LITERATURE REVIEW

2.0 INTRODUCTION

Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

2.1 CONCEPTUAL FRAMEWORK

Construction Industry

The building sector is the most complicated of all the industries in the economy. The reason for this is due to the fact that all other industries and sectors of the socio-economic system depend on it for the environment in which they are able to function. To all intents and purposes, the building sector is open to participation from everyone and everyone with a requisite skill devoid of certification. Chinwokwu (2020) opine that it is an industry that makes use of a wide variety of local and imported materials, personnel, and pieces of equipment in order to produce structures of a high quality that meet or exceed industry standards. Due to the scale and complexity of the business, the construction sector plays a vital part in the process of achieving sustainable economic growth and development in any nation. This is a function that is both crucial and dynamic. It is important to note that as determined by looking at previous budgets for the country, up to one sixth of the total sum that is allotted to construction projects by the governments of Nigeria takes the shape of actual buildings.

According to Chinwokwu (2020), the most precious assets that mankind possesses are the buildings that can be found all over the world. This is true whether a nation is still in the process of growing, as is the case with Nigeria, or if it is fully developed, as is the case with Britain. In addition, not only do these structures give mankind access to a wide range of living quarters in the shape of dwellings, mosques, churches, offices, schools, industries, hospitals, stadia, ports, hotels, and so on, but they also create work opportunities for both skilled and unskilled individuals.

Due to the scale and complexity of the business, the construction sector plays a vital part in the process of achieving sustainable economic growth and development in any nation. This is a function that is both crucial and dynamic. It is important to note that as much as one-sixth of the total sum given to construction projects by the governments of Nigeria takes the form of building, as shown in previous budgets of the country's construction projects. The goal of the construction industry is to meet the housing needs of the whole community with dwellings that are fit for habitation, of a quality that can be valued by the community, at a price that the community is able to pay, in the amount of time specified by the community, and within the capabilities of the construction industry. However, it is possible to deduce that the ultimate goal for any building projects is for such projects to be delivered in the shortest amount of time possible, at the lowest amount of cost possible, and within the highest quality possible so as to minimize the problem and the burden of future maintenance and building collapse (Roddis 2015).

Mogbo (2004) stated that, construction is being used to control the economies of nations; it is always strongly related to politics, economics, sociology and the legal framework. Political contribution in construction planning is obligatory in the current world democracies. Construction cannot grow in a weak and docile economy. Construction cannot feature where there is social distress and social instability, (Mogbo, 1998). Hillebrandt, (1985) stated that in developed counties construction is considered unique hence it can stimulate the growth of other industrial sectors. However looking at the growth of the construction industry in terms of its contribution to GDP in isolation is somewhat misleading because of the crucial roles played by the construction industry. Therefore, improving construction efficiency by means of cost effectiveness and timeliness would certainly contribute to cost saving for the country as a whole. Effort directed to cost and time effectiveness were associated with managing time and cost, which this study aimed at via investigating causes of delay at construction projects in Nigeria. Like other developing countries, such as Saudi Arabia (Assaf et al., 1995) Libya (Saleh, 2009) and Malaysia (Yong, 1988). Nigeria construction industry has suffered many setbacks in term of completion of the project at stipulated period within the predetermine sum. Majority of the construction project in Nigeria experience time and cost overrun which in turn lead to the abandonment of project.

Nature of a Building Project

A typical building project is a temporary undertaken with a distinct beginning and end, and executed at a time to evolve the physical facility. The project could be construction of new buildings of different types and purposes or improvement on the existing facilities all required to create a good environment for human use. 7 In any case, the project must be properly planned and organized to achieve the desired result, at appropriate price, time and quality. Construction is a production activity and as such is subject to the limitations imposed by the availability of the recourses of material, manpower, money, machine, and managerial know how. These limitations and other constraints make construction work a complex, expensive and high risk venture, which must be effectively managed and controlled in order to achieve the desired result.

Need for money in project procurement

Construction is capital intensive. The important of money in construction can be likened to that of blood in human being. Money is the lifeline of any construction work and dictates the scope, pace, quality, direction and final product. Money is needed to acquire construction resources such as materials, labour, plants and management expertise. The contractor also requires working capital to finance day-to-day activities on a construction site. Working capital is a critical element needed in achieving successful construction procurement. According to Austine and Neale, (1986), opined that money is the most important resource of all. Without it, the contractor cannot acquire the other resources and will not be able to maintain his liquidity. Many contractors underestimate the need for this resource and this accounts for the high number of bankruptcies in the construction industry today. In Nigeria, the small and medium sized indigenous contractors fall victim of this error, especially when delayed or non-payment occurs. Indeed, contractors in different industries differ in their requirement of working capital. To Austine and Neale (1986), the issue is not about profit per-se, but about the working capital necessary to run a contract. The construction industry presents a peculiar problem because the nature of the industry makes it possible for contractors to operate with low working capital and depend solely on progress payments for their cash flow requirements, such that any disruption on payment creates severe consequences. In recent time, economic recession, inflation, political instability, unstable exchange rate, high cost of borrowing, and high construction cost, has created unfavorable business climate, which has eroded business confidence in the construction sector. Consequently, even the very few large contractors are not willing to source or use their money to finance a construction project. The risk involved is very high and many who took the risk in the past never recover. This is 10 evidenced by the high rate of bankruptcies and project abandonment in the construction industry in Nigeria today.

