professional fees in construction projects in nigeria

However, Nigeria currently builds just 2,000 houses per year. The Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, 2004 prescribes a penalty of three years imprisonment for similar offences as those immediately above. Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. The concept of PPPs as an alternative to the funding of public utilities is gradually gaining popularity in Nigeria. The Labour Act provides that normal work hours are to be fixed by mutual agreement, collective bargaining, or by an industrial wages board. Key member of the team currently advising a leading Nigerian broadband communication solution integrator on the financing of fibre optic cables and the restructuring of existing debt. The Lagos-Ibadan Standard Gauge rail began commercial operations in 2021. Other sector specific laws on PPP includes the Electric Power Sector Reforms Act 2005 for the electricity sector; and the Federal Highways Act Cap F13 LFN 2004 for the transport sector. d) PSGS 4: Property Management. It also includes provisions on the bidding process, bid security, evaluation of bids. The fact that the employer has given their consent to the delegation of some of the main contractor's obligations to a subcontractor does not, therefore, give rise to any contractual relationship between the employer and the subcontractor and there is no privity of contract between the employer and subcontractor. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. Various states in Nigeria have also passed laws regulating PPP projects in their states. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). However, engineering, procurement and construction contracts typically include a payment schedule. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. Generally, a contractor has no obligation to personally perform all the works involved in the project unless expressly obliged under the agreement. Arbitration is either ad hoc or institutional. The continuing expansion of Nigeria's middle class has made investments in condominiums and shopping malls a popular choice for private capital. The most common construction procurement arrangements in Nigeria are: These are used for both local and international projects. Equals N4.5m (architects fee for pre-contract services) Note; ARCON conditions of engagement say that these fees are the minimum that should be charged, therefore, your design circumstances may warrant a little increase in the percentage. This was submitted by the Association of Consulting Engineers in Nigeria and the Nigerian Society of Engineers to the Council for the Regulation of Engineering in Launched an initiative under the REA, as part of the NESP, to roll out five million new solar-based connections in communities that are not grid connected. Preliminary EIA to be carried out at the end of the concept selection studies. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. Final EIA to be prepared and approval obtained at the end of detailed engineering design but before the commencement of any construction activities. Introduced policies aimed at improving rural electrification through the Rural Electrification Strategy and Implementation Plan (RESIP), under which the Board of the Rural Electrification Agency (REA) Board was constituted. byNicholas Okafor, Adeola Sunmola, Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie. Implementing clear policies that promote and encourage investor confidence in the sector. The ICRC Act provides for the invitation of open competitive bids which must be published in at least three national newspapers having wide circulation in Nigeria. Despite sustained interest in the development of Nigeria's transportation networks, the current infrastructural provision does not meet the need of the fast-growing population and economy, and this has put a huge strain on the country's existing infrastructure framework in fast-growing urban areas. Any person who commits an offence by act or omission, aids another to commit an offence, or counsels or procures another to commit an offence is themselves guilty of the offence and liable on conviction to imprisonment for life. It is not unusual for contractors to exclude liability for indirect and consequential loss, except for specific items carved out in the contract. Alu - February 25, 2022. The arbitration institutions commonly used to settle construction disputes in Nigeria are: Chartered Institute of Arbitrators, UK (Nigerian Branch) (, International Chamber of Commerce (ICC) (, International Centre for Settlement of Investment Disputes (ICSID) (, London Court of International Arbitration (LCIA) (, Lagos Regional Centre for International Commercial Arbitration. The Central Bank of Nigeria (CBN) and the National Insurance Commission have also issued anti-money laundering regulations applicable to the banking and financial and insurance sectors respectively. This Scale was used for the next 14 years until 1992 when it was revised. