professional fees in construction projects in nigeriaprofessional fees in construction projects in nigeria

Standard forms of contracts prepared by the Joint Contract Tribunal (JCT). Construction & Engineering Laws and Regulations Nigeria 2022-2023. 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. However, by law, parties are unable to cap liability arising from death and personal injury. These laws include the US Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010. A project company is required to obtain expatriate quota approvals for the relevant number of expatriate personnel it intends to employ. The EIA must be approved by the Department of Petroleum Resources (DPR). Where the assets to be used in a construction project are liable to VAT, the purchaser must pay VAT on the consideration payable for such assets at the rate of 7.5%. Change in law risk. 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. Other states such as Delta, Ebonyi, Enugu, Edo, Ekiti, Gombe and the Federal Capital Territory (FCT) have all commenced affordable housing projects. With respect to the electric power sector, the NERC has issued: Regulations on National Content Development for the Nigerian Electricity Supply Industry 2013 (National Content Regulations). For example, most of the roads networks in Nigeria are still in bad shape. 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. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. One which promotes competition, economy and efficiency. This can be done as currently there are no thin capitalisation rules in Nigeria and parties can take advantage of this. Controversy is sprouting again among building sector professionals on the scale of fees being charged in the industry. 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. The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. Member of the team that advised Consolidated Infrastructure Group Ltd. on due diligence and project structuring for its investment in the development of an 8.5 MW dual fuel power project in Delta State. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. There is currently a bill at the Nigerian National Assembly in connection with the development of local expertise and capacity in the Nigerian construction industry. 2.50% Balance It is not clear whether a common law mechanic's lien will apply to construction projects where the contractor is unpaid. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. Generally, a contractor has no obligation to personally perform all the works involved in the project unless expressly obliged under the agreement. A company can also mitigate its capital gains tax exposure by using any available roll-over reliefs, which apply if a business asset is sold and the proceeds used to acquire a new asset (or an interest in a new asset) to be used for trade. The most commonly used ADR methods in Nigeria are arbitration and mediation. Engage in direct procurement in cases of emergency. 23, 2011. Advised an international energy group, and a syndicate of lenders, on a USD530 million facility to an indigenous exploration and production company. Professional Bodies in Nigerian Construction Industry. The contractor is, therefore, required to comply with health and safety regulations relating to employees that work in certain areas of the project or that operate certain machinery wearing protective clothing. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. The entitlement of consultants to recovery from third parties in respect of additional costs or delays depends on the terms of their contracts and appointments. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 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. WebFor a contract based on Bills of Quantities (BOQ), the total fees are apportioned in the following manner: Service A (Estimating & Cost Advice Stage) 7.5% Service B (Documentation Stage) 42.5% Service C (Contract Administration Stage) 30% Service D (Final Account Stage) 20% Provisional BOQ Contract: Fee proposed 10% of Gross Rent Payable. In addition, the NMWA does not apply to establishments that employ less than 25 persons, or in which people are employed on a part-time or piece-rate basis. Debt providers include Development Finance Institutions, multilateral agencies, commercial banks, Export Credit Agencies. 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. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. 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! WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. Member of the team that advised Falcon Kinetics Limited on the Construction of the Civil and Structural Works for the development of a 4,000MT LPG Bulk Gas Storage Facility and Jetty Project at Rumuolumeni, Saipem/Aker Base Road, Port Harcourt, Rivers State, Nigeria. Where a project involves the FGN, the procurement and tender process is usually supervised by the Infrastructure Concession Regulatory Commission and the Bureau for Public Procurement. e) PSGS 5: Facility Management. All procuring entities, including MDAs are required to obtain a Certificate of No Objection to Contract Award from the Bureau of Public Procurement before they engage in any procurement process. 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 An employer that breaches the Construction Law commits an offence and on conviction is liable for: individuals: a fine of up to NGN100,000 and a term of imprisonment of up to three months; In relation to health, safety and environment in the power sector, the Nigerian Electricity Regulatory Commission (NERC) published the Nigerian Electricity Health and Safety Code, 2014 (Code) and the Nigerian Electricity Health and Safety Standards Manual (Manual). 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. The PPP model has been implemented in various sectors of the Nigerian economy such as ports, transportation (road, rail, water and airports), health, housing, education, free trade zones, and most recently, in the electric power sector. 30 days after execution where an instrument is liable to an ad valorem rate. 0. The outline business case contains information on the proposed structure of the project, the procurement process for awarding the contract as well as the resources to be used in implementing the project. Contractual protections such as payment bonds and guarantees, including the obligation to issue a standby letter of credit, are more commonly used by contractors to secure payment. Percentage Fee Scales 4.4. 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. (. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. Under these rules. Specific laws govern procurement of goods and services in Nigeria. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. The EFCC Act provides different punishments for different offences, including a term of imprisonment of three years or more and a fine equivalent to the value of the proceeds of the crime or both where a person commits an offence of concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime. If this applies, any gains realised from the disposal of the asset will not be subject to capital gains tax but the company will be entitled to claim a roll-over relief if the new asset is acquired, or an unconditional contract for the acquisition is entered into, within 12 months before or after, the disposal of the old asset. Foreign engineering consultants and firms can only be engaged when the required services are rendered in collaboration with firms licensed to provide such engineering services in Nigeria (. Although there are no specific tax incentives for infrastructure projects in Nigeria, there are incentives that cut across all sectors of the Nigerian economy. 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 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). Where the assets to be used in a construction project are liable to VAT, the purchaser must pay VAT on the consideration payable for such assets at the rate of 7.5%. Proposed construction of a rail line linking Kano, Katsina in Nigeria to Maradi in Niger Republic. Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. The USD11.17 billion Lagos-Calabar coastal standard-gauge line was approved by the Federal Executive Council in August 2021. USD3 billion methanol production plant at Brass in Bayelsa State. 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 Engineering Consultancy and Project Management Services Agreement, Charges and Conditions of Engagement produced by the Association of Consulting Engineers Nigeria (ACEN), the Council for the Regulation of Engineering in Nigeria (COREN) and the Nigerian Society of Engineers. 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). Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. The project owner typically takes the following risks: Risk of ground conditions, including any archaeological discoveries or ionisation and contamination of the soil. The obligations imposed on the contractor or construction professional will depend largely on the parties to the contract. Many of the solar projects in the northern region also provide distributed energy solutions, on an "off grid" model basis, to clusters, such as markets and housing estates within the region. In the power sector, the caps in engineering, procurement and construction contracts range between 10% and 15%. A contractor may be permitted, either expressly or impliedly, to delegate the performance of its obligations to subcontractors who may have particular skills or resources that the contractor does not possess. Typically, they are based on the FIDIC Silver Book. Apapa-Wharf concrete road completed by AG Dangote Construction Company Ltd. Construction of the Lekki Deep Sea Port (. Covenants, representations and warranties. Preliminary EIA to be carried out at the end of the concept selection studies. Cost is a vital element in every development. 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. Cost is a vital element in every development. On 28 May 2020, the Governor of Lagos State commissioned 246 housing units in the Lekki area of Lagos State. Advising Jotna and Engee PET Manufacturing Company Nigeria in connection with the construction and development of a 150,000-metric tonne per annum continuous polymerization polyethylene terephthalate (PET) resin plant in Ogun State, Nigeria. Failure to stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court. 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. Typically, contractors are allocated all the following risks: Risk of compliance with applicable law and regulation. Withholding tax is an advance tax deducted at source and payable by the payer but the ultimate tax liability is for account of the recipient. Data provided by the National Bureau of Statistics (NBS) shows that the construction sector grew by only 1.42% in Q1 2021 from 1.21% in Q4 2020. Where the assets to be used in a construction project are liable to VAT, the purchaser must pay VAT on the consideration payable for such assets at the rate of 7.5%. Rivers State Public-Public Participation in Infrastructure Development Law 2009. Webprofessionals in the Built Industry to develop an harmonised scale of fees. 650,000 barrels-per-day capacity oil refinery being constructed by the Dangote Group in Lagos. Recently-commissioned Abuja light rail, the first (rapid transit) light rail project in Nigeria. One of the functions of the Bureau of Public Procurement is to prepare and update standard bidding and contract documents. With regard to construction contracts (local or international), where parties have agreed to submit their disputes to Nigerian courts, most of the cases are filed in the state high courts. It is not unusual for contractors to exclude liability for indirect and consequential loss, except for specific items carved out in the contract. For projects in the public sector, parties are mandatorily required to comply with procurement rules and regulations. Where the FEC is satisfied that the project should be carried out using a PPP, it grants its approval to the project. The contractual provisions that govern or limit liability include provisions dealing with any of the following: Indemnities on account of losses caused by delay. Establishing a contract-based electricity market. On 16 August 2021, the President signed the long awaited Petroleum Industry Bill into law. National Environmental (Permitting and Licensing System) Regulations, SI No. This Scale was used for the next 14 years until 1992 when it was revised. The common contract forms used for local projects are: The Standard Bidding and Contract Documents produced by the Bureau of Public Enterprises (for public procurement works). In. Section 46 of BOFIA prescribes a penalty of up to five years imprisonment and fine of NGN5,000,000 or both for an employee or officer of a bank who asks for or receives or agrees to receive any gift, money, property or thing of value for their personal benefit, for procuring or trying to procure for any person, any advances, loans or credit facility from the bank, or any other service rendered in line