The Importance of Payment in the Industry

For most advanced countries, construction contributes more than 5% to the Gross Domestic Product (GDP). In the construction industry, payment is a major concern because:  Payment terms are usually on credit rather than on delivery.  Unlike other industries, the duration of construction project is often relatively long.  The size of the project is relatively large and each progress payment amount is sometimes large. Cash flow is therefore critical and depends on planned expected revenue flow, such that any deviation can have a major impact on the contractor and the project. As a result, persistent payment default has potential disastrous consequences across the industry and the economy.

Delays in the Construction Industry

The construction industry is large, volatile, and requires tremendous capital outlays. A unique element of risk in the industry is the manner in which disputes and claims are woven through the fiber of the construction process. Delay occurs in every construction project and the significant of this delay varies considerably from project to project. Bramble and Callahan (1987) explained delay as the time during which some part of the construction project has been extended or not performed due to unforeseen circumstances. An incident of delay can originate from within the contractor’s organization or from any other factors interfacing upon construction project. Some projects are only having a few days behind the schedule; some are delayed over a year. So it is essential to define the actual causes of delay in order to minimize and avoid the delay in construction project. Various studies were carried out by researchers and scholars to assess the causes of delay in construction projects. Ogunlana et al., (1996) studied delays in building projects in Thailand, as an example of developing economies. They concluded that the problems of the construction industry in developing economies could be nested in three layers: (1) problem of shortages or inadequacies in industry infrastructure, mainly supply of resources; (2) problems caused by clients and consultants; and (3) problems caused by incompetence of contractors. Kumaraswamy et al., (1998) conducted a surveyed on the causes of construction delay in Hong Kong as seen by clients, contractors and consultants, and examined the factors that affecting productivity. The study revealed differences in perception of the relative significance of factors between the three groups,indicative of their experiences, possible prejudices and lack of effective communication. However the study conducted by Maura et al,(2007) on the time and cost overrun in Portugees and discovered that design errors; client liability; project specification and direct change order by the client are the major factors that cause the time and cost overrun.

Assaf et al., (1995) studied the causes of delay in large building construction projects in Saudi Arabia and outline the most important causes of delays I construction projects as: approval of shop drawings, delay in contractors payments, cash-flow problems during construction, design changes, conflicts in work schedules of subcontractors, slow decision making, executive bureaucracy in the owners' organizations, design errors, labour shortage and inadequate labour skills. Mezher et al., (1998) conducted a survey on the causes of delays in the construction industry in Lebanon from the perspective of the clients, contractors and architectural/engineering firms. It was found that clients are more concerns with financial issues; contractors considered contractual relationships as the most important, and consultants considered project management issues as the most important causes of delays.

Abdullah & Battaineh (2000) evaluated the progress reports of 164 building and 28 highway projects constructed during the period of 1997 to 1999 in Jordan. The results indicate that delay is extensive: the average ratio of actual completion time to the planned contract duration is 160.5% for road projects and 120.3% for building projects. Al-Momani (2000) conducted a quantitative analysis of construction delays by examining the records of 130 public building projects constructed in Jordan during the period of 1990 to 1997. The researcher presented regression models of the relationship between actual and planned project duration for different types of building facilities. The analysis also included the reported frequencies of time extensions for the different causes of delays. The study concluded that the main causes of delay in construction projects are designing, user changes, weather, site conditions, late deliveries, economic conditions, and increases in quantities.

Ogunlana (1995) presented a paper on method for computing activity delay and assessing their contributions to project delays. The method consisted of a set of equations, which could be easily coded into a computer program that would allow speedy access to project delay information and activity contributions. There has been a considerable and continued interest on the effects of construction delay. The information available is diverse and widespread. Despite the necessity for such research, little work has been described in the literature concerning public projects. The previously proposed factors contributing to construction delay were frequently observed in public projects. The actual frequency and magnitude of these factors is not known, which has proven to be a serious and very expensive problems for the construction industry. The main objective of this study is to identify the main causes of delay in Nigeria construction industry through a survey and recommend few procedures to avoid it.

Delay in Projects

Many construction projects suffer from delay. Suspension means stoppage of work directed to the contractor from the clients, while delay is a slowing down of work without stopping it entirely (Bartholomew, 1998). Delay gives rise to disruption of work and loss of productivity, late completion of project increased time and costs of construction project, and third party claims and abandonment or termination of contract. It is important that general management keep track of project progress to reduce the possibility of delay occurrence or identify it at early stages (Martin, 1976). Construction planning has to be much more decentralized activity to cope with the inherently uncertain nature of task duration.

