bank in Nigeria” said that the structure of commercial is analyzed as follows; Modem commercial banking in Nigeria dates back to early, colonial period when the African banking corporation opened an office in 1892. Being the oldest unit of the Nigeria financial institution. The other financial intermediaries are restricted both in their capital resources and in their scope of activities most of them are new development. These gives the commercial banks an edge over the others particularly similar institution such as Federal Saving Banks, Merchant Banks and Mortgage Banks in collecting deposit and extending credit to the economy.

FUNCTION OF COMMERCIAL BANKS

The functions of commercial Bank according to Ekezie E.S. in his book “The Element of Banking” are illustrated below

1. POOLING OF SAVINGS

Commercial banks perform this very important function to all sector of the economy by making available the facilities for the pooling of savings through the acceptance of deposits from the public and then making these funds available for economically and socially desirable purposes.

2. PAYMENT MECHANISM

One other important function performed by commercial banks is the provision of a payment mechanism or the transfer of funds. This function becomes increasingly important as more and more Nigerians place greater reliance on the use of cheques and credit cards. Because of the poor banking habits of an average Nigerian, coupled with the fraudulent tendencies among us, the economy tends to remain a cash economy.

3. EXTENSION OF CREDIT

One of the primary functions of commercial banks is the extension of credit to worthy customers. A commercial bank lends certain percentage of the cash lying in the deposit on a high interest rate than it pays on such deposit. Sec 23(1) of decree No 25 of BOFID 1991, demands that every bank shall display at its office it’s lending and deposit interest rate for the interest of the public.

4. FINANCING FOREIGN TRADE

A commercial bank transacts through it foreign exchange department or international banking department, other foreign business of buying and selling of foreign currencies. Many Nigerians who travel abroad demand the services of the foreign exchange department of the commercial bank.

5. SAFE KEEPING OF VALUABLES

Commercial banks accept valuables for safe keeping on behave of their customers such as will, jewelry, certificate of occupancy.

PROBLEM OF TEAMWORK

PROBLEM OF TEAMWORK

There are certain problems that employees encountered when working as a team. Wright & Noe (1995) stated the following as some of their problem encountered in teamwork:

1. Breakdown in a role development as a result of the role ambiguity, role conflict and role overload. Where the roles of the teams or team member are not properly defined, unclear, incomplete or not explicitly communicated, it becomes problem to teamwork.

2. Group think: This is a problem encounter in teamwork, which attracts the team’s decision making. There’s always the problem of consensus and agreement in teamwork, which leads to the unwillingness to evaluate team members ideas critically, causing a barrier to effective decision making teams.

3. Social Loafing: Another serious problem encountered in teamwork is social loafing, a situation where some team members do or performed less than the own share of the work, on the assumption that the team’s result with not indicate the individuals failure to contribute. This efforts, teamwork as it decreases the moral of those who try to take up the slack. It also makes it hard for accountability structure and non-performance sanctions.

4. Production blocking: The problem of limiting another person’s out put by getting in teams and it is known as production blocking, which occurs as a result of every team members trying to show his worth or what he is capable of . also some team member dominant every affairs of the team, in meetings, decisions, making getting things done. Etc when this happens, it sometimes leave the work undone because one member feels it will be done by another, at the end of the day, the work is undone.

5. Technology factors: This problem occurs particularly in the early stages of the team formation. Where team members do not know or are not familiar with the technologies of that particular teams, its because a problem in getting the real work done.

FACTORS THAT ENHANCE TEAM WORK

FACTORS THAT ENHANCE TEAM WORK

The factors enhancing team work include the following: Diversity, Size
Rewards, Supervision, Client Climate, Cohesiveness etc.

(a) Diversity:

Only two studies examined diversity both studies conceptualized it in terms of knowledge and skills Magjuke and Baldwin (1991) measured heterogeneity as the proportion of various job categories within computer manufacturing employee involvement tools. Teams with greater diversity evaluated their effectiveness more positively. The author offer a number of possible explanations for this result, ranging better use of members knowledge to better communication and cooperation with external groups. Campin (2005) found skill heterogeneity to have no relationship to productivity, employee satisfaction, and manager ratings of performance in a service settings. They suggest that their sample may have varied little in terms of background and expertise.

(b) Size:

Nieva (1999) Relation to effectiveness such that too many members reduce performance sample found that increasing group size actually improved performance without limit. Campion (2003) found that group size was positively related to productivity. Manager judgement of effectiveness, and employee satisfaction.

Magjuke and Baldwin (1999) found group size to be a significant positive predictor of a group performance among employee involvement teams. Team size ranged from 8 to 35 members; the team focussed on continuous improvements. The actors note the benefit of increasing teams size , larger teams imply fewer teams within a firm, thus fewer leaders must be trained less coordination is required among teams and fewer team proposal must be reviewed by steering and oversight committee.

(c) Rewards:

The results for rewards are somewhat mixed. Rewards were found to have no significant relationship with manager ratings of performance Magjuke (1999) productivity, Campion (1999) and process effectiveness Wageman (1995).

Only two studies found with ratings of performance, trust in management, organisational commitment, and satisfaction for both self directed and traditionally managed groups in a telecommunication management firm when jointed with other contextual Variables (information access, raining, resources and feedback) it proof a strong positive predicator of manager rating of performance for self- directed work groups. klageman (1995) found that the highest performing maintenance technician groups were those whose reward and task had either pure group or pure individual design.

(d) Supervision:

Supervision behaviours, moods and expectations were studies for either effect on group performance . Cohen (1996)examined , encouraging supervisory behaviours (for example, self – rehearsal and self management) among self directed work teams and traditionally managed teams.

Contrary to Manzand sim-self- leadership theory 1998, encouraging supervisory behaviour was a negative predictor of performance for self- directed work groups several possible explanations are posed supervisor may tends to exhibit encouraging behaviour with groups management knows are performing poorly but not those that are performing well, supervisors may actually obstruct high performance when they interfere with self-managing work teams or upper management may perceive groups that receive (needs) such help to be struggling .

(e) Client Climate:

Only one study of work group environmental factors. Nuptal ( 1994) united contingency and institutional theories to explain the simultaneous presence of bureaucratic group, and personal modes of work until control in the U.S. general accounting office (GAO) when auditing government agencies that operate in institutionalised setting, the GAO rational in the eyes of the audited agencies. However, because audits in highly institutionalized setting were characterized by greater task difficulty and high member and supervisor interdependence, contingency theory correctly predicted that more social forms of work –until control, such as group or personal modes, would be chosen behind the scene to coo-ordinate and control audit team activities. The study clearly demonstrate how environmental factors can alters task design characteristics.

(f) Cohesiveness:

In the past six years, four meta – analyses of cohesiveness have been conducted using both laboratory and field finding. Two studies (Evans & Dion.1991:)Mullen; & copper, 1994) found a moderately strong positive relationship between cohesion and performance. In the former, however, the sample was based by sports team, where performance criteria are obvious and logical (for example, win-loss records)and members are unlikely to question goals: obviously, such situation would not hold for many groups in organization. Both studies were criticized by gully, Devine, and Whitney (1995) for task inter-dependence. Taking those two factors into consideration they also confirmed a positive relationship between cohesion and performance, nothing that the effect was larger in studies using a group level of analysis then it was in these with an individual level.

Task interdependence also proved a moderator, with highly interdependent tasks showing a larger effect the authors note that many studies lacked sufficient detail of task interdependence in group, forming them to employ a simple high-low categorisation. They also recommend that future studies examine different types of cohesion (for example, task versus social) as well as the possible moderating effect of group goals. Mullen, Anthony, Salas, and Driskell (1993) conducted the fourth Ineta analysis to examine the impact of cohesiveness on group decision making quality they found that the more the operationalization of cohesion tapped into interpersonal attraction, the more cohesiveness impaired group decision making. Additionally, cohesiveness tended to impair the quality of decision making as team (group) size increased.