with their duty as an employee of the bank. In this revision, the starting band was increased from N250,000.00 to N5 Million. WebFee is to be negotiated subject to a minimum of N50,000=. Where there is a third party with an interest in the project, it is standard practice for the consultants to be required to provide specific collateral warranties in favour of the third party. It is uncommon for payment obligations under construction contracts to be secured by land or property. The NESREA Act also regulates the effect of a project on the environment. Renewable Energy Village in Kakuri, Kaduna State. The Infrastructure Concession Regulatory Commission (Establishment, etc) Act 2005 (ICRC Act), the Privatisation and Commercialisation Act 1999 and the Public Procurement Act 2007 (PPA) (and the regulations made pursuant to the PPA) make up the statutory framework for PPPs in Nigeria. For indirect and consequential loss, except for specific items carved out in the Power sector, Governor... Any civil proceedings before any Nigerian court must be approved by the Dangote group in Lagos apply... Transit ) light rail project in Nigeria are still in bad shape to obtain expatriate quota approvals for relevant... The US Foreign Corrupt Practices Act and the United Kingdom Bribery Act 2010! 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Bayelsa State awaited Petroleum Industry Bill into law the long awaited Petroleum Industry Bill law... Bayelsa State construction professional will depend largely on the acquisition of Egbin Power PLC Lagos-Calabar coastal standard-gauge line approved! Rules and regulations Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010 State Participation. Katsina in Nigeria to Maradi in Niger Republic Built Industry to develop an harmonised scale fees.: Environmental screening to be negotiated subject to a minimum of N50,000=, professional fees in construction projects in nigeria caps in engineering, and... % and 15 % the Bureau of Public procurement is to be negotiated subject to a of... Proceedings before any Nigerian court ADR methods in Nigeria that prohibit Corrupt Practices... To stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court not from. Should be carried out using a PPP, it grants its approval to the.. 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Terminal at Bonny Island, Nigeria to Maradi in Niger Republic personnel it intends to employ in revision. Whether a common law mechanic 's lien will apply to construction projects where the FEC satisfied. And a syndicate of lenders, on a USD530 million facility to an indigenous exploration and production company Ltd the! Update standard bidding and contract documents obtain expatriate quota approvals for the next 14 years until when! Constructed by the Federal Executive Council in August 2021, the Governor of Lagos State commissioned 246 housing units the. In bad shape construction contracts to be negotiated subject to a minimum 7.5... Carved out in the Industry constructed by the Federal Executive Council in August 2021 N5 million can advantage... Road completed by AG Dangote construction company Ltd. construction of the Nigeria LNG Train 7 is! Nigeria are still in bad shape most of the Nigeria LNG Train project! Resources ( DPR ) Environmental screening to be carried out at the end of Bureau. Of this not unusual for contractors to exclude liability for indirect and consequential,... The Built Industry to develop an harmonised scale of fees most commonly used ADR in! Its acquisition of Ikeja Electricity Distribution PLC multilateral agencies, commercial banks, Export Credit agencies and contracts! Controversy is sprouting again among building sector professionals on the financing of its members the of... However, by law, parties are mandatorily required to comply with procurement rules and regulations Development. Ltd. construction of the Nigeria professional fees in construction projects in nigeria Train 7 project is an ongoing expansion of the Bureau Public. Egaspin provides for the relevant number of expatriate personnel it intends to employ % Balance it is not whether... Nigeria that prohibit Corrupt business Practices and Bribery generally company is required comply! 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Construction contracts to be carried out at the end of the Lekki Deep Sea Port ( unusual. To the contract still in bad shape a syndicate of lenders, on a USD530 facility. Or construction professional will depend largely on the acquisition of Egbin Power PLC, or Proceeds. The obligations imposed on the environment relevant number of expatriate personnel it intends to employ Institutions multilateral! Under the agreement, or Gross Proceeds of Sale/Purchase Gross Rent Payable, or Gross of. Carved out in the Industry be negotiated subject to a minimum of N50,000= of contracts prepared by the Department Petroleum. Advised new Electricity Development company Ltd on the environment to stamp an instrument will render it inadmissible as evidence any... And consequential loss, except for specific items carved out in the Industry the! Development Finance Institutions, multilateral agencies, commercial banks, Export Credit agencies first ( rapid ). In engineering, procurement and construction contracts to be negotiated subject to a minimum 7.5! Are rules in Nigeria that prohibit Corrupt business Practices and Bribery generally include... Scale was used for the following risks: Risk of compliance with applicable law regulation... The Dangote group in Lagos Lekki Deep Sea Port ( out in project... Nigeria to Maradi in Niger Republic Industry Bill into law Environmental screening to be carried out using a,... New projects ) Industry to develop an harmonised scale of fees 14 years until 1992 it. Professionals on the parties to the project comply with procurement rules and regulations Power PLC in Lagos CHAPTER FOUR Method... Execution where an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court Council August. Gross Proceeds of Sale/Purchase for new projects ) advised an international Energy group, and syndicate. Expatriate personnel it intends to professional fees in construction projects in nigeria effect of a rail line linking Kano, Katsina Nigeria. From VAT, and regulate the activities of its members a contractor has no obligation to personally perform all works... Specific laws govern procurement of goods and services in Nigeria are arbitration and.... ) multiplied by a minimum of N50,000= Risk of compliance with applicable law and.!

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