However, Ballard and Howell (1998) argued that construction planners should make only “quality assignments” where the tasks are not meeting these criteria’s: (1) sufficiently well defined (to be coordinated with other work and the inputs to be identified and assembled); (2) are ready to start (material, design, and precedent works complete); (3) have priority in the critical path for delivery to the customer; (4) are commensurate in scale with the available labour for the coming week; and (5) are carried out within a system where the causes of incomplete or poor quality assignments are investigated and identified, should be deferred. Monitoring gives early warning of the possibility of contractor’s delay and help in anticipating the consequences of changes that may be needed (Cleland, 1999; Abdul-Rahman and Berawi, 2002).

Young and Jinijoo (1998) explain that top management support is required and this can be defined as the willingness of top management to provide necessary resources, authority, and power. Decision making at the right time is important especially with a fast-track project in preventing delay because the concept of using fast-tracking can be applied to traditional contract projects whereby construction starts prior to completion of the design/contract document (Abd majid et al.; 1998). Decision making process is used as the key to effective project management especially in value and risk analysis (Stuckenburck, 1982).

Type of Delay Causes in Construction Projects

There are two types of delays:

Inexcusable delay (Non- Excusable delay) caused solely by the contractor or its suppliers. The contractor is generally not entitled to relief and must either make up the lost time through acceleration or compensate the owner. This compensation may come about through either liquidated damages or actual damages, provided there is no liquidated damages clause in the contact. Liquidated damages are generally expressed as a daily rate that is based on a forecast of costs the owner is likely to incur in the event of late completion by the contractor.

Excusable delay

There are two types as shown below;

Non-compensable delay is caused by third parties or incidents beyond the control of both the owner and the contractor. Example typically includes acts of God, unusual weather, strikes, fires, acts of government in its sovereign capacity, etc. In this case, the contractor is normally entitled to a time extension but no compensation for delay damages.

Compensable delay is caused by the owner or the owner's agents. An example of this would be the late release of drawings from the owner's architect. An excusable, compensable delay usually leads to a schedule extension and exposes the owner to financial damages claimed by the contractor. In this case, the contractor incurs additional indirect costs for both extended field office and home office overhead and unabsorbed home office overhead.

Delayed payment

Problem in the construction industry is delayed payment. Reference [1] stated that delayed payment is a major cause in project delay and over bloated cost in the construction industry. The causes of delayed payment in Nigeria are considered an important topic that has plagued stakeholders in the construction sector. These problems actually need to be examined in depth, so as to identify the causes that occur in the process of construction execution in the industry. Delayed payment occurs in construction project and the size varies from work to work. Payment is delayed when the client fails in making advance or progress payment when the required interim payment certificate (ipc) is received, to the contractor during the time specified in the construction contract. In Nigeria, many contractors have been apprehensive about what to do to ensure they do not run out of cash during the execution of their projects to ensure positive cash flow and profitability,

According to [2], reasons for payment delays were uncertain cash flow, financial problems, mistakes in claims .and unaccepted valuation of work. Delayed payment of workers affects their productivity, motivation and successful execution of construction projects.

Problem associated with payment in construction industry.

Over the years, there has been a multitude of epithets about the relationship between the construction industry and its many varied payment procedures. Payment and cash flow are the lifeblood of the industry; they are fundamental to the process of construction, they are the root of its problems, Pettigrew (2005). Banwell Report, Banwell (1964), Sir Harold Banwell comments that “the operation of the payment system in the construction industry is not always smooth. Payment to the main contractor by the employer is often slow and uneven, with consequential delays in payment to suppliers and `subcontractors. This has an adverse effect on the efficiency and stability of the whole industry……. . What is needed is an agreed procedure to ensure that payments are made regularly and promptly”.

In 1993, a report titled “Trust and money” by Sir, Lathman (1993), revealed that payment difficulties featured largely. “The fears of contractors and specialists contractors about payment were largely identified with available evidence showing an industry supply chain wracked with intercine, where payment abuse was the inevitable battle ground.” It is reported “contractors worry that they will not be properly paid by clients, either because the employer will fail financially or because the certified monthly payment will not properly reflect what they believed to be the true value of the work carried out.” In 1994, Sir Michael Latham in his report “Constructing the team,” it was observed that ‘the cascade system of payment in the industry – normally 14 employer to main contractor, main contractor to subcontractor and so on, down the chain – makes the exposure of different parts of the process to the insolvency of one participant particular vulnerable’. In 2004, a survey of payment performance conducted in the U.K, revealed that construction is clearly at the lower end of the payment periods with loss of income of about 1.6%, and with payment taken an average 56.51 days after invoices or certificates for payment have been rendered, Experian (2003). According to Nonshad Ali Naseem (2004), a working group report indicated that it appears 100% consensus that payment and related issues are considered to be a problem in the construction industry. In short, the problems on payment range from:  Failure to pay.  Refusal to pay.  Setting-off sum certified or due.  Allegation of under or over certification and failure to certify.  Delayed

