The PPA also requires procurement to be conducted in a manner that is: Equitable for ensuring accountability and conformity with its provisions (with the aim of achieving value for money and fitness of purpose). Key member of the team that advised Stanbic IBTC Bank PLC, as Lender's counsel, with respect to an USD11.3 million medium term loan facility advanced for the refinancing of a residential real estate development in Durunmi, Abuja. In addition to the EIA Act, the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), which apply specifically to the oil and gas industry, requires an EIA to be carried out when constructing certain oil and gas facilities, including oil and gas pipelines, crude oil production facilities, tank farms, hydrocarbon processing facilities, product depots, waste treatment/disposal facilities and so on. The USD11.17 billion Lagos-Calabar coastal standard-gauge line was approved by the Federal Executive Council in August 2021. Failure of the project to meet the performance standards. Cost is a vital element in every development. There is also no compulsory levy to fund local infrastructure. There are usually no restrictions on the project sponsor's or the lenders' right to terminate the contract in the event of the contractor's bankruptcy or insolvency, unless otherwise stated in the contract. Professional Bodies in Nigerian Construction Industry. Construction contracts do not differ for international projects. The Constitution also creates the Federal High Court with jurisdiction over specific subject matter. The EFCC Act defines economic and financial crimes as non-violent criminal and illicit activity committed with the objective of earning wealth illegally, either individually or in a group or organised manner and includes any form of fraud, narcotic drug trafficking, money-laundering, embezzlement, bribery, looting and any form of corrupt malpractice, illegal arms deal, smuggling, human trafficking and child labour, illegal oil bunkering and illegal mining, tax evasion, foreign exchange malpractices including counterfeiting of currency, theft of intellectual property and piracy, open market abuse, dumping of toxic wastes and prohibited goods, among others. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. Webprofessionals in the Built Industry to develop an harmonised scale of fees. 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. The following forms of security are typically taken in infrastructure projects: Share charge on all the shares and other equity rights (present and future) of the sponsors in the project company (and holding company). Fee proposed 10% of Gross Rent Payable. Basis of Professional Charges for Consulting Services 4.3. However, the following are typical significant approvals. In this revision, the starting band was increased from N250,000.00 to N5 Million. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. It is common for the funder to enter into a direct agreement with project sponsor/company and the contractor that will provide the funders with step-in rights to terminate the project contract with the contractor and appoint a replacement contractor. 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. The most common corporate structure for projects in Nigeria is a private company limited by shares. In the power sector, the caps in engineering, procurement and construction contracts range between 10% and 15%. Ibom Deep Seaport project, which is nearing realisation, following the opening of the bid process in Lagos which was won by Bollore Africa in November 2018. Debt providers include Development Finance Institutions, multilateral agencies, commercial banks, Export Credit Agencies. 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 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. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. The project is currently at the pre-engineering state which is estimated to be completed in 10 months. The most common form of debt financing in Nigeria is a term loan facility which is a committed loan facility, under which the project company is allowed to request a lump sum of capital from the funders (usually in tranches) within an agreed period. State governments have also embarked on projects aimed at providing affordable housing for citizens. 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. However, engineering, procurement and construction contracts typically include a payment schedule. In relation to projects in the private sector, the process of appointment depends on the internal rules developed by project sponsors. It is uncommon for payment obligations under construction contracts to be secured by land or property. However, it is common for a contractor's obligations to be qualified to the extent that once the contractor has used its best endeavours or has applied the degree of skill and care that could reasonably be expected from a professional of its status, the project company is obliged to accept the completed project. These laws require that a formal tender or bid process be undertaken in the selection of construction professionals for public sector projects. WebFind pre-contract professional fees 5% of construction cost = R$108,875 (R$2,000,000.00 to R$4,000,000.00 Range) Contract Value/Building Gross Floor Area = 2,177,500.00/347m2 = R$6275.22 per m2 Pre-contract professional fees 5% of R$6275.22 = R$313.76 per m2 of gross floor area Stage A 7.5% of R$313.76 = R$23.53 per m2 In January 2021, the FGN signed a Memorandum of Understanding with a Portuguese construction firm Mota-Engil for the construction of the cross-border Kano-Maradi rail line which has an estimated construction cost of USD1.96 billion. Harmful Waste (Special Criminal Provisions, etc.) In June 2020, the FGN approved a USD120 million continued construction and completion of the Kashimbila multipurpose dam in Taraba State, which is expected to generate 40 MW of electricity and water for the community. 19, 2011. Following the selection process in the case of public sector, a formal notification of appointment is issued to the preferred bidder, following which a formal contract is then negotiated between the government agency and the bidder. For projects in the public sector, parties are mandatorily required to comply with procurement rules and regulations. Failure to stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court. In Lagos State, under the Construction Workers Safety Law (. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. Professional Bodies in Nigerian Construction Industry. Construction & Engineering Laws and Regulations Nigeria 2022-2023. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. In addition, if the sponsors are executing a project for a government entity this may require the sponsors to adopt a selection process that complies with the PPA. Advising a leading Nigerian broadband communication solution integrator on the financing of fibre optic cables and the restructuring of existing debt; Advising IFC in connection with the proposed facilities of up to USD325 million to a liquefied natural gas company in Nigeria. d) PSGS 4: Property Management. Construction professionals will usually seek to place a cap on their liability. Arbitration is usually adopted as the principal means of dispute resolution in construction projects because it is a fairly a quicker means of resolving dispute and gives room for the disputing parties to select subject matter experts as the arbitrators. Typically, they are based on the FIDIC Silver Book. This trend has continued in 2021, and a report published by the World Bank in June 2021 (. Where the FEC is satisfied that the project should be carried out using a PPP, it grants its approval to the project. 