Navigating the Nigerian Market: Critical Success Factors for Developers

Navigating the Nigerian Market: Critical Success Factors for Developers The iron triangle for measuring success for developers is to ensure that projects are delivered within time and budget allocation without compromising quality. Considering the uniqueness of the Nigerian real estate industry, one is tempted to introduce additional metrics to capture the local market nuances. Are Nigerian developers even meeting the minimal standard, especially those in Lagos? This is a question that bothers a good number of Lagosians. Everyday, new projects are delivered in Lagos, and the city has in recent times become replete with a number of poorly built properties. Hence, building collapse incidents have been on the increase. The number of dissatisfied clients is rising and when buildings collapse or the client is not satisfied, the developer is usually the first to be queried. Based on our recent analysis of the market, there are over

50% formal housing supply gaps in Lagos alone. Developers in Lagos are under pressure to deliver within agreed timelines and this is understandable, but is this supply gap and client’s pressures enough to justify the damages that result from poorly executed projects? Your guess is as good as ours. In this article, we will look at the fundamentals, to discuss how developers can be successful by adequately balancing these three key metrics.

As much as possible, stick to the scope of the project.

Clients can cause a scope creep, and they usually do. Scope creep is when a client brings an addition to what was initially agreed on a project. Any adjustment or addition that is beyond the initially agreed project boundaries and most times, increases the project budget is a scope creep. The 9th Global Project Management Survey conducted by the Project Management Institute in 2017 revealed that 50% of projects experience scope creep. As a developer, you need to clearly agree on the scope of work before commencement. As much as possible, it is important to deliver construction projects to the taste and specification of the client. There are quite a number of poorly built projects within the Nigerian market today, and developers who can demonstrate competence in delivering quality will have an edge over the competition. Where there are scope creeps, make sure that the contract provides for additional cost remedy.

Deliver within the agreed timeline.

According to the 9th Global Project Management Survey conducted by the Project Management Institute in 2017, only 51 percent of projects are delivered within the agreed time frame. From legislative approval delays, to delays resulting from suppliers, a number of factors are responsible for projects not being delivered on time. Considering the reliance of the Nigerian construction sector on import, the odds that stack against the developer’s ability to keep to time are enormous. In an environment where it is very difficult for existing players to keep to time, this can be a good competitive advantage to exploit. As much as possible, ensure you manage your client’s expectations well, and deliver their project in time, and within the agreed budget without compromising quality. This is tough, and requires proper procurement and manpower planning to achieve.

It is important to keep to a budget.

From inflation to additional cost associated to changes in project scope, a handful of factors affect project budget. According to the 9th Global Project Management Survey conducted by the Project Management Institute in 2017, only 57 percent of projects finish within budget. This is to say that almost half of projects that are executed, overshoot the initially agreed budget. Most times, factors that influence variations in project budget are beyond the control of the developer. For instance, fluctuations in exchange rate or inflation can cause prices to significantly overshoot what was initially agreed. Irrespective of the cause of the variation, it is expected that the developer keeps things in check and proactively plan execution and procurement to avoid budget overshoot.

Here are a few tips to balance the triangle.

1. Ensure you clearly define the scope with the client before commencement and get the client to sign.

2. Procure material and manpower in time.

3. Include clauses to cater for unavoidable variables in the contract.

4. Ensure close monitoring of material on site.

5. Optimise manpower utilisation on site.

6. Ensure you have the necessary approvals from the state and local authorities.

7. Constantly communicate project flow and milestones with the client/stakeholders.

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