payments.  Associated problems of getting paid even with certificates in hand including significant delays in enforcing rights to payment. A survey conducted by the Construction Industry Development Board (CIDB) Malaysia among its members, indicated that 80.3% had encountered slow progress payments both in public and private funded projects. The survey 15 also indicated that the contractors are facing delay of payment for up to 12 months compared to the contractual due date. In Nigeria, many complaints have been voiced out about the issues of late and non-payments, but the information has been mainly in the form of press statements, especially on Government funded projects. In summary, the analysis revealed that the issue of late and non-payment had persisted for quite sometime now, but the issue has to be fully resolved.

Causes of Delayed Payment

Saleh (2009) stated that the major reason for delayed payment is mistakes in claims submitted by the contractor, containing claims without relevant supporting documents, inaccurate claims and documents submitted without following due process. Abdullah and Battaineh (2002) stated that late payment to contractors for project done is a major factor causing delay or abandonment of construction project in developing countries. The effectiveness of contractor has been negatively impacted due to delayed payment and as such affecting the delivery schedule of the project. The delay to pay contractors for executed project might lead to the contractor company going into bankruptcy.There are several factors that cause delayed payment, which most times is due to the inexperience/incompetence of the clients, consultants and contractors. Frequent problems of delayed payment happen when some required documents are left out, and to avoid delayed payment to the contractors, the quantity estimators/surveyors must ensure complete documentation. According to Chitkara (2009), most times the supervising/certificate processing personnels have the tendency to withhold payment to the contractor in the hope of getting some kind of “kickback or gift” from contractors before they are paid. When most private construction work is going on and the client defaults in its payment, it leads to delayed payment. In Nigeria, very few studies have been carried out on the causes of delayed payment on construction project delivery. This study examined the causes of delayed payment on construction project delivery by evaluating different perspectives of the project’s relevant players, including the client, the consultant and the contractor. On this note, the study seeks to assess the causes of delayed payments in construction project delivery. The causes of delayed payment have been a lingering issue affecting the major stakeholders, who are the clients, consultants and most especially contractors. The conclusion of this study will be vital to the clients, contractors, government and the built environment consultants by elucidating on the causes of delayed payment.

Payment according to consensus is said to be the backbone of the construction sector. When there is a delay in the payment, it automatically affects the delivery time of a project. Delayed payment is mostly caused by the client and result in poor cash flow of the contractor. The impact of delayed payment to contractors and consultants are known facts in the construction sector. Saleh (2009) stated that the cause of delayed payment is when the client does not pay within the agreed period of receiving interim payment certificate in the contract. The payment chain process includes the client, contractor and active participant in the project. The payment issue of the construction industry has a far reaching effect on all stakeholders. When payment is delayed by one stakeholder, it might affect the whole payment chain of the construction project. Delayed payment problem is interrelated with the flow of funds problem. According to Pandey (2000). lack of access to funds, before construction leads to disqualification of emerging contractors due to their inability to meet performance bond requirement during construction. Emerging contractors possess low fund reserves, which makes them use profit from current project to finance their up-coming project. Also emerging contractors face difficulties in getting loans from financial bodies due to the high level of bankruptcy in the industry, this requires the contractors to provide the starting capital .

Odeyinka & Kaka (2005) identifies causes of delayed payment as client financial issues, delay in approval of work by consultant, wrong bill of quantities by consultant/contractor, insufficient documentation and information for valuation and poor workmanship by contractor. The causes of delayed payment according to [9], are the client's bad management of finance, client withholding of payment, incorrect valuation for work done, invalid claims by contractors, slowness of valuation and initial payment certification by consultant, bottleneck in the process of honouring certificates, client's instruction of variation order being misunderstood by contractors/consultants.

Sherif, E, & Kaka (2003) identify causes of delayed payment as client and contractor poor handling of finances, client lacks cash to pay contractor, client withholding of payment due to misunderstanding variation orders or disagreement of fee to be paid for executed task, slowness in certification e.g. wrong assessment of task completed, bad work, given instruction are not stated in writing, inefficient communication, contract details and technical problems.

The root to understanding the inherent difficulties over payment lies in identifying the many complex factors that are present in the industry. Based on the research conducted by the construction industry Development Board (CIDB) of malaysia (2006), both contractors and consultants agreed that the most frequent causes of late and non-payment inter-alia are; 

Employer’s ill intention to delay payment when work is completed, that is, when the contractor has lost all commercial leverage in the contract. Undoubtedly, the process of construction is complicated and fragmented.

