Effect of bond administration on construction project delivery

Open access

Abstract

Construction bond administration involves management of bond issues from inception of obtaining bond from guarantor to the point of release of contractor by the client. This process has posted a lot of challenges to construction stakeholders; it is therefore, necessary to examine the relationship between bond administration and project success. Archival data of completed bonded building projects were gathered through a pro forma developed for this purpose. Using Pearson product moment of correlation, it was revealed that the cost of securing a construction bond has a positive and significant effect on the initial and final costs of the project, while the number of days needed to secure a construction bond has no significant effect on the initial and final durations of the construction project. In order to establish the relationship between project delivery indices of cost and time and the construction bond administration variables, iteration of linear regression was adopted to arrive at the best-fit equation. Factors affecting the cost of securing construction bonds from guarantors should be identified and given adequate attention by construction stakeholders in order to minimize the effect of construction bond administration on project delivery.

References

  • Adegboye, K. (2004). Stakeholders review advance payment bonds in construction contracts. Nigeria Vanguard Newspaper, 20 July, pp. 23-24.

  • Aibinu, A. A., & Jagboro, G. O. (2002). The effects of construction delays on project delivery in Nigerian construction industry. International Journal of Project Management, 20, pp. 593-599.

  • Ajibade, A. A., & Odeyinka, H. A. (2006). Construction delay and their causative factors in Nigeria. Journal of Construction Engineering and Management, 132(7), pp. 667-677.

  • Ashworth, A. (1986). Cost models-their history, development and appraisal. Technical Information Service of the Chartered Institute of Building, 64, pp. 1-6.

  • Augustin, P., & Constanta-Nicoleta, B. (2015). Financial management of the construction projects: A proposed cash flow analysis model at project portfolio level. Organization, Technology and Management in Construction An International Journal, 7(1), pp. 1217-1227.

  • Augustine, U. E., & Mangvwat, J. (2001). Time-overrun factors in Nigeria construction industry. Journal of Construction Engineering and Management, 127(5), pp. 419-425.

  • Boswall, R. G. (2010). Construction Bonds Guide, Clark Wilson LLP, Available at www.cwilson.com on 23 June, 2011.

  • Coker, U. (2008). The Concept of Construction Project Delivery, 1st edn. Afram Publishing Company. Ibeju-Lekki, Lagos.

  • Doloi, H., Iyer, K. C., & Sawhney, A. (2010). Structural equation model for assessing impacts of contractor’s performance on project success. International Journal of Project Management, 29, pp. 687-695.

  • El-Haram, M. A., & Horner, M. W. (2002). Factors affecting housing maintenance cost. Journal of Quality in Maintenance Engineering, 8(2), pp. 115-123.

  • Elinwa, A. U., & Joshua, M. (2001). Time overrun factors in Nigerian construction industry. Journal of Construction Engineering and Management, 127(5), pp. 419-425.

  • Fayomi, F. A. (2009). Request for proposal (RFP) for the provision of passive telecommunications infrastructure for the purpose of co-location of telecommunication companies in rural/unserved communities in Nigeria. Universal Service Provision Fund, RFP No: USPF/RFP/PASS/009/2009, 6th February.

  • Hinkle, D. E., Wiersma, W., & Jurs, S. G. (1998). Applied Statistics for the Behavioural Sciences, 2nd edn. Houghton-Mifflin, Boston.

  • Hosie, J. (2010). Security for payment: bonds and guarantees - five pitfalls and protection against them. Construction & Engineering London Legal Update, 60(July), pp. 21-26.

  • Jenkins, J. (2009). Contractor insolvency - Be prepared. Freshfields Bruckhaus Deringer LLP. Available at www.freshfields.com/support/legalnotice on May, 2011.

  • Kaming, P. F., Olomolaiye, P. O., Holt, G. D., & Harris, F. C. (1997). Factor Influencing construction time and cost overruns on high-rise projects in Indonesia. Construction Management and Economics,15, pp. 83-94.

  • Kangari, R., & Bakheet, M. (2001). Construction surety bonding. Journal of Construction Engineering and Management, 127(3), pp. 232-238.

  • Kothari, C. R. (2004). Research Methodology, 2nd edn. New Age International (P) Ltd, New Delhi.

  • Koushki, P. A., Al-Rashid, K., & Kartam, N. (2005). Delays and cost increase in the construction of private residential projects. Construction Management and Economics, 23, pp. 285-294.

  • Loosemore, M. (2006). Managing risks. In: Pryke, S., & Smth, H. (eds.). The Management of Complex Projects: A Relationship Approach. Blackwell Publishers, UK, pp. 22-34.

  • Love, P. E., Skitmore, M., & Earl, G. (1998). Selecting a suitable procurement method for a building project. Construction Management and Economics, 16, pp. 221-233.

  • Mehmet, E. B., Qingbin, C., Makarand, H., & Issam, M. (2006). Warranty bonds from the perspective of surety companies. Journal of Construction Engineering and Management, 34, pp. 333-337.

  • Ogunsemi, D. R., & Jagboro, G. O. (2006). Time-cost model for building projects in Nigeria. Construction Management and Economics, 24, pp. 353-258.

  • Ojo, A. E. (2011). Why do clients require construction bonds, Construction Connects, OJ Connects Resources, 1, pp. 1-4.

  • Oyewobi, L. O. (2010). Evaluation of rework in some selected building projects in Niger state, Nigeria. An unpublished M.Tech thesis submitted to Department of Quantity Surveying, Federal University of Technology, Akure, Nigeria.

  • Ramus, J., Birchall, S., & Griffiths, P. (2006). Contract Practice for Surveyors, 4th edn. Butterworth-Heinemann, Oxford.

  • Sanni, A. (2007). The Concept of Construction Project Delivery, 1st edn. Aluko Publishing Company, Ibeju-Lekki, Lagos.

  • Seeley, I. H., & Murray, G. P. (2001). Civil Engineering Quantities, Revised edn. Jossey-Bass Publishers, San-Francisco, USA.

  • Sipasi, S., & Onuma, A. (2010). Corporate Guarantees Under the 2005 Nigerian Production Sharing Contract- An Indigenous Company Perspective. Aelex Quarterly, 1, pp. 1-2.

  • Stuart, S. B. (2001). Team Building in the Construction Industry, 2nd ed. Macmillan Press Ltd, London.

  • The Associated General Contractors of America (2006). An overview of the contract surety bond claims process. Available at www.spio.org on 23 March, 2012.

  • Wardani, M. A., Messner, J. I., & Horman, M. J. (2006). Comparing procurement methods for design-build projects. Journal of Construction Engineering and Management, 132(3), pp. 230-238.

Organization, Technology and Management in Construction: an International Journal

Co-published with University of Zagreb, Faculty of Civil Engineering

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 48 48 32
PDF Downloads 12 12 10