(g) Organisational policy and culture:

Orally (1995). Teams are most likely to succeed if they fit the organisations policy and culture an organisation supportive of team work has policies and procedures that faster cooperation and trust among departments and levels of the organisations hierarchy. Team work may fail, however, if the culture is based on an assumption that employees must be compelled to work, and if efficiency is valued at the expense of sols satisfaction. Employees will likely doubt that other organisation is serious about empowerment, and manager may be afraid to delegate authority to teams.

IMPORTANCE OF TEAMWORK

IMPORTANCE OF TEAMWORK

Wright and Noe (1995) states that organisation institute s teamwork because they expect higher productivity and profit, greater flexibility and better ability to attract and retain good employees.

The importance of teamwork is as follows;

1) Higher quality and productivity and profit;

Humphery (2009) said, many organisations have credited teamwork with improvement in quality productivity and profitability. To establish and maintain a competitive edge in the quality of their goods and services organisations should continually make improvement.

These incremental improvements to product and processes will most likely be made when employees at all levels are directly involved in the case of team work.

Alughnes, (2009) also said team improves productivity in the same way improve quality. That is, they give employees the means by which they can make continuous improvement in work process.

These improvement should improve employees efficiency As well as the quality and productivity rise so do profits. Teamwork also boosts profitability by reducing cost. At organisation that seeks to cut costs by eliminating layers of management decision making is transferred to employees further down the hierarchy. Teams are a structure within which such decision can take place successfully.

2. Greater flexibility

Leonard, (2000 successfully organisation, excel by meeting the specialised needs of their customers requirements. As a result , organisation today must be flexible.

Strom (2003).Teams can improve flexibility because team members board skills and job descriptions enable them to adopt processes quickly. Switching to a different order to addressing new customers needs routinely for such in formation and authority to direct their expertise and to commitment towards satisfying these needs.

3. Greater responsiveness to change.

Kalzenbach and Smith (2009) said, not most organisation responsiveness to variations in customer demand. It must be able to respond to boarder environment changes. Change affecting one area of the organisation quickly has a major impact on other areas. For the organisation to respond fast, the employees who implement strategies must be involved in decisions about those strategies.

A logical way to create the necessary involve decision making is transferred to employees further down the hierarchy. Teams are a structure within which such decision can take place successfully.

4. Greater flexibility.

Leonard, (2000 successful organisation excel by meeting the specialised needs of their customers. They tailor their products and delivery schedules to each customers requirements. As a result organisation today must be flexible.

Strom, (2003). Teams can improve flexibility because team members broad skills and job description enable them to adopt processes quickly. Switching to a different order to addressing new customers needs routinely for such team. Team members have the skills information and authority to direct their expertise and commitment toward satisfying these needs.

5. Greater responsiveness to change.

Kaizenbach and smith (2007) said not most organisation responsive to variations in customer demand. It must be able to respond to broader environment changes. Change affecting one area of the organisation quickly has a major impact other areas. For the organisation to respond fast, the employees who implement strategies must be involved in decision about those strategies. A logical way to create the necessary involvement of these employees is to use teams

6. Better ability to attract and retain good employees

Strom, (2003), considering that an organisations source of sustainable competitive advantage is its people ; an important test of teamwork can make an organisation more attractive to current employees. Teamwork alter a chance to meet social needs and enjoy a sense of involvement and achievement. It can make work more interesting and it is a good fit with the high value modern employees place in participation in decision making and on opportunity to do something meaningful.

When teamwork offers an organisation a more attractive employees, it enables the organisation to hire and keep the best people, and employees will be reluctant to leave such an organisation, they can contribute any ways to realizing the organisations objective.

References

Argotes, I. & McGragth, J.E (1995): Group processes in organisations: Continuity and changes Pp.383 in C.L. cooper & I.T. Roberson (Ed). I international review of industrial and organisational Psychology. Vol. 8.New York: John Wiley & sons.
Leonard, H.S., & Freedman A.M (2000): From scientific management through fun and games to high-performance teams: A historical perspective on consulting to team-based organisations. Consulting psychology Journal: Practice and Research,

52 3-19.
Senecal, J., Loughead, T.M., & Bloom, G.A. (2008).A season-long team-building intervention: Examining the effect of team goal setting on cohesion. Journal of Sport & Exercise Psychology, 30.186-199.
Kirkman, B, L., Jones R.G., & Shapiro, D.L. (2000): Why do employees resist team? Examming the ‘’ resistance barrier ‘’ to work team effectiveness. (DVD) International Journal of Conflict Management, 11, 74-92.

Team - Definition and Types

Team – Definition and Types

Definition Of Team

According to demesne and Futrell (1996) A team is a collection of individuals who are interdependent in their tasks who share responsibility for outcomes, who see themselves and who are seen by others as an intact social entity embedded in one or more larger social system. E.g. business unit or the corporational abundances e.g. in a production work team. One members sharing responsibility for the quality and quantity of the final output that is produced.

In a project team research and development engineer may work interactively with manufacturing process engineers to make sure that the designs that are being developed can be manufactured services and carrying out a project such as developing a new product.

Team Works
According to Senial (2000) teamwork is any work performed by two or more people whether in an organization or outside the organization, is teamwork Wright and Noe (1995) define teamwork as the coordination of work groups to achieve one or more common goals / objectives. The encyclopaedia defined teamwork as the concept of people working together as a team.

Types of teams

Mohrman (1995) offered the following types of team which differentiate between advice and involvement teams production and service team project and development team and action and negotiation team of the categories in out typology, work teams correspond to their production and service teams, parallel team with advice and involvement teams and project correspond to their project and development team. Sandstorm (2003) category for management team and the category for action and negotiation team the teams tentative designs may be reviewed by the research and development and manufacturing functional managers. By this definition a department of electrical engineer who works on separate project is not a teams. The engineer work independently of each other and do not share responsibility for outcomes and are not interdependent.

Kalzen back and smith, (2003) team and group can be used interchangeably. The popular management literature has tended to use the term “Team” e.g empowered teams, quality improvement teams and teams effectiveness.

This study is therefore, concerned with the organizational, teams in which employees are organized into teams to achieve some or all of the organizations objectives and goals.

Higgin (1999) defines team (in the organization context) as a group normally within the same department, that is designed to work together to identify and solve group related work problems.

Miller (2002) opined that a team is a relatively permanent work group whose members must coordinate their activities to achieve one or more goals or common objectives.

The objectives might include advising others in the organization, producing goods and services and carrying out a project such a developing a new product.

i. Work team:
Are type of teams most people think about when discussing teams. Work teams are continuing work units responsible for producing goods or providing services. The membership of typically stable, usually fulltime, and well defined (Cohen, 1999). Work team are found both in manufacturing and service settings.

(Sputa Dirnitt & Figarty, 1998) Asserted that, work team are directed by supervisor who make most of the decisions about what is done how it is done, and who does it.

An alternative form of work team called a variety of labels self managing, autonomous, semi-autonomous, self-directing empowered is going favour. Self managing work teams involved employees in making decisions that were formerly the pronounce of supervisor and managers.

Typically, the member of self – managing work teams are cross-trained in a variety of skills relevant to the tasks they perform e.g self-managing engineering work shop teams and telecommunication team.

Katsenbach & Smith (2007) categories work teams with product and service team. These are teams charged with the activities related to producing and selling goods and services team. These are teams charged with the activities related to producing and selling of goods and services. Teams work for this group may be full time over extending period. Examples of such teams includes crews, and data processing groups product and service teams like advice and involvement teams, draw their membership from a broad base and often are formed as a way to empower first time employees although they are low in differentiation, these are highly integrated with suppliers, customers and other groups in the organisation.

ii. Parallel teams
Pull together people from different work units or jobs to perform well (Ledford, 2007). They literally exist in parallel with the formal organisational structure. They generally have limited authority and can only make recommendations to individuals higher up in the organizational hierarchy parallel teams are used for problem solving and quality improvement teams employee involvement groups, quality circles and tasks forces.

Steel (1990) parallel teams have been used for quite sometime but the continuing interest in quality and employee involvement has resulted in the widespread diffusion of this team type.

