Cost Over-Run in Civil Works: A Case-Study of Engineering, Procurement and Construction (EPC) Gas Depot Construction Projects in Nigeria



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Submitted Aug 18, 2020
Published Aug 27, 2020
10.24018/ejgeo.2020.1.4.54

Abstract viewed = 975 times

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Engineering, procurement and Construction (EPC) projects in the oil and gas sector of Nigeria are under-researched. This leaves investors with little or no guide on the cost-overrun risks of oil and gas depot projects. Using the qualitative case study research technique, this study investigated cost overrun in the civil works of a petroleum products depot project in Lagos, Nigeria. The objectives were to ascertain the reasons for cost overrun and the areas of substantial cost overrun in the project. It was found that except for the cost of construction of “gantry” which was under-measured as a result of use of a wrong method of costing, the rest of the major facilities experienced cost overrun with a cumulative difference of 106%. It was also discovered that the cost overruns mainly originated from design and construction activities. The study recommends the timely engagement of consultants to review the conceptual designs of contractors and monitor the activities of EPC contractors for oil and gas depot projects on behalf of clients. Such consultants should not, however, have powers to control the contractors. As much as possible, parties to EPC contracts should use standard conditions of contract that will better reflect their intentions rather than contrive bespoke conditions.

Keywords: EPC contract, contract agreement, cost overrun, oil and gas depot

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