It involves many different commercial parties operating in supply chain under a range of contractual arrangements where risks are shared throughout the supply chain, Pettigrew .R. (2005). In a developing economy such as Nigeria, the construction industry is made up of a large number of small and medium-sized indigenous firms and a small number of large dominant companies. The hierarchical structure of the industry’s contractual framework makes it particularly susceptible to the poor payment practices that it adopts. The wide range of parties involved in the construction process, the unequal commercial bargaining power of large as opposed to small companies and the cascading system of contracts among those parties, meant that using contractual provisions to delay payment was easy, Lip, Euginie, (2006). Critics have also Lambasted the construction industry for its outdated and inefficient payment practices resulting from undesirable culmination in disputes, late payment and the uncertainty on when payment will be due Lip, Euginie, (2006). 17 The standard contract form for the main contract is not explicit on payment provisions governing the domestic subcontractors and suppliers. Domestic subcontractors and suppliers do not have any protection against the financial risks inappropriately offloaded upon them. Also, there is no statutory legislation over the length of time that organizations could take to pay the suppliers and subcontractors despite contractual provisions that set out payment entitlements, Pettigrew R. (2005). Security of payment problems is common to many commercial relationships, but the construction industry has special issues to deal with. For example with normal sale of goods, ownership does not transfer until payment is made. In construction work, items fixed to the land immediately become the property of the land owner.

This means that the materials provided by the supplier may be incorporated into the works and become the property of the land owner, well before payment is made Gow, P.W. (2006). It is then too late to repossess such materials, if payment is not made. Payment woes are made worse by the growing affluence and higher quality expectations of purchasers and consumers, Lip Euginie (2006). The consequence of this has spurred developers to stipulate longer defects liability periods and higher retention amounts. These inevitably translate to excessively large tied-up funds which for most, are the main contractors lifeline. Project personnel changes, poor documentation, no written instruction and incomplete or unavailable information are often cited, as the reasons when pressured to bring the accounts to conclusion. Delay in finalizing variations and accounts serve no one’s interest in time and expense, Lip, Euginie (2006). In some projects, particularly public projects bureaucratic procedures contribute to delayed and non-payment. Consequently, the average indigenous contractors make monetary provision in their tenders to narrow the gab between period of certification of work executed and receipt of actual payment as a stop-gab measure. This contributes to high cost of projects.

The slow processing of variations and final accounts and difficulties in reaching settlement further add to the problem of late and non-payment issues Lip, Euginie, (2005).

Delayed Payment caused by Contractors

Reference [3] showed that a major factor of delayed payment caused by contractors is mistakes in submission of claims, which includes claims lacking sufficient supporting documents, incorrect assessment of claims and all these presented without following due process. A major factor is the disagreement on valuation of work executed.B.Delayed payment caused by clientAccording to [3], the main factor contributed by clients is when they delay in terms of the contract to approve the claim and pay on time. It may be as result of increase in claims arising out of their design andconstruction. Clients also withhold payment in order to receive gift, once payment is made.C.Delayed payment caused by consultant Reference [2] identified these factors as consultant related, they are lack of coordination of project team activities, poor estimation of project cost at the design stage, inadequate flow of information between project team, Inability of consultant to manage funds, consultant failure in treating claims and delay in certification of work done by consultant.The reviewed literature revealed various studies in different parts of the world that have largely touched on causes of delayed payment by contractor and clients. These studies have been carried out and published. However there is no literature available on the causes of delayed payment on construction project delivery in Lagos state, Nigeria. The study aim is to establish the causes of delayed payment by clients, contractors and consultant on construction project delivery.

Economic Recession

The nature of construction performance and workload is often related to the economy of developing nations like Nigeria. Where there is a boom in the economy, construction activities will increase, therefore increasing the scale of operations of a firm. This leads to an increase in level of stock and debtors, therefore necessitating an increase in working capital requirement of the firm. The reverse is the case when the economy is in recession and contractors require less working capital. Weather condition Also most construction works in Nigeria take place during the dry season when the weather is very conducive for outdoor activities. However, there is reduction in construction activities during the rainy season, as rain or wet conditions disrupt construction activities.

According to Pandey (2000), most construction firms experience seasonal and cyclical fluctuations in the demand for their products and services. Price Changes/ Inflation In a period of rising price levels, i.e. inflation, the cost of goods will rise, and companies that need to maintain the same level of current assets will need more working capital. The low value of naira, the importation of numerous resources for construction ranging from materials to equipment/vehicle, unstable economic and political climate and government fiscal policy in terms of increases in tariffs, taxes duties etc. all lead to inflation in prices of construction industry resources, and unpredictable increase in the cost of capital. In such a scenario, the contractor‘s working capital requirement for the project will rise above what it should normally be, and the contractor will have to look for external credit in order to finance the extra cost of increased working capital arising out of increases in current liabilities due to inflation.

Effects of delay in payment

Lack of payment to contractors is a common cause of disputes in the construction industry (Kennedy 2005; Watts & Scrinvener 1993).