Katzen bach & Smith (2007) state that An advice and involvement team is a team formed to generate input from a broad base of employees.
Organization may assign all employees or representatives of each department or work group advice and involvement teams. Teams members meet only long enough to generate ideas or develop proposals, because their tasks is limited the group needs little integration with the rest of the organization.

iii. Project and development teams
There are times limited. They produce one time output such as a new product or service to be marketed by the company a new information system or a new plant, (Makin, Cohen, & Dickson 1996). For the most part, project team task, area non-repetitive in nature and involve considerable application of knowledge. Judgement, and expertise. The work that a project team performs may represent either an incremental improvement over an existing concept or radically different new idea.

iv. Management teams
These coordinate and provide direction to the sub unit under their jurisdiction, literally integrating interdependent sub unit across key business processes (Morhaman 1995).

The management teams responsible for the overall performance of a business unit. It is authority stem from the hierarchical rank of its members. It is composed of the management responsible for each sub unit as vice president of research for each and development , manufacturing, marketing and quality.

At the top of the organisation, the exclusive management team establishes the firms strategic direction and manages its performance. The use of top management teams (TMTS) is expanding in response to the turbulence and complexity of the global business environment. Management teams can help companies achieve competitive advantage by applying collection expertise, integrating desperate efforts and sharing responsibility for the success of the firm (Mankind 1996).

(v) ACTION AND MANAGEMENT TEAMS
The members of action and management teams are experts with specialised skills. Examples of such teams includes, players on a basket ball, members of an orchestra and personal on a surgical team owing to their expertise, the team is highly differentiated it is also highly integrated with the organisation and such teams closely coordinate their effort with the work of supporting personnel or with other action and negotiation teams.

For examples, even when the negotiation team is a labour dispute has different objectives each teams success rests partly on the action of others. Resolving the dispute not only requires effective planning by each team independently but depends on the team meeting and communicating with one another.

(vi) Cross Functional Teams
Lepine, (2003) cross functional team with members from several functions that are responsible for a project and crosses functional line communicating and solving problems across functional lines can help organisations more faster by eliminating the time devoted to reviewing and requesting changes in other to identify how it will be affected by another action.

REFERENCES

Cohen, S.G, Ledford, G.E. & Spreitzer, G.M (1996): A predictive model of self – managing work teams effectiveness: Human Relation, 49 (5): 643-676.

Driskell, J.E, Goodwin, G.F., Salas, E.O., & Patrick G., (2006): What makes a good teams player? Personality and teams effectiveness. group dynamics: (CD-ROM) Theory, Research, and Practice. 10, 249-271.

Humphery, S.E., Morgeson, Frederick P., & Mannor, M.J. (2009): Developing a theory of the strategic core of teams: A role composition model of team performance. (DVD) Journal of Applied Psychology, 94,48-61

Kirkman, B, L., Jones R.G., & Shapiro, D.L. (2000): Why do employees resist team? Examming the ‘’ resistance barrier ‘’ to work team effectiveness. (DVD) International Journal of Conflict Management, 11, 74-92.

LePine, J. A (2003): Team adaptation and post change performance: Effects of teams composition in terms of member’s cognitive abilities. Journal of Applied Psychology, 88, 27-39.

Miller, B.C. (2007). Quick activities to improve your team: How to run a successful teams-building activity. (CD-ROM) The Journal for Quality and Participation. 28-32.

Salas, E., Nicholas, D.R., & Driskell, J.E. (2007. Testing three team training strategies intact teams: A meta- analysis. (CD-ROM) Small Group Research, 38, 471-488.

Senecal, J., Loughead, T.M., & Bloom, G.A. (2008).A season-long team-building intervention: Examining the effect of team goal setting on cohesion. Journal of Sport & Exercise Psychology, 30.186-199.

Svyantek, D.J., Goodman, S.A., Benz, L.L., & Gard, J.A. (1999). The relationship between organisational characteristics and team building success. Journal of business and psychology, 14(2), 265-283.

MARKETING PHILOSOPHY

MARKETING PHILOSOPHY

Generally, managers of organization in commercial circle opined that four philosophies of marketing exist, John (1984:5759) namely:
1. The production concept
2. The product concept
3. The selling concept and
4. The marketing concept

These philosophies are considered below, one after the other as they relate and affect service marketing.

– THE PRODUCTION CONCEPT: In (1984) John succinctly remarked that production manager assumed that customers will buy the service that organization by implication banks offer to them provided it is available where and when required. Financial institution or banks thus challenge to develop services that are useful, relevant and affordable to their customers in order to increase patronage.

– THE PRODUCT CONCEPT: The essence of this concept is the fact that customers will continue to patronize or accept services that provide the quantity and value for money. Service marketing organizations by this philosophy are expected to continually improve the quality of their services to further encourage more customers.

– THE SELLING CONCEPT: Selling has been described by Lyman and Carth (1978:78), as “the ultimate satisfaction of the customer’s desire for services”, this implies that managers of service organization especially of branches or divisional levels have to embark on aggressive or active persuasive selling for heir product or services.

– THE MARKETING CONCEPT: This concept has been continually commented upon for over fifty decades; scholars variously opined and agreed that marketing concept provides the right philosophy for long term organization achievement. For instance, Drucker (1987) observed that there will always be some need for selling.

However, the need to or aim of marketing makes selling a wonderful experience. Hen then, further commented that the aim of marketing is to understand so well that the products or services fits into the needs of the customer and sell itself.

Another scholar, Kotler (1988:210) remarked that “marketing concept is customer need and wants oriented back by integrated marketing efforts aimed at generating customer’s satisfaction as a key to satisfying organization goals”.

The implication to UBA bank and other financial institutions is that the marketing concept means recognizing the fact that they cannot sell their products/services unless products or services are developed to satisfy customer’s need. This demand a good understanding of who the bank’s customers are, what their needs are and the type of satisfaction experience they are requesting.

In essence, marketing concept should assist organization to understand the following:
a) Customers can be segmented into different market, base on their needs.

b) Customers in each segment of the market will buy only products that closely meet their needs.

c) Marketing research become very essential to financial institutions/banks in order to identify market segment, develop product, choose target market and design promotion program.

SERVICE MARKETING

SERVICE MARKETING

HISTORY OF SERVICE MARKETING
Service marketing is a sub-field of marketing which can be split into the main areas of goods marketing (which include the marketer of fast moving consumer goods FMCG and durables) and services marketing. Services’ marketing typically refers to both business to business (B2B) service include marketing of services telecommunication service, financial services all types of hospital services and professional services. The range of approaches and expression of marketing ideas developed with the hope that it be effective in conveying the ideas to the diverse population of people who receive it.

Services are economic activities offered by one party to another, often time based, performance bring about desired results to recipients, objectives, or other assets for which purchasers have responsibility, in exchange for money for money, time and effort. Service customers expect value from access to goods, labour, professional skill, facilities, networks and systems, but they do not normally take ownership of any of the physical element involved.

DEFINITION OF SERVICE MARKETING
The world economy these days is increasingly characterized as a services economy. This is primarily due to the increasing importance and share of services sector in the economies of most developed and developing countries. In fact, the growth of the services sector has long been considered as indicative of a country’s economic progress.

The American Marketing Association (AMA) defines services as activities, benefit and satisfaction which are offered for sale or are provided in connected with the sales of goods.

Adrian Palmer (2008; 78) define services marketing “as the production of an essentially tangible benefit, either in its own right or as significant element of a tangible product, which through some form of exchange to satisfied an identified need”. This definition recognizes that most products are in fact a combination of goods elements and service element. In some cases, the service element will be the focal element of the services (e.g. hairdressing management consultancy) while in other cases the service will simply support the provision of a tangible goods (e.g. a loan facility provided to support the sales of new car).

