Managing Conflicts Between Clients and Building Professionals in Nigerian Construction

Introduction

The Nigerian real estate sector plays a critical economic role, contributing about 4% of the nation's GDP. However, this industry faces persistent issues, chiefly construction disputes between clients and on-site professionals. These conflicts can consume over 30% of a project's budget and extend project timelines by 40-60% beyond initial estimates.

Construction involves diverse professionals—architects, engineers, and project managers—each with distinct objectives and duties. In Nigeria, weak regulation, the presence of over 250 ethnic groups, sluggish government response, and reliance on traditional project management compound the complexity.

What Causes These Conflicts?

The primary source of contract-related grievances is the absence of clear terms in the contracts, which has been rated an importance score of 4.27 on a scale of 5. Poorly drafted contracts will mislead and confuse parties in four main ways: the use of vague terms that are interpreted differently by different parties, a lack of information and incomplete details, contradictory statements that confuse everyone, and outright mistakes in the documents. These problems add to the misunderstandings and allow the parties involved to be dishonest.

Among the several factors that lead to disputes, communication is considered the most important, and its influence extends to 82% of all projects. This is not just a matter of failing to inform others, but in 79% of cases, communication is deliberately kept confidential in order to have an advantage. Communication is slowed down due to governmental procedures that take a long time, improper usage of technology, language differences among various ethnic groups in Nigeria, and a lack of trust that sometimes prevails among the parties concerned.

In the case of government projects, one of the main problems is payment issues. The situation with bureaucracy, budget cuts, and corruption is such that payment is always delayed. These financial disputes include not only late payment but also arguments over extra work, disagreements regarding payment for completed work, and disputes over the amount held as security.

Alterations in design during construction give rise to a whole new set of problems. The alterations not only directly affect the cost, time, and quality of the work, but also start the blame game - the contractor puts the designer on the spot, and the designer claims that the contractor has to take the cost of changes.

The Role of Culture and Ethics

The culture in Nigeria is very complex and rich due to the presence of a large number of ethnic groups, which add up to more than 250. This is not only a sociocultural issue but also a source of problems in marketing that are very unique to the country. The differences in the ways of expressing oneself at work and the methods used for making decisions and resolving disputes greatly affect the marketing and even the trade of goods. What might be a compatible and acceptable business practice in a certain culture could be entirely unacceptable in another.

Unfortunately, the issue is compounded by the corruption that is prevalent in the country. Trust is destroyed among the parties, who involve bribery, kickbacks, and misuse of funds as the cause for their actions. From the very beginning, the project is destined to encounter problems when it is decided that the awarding of contracts is based on political power rather than on capability and experience. Most of the time, the contractors who bribed the officials to obtain the contracts are the ones doing poor work and thus creating conflicts.

How Conflicts Show Up

Conflicts won't be hidden—they will manifest in very obvious ways. The total work stoppage happens in 34% of projects. Clients do not pay in 52% of the cases. About 75% of projects have the exchange of formal written complaints. More than half of such cases result in the deterioration of relationships, and the parties involved cease to cooperate.

The conflicts that arise are of the same kind and follow the same road. They begin as unexpressed, silent worries that nobody is dealing with. Little by little, the people involved begin to realize that there is a problem. Emotions are involved, and thus, the pressure is built. Finally, the conflict breaks out, accompanied by formal complaints and work stoppages. In the worst-case scenarios, the aftermath lasts for months or even years of court battles.

The loss incurred is huge and can be quantified. The total cost rises by 30-50% as compared to the initial budget. The project takes 40-60% more time than what was originally planned before it is finally completed. The end quality of the product is affected negatively because the people are involved in fighting instead of being focused on good quality work. Some projects get entirely abandoned. Sometimes, buildings are legally completed with disputes still going on regarding the quality that was compromised during the uproar. The public loses trust in the construction industry.

How People Try to Solve Conflicts

Most people (89%) who have the same opinion as a large part of the population use the least complicated negotiation methods to settle their disputes, and different people prefer a more direct way of communication to solve their problems. This approach will not always be successful, but still, some people opt for arbitration (31-43%), where a neutral third person decides, and such a decision is obligatory for the parties involved. A small number of people still go to court (28%), but internally they know that this is the last place they would choose to be.