According to Artidi and Chotibongs (2005), all the problems in the construction industry begin when payment in the exact amount due by the date shown on the statement is not received. Projects exceed initial time estimates and costs escalate and extensive delays are experienced. Its effects are sometimes so harsh that some companies have to close down. One of the biggest consequences would be the interest due on capital borrowed. Contractors often borrow working capital from banks in order to finance their construction operations and invariably have to pay interest on these borrowings. Contractors are highly dependent on regular interim payments from employers during the course of construction to help discharge the debt so accrued. Therefore, when a contractor does not receive interim payments on time or in accordance with the terms agreed or for the proper amount, the interest he or she needs to pay in the form of finance charges to the bank will invariably increase. For example, delays in approving contractors‘ invoices/claims and settling payments and release of retention monies have had major impacts on constructors‘ cash flows (Odeyinka, Lowe & kaka, 2008; Sin 2006). Odeyinka and Kaka (2005) and Euginie (2006) both suggest that failure to make payments within stipulated time frames mean that contractors would have to incur additional financing and transaction costs, which increases their risk of insolvency.

Delayed payment will also affect the contractor‘s performance. He may lose his workers. He might not have sufficient funds to tide him over until such time as conflict is resolved and the next payment is received in terms of the contract. The construction process will be delayed and the list goes on. But one thing is for sure: delayed payments or non-payment to contractors have a negative influence on the overall construction process. It should be understood that ‗the practice of efficient and timely payment in construction projects is a major factor that can contribute to a project‘s success‘ (CIOB, 2004). The possible effects of delayed payment have been identified as follows:  Creates financial hardship: It is anticipated that delayed payment can create financial hardships for the contractor.  Creates a negative chain effect on other parties: As stated by Davis Langdon and Seah Consultancy (2003), ‗the construction payment blues have domino effects‘. A delayed payment by one party may affect the entire supply chain of payment of a construction project.  Creates cash-flow problems: It is universally accepted that delayed payment affects the contractor‘s cash flow, which in turn can affect the progress of the works and profitability (Naseem, 2005). 

Results in a delay in completion of projects: According to Abdul-Rahman and Berawi, (2006), a financial problem is confirmed by the view of top management in the survey as being the main cause of delay, in addition to manpower shortage, Leads to bankruptcy or liquidation, Leads to abandonment of projects, Results in formal dispute resolution, e.g. litigation/arbitration and Creates negative social impacts.

Ways of mitigating delay in interim payment.

Lim (2005) identified payment of accrued interest, suspension of works, right to slow down work, eradication of the ‗pay-when-paid‘ clause, right to refer dispute to adjudication, creation of a trust account, payment bond e.t.c as means for improving the problem of delayed payments in the construction industry. Ye and Abdul-Rahman (2010)reported that understanding and researching the owner‘s ability to pay is the most effective solution in mitigation of late payment problems. Other mitigating measures include implementation of the Construction Payment and Adjudication Act, negotiation of payment terms with client to facilitate a healthy cash flow, obtaining payment due before handover of project to client,understand and study the payment requirement of each individual project and implementation of financial management to ease cash flow problems.

Contractual remedies for payment default

Perhaps, the question which troubles a contractor most now is the question of non-payment or delayed payment by the employer. Effecting of payment to the contractor in return for the performance of the works under the contract is one of the primary obligations of the employer; default of which may result in breach of contract, with its attendant consequences (Harban singh. 2003). These may be either expressly stated or implied from the prevailing industry practice, although the tendency is and has been, for the express provisions to prevail. Should there be any default in disbursing the required sum; the contractor may then resort to his various remedies, which include: Under the express contractual provisions 

Repudiate the contract and attempt to recover the necessary damages under common law principles.

What does the contract provide?

It is clear that the first place for an injuired party to look for a description of his remedy in the event of breach must be in the terms of his contract.

Most standard forms of building contract contain provisions governing the cardinal issue of honoring periodic payments and the remedies available to the contractor in the event of the employer’s default in making payment. The most common and final remedy is by application of the determination provision in the contract. Contractually, the employer must effect the necessary payment certified within the period expressly stipulated in the contract. Otherwise, the contractor is entitled to bring the contract of his employment under the contract to an end (clause 26JCT 80 lump sum form). Proper procedure must be followed. Another remedy the contractor can resort to is to suspend further performance of his obligation under the contract. This can be a safe position and in fact, one routinely taken by the contractor when non-payment from the employer ensues. The problem of taken this position is that in the absence of a clear contractual right to do so, there can be no unilateral suspension of work; two wrongs do not make a right. (Channel connel Group V. Balfour Beathy Const. Ltd (1992 IBO 56). In the case of JM Hill & Sons Ltd V. London Borough of camdem (1980) 18 BLR31 and Lubenham Fidelities V South Pembrokeshine District Council); where the contractor determined his own employment for alleged non- 30 payment and the employer concurrently determined the contractor’s employment for his failure to proceed regularly and diligently. As the contractor in the latter case was to learn to the cost; what seemed to him taking a commonsense approach to the meaning of non-payment, an obvious breach of contract was in law no breach at all. This raises the question that if the procedures have not been followed sufficiently do the contractual provisions for determination excluded common law rights? As reflected in the case of Architectural installation services V James Gibbon Windows Ltd (1989) 46 BLR91), the court held that, where a determination was held to have failed under the contractual provisions, but to be rightful under common law rights, which were not excluded by the contract. Also in the case of Greatiles Building materials Co. Ltd V To’s Universe construction con ltd (2003) 2 HK LRD 309), where the court of appeal re-affirmed that the general principle, as a starting point, that there is no general right in common law to suspend work if Payment was wrongly withheld, but recognizing that, deliberate refusal to make an interim payment was capable of amounting to a repudiation of the contract.