Services have grown dramatically in recent years, services now account for close to 68% of the gross domestic product of Nigeria. Services are growing even faster in the world economy, making up to 64% of gross world product. Service industries vary greatly. Government offer services through courts, employment services, hospital, military services, police, fire services, postal services and educational services. Private no-for-profit organizations offer services through museums, charities, churches, colleges, foundations, hospital e.t.c. A large number of business organization offer services; airlines, banks, hotels, insurance companies, real-estates firms, retailers e.t.c.

NATURE AND CHARACTERISTICS OF SERVICE
A company must consider four (4) special services characteristics namely; intangibility, inseparability, variability and perishability.

1. SERVICE INTANGIBILITY: This means that services cannot be seen, tested, felt, heard, or smelled before they are bought, for instance people undergoing surgery cannot see the outcome when paying for the operation or passenger traveling cannot promise that they and their luggage will arrive safely at the intended destination.

To reduce uncertainty, buyers look for “signal” of service quality, they drew conclusions about quality from the place, people, price, equipment, and communications that they can see.

2. SERVICE INSEPARABILITY: It means that services depends on who provide them as well as when, where and how they are provided. For example some hotels, say Transcorp Hilton have reputations for providing better services than the others. Still, within a given Transcorp Hotel, on registration counter employee may be cheerful and efficient, where as another standing just few meter away may be unpleasant and slow even the quality of a single Transcorp Hilton employee’s service varies according to his or her energy and frame of mind at the time of each customers encounter.

3. SERVICE PERISHABILITY: Means that service cannot be stored for later sales or use. Some doctors change patients for missed appointments because the services value existed only at that point and disappeared when the patient did not show up. The perishability of services is not a problem which demand is steady. However, when demand fluctuated, service firms often have difficulty.

References

Christopher Lovelock and Jochem Witz (2011), Services Marketing People, Technology, Strategy. 7th Edition Upper Saddle River, New Jersey Prentice Hall Pg 22-23

Lovelock, C. Gummenson, E. (2004): Whither Services Marketing: In Search of a New Paradigm and Fresh Perspectives. Journal of Services Research 7 (1) 20 – 40.

Learn Marketing Net: For Marketing Learners Globally.

Kotler and Armstrong (2010): Principles of Marketing 13th Edition, Pearson Education USA.

Michael Et al (2007) Marketing (14th Edition) McGraw Hill/ Irwin.

THE BASIC CONCEPT OF ACCOUNTING INFORMATION

THE BASIC CONCEPT OF ACCOUNTING INFORMATION

The Entity Concept: accounting information is prepared from the point of view that every economic unit, regardless of its legal form of existence is treated us a separate entity from parties having proprietary or economic interest in it. Thus, the business and the owner (s) are considered completely separate. This is so such that the business will always be treated by the accountant on its own merit.

THE MONEY MEASUREMENT CONCEPT
This convention states that the accountant only records those facts that are expressed in money terms. Any facts, however relevant they may be to the user of the financial information is ignored by the accountant if they can not conveniently by expressed in money terms. It is often that the greatest asset on effective and efficient business possesses is the work force. So why does the work force never appear on a business balance sheet? The short answer is that it would be extremely difficult to quantify this asset and other resources in money terms. So the accountant does not bother to try. Facts and outcomes that cannot be expressed in money terms are ignore.

 THE GOING CONCERN CONCEPT
This concept states that in the absence of evidence to the contrary it is assumed the business will continue to indefinite future. This concept has a major influence on the assumptions made when evaluating a particular item in the balance sheet. For example, the convention allows us to assume that stock will eventually be sold in the normal course of business i.e. at normal selling price. Perhaps, even more obviously it allows for the principle of depreciation. If an item of plant is depreciated over ten years, when we are assuming that the plant will have a useful life to the business of ten years. It is worthy of note that the going concern concept does not say that the business is not going to heep being profitable into the indefinite future. It merely says or assumes that the business will manage not to collapse altogether.

THE HISTORICAL CONCEPT
The historical concept holds that cost is the appropriate basis for initial account recognition of all assets acquisition, service rendered or received expenses incurred, creditors and owners interests and it also holds that subsequent to acquisition values are retained throughout the accounting process. The historical cost concept does not always receive the new universal support of earlier years.

THE PERIODIC CONCEPT
It is a well known fact that the result of a business unit cannot be determined with precision until its final liquidation, the business community and users of financial statements require that the business be divided into accounting periods usually one year and that the charges in position be measured over these period.

THE DUALITY CONCEPT
This may be regarded as a formalization of the basis of double entry. It states that in relation to any one economic event, two aspects are recorded in the account namely:
a. The source of wealth.
b. The form is takes (its application). The concept further states that these two aspects always equal to each other.

THE MATCHING CONCEPT
This concepts holds that for any accounting period the earned revenue and all the incurred costs that generated that revenue must be matched and reported for the period if revenue is carried over from a period or deferred to a future period all elements of costs and expenses is relation to the revenue are usually carried over or deferred as the case may be.

THE CONSISTENCY CONCEPT
Usually, there is more that one way in which an item may be treated in the accounts, without violating accounting principles. The concept of consistency holds that when a company selects a method, it should continue (unless conditions warrant a change) to use that method on subsequent periods so that a comparison of accounting figures over time is meaningful.

THE REALIZATION CONCEPT
The concept establishes the rule for the periodic recognition of revenue as soon as:
a. It is capable of objective measurement.
b. The value of assets received or receivable in exchange is reasonably certain. It is the view that revenue can be recognized at various points for example, when goods we produced, when goods are delivered and the owner has assumed liability or when the transaction is completed choice, in most cases is an industrial norm and depends on which of the points is the critical even only when the event is passed can revenue be legitimately recognized.

APPROXIMATE ESTIMATE AND ITS TYPES

APPROXIMATE   ESTIMATE

Approximate Estimate (ing) is a challenging task, if only that accuracy is required when the cost information available is scant. Various approximate estimating techniques exist for arriving at desired answers.

 

The different types of cost estimates, those are prepared during various phases of a project are already stated in Lecture 2 of this module. As already mentioned in Lecture 2 of this module, the approximate estimates (also known as order-of-magnitude estimates) are prepared during initial stages of the project life cycle. The different methods used in the preparation of approximate estimates are described below. In addition to use in the preparation of estimates during early stages of project development, these methods may also be sometimes used for cost estimating in the detailed design phase.

 

INTERPOLATION METHOD: Interpolation is a techniques used in the early stage of the design sequence when information drawn or otherwise on the proposed project is in the short supply .It requires a good deal of skill and experience and is the process of adding in or deducting from the cost analysis figure to arrive at a budget for a new project. Therefore in preparing a budget for a new project assume, a cost analysis has been chosen as the basis for the estimate as the basics for the estimate. However cost analysis will contain items that are not required for the new project and these must be deducted, for example, in the new project the client wishes to exclude the installation of air conditioning, included in the cost analysis project, from the estimate and this will have to be deducted from the budget; but on the other hand the client wishes to include CCTV thought and added in it is important as describe later, to adjust cost to take account of difference in price level. The process continues until all identified difference have been accounted for.

UNIT METHOD: The unit method is a single price rate method based upon the cost per functional unit of the building, a functional unit being, for example, a hotel bedroom. The method is often regard as a way of making a comparison between building in order to satisfy the design team that the cost are reasonable in relation to other building of a similar nature. It is not possible to adjust the single rate price and therefore is very much a ball park approach. Suitable for client who specialise in one type project; for example, a hotel or supermarket chains, where it can be surprisingly accurate. Other example where unit cost may apply are:

• School – cost per pupil
• Hospital – cost per bed space

SUPERFICIAL METHOD: The superficial method is single price rate method base on the cost per square metre of the building. The use of this method should be restricted to the early stage of design sequence and is probably the most published cost data is express in this form. The method is quick and simple to use through, as in case of unit method, it is important to use data form similarly design project. Another advantage of the superficial method is that the unit measurement is meaningful to both the client and the design team. Although the area for method is relatively easy to calculate, it does require skill in assessing the price rate. The rules for calculating the area:

• All measurement is taken from the internal face of external wall. No deduction is made for internal walls lift shaft, stairwells e.t.c
• Where different parts of the building vary in functional, then the areas are calculated separately.
• External works and non-standard items such as pilling are calculated separately and then added into the estimate figure for specialist works may be available for sub-specialist contractor and specialist contractor.