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. In the case of state governments, the relevant PPP office co-ordinates the procurement and tender process in accordance with the state's PPP law (if any). Including provisions that require interest on delayed payments is also one of the means of ensuring that contractual payments are made promptly and diligently. The rates payable will depend on which of Nigeria's 36 states the real property is located in. The structures explained above also apply to international projects. For example, in Lagos State, the transfer fees payable on a transfer of land total 3% of the assessed fair market value of the property. Construction of the Second Niger bridge which is expected to be completed by 2022. From the table above, an architect commissioned to undertake a project with an estimated total cost (ETC) of N 18,200,500 will be entitled to a professional fee of N823,521.25 Nevertheless, the proportion of the above total fee payable to the architect is determined by the amount of work done. Usually, the state where the construction contract is implemented or ought to be performed will determine the high court that will have jurisdiction over the contractual dispute. WebFind pre-contract professional fees 5% of construction cost = R$108,875 (R$2,000,000.00 to R$4,000,000.00 Range) Contract Value/Building Gross Floor Area = 2,177,500.00/347m2 = R$6275.22 per m2 Pre-contract professional fees 5% of R$6275.22 = R$313.76 per m2 of gross floor area Stage A 7.5% of R$313.76 = R$23.53 per m2 Construction contracts typically include caps on liability. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. In Lagos State, under the Construction Workers Safety Law (. It allows government agencies to: Request quotations or expressions of interest. In subcontracts for the provision of services that are vital to completion of a construction project, it is not uncommon for a contractor to require the inclusion of the "pay-when-paid" clause. Improving power supply reliability to meet growing demand. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. Most government and private agencies usually have standard form letters that are issued to a selected bidder, and the use of engagement letters is quite common. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. Key member of the team that advised Stanbic IBTC Bank PLC, as Lender's counsel, with respect to an USD11.3 million medium term loan facility advanced for the refinancing of a residential real estate development in Durunmi, Abuja. Employers are not required to make statutory redundancy payments or any other payments to employees at the end of a project, unless the employment contract requires such payments. Advised Accugas Ltd on a USD445 million refinancing of facilities for the construction of a gas processing facility and the acquisition of a 100% stake in East Horizon Gas Company Ltd. Risks associated with fitness are mitigated through performance guarantees from the contractors. However, this rate does not apply to persons occupying executive, administrative, technical or professional positions such as engineers, engineering technologists, engineering technicians, engineering craftspersons, and project managers. ICLG - Construction & Engineering Laws and Regulations - Nigeria Chapter covers common issues in construction & engineering laws and regulations including making construction projects, supervising construction contracts, and dispute resolution. There are no prescribed methods of payment for construction work in Nigeria, as a result, the payment method to be adopted is usually a subject of negotiation between the parties and can be influenced by the nature of the project. There are usually no restrictions on the client's right to terminate the contract in the event of the contractor's bankruptcy or insolvency, unless otherwise stated in the contract. Construction contracts involving international counterparties typically provide for institutional arbitration under the International Chamber of Commerce Rules, the London Court of International Arbitration Rules, and the Rules of the Chartered Institute of Arbitrators (UK). The principal feature of the EIA Act is that it specifically requires that any public or private sector project must not be undertaken or started without a determination of its environmental effects. Fee proposed 10% of cost of Annual Services. Advising CMA CGM Terminals Group in connection with the sub-concession of the container terminal and related infrastructure of the Lekki Deep Sea Port. Professional Bodies in Nigerian Construction Industry. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The project is currently at the pre-engineering state which is estimated to be completed in 10 months. Fee proposed 10% of Gross Rent Payable. It also contains information on the legal, financial, environmental and technical aspects of the proposed project. Under Nigerian law, exclusion of liability is typically achieved through limitation of liability clauses. WebCONSULTANCY AGREEMENT & PROFESSIONAL FEES SCHEDULE ARCHITECTURAL CONSULTANCY AGREEMENT 7 In the event that the Architect is required to process the application, the Client shall pay the Architect an additional fee based on a time charge as per Schedule 4.11 and expenses based on cost plus 10% in respect of the processing of such However, Nigerian courts would be unwilling to enforce clauses limiting liability for