CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

It is a fact that the cost of construction, especially that of construction resources (materials and labour), has accelerated rapidly since the introduction of the Structural Adjustment Programme (SAP) in 1986 Onabule, (1991). Continuing, Onabule (1991) maintained that the exchange rate depreciation resulted in an inflationary impact on construction activities because of the short-term import inelasticity of building materials production. This escalated cost of construction contributes significantly to enlarging the average mortgage loan size demanded with serious implications for repayments and effectively marginalizing most Nigerians in the home ownership market. 

The increase in the project cost has led to high level of economic fluctuation and conflict between parties in the project contract. It is essential therefore, to identify the main dominating factors leading to high construction cost so that efforts can be concentrated on those factors in order to reduce construction cost in Nigeria.

When evaluating the success of any building project, cost is one out of the three variables that must be considered. The others being time and quality. However, there are several factors affecting the construction cost of building projects, both positively and negatively. According to American Institute of Architects (AIA) (2007), Building costs are influenced by several factors such as location, design, performance requirements, construction, and time greatly affect the building cost.

Again, Li (2009) observed that construction cost which is out of control adds to investment pressure, increase construction cost, reduces investment profit, affects investment and decision-making, and to a great extent, wastes the national finance, so it is likely to result in corruption or offence. If compared with the huge capital outlay involved in building project coupled with its proportion in the fixed capital formation of every economy in the world, the cost of building projects requires greater

attention.STRUCTION COSTS IN ENUGU, ENUGU STATENALYSIS OF DETRACTING FACTORS AFFECTING CONSTRUCTION COSTS IN ENUGU, ENUGU STATE

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