APPROXIMATE QUANTITIES: Regard as the most reliable and accurate method of estimating, providing that there is sufficient information to work on. Depending on the experience of the surveyor, measurement can be carried out fairly quickly using composite rate to save time. The rule of measurement are simple, although it must be said, they are not standardised and tend to vary slightly from one surveyor to another

• Approach involves grouping together items corresponding to a separate operation and relating them top a common unit of measurement unlike the measurement for a bill of quantities, where items are measure separately.
• All measurement are taken as gross over all but the very lager opening
• Initially, the composite rate requires time to build up rate, but one calculated they may be used on a variety of estimating needs

CUBICAL METHOD: In this method, cost per unit volume is taken as the criterion for rough estimate. Approximate cost of proposed building = cubical content of building multiply by cost per unit volume of similar structure.

In arriving at the cubical content, no hard and fast rules are as follows

1. Whether the space of open veranda, porch, should be taken into account,
2. How to measure the height of the building and
3. Whether to take into account the basement and the foundation and parapet above ceiling.

The RIBA (Royal Institute for British Architect) rules that are generally followed give the followings procedure.

Cubical content = Plan area measure over the external walls x height from top of concrete foundation footing to halfway up the roof if pitched, or to 600cm above the roof if flat

Generally the cubical method can be said expected to give more accurate estimate for single storey building than the area method, as it takes into accounts the ceiling height ; But the cubical method is very unreliable unless two very similar building are compare for example comparison of geometrically proportionate building can give a very wide fluctuation and lead to an unreal estimate. For as all the dimension (size) of the building increase or decrease proportionately, the cubical content fluctuate for widely than the area of the component structure. Also the volume method does not take into account the number of floor or storey. Also such items, as lift are generally, included as lump sum since their cost to not bear any relation to their volume

TYPICAL BAY METHOD: This method is useful for application in frames structure consisting of a number of similar bays, as for example, industrial building. A typical interior bay (between to successive columns) is selected and its total cost worked out.

Then the approximate cost of the building = number of bay in the building x cost of one bay suitable correction factors may have to be used to taken into account the dissimilarities in end bay (and in different floor, if applied to multi storied construction)

 

   

TYPES OF MAINTENANCE

TYPES OF MAINTENANCE

BS 3811 categorizes building maintenance by means of the following terms and definitions.

i. Planned maintenance: The maintenance organized and carried out with forethought, control and the use of records to a predetermined plan

ii. Unplanned maintenance: The plan carried out to no predetermined plan. It refers to work necessitated by unforeseen breakdown or damages. For example, the ripping – off a building, through the action of a storm, and its remedial action constitute unforeseen damage’s. It can also be termed unexpected and unavoidable maintenance.

iii. Preventive maintenance: The maintenance carried out at predetermined intervals or corresponding to prescribed criteria and intended to reduce the probability of failure or the performance degradation of an item.

iv. Corrective maintenance: The maintenance carried out after a failure has occurred and intended to restore an item to a state in which it can perform its required function.

v. Emergency maintenance: The maintenance which it is necessary to put in hand immediately to avoid serious consequences. This is referred to as day to day maintenance, resulting from such incidents as gas leaks and gate damage.

vi. Condition based maintenance: The preventive maintenance initiated as a result of knowledge of the condition of an item from routine or continuous monitoring.

vii. Scheduled maintenance: The preventive maintenance carried out to a predetermined interval of time, number of operations, mileage.

viii. Running Maintenance: Maintenance which can be carried out whilst an item is in service.

At one end is deferred maintenance, which occurs when projects are identified as necessary but put off due to lack of resources. Next along the continuum are unplanned activated including emergency maintenance, such as restoring lost electrical power, and corrective and maintenance such as fixing a broken window. Emergency and corrective maintenance occur as the need arises neither is planned far in advance.

Planned maintenance follows on the continuum, although the maintenance categories are not mutually exclusive. General maintenance is the up keep of building components to restore them to their original conditions or to keep them in good working condition. Preventive maintenance follows on the continuum.

Preventive maintenance: is a planned program of periodic inspections, adjustments and replacements. Preventive maintenance means the regularly scheduled repair and maintenance needed to keep a building component operating at peak efficiency and extend its useful life. It includes scheduled activities intended to prevent break downs, such as periodic inspections, lubrication calibrations’ and replacement of equipment. Replacing filters in an air handling unit on a regularly scheduled basis is an example of preventive maintenance, because prolonging the life of major building systems required periodic replacement of equipment, preventive maintenance typically required both capital and operating expenditures. Preserving these assets including the building’s rooting plumbing, heating, ventilation, air conditioning, electrical systems, extensors – is a primary objective behind preventive maintenance.

A step beyond that is proactive maintenance, a highly structured practice that uses information from analyzing equipment to identify origins, not just symptoms, of equipment problems. Proactive maintenance would, for example, identify whether excessive wear resulted from defective installation, unsuitable design or some other cause, because it addresses the root sources of equipment problems, proactive maintenance eliminates recurring problems and the down tune and other costs associated with those recurrences.

Maintenance work has also been categorized as predictable and avoidable: predictable maintenance is regular periodic work that may be necessary to retain the performance characteristics of a product, as well as that required to replace or repair the product after it has achieved a useful lifespan.

Avoidable maintenance is the work required to rectify failures caused by poor design incorrect installation or the use of faculty materials.

Another approach to maintenance classification has been adopted by Speight (1982) as cited in Seely (1987), according to Cobbinah, 2010) subdivided maintenance into three broad categories.

1. Major repair or restoration: Such as re-roofing or rebuilding defective walls and often incorporating an element of improvement.

2. Periodic maintenance a typical example being annual contracts for decorations and the like.

3. Routine or day – to – day maintenance: This is largely of the preventive types, such as checking rainwater gutter and servicing maintenance and clerical installations.

Maintenance practices Public Hospital Building

Maintenance practices Public Hospital Building

Maintenance practices – BS 3811, defines maintenance practices as a strategy within which decisions on maintenance are taken, alternatively, it may be defined as the ground rules for the allocation of resources (men, material and money) between the alternative types of maintenance actions that are available to management.

In order to make a rational allocation of resources the benefits of those actions to the organization as a whole must be identified and related to the cost involved. issues under consideration in a practice.

Physical causes of poor maintenance in public hospital building

The physical causes of maintenance problem refer to all the natural/physical factors that negatively affect the durability of the building. The durability of a built facility is a measure, in an inverse sense, of the rate of deterioration of a material or component (S. Afranie and Osei – Tutu, E 1999). According to Cobbinah, 2010. the British standard institution (BSI). Code of practice defines durability as the quality of maintaining as satisfactory appearance and performance of required functions. The code measures this parameter in terms of the minimum number of years of satisfactory life. The three major causes of deterioration and hence maintenance problems are, age or period of construction environmental and location factor.

The location of hospital building has a direct effect on the maintenance problem. The location refers to the exact Loci of the building.

Thus location is influenced by the terrain of the environment, soil, nature of social and seismic movement, slat Laden winds and salty water effects as well as high temperatures and drastic temperature changes.

The public hospital building maintenance department

The public hospital building maintenance department is managed by maintenance manager. The maintenance manager is responsible for the planning and control of maintenance operations. In a small firm, the functions may be undertaken by a member of staff in addition to his other duties, while in a larger form there would be a separate group of people solely responsible for maintenance.

The functions of the maintenance department

the maintenance department among other things performs the following basic functions.