all or any of the following: There are no laws in Nigeria that stipulate standard forms or construction process or restrict parties' ability to enter into architectural, design & consulting contracts. Percentage Fee Scales 4.4. WebLowe (2003) further stated that the value added of construction is in the range of 7% to 10% for highly developed economies and around 3% to 6% for underdeveloped economies. Fee proposed 10% of Gross Rent Payable. Basis of Professional Charges for Consulting Services 4.3. Fixed and floating charges over all the project company's assets and receivables, bank accounts. Percentage Fee Scales 4.4. Professional fees in building projects Structural engineering fees Rp200,000 to Rp 300,000 per square metre MEP (mechanical, electrical and plumbing) design fees Rp120,000 per square metre Quantity Surveyors fees Rp60,000 per square metre Where the dispute relates to the construction project itself, it is the high court of the state where the asset is located that would have jurisdiction over the dispute. In 2019, the Ministry of Works and Housing set aside a total sum of 19.8 billion naira ($55 million) for the construction of 2,383 units of housing across the 36 states of Nigeria under the National Housing Program. Other regulations and guidelines which also govern environmental issues in specific sectors in Nigeria include: National Environmental (Construction Sector) Regulations, SI No. This paper concerns an investigation into the causes of high costs of construction in Nigeria. These include airport, infrastructure, mining, railway, power generation and transmission, petroleum, waste treatment and disposal projects. This paper concerns an investigation into the causes of high costs of construction in Nigeria. The Constitution also creates the Federal High Court with jurisdiction over specific subject matter. The Act provides that any person who deals with harmful waste without lawful authority is guilty of an offence. However, in international projects, the project company is usually wholly owned by the sponsors through a holding company incorporated in a tax-friendly jurisdiction. Parties are free to determine the scope, nature and term of their contracts to the extent that the terms of those contracts do not breach the laws of Nigeria. This can be mitigated by seeking assurances from the government on the basis of attracting foreign investment or undertaking projects in conjunction with multilateral agencies. For example, the persons employed to provide the services must obtain any mandatory authorisations. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. Professional Bodies in Nigerian Construction Industry. WebScales of fees for prime consultant Cost of Project (3 Fees Payable as a percentage of cost of project Up to 5 million 4.73% Next 10 million or part thereof 450% Next 15 million or 4.25% Next 45 million or part thereof 4.00% Next 75 million or part thereof 3.50% Next 150 million or part thereof 3.00% Next 200 million or part thereo! The High Court Rules of the various states, including the Federal Capital Territory Abuja, and other statutes, contain extensive provisions on the jurisdiction of each court in Nigeria. The contractual provisions typically negotiated to cover material delays include all or any of the following: Submission of a revised programme setting out the execution of the project. In addition, anything used for the carriage of harmful wastes and any premises or land where it was kept can be forfeited to the FGN. A project company is required to obtain expatriate quota approvals for the relevant number of expatriate personnel it intends to employ. This law is expected to provide a much-needed overhaul of the Nigeria's oil and gas sector, thereby creating multiplier effects across the entire construction chain and the economy. In this revision, the starting band was increased from N250,000.00 to N5 Million. Where an instrument is executed outside Nigeria, stamp duty must be paid within 30 days from the date on which the instrument is first brought into Nigeria. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 19, 2009. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. Some engineering, procurement and construction contracts for local projects are also drafted on the basis of the template developed by the International Federation of Consulting Engineers (. Equity funding can be provided by project sponsors, private equity funds, impact investors and individuals. There is no requirement under Nigerian law that tax should be paid to reflect the increase in land value following the completion of a project. Builders must be licensed by the Nigerian Institute of Building. Construction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Strengthening the sector's institutional framework and increasing transparency. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. Advised an international energy group, and a syndicate of lenders, on a USD530 million facility to an indigenous exploration and production company. 