Effect of Inflation

2.10 INTRODUCTIONInflation has been in existence in the construction industry from time immemorial. Although, it was in significant during the stone age but in recent years has been so permanent due to technological development, complexity of client, construction cost and variation to meet the tastes of the day. In order to understand what Inflation on construction project is, the various ways by which it present itself must be diagnosed. That is, the cause and effect on the construction project should be known.

Tim McMahon (2008) define, Inflation is a persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money. In other word according to this definition inflation is thing getting more expensive, caused by an increase in available currency and credit beyond the of available goods and services. In addition, inflation is a sustained increase in the general level of price of goods and services. It is a measure of annual increase.

As inflation rises the percentage of goods and services rises. The Construction industry is an important sector of any national economy, since the capital investments of any country, to large extent, is based on efficiency of the sector. Inflation has become a chronic problem whose effects permeate the entire construction Industry. Owners are not only paying for the increase cost of facility and capital but also for premiums on construction prices because of the uncertainties of inflation and its side effect.

2.11 STATEMENT OF RESEARCH PROBLEM1. Inappropriate contract arrangement and tendering method led to the award of contract to a contractor with low tender sum that cause fluctuation. 2. Excessive reliance on important materials, plant and equipment make the construction cost to be high. 3. Ineffective project planning result in extension of time and inflation of contract sum 4. Delay in issuing of instruction by the client or his representative leads to postponement of work and extension of time. 2.12 AIM AND OBJECTIVE

The proposal is aimed at an appraisal of the effect of inflation on the delivery of construction project in Nigeria.

OBJECTIVESThe objective of this study is as follow:1. To Identify the causes of inflation on construction project 2. To identify suggestion to curb inflation on construction project 3. To identify how to achieve effective project planning

4. To investigate the causes and consequence of delay in issuing necessary instruction on project work 2.13 RESEARCH QUESTION1. Can ineffective project planning result in extension of time and inflation of contract sum 2. Can excessive reliance on important materials, plant and equipment make the construction cost to be high. 3. Can Inappropriate contractual arrangement and tendering method led to the to the award of contract to a contractor with low tender sum that cause fluctuation. 4. Can delay in issuing of instruction by client or his representative result to postponement of work and extension of time. 2.14 DEFINATION OF TERM AND CONCEPT

INFLATION: is a persistent increase in the level of consumer prices or a persistent Decline in the level of consumer prices or a persistent decline in the Purchasing power of money.

FLUCTUATION: This refer to increase or decrease in cost due to legislative or Market force over and above the quoted market price. In other Fluctuation is the terminology used in denote changes in Contract sum (increase or decrease) that result from change in the basic prices of labour, material and goods during the duration of the contract.

VARIATION: A variation is define in JCT standard form of building contract as the Alteration or modification of the design, quality or quantity of the Work as shown upon the contract drawing and described the addition, omission or substitution of any (minor) work or the alteration of type or standard of any material or goods to be used in the work and removal from the site of any work material or good executed or brought there upon by contractor for the purpose of the works.

PROJECT DELIVERY: Project meeting are highly relevant towards project delivery, Basically, public and private project needs to be coordinate by a leader or a supervisor. He may be appointed among the team or outside. When a project has been procured, a meeting comprising member of the professional team and contractor including major sub-contractor should be convened before field operation. 2.15 SCOPE OF STUDY

* The study is geared towards the effect which inflation has cause on the construction project in Nigeria. It is limited to how inflation affects material, plant, equipment and labour which constitute the major resource for construction works in Nigeria. The research work is limited to building project in Lagos State. 2.16 SIGNIFICANT OF THE STUDY

* The study is geared towards the effects of inflation on delivery of construction project. It is a believe that the finding will assist to device ways of reducing the effect of inflation on building construction project. This will help to actualize project with little or no significant change to the initial contract sum. * To the client it will encourage him to observe and perform his duties concerning matters relating to the execution of the project. * To the contractor, it will enable him have confident to carry out their work without abrupt disruption of works.