1. Advisory function: This involves liaison with occupants and users and consultation with upper management on such matters as:

i. The standards to be maintained and the effect on user activities of deviations from these standards.

ii. The relative merits of alternative maintenance practice and the extent to which it would be advantageous to employ operatives directly for executing the work.

iii. Clarification of any constraints in relations to limits of expenditure, desirable cash flow patterns, acceptable delay times or restrictions on time and method of carrying out work.

iv. Estimates of maintenance expenditure both long and short term, including where appropriate, the cost of initially bringing up to the require standard and the possibility of phasing any such backlog over a period of years.

v. Provision of cost and other data to assist upper management in deciding whether to repair or renew.

vi. Technical requirement for minor works involving alterations or small additions to the buildings although not strictly maintenance it is usual for the maintenance organization to assume full responsibility fir this types of work.

vii. Advice on the maintenance implications of designs for proposed new buildings.

(2) Organizational function: – this nay be in relation to the central administrative and supervisory system or to the execution system whether by direct labour or contract.

(3) control functions:- the control functions are dependent on the timely receipt of accurate information relating to the state of the system, the control functions operate in the following areas.

(i) Work input, identifying the extent of work necessary to achieve the required standards within the constraints laid down. The process involved would include planned inspections, appraisal of user request and assignment of priorities

(ii) Time of execution. Programming the workload so that the carrying out of the work is timed in accordance with the needs of the user and the available labour force.

(iii) Quality-supervision of work during execution and by subsequent control inspections to detect latent defects.
(iv) Cost budgetary control system including estimating resource requirements in cost and performance terms for later comparison with actual cost and performance achieved.
(v) Feedback:– this is an inherent feature of all the control functions and involves keeping such records as are necessary for the proper control of the operations.

(4) Building maintenance depends on the materials used in the construction of the building and the types of building. Buildings however, can be categorised into public and private. Public hospital buildings are owned by the state where as private hospital buildings are owned by individuals other the state, in addition hospital building many for health and safety of people only. Maintenance of the building will however ensure that the building is restored to its initial status and also increase the life span of the buildings.

Maintenance

Introduction

Maintenance is an action necessary for retaining or restoring a piece of equipment, machine, or system to the specified operable condition to achieve its maximum useful life. It includes corrective maintenance and preventive maintenance

involves a considerable amount of work which Harper (1969) as cited in (S. Afranie and E. Osei-Tutu, 1999) has been categorized into three components namely, servicing, Rectification and replacement.

Components of maintenance

1. Servicing: Servicing is essentially a clearing operation undertaken at regular intervals of varying ‘frequency and is sometimes termed day-to day maintenance. Daily sweeping of floors monthly washing and cleaning of windows and regular painting for decoration and protection every for years are some examples of servicing, however, as more equipment that are sophisticated are introduced so more complicated service schedules become necessary. Servicing becomes necessary because of constant use of facilities, the effect of the weather and atmospheric conditions on the components of the buildings.

2. Rectification: Rectification work usually occurs fairly early in the life of a building; but it can also occur some time within the lifespan of the building. It arises from shortcoming in design, inherent fault in or unsuitability of component, damage of goods in transit or installation and incorrect assembly. Rectification represents a fruitful point at which to reduce the cost of maintenance, because it is available. All that is necessary at any rate in theory is to ensure that components and materials are suitable for their purpose and are correctly installed. Rectification work could be reduced by the development and use of performance specifications and codes of installation (Lee 1987 p. 23) (according to Cobbinah 2010). Rectification is the response to inherent defects in design, construction or installation stages of the building process.

3. Replacement: Replacement occur at all cost in buildings. It is inevitable because service conditions cause materials to decay at different rates. Much replacement work stems not so much from physical breakdown of the materials or element as from deterioration of the appearance.

Aims of maintenance

The primary aim of maintaining a building is to ensure that the building continue to serve the purpose for which it was put up. The purposes for which maintenance are undertaken include:

1. To create suitable appearance can make a positive contribution to external environment and social condition. Dilapidated buildings can contribute to social deprivation and badly maintained services and facilities, waste energy and resources and can affect the environment.

2. To maximize the life of main components and materials – maintenance can reduce cost of subsequent maintenance by extending periods between repairs and replacements.

3. To ensue that building do not detract from surroundings and also maintain a suitable appearance.

4. To maintain the value of a building – a better maintained building normally has greater value, however, increased value may be marginal as location and size of site all play an important in the determination of value (S. Afranic and Osei-Tutu 1999) according to (Cobbinah, 2010).

Factors influencing decision to undertake maintenance

According to (Cobbinah, 2010) identify the following as influencing the decision to carry out maintenance on a building.

1. Inadequate finance: It is generally acknowledged that inadequate finance is a major constraint on effective property management, partly because maintenance budgets are the easiest to cut when money is scarce. Maintenance expenditure can be absorbed more easily in commercial and industrial organizations where it may account for as little as 0.5% of turnover but even in these cases maintenance is taken for granted except when it threatens production or profitability.

However, the situation is more serious in the public Hospital building where damaging effects of poor maintenance are less immediately obvious.

1. Bad management – refers to the idleness and waste among maintenances personal. Stapleton (1994). In S. Afranie and E. Osei-Tutu (1999), according to (Cobbinah, 2010) relates than the decision to carry out maintenance is affected by many factors among whch are:
2. Cost – Investors would want to have the most economic method for carrying out maintenance work whether corrective or preventive, thus they look at:
   1. Actual cost of maintenance of the building to the cost of maintaining similar buildings.
   2. Consideration of money spent to achieve acceptable standard at present.
   3. Cost of maintaining same standard in future and economics of replacing facilities
   4. Amount of work available and priority of work to be executed.
3. Availability of physical resources – the availability or non-availability of physical resources affects decisions in that, when suitable materials for maintenance are not available, it becomes difficult to undertake maintenances. Again even if suitable materials are available but not in adequate quantities and the alternative materials are not available, it will deter people from undertaking maintenances activities. The level of craftsmanship in terms of both skills and efficient numbers can also affect decisions to carry out maintenance.
4. Urgency of work – Thus also affects decisions on maintenances in that investors consider whether delayed work in the shot run will required more expensive work at a later stage. This usually take into account.
   1. Safety of building
   2. Possible damage to structure and finishes used in the building
   3. Interference with activities carried out in the building.

INSURANCE CLAIMS

CLAIMS

Claims can be define as the assertion of a right or a policy of assurance when the event insured against happens. A claim in construction contract may arise from measurement, quantities, rates, delays and disruption or a combination of these. Aswo (1998) sees claim as contractually extra-contractual or ex-gratia. Contractual claims are found in the clause of the contract and an adjudication name there in.

Extra-contractual claims is said to arise when the contract makes no specific provision for the basis of the claiming such situation, redress is sought in common law of equity, therefore adjudication is rested in the court only. x-gratia claim arise in situation where there is no ground for redress in the contract or common law, it is said to be sympathetic claim, which the public authority never honour. Chejina (1995).

This means that the exact amount of the compensation is not known before the loss occurs .however, in property insurance, the general rule is that the measure of indemnity in respect of the loss of any property is determine but by its cost, by its value at the date of the loss and at the place of the loss.

SETTLING OF INSURANCE CLAIMS

The greatest single features of insurance scheme as far as the insured is concern is the claims service provided, claims settlement therefore, form one of the major aspect of insurance in construction, if claims are delayed or withheld without satisfactory reasons, the indigenous construction companies will lose confidence in the insurer concern (Liyadu 1985).

In other to improve the conditions in claim settlement, the indigenous construction companies should be educated on the normal procedure in claims settlement. And as for other parties, there should be compromise and prompt attention from all parties concern in the claims settlement, these include the insurer, the third parties, police, surveyors, engineers, expert loss adjusters and repairers.

The insured may submit his claims personally or through a fully authorized agent acting on his behalf such as his insurance broker.

