The Federation of Construction Industry (FOCI) has lamented that the inability of the federal government to adequately fund road projects to contractors has led to sacking of 41,000 workers in two years.
Speaking at a press briefing at the end of its 70th Annual General Meeting themed ‘The Competitive Advantage of Construction in Nigeria’ on Wednesday, FOCI’s President, High Chief Vincent Barrah, said termination, suspension, or delayed payment of its members contracts has resulted in significant loss of employment across the country.
‘This is increasing the unemployment rate in the society. Situational reports from our unions show that about 1,000 workers in the senior staff category and 40,000 workers in the junior staff category lost their jobs within the period under review. Imagine the consequences and the multiplier effect on their families, the market women, and the economy at large,’ he said.
He added that despite FOCI being the second largest employer of labor in Nigeria after governments as it employs millions of Nigerians directly and indirectly, the slow pace of work by members within the last one year has been very worrisome.
He noted that a major constraint members faced is the gap between the annual budgetary provisions and the actual cash releases.
‘Many infrastructure projects are awarded without multi-year funding, resulting in delayed payments, accumulation of certified debts, reduced construction activities, and in some cases, suspension of projects. Most of our members handling various projects are not working as we speak, and those working are operating at a very low capacity due to non-payment of certified jobs.’
He lamented that its members suffered arbitrary termination of contracts by the Ministry of Works even though the termination of those contracts were done by mutual consent.
He said the termination is mostly due to inadequate funding that delayed execution of those projects.
‘You do not expect a contractor to continue working without the provision of the necessary funds by the employer. Infrastructure projects are capital intensive, and for contracts to be completed on schedule, it requires constant funding. So, if projects are delayed, suspended, or even abandoned, it is not the fault of contractors.’
He added that the non-compliance with the standard conditions of contracts in existence as at the time the contracts were awarded posed serious challenges to its members, adding that total rejection of existing mechanisms for adjusting contract prices do not always respond adequately or quickly to major movements in inflation, foreign exchange fluctuations, and construction input costs.
‘Prolonged approval of variations can leave contractors executing projects at rates substantially below the prevailing market conditions. It is a well-known fact that the determination of contract prices is a function of many factors, including material prices, labour costs, the geographical location and soil condition of the project area, and so on. Every project is unique. So, either in augmentation or review of rates, the consideration should be based on its uniqueness and must reflect the current realities for it to be effectively implemented.
He added that significant depreciation of the naira and increases in the price of cement, steel, bitumen, diesel, equipment, spare parts, and other construction inputs have substantially increased project costs, thus contracts awarded several years ago may consequently become commercially difficult to execute at their original rates.