2.3 Theoretical Framework

This theory adopted the game theory since game theory may provide, by its very nature, the appropriate tools for the analysis and eventual solution of conflicts of any kind in the construction industry, this paper adopts the negotiation theorist’s approach. Game theory, defined as the study of mathematical models of conflict and cooperation between intelligent rational decision-makers, has the potential to address some of the problems facing the construction industry within a collaborative framework. In construction projects, conflicts among builders and owners are very common, particularly in a bidding or claiming situation, and game theory is a natural tool that can be used to analyze the situation systematically. Game theory focus on strategic interaction and conflict providing a way to think about the conflicting structure of collective decision making processes. In project management, game theory is still in the beginning of its practical applications. Branzei et al. proposed two coalitional games related to delay cost sharing problems to determine fair shares for each of the agents who contribute to the delay of a project so that the total delay cost is clear. Bergantinos and Sanchez introduced a nontransferable utility game associated to the Program and Evaluation review Technique (PERT) problem to divide the floats of time among the different activities. In a second paper, Bergantinos and Sanchez presented two different approaches, one based on serial cost sharing problems and the other in game theory, to distribute the cost caused by the delay of a project among the firms which are responsible for it. Estevez-Fernandez et al. [38] analyzed both delayed and expedited problems where the penalty (reward) function is proportional with respect to the total delay (expedition) of the project. In a second paper, Estevez-Fernandez analyzed project problems with arbitrary but non-decreasing penalty and rewards functions taking into account whether an activity could be started before its planned starting time. San Cristobal applied the Shapley value to the fair allocation of gains obtained by cooperation among several firms carrying out a vessel drydocking who form a coalition to expedite the project. In a broad sense, game theory can be classified into two categories: non-cooperative game approaches, where a decision-making unit treats the others as competitors, and cooperative approaches where a group of decision-makers decide to undertake a project together in order to achieve their joint business objectives. In game theory, individuals or groups become players when their respective decisions, coupled with the decisions made by other players, produce an outcome. The options available to players to bring about particular outcomes are called strategies. Strategies are linked to outcomes by a mathematical function that specifies the consequences of the various combinations of strategy choices by all of the players in a game. A coalition refers to the formation of sub-sets of players' options under coordinated strategies.

2.4 Empirical Review

A few selected related articles were presented in this section on causes and effects of delay on construction works. Yates (2003) studied construction delays, the study developed a decision support system for construction delay analysis called (DAS). The main categories of delays in DAS according to the study, includes engineering, equipment, external delays, labour, management, material, owner, subcontractors, and weather. Similarly, Mansfield et al., (1994) studied the causes of delay and cost overrun in construction projects in Nigeria. The results showed that the most important factors are financing and payment for completed works, poor contract management, changes in site conditions, shortage of material, and improper planning. Also, Odeh and Battaineh (1999), and Battaineh (1999) evaluated the progress reports of 164 building and 28 highway projects constructed during the period 1996-1999 in Jordan. The results indicate that delays are extensive: the average ratio of actual completion time to the planned contract duration is 160.5% for road projects and 120.3% for building projects. Likewise, AlMomani (2000), conducted a quantitative analysis of construction delays by examining the records of 130 public building projects constructed in Jordan during the period of 1990-1997. The researcher presented regression models of the relationship between actual and planned project duration for different types of building facilities. The analysis also included the reported frequencies of time extensions for the different causes of delays. The researcher concluded that the main causes of delay in construction projects relate to designers, user changes, weather, site conditions, late deliveries, economic conditions, and increase in quantities.

Moreover, Assaf, Al-Khalil, & Al-Hazmi, (1995) for example, provide a concise summary of the methodologies used by transportation agencies to establish the contract duration used for highway construction projects, and also provides a schedule guide for field engineers during construction. Similarly, Mohammed & Isah (2012) conducted a review on project delays in developing countries during planning and construction stages. In their study they found that the delay and cost overruns of construction projects are dependent on the very early stages of the project. In another related study, Wilson (1992) examined the role of the owner and architect/engineer’s roles in the prevention and resolution of construction claims. Wilson also summarized the causes of construction claims which include: extra work, project delays and acceleration, lack of management, limited site access and change in work schedule. Divakar k. & Dr Subramanian k (2009) presented a paper on method for computing activity delays and assessing their contributions to project delay. The method consisted of a set of equations, which could be easily coded into a computer program that would allow speedy access to project delay information and activity contributions. Leishman, D.M. (1993) presented a paper which discussed different delay analysis techniques that are currently used by practitioners in the construction industry. It also discusses a proposed new delay analysis technique called the isolated Delay Type (IDT). These techniques were tested against a case example and their strengths and weaknesses highlighted. Empirically based time performance research measures either construction time (physical building time) or contract time (performance measured against the date stipulated in contracts).