Because of some special circumstances surrounding existing works such as

• The complexity and size of many construction projects.
• The frequencies of losses, large number of collaborating parties with potentially conflicting interest, the difficulty with some of the problem that may arise, these difficulties demand a special claim procedure as such a building insurance claim normally follow a patterned procedure as follows

1. Notification: As in other classes of insurance, the policy conditions require the insured to inform the insurers immediately in written upon having knowledge of any event that may give rise to a claim. This is so important that nearly every insurance policy will require notification within stipulated period.
2. Particulars and proof of loss: The duty of providing full particulars and proof of loss is the insured obligation, he is to provide the insurers prompt and full information about any accident and its circumstances, if possible he should provide photographic evidence and damage part should be retained for subsequent inspection if required.
3. Investigation: if need be an adjuster or team of experts (quantity surveyor, engineers and architect) will be appointed to make any further enquiries that may be needed to establish the facts and circumstances not known to the insured and insurer. The team will then submit its report and recommendation on which the insure bases his final decision on awards.
4. Payment and method of settlement: In other classes of insurance, payment is required to be effected within three month either by cash, replacement repair but in case of construction (building insurance),it is often not possible to effect full payment within three months, as a replacement or repair of a collapse building may need a period of time more than three months.

To effect payment in construction insurance, there is often a provision in the condition of contract as to the method of payment for example in the JCT form of contract clause 20 (a)

(2) Made a provision for the payment of contractor to be installments made under certificate of the architect issued at the period of interim certificates name in the conditions of contract. The final stage of claim settlement is marked with the filling of “settlement of claims are properly made and followed up, it is advisable that contractors keep a file of report and claim

INSURANCE SCHEME AVAILABLE TO THE CONSTRUCTION INDUSTRY

INSURANCE SCHEME AVAILABLE TO THE CONSTRUCTION INDUSTRY

The following are types of insurance scheme available to the construction industry in Nigeria:

CONTRACTOR ALL RISK INSURANCE (C.A.R ) –different types of civil engineering work ,ranging from small building to massive dam ,such has residential and office building, hospital school ,theater factory, power plant road railway facilities , air port , bridges ,tunnel. Water supply drainage system, canal, e.t.c are exposed to damage from a wide range of causes such as fire lightening. Flood storm and other accidental damages.

CONTRACTOR PLANT AND MACHINERY (C. P. M) –plant and equipment often constitute considerable part of a building contractor investment ,contractor plant and machinery is an all risk policy covering the plant and machinery sued by the contractor at the site for various project

ELECTRONIC EQUIPMENT INSURANCE (E .E. I ) –with the present electronic era in the country Nigeria, almost every industry rely on electronic aids , it is very glaring that such electronic equipment are very costly enough to warrant a comprehensive policy to cover the electronic equipment, such as
– Communication facilities such as teleprompter, telex.
– Office machinery such as word processor ,printing fax machine e.t.c

ERECTION ALL RISK INSURANCE (E. A. R) – the basic concept of erection all risk insurance is to offer comprehensive and adequate protection against all site risk, involve in the erection of machinery plant, steel structure of any kind as well as third party claim in respect of property damages injury arising in the connection with the execution of the erection project.

MACHINERY BREAKDOWN INSURANCE(MBD) – since the substitution for perfection in maintenance is zero to avoid breakdown in machine, however breakdown still occur involving expensive machinery equipment consuming financial investment. This insurance is an accident insurance on machinery. It covers machinery against sudden and unforeseen accident.

RISK IN CONSTRUCTION

RISK IN CONSTRUCTION

Risk in Construction – Risk is the probability of occurrence of a defined hazard and the magnitude of the consequences. Risk and uncertainties are inherent in all construction projects.

Risk in relation to construction was describe by Bufaied (1987) as a variable in the process of construction projects whose variation results in uncertainty as to the final cost, duration and quality of the project.

Ashworth and Hogg (2003) explained that all projects have life cycle or a sequence of stages and activities from beginning to completion and there is always a degree of risk associated with each stage.

RISK ASSOCIATED WITH CONSTRUCTION WORK

Shittu (1996) indicated that the risk which exists in the construction site during the process of work may arise as a result of the following possible injuries :

a) The possibilities of injury to persons

b) The possibilities of damage to property

c) The possibilities of damage to the work or part of the work.

d) The possibilities of loss of materials and plant items

INJURY TO PERSONS

This occurs in two ways, injury to work men who are directly engaged to work on site and injury to persons who are not in any form connected to the contractors work on site, this belong to the first category, but if such object were to fall across the road and landed on the body of a passer by, causing him hence, injury here belongs to the latter part negligence.

INJURY TO PROPERTY

This could arise when construction activities on site, cause some nuisance to escape and falls, this cause damage to a neighbour property.

For instance, where subsidence of a building going on in an adjacent site or a piece of block falls of some height and across the public road, to damage completely across the public road, to damage completely the body of a moving or parked vehicle.

DAMAGE TO THE WORKS

This may be due to situation or entire works that may hinder construction such as fire, tempest, earth tremors, faulty material or workmanship, solely due to the construction companies negligence and unforeseen force of nature e.t.c

LOSS OF MATERIALS AND PLANT ITEMS

This could be as result of theft or pilfering and also damage to temporary structures, it could be as a result of war note, commotion, disorder, nuclear and pressure wave risk e.t.c

TYPES OF INSURANCE COVER ON BUILDING PROJECTS

TYPES OF INSURANCE COVER ON BUILDING PROJECTS

The broad pattern of contracts with regard to injury is first to ensure that the insurance companies will compensate the indigenous construction companies, in respective of a wide range of injuries arising out of the progress of the works.

There are usually three main types of covers, which require to be taken by the insurance company to compensate the indigenous construction companies as far as insurance of new building project are concerned, these include:

a. Employers liability: other wise referred to as workmen compensation insurance. This type is design to protect the indigenous construction companies against injury to be sustained by the contractor employer on the works, out of or in the course of the employee appointment.

b. Public liability: this policy protect the indigenous construction companies and building owner from the legal liabilities, arising out of bodily injury to the third party (A person who is not building owner) as well as protection for loss of damage to the third party proposed for instance, business escaping from a construction site and causing bodily harm person’s, who are not employee or land owners or damages to an adjourning properties.

c. Insurance of the works: This policy is design to cover the cost arising from damage to or loss of a contract works, while the project is still under going construction that is before practical completion. The cost of consultant’s fee is usually also included in the value of the work to be insured. The essence of this is to ensure that, any fee paid to the consultant for redesigning or carrying out any duties in respect of the damage works are also borne by the insurance company in building contracts. The value of all unfixed materials and goods that have been brought into the site or its adjacent or property certified but off site are insurable, while the contractor’s plant and temporary building are excluded from this cover. The three types of insurance cover in building project are usually combined and referred to as a contractors all risk (C.A.R ) policy in the insurance market .

INSURANCE POLICY

INSURANCE POLICY

Insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policy holder, which determine the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promise to pay for loss caused by perils covered under the policy language.

Insurance contract are designed to meet specific need and thus have many features not in many other types of contracts. Since insurance policies are standard forms, they feature boiler plate language which is similar across a wide variety of different types of insurance policies.

The insurance policy is generally an integrated contract, meaning that its include all form associated with the between the insured and insurer in some cases, supplementary writing such as letter sent after the final agreement can make the insurance policy a non –integrated contract, one insurance textbook states that generally “courts consider all prior negotiations or agreements…every contractual term in the policy at the time of delivery, as well as those written afterward as policy rider and endorsement with both parties consent, are part of written policy.

The textbook also state that the policy must refer to all papers which are part of the policy, oral agreement are subject to the parole evidence rule, and may not be considered part of the policy if the contract appears to be whole.

Advertising materials and circulars are typically not part of a policy. Oral contracts pending the issuance of a written policy can occur.

OBJECTIVES OF THE INSURANCE POLICY

• creating a competitive environment that may lead to brand activities increased investment and better public awareness for the benefit of insurance companies to the society at large
• Achieving the necessary economies of a scale that will make insurance affordable and accessible
• To increase the industry and the indigenous company low retention capacity.
• To attract foreign capital intrusion into the industry for enhancing premium growth and profitability
• To enable operator to attract the ware for the strategic investment in human capital development, i.e to attract train and retrain professional that are able to utilize new technology for greater efficiencies.
• Encouraging the industry to leverage on synergies from merger and acquisition and other alignment to achieve superior product innovation deeper market penetration and product distribution.