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. The most common forms of dispute resolution in Nigeria are litigation and arbitration. 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. There is no limit to the number of hours an employee can work in a day. Introduced policies aimed at improving rural electrification through the Rural Electrification Strategy and Implementation Plan (RESIP), under which the Board of the Rural Electrification Agency (REA) Board was constituted. 23, 2011. Currently advising the project sponsors in connection with the 500 MW independent Gas Power Project proposed to be constructed by Oma Power Generation Limited in Abia State, Nigeria. Table of Professional Charges 4.5. The project owner typically takes the following risks: Risk of ground conditions, including any archaeological discoveries or ionisation and contamination of the soil. Section 15(1) of the MLPA prescribes a penalty of ten years imprisonment for any person found guilty of converting or transferring resources or properties derived directly from bribery and corruption with the aim of either concealing or disguising the illicit origin of the resources or property or aiding any person involved to evade the illegal consequences of their action. The repayment of the loan is structured in accordance with a repayment schedule by way of amortisation, or very rarely, a bullet repayment. Some Nigerian construction contracts permit the owner to request the contractor to alter the works and services (or any part of them) through change orders, change requests, and change notices. For both local and international projects, a syndicate of lenders typically provide the debt financing but some local projects are funded on a bilateral basis. byNicholas Okafor, Adeola Sunmola, Victor Samuel and Chisom Okolie, Udo Udoma and Belo-Osagie. Parties to construction contracts typically agree the inclusion of provisions that permit the contract to continue, on the occurrence of events or circumstances that are not within the reasonable control of the parties and that could have a material adverse effect on their ability to perform their respective obligations. The parties must also ensure that the service is not being carried on illegally and must comply with local content requirements set out in either regulations or executive orders made by the President of Nigeria. Percentage Fee Scales 4.4. The PPA requires all procurement of goods and works by a public entity to be done by way of open competitive bidding. Cost is a vital element in every development. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). 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. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. However, Nigeria currently builds just 2,000 houses per year. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. 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. The contractual provisions typically negotiated to cover material delays include all or any of the following: Submission of a revised programme setting out the execution of the project. Where an instrument is executed outside Nigeria, stamp duty must be paid within 30 days from the date on which the instrument is first brought into Nigeria. Rules of the Chartered Institute of Arbitration (UK). The main stages are: Selection of projects in each sector to be implemented on a PPP basis by the relevant ministry, department and agency (MDA) charged with the responsibility of regulating that sector. Alu - February 25, 2022. Final EIA to be prepared and approval obtained at the end of detailed engineering design but before the commencement of any construction activities. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. In addition, anything used for the carriage of harmful wastes and any premises or land where it was kept can be forfeited to the FGN. The insurance must have a value that is at least three times the total annual emoluments of all the employees. The project company or relevant contractor must also obtain a fire safety certificate from the Federal Fire Service and the relevant State Fire Service to confirm compliance with fire safety measures. Service fees are also liable to VAT at 7.5%. However, in international projects, the project company is usually wholly owned by the sponsors through a holding company incorporated in a tax-friendly jurisdiction. f) PSGS 6: Letting/Real Estate Brokerage/Agency. The obligations imposed on the contractor or construction professional will depend largely on the parties to the contract. The Stamp Duties Act 2004 (as amended) requires stamp duty to be paid on instruments executed in Nigeria or relating to any property situated in Nigeria or matter to be done in Nigeria. Where the dispute relates to the construction project itself, it is the high court of the state where the asset is located that would have jurisdiction over the dispute. Expatriate Quota Approvals are granted on a temporary basis, usually for two to three years and can be renewed up to five times for up to 10 years in some instances. 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). Fee proposed 10% of cost of Annual Services. Despite the impact of the pandemic that led to a significant decline of construction activities, the industry was forecast to be one of the lead drivers of the Nigerian economy in 2021. Other debt funding arrangements include overdraft facility, revolving credit facility, debt capital markets and letters of credit. Although a subcontract is derived from the main contract, it is a stand-alone contract creating contractual rights and obligations strictly between the parties to it. Professional Bodies in Nigerian Construction Industry. The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. Webprofessionals in the Built Industry to develop an harmonised scale of fees. The structures explained above also apply to international projects. The Factories Act also provides that where an offence is committed by a body corporate, every director, manager, secretary or other similar officer of the body corporate is guilty of that offence and liable as if they had committed that offence unless they prove that the act or omission constituting the offence took place without their consent, knowledge, connivance or neglect. The Nigerian construction industry struggled in 2020 due to disruptions caused by the COVID-19 outbreak and the subsequent lockdown measures. 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! The EIA Act sets out the principles, procedure and methodology for determining the environmental effects of public and private projects. 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