Finally, Bromilow (1998) developed cost and time model that could be used to evaluate delay oin projects. One outcome of this study was the development of an empirical relationship between total cost of construction and project duration. The equation describing the average duration as a function of value is T = KCb, where ‘T’ equals the construction period from possession of site to practical completion in days, ‘C’ is the final adjusted project value, ‘K’ is a constant describing how time performance is affected by size, and ‘b’ a constant indicative of the sensitivity of time performance of cost level. This established the parameters of cost/time performance predictability, although the performance of the individual projects varied significantly. The relationship was re-tested by Bromilow (1998) in collaboration with the Australian Institute of Quantity Surveyors (AIQS) in two follow-up contract time performance studies, in 1976 and 1988. The former study investigated 408 projects built between 1990 and 1996 and found they despite evidence of greater variation between the time performance of projects of similar value, ‘the relationship between construction duration and project cost uncovered in the 1960s still holds.’ The 1988 study investigated 408 projects built between 1976 and 1986. It found that the average contract time was about 32% for government contracts and 22% for private contracts (Bromilow, Hinds, & Moody 1998).

Many studies have attempted to identify the causes that put construction projects behind planned schedule. For example, Baldwin and Manthei 1971 investigated delay causes in building projects in the United States. Sullivan and Harris 1986 examined delay causes in large construction projects in the United Kingdom.

Kaming et al., (1997) analysed the causes of time and cost overruns in highrise construction projects in Indonesia; Odeh and Battaineh (2002) investigated delay causes in large construction projects in Jordan. The causes identified included design changes, poor labour productivity, and inadequate planning. Furthermore, previous studies showed that delays can be caused by owners, planners/designers, contractors, or acts of God. However, most studies focused mainly on identifying delay causes in the construction phase, rarely emphasizing on the planning and design phases. McManus et al., 1996, who evaluated delay causes in architectural construction projects, concluded that many delays manifest during all project phases and primarily occur during the construction phase; however delays that start in the design phase include inadequate schedule control by architects, inability of owners to review design in a timely manner, late incorporation of emerging technologies into a design, and ineffective coordination and/or inclusion of project user groups. Basu 2005 identified factors at the start of a project that almost certainly lead to project delays and provided insight into the reasons for the delay and their impact on schedule. Toor and Ogunlana (2008) studied construction delays in Thailand. They found that the problems faced by the construction industry in developing economies like Thailand could be: (a) shortages or inadequacies in industry infrastructure (mainly supply of resources); (b) caused by clients and consultants and (c) caused by contractor’s incompetence/inadequacies. They recommended that there should be concerted effort by economy managers and construction industry associations to provide the necessary infrastructure for efficient project management. Chan and Kumaraswamy(2008) conducted a survey to determine and evaluate the relative importance of the significant factors causing delays in Hong Kong construction projects. They analysed and ranked main reasons for delays and classified them into two groups: (a) the role of the parties in the local construction industry (i.e. whether client, consultants or contractors) and (b) the type of projects. Results indicated that five major causes of delays were: poor site management and supervision, unforeseen ground conditions, low speed of decision making involving all project teams, client initiated variations and necessary variations of works. Odeyinka and Yusif (1997) have addressed the causes of delays in building projects in Nigeria. They classified the causes of delay as project participants and extraneous factors. Client-related delays included variation in orders, slow decision-making and cash flow problems. Contractor-related delays identified were: financial difficulties, material management problems, planning and scheduling problems, inadequate site inspection, equipment management problems and shortage of manpower. Extraneous causes of delay identified were: inclement weather, acts of nature, labour disputes and strikes.

AlMomani(2000), carried out a quantitative analysis on construction delays in Jordan. The result of his study indicated that the main causes of delay in construction of public projects were related to designers, user changes, weather, site conditions, late deliveries, economic conditions and increase in quantity. Similarly, Odeh and Battaineh also conducted a survey aimed at identifying the most important causes of delays in construction projects with traditional type of contracts from the viewpoint of construction contractors and consultants. Results of the survey indicated that contractors and consultants agreed that owner interference, inadequate contractor experience, financing and payments, labour productivity, slow decision making, improper planning, and subcontractors were among the top ten most important factors. Frimpong et. al., conducted a survey to identify and evaluate the relative importance of significant factors contributing to delay and cost overruns in Ground water construction project.