 GENERAL FEATURES OF INSURANCE POLICY

The insurance contract or agreement is a contract whereby the insurer will pay the insured (the person whom benefit would be paid to, or on behalf of).if certain define event occur. Subject to the “fortuity principle “the event must be uncertain. The uncertainty can be either as to when the event will happen (e.g. in a life insurance policy, the time of the insured death is uncertain) or as to fit it will happen at all (e.g. in a fire insurance policy, whether or not a fire will occur at all).

Insurance contract are generally considered contract of adhesion because the insurer draw up the contract and the insured has little or no ability to make material changes to it.

This is interpreted to mean that the insurer bears the burden if there is any ambiguity in any terms of the contract. Insurance policies are sold without the policy holder even seeing a copy of the contract. Insurance contract are unilateral meaning that only the insurer makes legally enforceable promises in the contract. The insured is not required to pay the premiums, but the insurer is required to pay the benefit under the contract if the insured has paid the premiums and met other basic provision.

Insurance contracts are governed by the principle of utmost good faith uberrima fides which required both parties of the insurance contract to deal in good faith and in particular its impact on the a duty to disclose all material facts which relates to the risk to be covered. This contrast with the legal doctrine that cover most other types of contracts, caveat emptor (let the buyer beware).in the united the insured can sue an insurer in tort for acting in bad faith.

INSURANCE DOCUMENT

INSURANCE DOCUMENT

There are various insurance document used for different types of insurance, which are essential for all classes of insurance business. The object of insurance documents is give to the insurer full particulars of the risk against which insurance protection is desired. It also provides evidence of contract in to which the parties have entered.

1. PROPOSAL FORMS
The company’s printed proposal form is normally used for making an application for the required insurance cover. The proposal form contain question designed to elicit all material information about the particular risk proposed for insurance. The number and nature of question varies according to particular class of insurance covered.

In marine cargo insurance, insurance document is not the practice to use a proposal form, although some times it is usual to obtain a questionnaire or a declaration form duly completed. Proposal forms are used for hull insurance.

In fire insurance, the practice varies among the companies, proposal forms are not generally used for large industrial risks where inspection of the risk is arranged before acceptance of the risk. Forms are used for simple risks. Proposal forms are used in respect of risks which are normally declined but have to be accommodated to retain the goodwill of the client.

In miscellaneous insurance, proposal forms are invariably required and they incorporate a declaration which extends the common law duty of good faith.

Fire proposal forms may or may not have the declarations. The following items may be considered as common to all proposal forms.
1. Proposer’s name in full
2. Proposer’s address
3. Proposers profession occupation or business
4. Previous and present insurance
5. Loss experience
6. Sum insured
7. Other section, s-signature, date, plate e.t.c

2. POLICY FORMS
Policy forms, like proposal forms, vary within wide limits as between different classes of insurance but they have certain features in common. The policy is a document which provides evidence of the contact of insurance. This document has to be stamped in accordance with the provision of the India stamped Act 1899.Where the insurance is governed by a tariff or a market agreement, the policy wording is prescribed there in itself and it is obligatory for insurer to use this wordings. In fire and miscellaneous insurance, the policy form used is on a scheduled basis i.e. all individual details relating to a particular insurance are grouped together in a schedule.

Generally speaking policies are divisible into certain well define sections and these are as follow:
1 .Recital clause or preamble
2 .operative clause
3 .Attestation clause
4 .conditions
5 .Schedule

3. COVER NOTE
A cover note is a document issued in advance of the policy. It is issued when the policy can not for some reason or the other, be issued straight away. Cover note are issued when the negotiations for insurance are in progress and it is necessary to provide cover on a provisional basis or when the premises are being inspected for determining the actual rate applicable. Pending the preparation of the policy, the cover note is issued as evidence of protection for a temporary period of time and to prove that cover is in force. Here is a brief detail of cover.

In marine insurance, marine cover notes are normally issued when details required for the issued of policy such as name of the steamer, number of packages or exactly etc are not known. In fire insurance,, the operative clause of a fire cover note is issued in consideration of the proposer named in the scheduled having proposed the effect of an insurance against fire for the period mention, on the usual term and conditions of the company’s policy. In motor vehicle insurance, motor cover notes are to be issued in the form prescribed by the motor tariff.

4. CERTIFICATE OF INSURANCE
In motor insurance, in addition to the policy, a certificate of insurance is required by the motor vehicle Act.1988.this certificate provide evidence of insurance to the police and registration authority. It contains the essentials features of the cover including the terms and the conditions. In marine insurance, certificate of insurance is issued to provide evidence of cover on shipment insured under cargo open cover or policies.

5. ENDORSEMENTS
It is the practice of insurer to issue policies is a standard form, covering certain perils and excluding certain other. If it is intended at the time of issuing the policy to modify the terms and condition of the policy, it is done by setting out the alteration i.e. Memorandum which is attached to the policy and forms part of it. The memorandum is called an endorsement.

DUTIES OF INSURANCE COMPANY

DUTIES OF INSURANCE COMPANY

Insurance company (ies) have duties and obligation expected to comply with, while handling a claim submitted by a policy holder.

1. An insurance company is mandated to treat its policy holder in a reasonably and good manner, they are to fully investigate claim submitted by their policy holder and should never deny claim prior in making a complete investigation.

2. They also have duty to exercise diligent in the handling and payment of claims.

3. They are mandated to make prompt and full payment on claims, when liability is not in dispute. When an insurance company does deny a claim, it a duty for them to provide the policy holder, with an evidence or basis for such denial.

4. An insurance company is not expected to harass or embarrass a witness or solicit false statement to close a file unless a policy holder reasonably, it conduct under California law may be said, it is not effective and could result to damage above, which may go beyond the contract benefit under the policy, “my brother keeper duties and liability of agent and broker”

In Nigeria today, insurance policy has played many important role in societies, protecting individuals, properties and businesses from different types of risk.

A wide variety of policies and product have been developed to cover common and not so common risk found in today business or construction world.

However in these eye of law, agent and broker, it incur certain duties and obligation undertaken to acquire insurance coverage for a customer and which continue after delivery of the policy, which they and the insurance companies should be aware of.

6.  Insurance policy or companies are mandated to disclose coverage to their holder.

This duty is widely accepted and recognized as a component of the duty of good faith and fair dealing in the environment claim, however the system has been violated by the insurance policies, which demand to conceal, rather than disclose coverage environmental claims.

CHARACTERISTIC OF INSURANCE RISK

CHARACTERISTIC OF INSURANCE RISK

The following are characteristics of insurance risk:

Commercially insurance risks typically share the same characteristics (Mehr and camack, 1976).

1) A large number of homogenous exposure units the vast majority of insurance policies are provided for individual member of a very large clause.

2) Definite loss: The event that gives risk to loss that is subject to the insured at least in principled, take place at a known time in a known place and from a known cause ideally, the, time, place and cause of a loss should be clear enough that a reasonable person with sufficient information could objectively verify all these element.

3) Accident loss: The events that constitute the trigger of a claim should be fortuitous or at least outside the control of the beneficiary of the insurable, the loss should be pure in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculation elements, such as ordinary business risks are generally not considered insurable.

4) Large loss: The size of the loss must be meaningful from the perspective of the insured insurance premium need to cover both the expected cost of losses, plus the cost of issuing and ambushing policy adjusting losses and supply the capital be able to pay claims for small losses those later cost may be several time the size of the expected cost of losses, there is little point paying such unless the protection offered has real value to buyer.

5) Affordable premium: If the likelihood of an insured event is so high, or

the cost of the event so large that the resulting premium is large relations that any one will buy insurance even if on offer.

6) Calculate loss: There are two elements that must be at least estimated, if not normally calculated, the probability of loss and the empirical exercise, which cost has more to do with ability of a reasonable person in possession of a copy of insurance policy and a proof of associated with a claim presented under that policy to make a reasonable definite and objective evaluation of the amount of the loss recorded as a result of the claims.