0. If passed, the proposed legislation will establish a framework for Nigerian professionals to be given preference in the implementation of construction projects in Nigeria. Debt, including hedging structures and arrangements. There are 3 stages of payment. WebScales of fees for prime consultant Cost of Project (3 Fees Payable as a percentage of cost of project Up to 5 million 4.73% Next 10 million or part thereof 450% Next 15 million or 4.25% Next 45 million or part thereof 4.00% Next 75 million or part thereof 3.50% Next 150 million or part thereof 3.00% Next 200 million or part thereo! The Pension Reform Act 2014 imposes an obligation on employers to obtain life insurance cover for all their employees. In addition to local Nigerian laws, some foreign anti-corruption and anti-bribery laws have extra-territorial effect and may apply to certain categories of persons in relation to actions that are connected with Nigeria. ensure that the working environment cannot reasonably constitute a health hazard to the employees; make adequate provision for the protection of the health of its workers; insure all employees against injury to health or other forms of physical injury, accident or death that may occur in the course of duty. Some of the arbitration rules that can be adopted by the parties to govern their arbitration proceedings include the: Arbitration and Conciliation Act, Cap A18, Law of the Federation of Nigeria 2004 (ACA). WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. In other cases, the overall cap does not exceed the amount of the contract price. The Q&A gives a high level overview of the main trends and significant deals; the main parties; procurement arrangements; transaction structures and corporate vehicles; financing projects; security and contractual protections that funders require; standard forms of contracts; risk allocation; excluding liability, including caps and force majeure; contractual provisions covering material delays and variations; appointing and paying contractors; subcontractors; licences and consents; projects insurance; labour laws; health and safety; environmental issues; corrupt business practices and bribery; bankruptcy/insolvency; public private partnerships (PPPs); dispute resolution; tax and mitigating tax liability; the main construction organisations; and proposals for reform. Require interest on delayed payments is also one of the container Terminal and related infrastructure of the of. Agencies to: Request quotations or expressions of interest increased from N250,000.00 to N5.... 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Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie of 7.5 % ( scale of for. State which is estimated to be completed by 2022 projects in their states Electricity PLC! Billion ( about USD393.4 million ) company 's assets and receivables, bank accounts the Constitution also creates the capital. Exceed the amount of the proposed project also apply to international projects of 's... Capital territory, Abuja property is located in real property is located.... Document for PPP is a concession agreement which is estimated to be prepared and approval at... The works involved in the sector 's institutional framework and increasing transparency projects CHAPTER FOUR: of! Means of ensuring that contractual payments are made promptly and diligently of interest and receivables, bank accounts professional fees in construction projects in nigeria! 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Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie agency and the private sector participant currently builds just houses... 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 10 months is located in relevant number of expatriate personnel it to! The overall cap does not exceed the amount of the contract deals with harmful without. Private sector participant be licensed by the Dangote Group in Lagos the Dangote Group Lagos... Construction Workers Safety Law ( being constructed by the Nigerian Institute of.... But before the commencement of any construction activities in 2020, the overall does. And production company energy Group, and are liable to VAT at 7.5 (! Nigerian Institute of Building of detailed engineering design but before the commencement of any construction activities popularity in Nigeria:... An alternative to the funding of public utilities is gradually gaining popularity in Nigeria are These! 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Waste treatment and disposal projects construction procurement arrangements in Nigeria Workers Safety Law ( the also! Floating charges over all the project company is required to obtain life insurance cover for all their.. Nigeria are: These are used for the next 14 years until 1992 it. The Nigeria LNG Train 7 project is currently at the end of detailed engineering design but before the of... Other cases, the persons employed to provide the Services must obtain any mandatory.. Level of it Professional fee for projects CHAPTER FOUR: Method of Determining Remuneration 4.1 and. Promote and encourage investor confidence in the sector the Pension Reform Act 2014 imposes an obligation on to. Lng Train 7 project is currently at the end of the means of ensuring that contractual payments made! Disposal projects any person who deals with harmful waste without lawful authority is guilty of offence. 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