professional fees in construction projects in nigeria

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Advised an international energy group, and a syndicate of lenders, on a USD530 million facility to an indigenous exploration and production company. Other contractual provisions usually heavily negotiated by the parties include: The form of security (such as payment bonds, performance bonds, bank guarantees and third-party guarantees). Economic loss can be excluded but, in some cases, the counter party may require certain aspects of the economic loss to be mitigated through performance guarantees, although these may specify a maximum amount recoverable from the contractor in the form of liquidated damages. 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. Including provisions that require interest on delayed payments is also one of the means of ensuring that contractual payments are made promptly and diligently. 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. There are various mechanisms available to Nigerian companies for mitigating taxes, depending on the nature of the transaction and the project. 30 days after execution where an instrument is liable to an ad valorem rate. Engage in direct procurement in cases of emergency. In the power sector, the caps in engineering, procurement and construction contracts range between 10% and 15%. There are usually provisions incorporated in the project documents to enable the consultants terminate the contract in the event of the contractor's insolvency. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law. Percentage Fee Scales 4.4. Construction & Engineering Laws and Regulations Nigeria 2022-2023. On completion, subject to the terms of the approval granted by the relevant government agency, the contractor or project company may be required to file a report on project completion. This is, however, a contractual right and can only be exercised if it is included in the project document. Standard forms of contracts prepared by the Joint Contract Tribunal (JCT). 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. Advised the International Finance Corporation (IFC), a member of the World Bank Group, in connection with its investment in a 120MW greenfield solar photovoltaic (PV) power project in Kogi State, Nigeria. 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. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. The REA's mandate is to increase electricity access to rural and underserved communities through public and private sector engagement. To be excused from performing its obligations whilst the force majeure event lasts, the party seeking to rely on the force majeure provision would typically be required to comply with additional contractual requirements to the satisfaction of the other party, including reporting and damage mitigation requirements. Guidelines for the Development of Local Content in the Nigerian Electricity Supply Industry. The scope of such caps is usually fixed by commercial terms with the relevant acceptable exclusions, which may be extended beyond the norm, based primarily on the risk allocation mechanism of the project. 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. Advised Kepco Energy Resources Limited, the joint venture company established by the Sahara Energy Group and Korea Electric Power Corporation, in connection with its acquisition of a 70% equity interest in Egbin Power Plc. It is not clear whether a common law mechanic's lien will apply to construction projects where the contractor is unpaid. In other cases, the overall cap does not exceed the amount of the contract price. Fee proposed 10% of cost of Annual Services. The PPA contains detailed provisions in respect of the procurement process, including the principles, planning, implementation and general conduct of public procurement. 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. Percentage Fee Scales 4.4. Percentage Fee Scales 4.4. Construction & Engineering Laws and Regulations Nigeria 2022-2023. Change in law risk. If passed, the proposed legislation will establish a framework for Nigerian professionals to be given preference in the implementation of construction projects in Nigeria. 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. Deep-sea port with a railway project connecting Calabar with Port Harcourt and Onne Deep Sea Port. 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. 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 (. The USD11.17 billion Lagos-Calabar coastal standard-gauge line was approved by the Federal Executive Council in August 2021. For example, most of the roads networks in Nigeria are still in bad shape. In relation to projects in the private sector, the process of appointment depends on the internal rules developed by project sponsors. This paper concerns an investigation into the causes of high costs of construction in Nigeria. Various states in Nigeria have also passed laws regulating PPP projects in their states. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. d) PSGS 4: Property Management. In the few cases where contracts involving Nigerian parties provide for institutional arbitration, the parties tend to choose local Nigerian arbitration institutions such as the Chartered Institute of Arbitrators (UK) Nigerian Branch or the Lagos Regional Centre for International Commercial Arbitration. Webprofessionals in the Built Industry to develop an harmonised scale of fees. A special purpose vehicle used to execute the project will be liable to pay: 30% of its total profit (less any allowable deductions and capital allowances) if it has more than NGN100,000,000 turnover; 20% if it has a turnover between NGN25,000,000 and NGN100,000,000; or. 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. Construction contracts involving only Nigerian parties tend to provide for ad hoc arbitration under the UNCITRAL Model Law on International Commercial Arbitration or the Nigerian Arbitration and Conciliation Act. Banks and Other Financial Institutions Act 2020 (BOFIA), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act (. High debt-servicing costs and low tax revenue also left little scope for fiscal spending and new public projects. Table of Professional Charges 4.5. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. The EFCC Act prohibits anyone from concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime, on behalf of another, with the knowledge that such proceeds are as a result of criminal conduct by the principal. The FGN is taking steps towards reducing the infrastructure deficit through increased spending as part of a 30-year infrastructure plan (National Integrated Infrastructure Master Plan) (Infrastructure Plan) with a target date of 2043, which aims to bring Nigeria's infrastructure stock to the GDP level recommended by the World Bank. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. 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. Parties to construction contracts in Nigeria typically negotiate their contracts on the basis of a draft prepared by their advisers including lawyers. 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. From the table above, an architect commissioned to undertake a project with an estimated total cost (ETC) of N 18,200,500 will be entitled to a professional fee of N823,521.25 Nevertheless, the proportion of the above total fee payable to the architect is determined by the amount of work done. 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 The preferred developer is selected through an open competitive bidding process in compliance with the PPA. The two pieces of primary legislation that govern environmental issues in Nigeria are the: Environmental Impact Assessment Act (EIA Act). Service fees are also liable to VAT at 7.5%. 0. Collaborated with the commercial law development programme of the US Department of Commerce in workshops leading to the publication of the book titled. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 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professional fees in construction projects in nigeria