It is a rather strange but also an interesting fact that, although there are various other less-known ways of resolving conflicts which are more effective, still not everybody is aware of such methods. A case in point is mediation, where the two conflicting parties are assisted by a neutral person to reach a common ground; mediation has a success rate of 78% provided that people allow it. However, only 23% of the disputes get to mediation. In the case of international arbitration, the success rate is 83%, yet this method is employed in merely 12% of the situations. The use of Dispute Review Boards that intervene to stop escalation of conflict has an 88% success rate, but only 3% of the projects are done by the Board.

The legal route is the least attractive choice for the disputants. The resolution of the case requires only about 5-10 years. The lawyers’ fees claim 15-35% of the initial amount that is disputed. The proceeding is open, and it is going to leave a bad light on the parties involved. The long, expensive, and aggressive court process results in completely draining all the little goodwill that might have been left between the disputing parties.

Why Aren't People Using Better Methods?

In case mediation is such an effective way of resolving disputes, why then do the parties not avail themselves of it? It is not really the cost that is the primary factor—the charges of mediation are only 2-5% of the disputed amount, while the cost of litigation is 15-35%. In fact, the actual obstacles are quite different.

Most people are not at all aware of these alternatives, nor do they realize how they can benefit from them. These methods of dispute resolution are not part of the professional training courses. Particularly, the Nigerian lifestyle espouses the ruling of a judge over reconciliation, which is viewed as a sign of weakness; hence, the absence of trust in the process makes the people think that the third party may favor the other side.

The pool of mediators and arbitrators experienced in construction-related disputes is very limited. Moreover, there are no special institutional centers providing this service. The recent legislation (2023) promoting the use of alternative dispute techniques is still fresh; thus, the public is reluctant to apply it. Many contracts do not even refer to these means, or the clauses are so complicated that no one knows what to do when a dispute arises.

A Better Way Forward

By this composite solution, every layer of the building is ensured to be sturdy, starting with the foundation being laid below.

First and foremost, Prevention: Contracts that are drawn up in such a manner that the simplest and the most complete language is used, which excludes any technical words, are the first things on the list. Every person's responsibility should be mentioned clearly. A communication system of regularity should be set up. It should be a practice to recognize potential problems beforehand.

Prevent enlargement of problems: The whole project should be under regular and strict scrutiny. Conduct meetings at regular intervals where everyone can express their concerns. One of the ways to establish a problem-monitoring and directing process in such a way that problems do not grow large is through the use of easy techniques.

Informal Solutions should be promoted. Allow people to converse and be transparent with one another. If needed, the organization of negotiations may be done by an impartial individual. Instead of engaging in word battles, all groups should be helped to pinpoint compromises that are agreeable to all.

Always keep the possibility of formal assistance close at hand: Mediation should be treated as the initial phase of the formality. Quick temporary measures should be applied to urgent issues that lack an immediate decision under the adjudication process. Technical experts should be brought in to resolve technical disputes. Arbitration should be restricted to complex and expensive cases requiring a final and binding decision.

Make certain that litigation is the last resort: Nigeria might set up special construction courts with judges who are knowledgeable in the area, and thus be able to speed up the trials.

Avoid forgetting past mistakes: Keep a log of the wrongdoings and good practices. Spread the know-how to the entire industry so that eventually everyone will master both conflict prevention and resolution.

Conclusion

The disputes that occur in Nigeria's construction industry not only deplete the economy of the sector, but they also result in dissatisfaction among the participants; nevertheless, they can be prevented by implementing specific measures. The solution is merely a shift of the attitude and handling the issue of uno as it is, rather than regarding the quarrel over it as an unavoidable and later fight-over consequence of the construction. Such an approach will necessitate better contracts, fewer communication barriers, trust-building, and the use of fast and fair methods that are tried and tested in resolving disagreements.

The transition to this new approach will not happen overnight; it will take time. The government has to pass legislation and set up the new dispute resolution centers, the professional associations have to build up the capacity to train people to the required standards, the companies have to invest in proper project management, and people have to adopt a more cooperative attitude at work.

The positive side is that there are remedies, and they work. Different countries in various regions of the world have been able to reduce construction disputes through the very changes that Nigeria still needs. Eventually, relying on providing the list of possible benefits of completing the project on time and within budget, building up better relationships, quality buildings, and increasing trust in public institutions, it will be the effort put in that will weigh against the non-material benefits. Thus, the construction industry of Nigeria can change from being the one that is constantly fighting over disputes to the one that is respected for its ability to deliver projects on time. But, this only requires the commitment of various approaches in the industry.