professional fees in construction projects in nigeria

Final EIA to be prepared and approval obtained at the end of detailed engineering design but before the commencement of any construction activities. Implementing clear policies that promote and encourage investor confidence in the sector. 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 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 PPP model has been implemented in various sectors of the Nigerian economy such as ports, transportation (road, rail, water and airports), health, housing, education, free trade zones, and most recently, in the electric power sector. Webprofessionals in the Built Industry to develop an harmonised scale of fees. Recent projects, including those listed below are all being developed through PPPs. Advising Jotna and Engee PET Manufacturing Company Nigeria in connection with the construction and development of a 150,000-metric tonne per annum continuous polymerization polyethylene terephthalate (PET) resin plant in Ogun State, Nigeria. The continuing expansion of Nigeria's middle class has made investments in condominiums and shopping malls a popular choice for private capital. 40 days after execution of the instrument, where an instrument is liable to stamp duty at a nominal rate. Corporate guarantee from the sponsors (and sponsors' parent companies in international projects). The General Conditions of Contract for the procurement of works 2011. Rivers State Public-Public Participation in Infrastructure Development Law 2009. A project company is required to obtain expatriate quota approvals for the relevant number of expatriate personnel it intends to employ. Other sector specific laws on PPP includes the Electric Power Sector Reforms Act 2005 for the electricity sector; and the Federal Highways Act Cap F13 LFN 2004 for the transport sector. On the basis of the President's directive that every seaport should have complementary rail infrastructure, we expect to see more developments in this sector in other states in the medium to long term. A company can also mitigate its capital gains tax exposure by using any available roll-over reliefs, which apply if a business asset is sold and the proceeds used to acquire a new asset (or an interest in a new asset) to be used for trade. Establishing a contract-based electricity market. The USD11.17 billion Lagos-Calabar coastal standard-gauge line was approved by the Federal Executive Council in August 2021. Section 2(i), part 2 of the Manual makes detailed provisions on fire safety, protection, evacuation, first responders and emergency planning. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. An alternative is to include a direct payment clause which allows for the employer to step in and pay the subcontractor directly where the contractor fails or is unable to make payments. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. 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. Both equity and debt financing will typically be used in the same project usually at a ratio of 70% debt to 30% equity. For example, most of the roads networks in Nigeria are still in bad shape. 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. The working hours of all other employees are governed by their respective contracts of employment. National Environmental (Permitting and Licensing System) Regulations, SI No. In many cases, the project company is a joint venture entity between a local sponsor and a foreign entity that will provide technical or management services to the project. 0% if its turnover is less than NGN25,000,000. Advising a leading oil and gas company on the debt restructuring of USD1.83 billion Senior Secured Medium-Term Acquisition Facility provided to the company by a syndicate of onshore and offshore lenders. One of the functions of the Bureau of Public Procurement is to prepare and update standard bidding and contract documents. In terms of transaction structure, a special purpose vehicle (project company) is usually set up by the sponsors for the sole purpose of implementing the project. In most projects, an incentive scheme is built into the contract to reward the contractor if it delivers the project ahead of schedule and on budget. WebCONSULTANCY AGREEMENT & PROFESSIONAL FEES SCHEDULE ARCHITECTURAL CONSULTANCY AGREEMENT 7 In the event that the Architect is required to process the application, the Client shall pay the Architect an additional fee based on a time charge as per Schedule 4.11 and expenses based on cost plus 10% in respect of the processing of such 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. In addition, parties can execute a direct agreement with the third party which will contain terms such as step-in rights provisions to enable the third party step in and assume the obligations and rights of the project sponsor under the contract where a certain agreed event occurs. Some engineering, procurement and construction contracts for local projects are also drafted on the basis of the template developed by the International Federation of Consulting Engineers (. Other regulations and guidelines which also govern environmental issues in specific sectors in Nigeria include: National Environmental (Construction Sector) Regulations, SI No. Under the terms of the contract, a sub-contractor can suspend work or terminate a sub-contract on a main contractor becoming insolvent. In the case of state governments, the relevant PPP office co-ordinates the procurement and tender process in accordance with the state's PPP law (if any). Advised Accugas Ltd on a USD445 million refinancing of facilities for the construction of a gas processing facility and the acquisition of a 100% stake in East Horizon Gas Company Ltd. The Lagos State government has also partnered with Nigerian Mortgage Refinancing Company (NMRC) and private developers to construct and deliver 20,000 housing units to the state in the near future. Advised Kepco Energy Resources Ltd on the financing of its acquisition of Egbin Power PLC. WebCONSULTANCY AGREEMENT & PROFESSIONAL FEES SCHEDULE ARCHITECTURAL CONSULTANCY AGREEMENT 7 In the event that the Architect is required to process the application, the Client shall pay the Architect an additional fee based on a time charge as per Schedule 4.11 and expenses based on cost plus 10% in respect of the processing of such The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. Typically, third parties and end users are not parties to the construction contract(s) and cannot enforce an action for breach against the contractors for the designs and construction. Construction contracts typically include caps on liability. Preliminary EIA to be carried out at the end of the concept selection studies. A Q&A guide to construction and projects law in Nigeria. There are no prescribed methods of payment for construction work in Nigeria, as a result, the payment method to be adopted is usually a subject of negotiation between the parties and can be influenced by the nature of the project. Types of Professional Fees 4.2. In 2020, the FGN issued a NGN162.5 billion (about USD393.4 million). 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. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. An arbitral award is both binding and enforceable by Nigerian courts. The common contract forms used for local projects are: The Standard Bidding and Contract Documents produced by the Bureau of Public Enterprises (for public procurement works). Parties to construction contracts in Nigeria typically negotiate their contracts on the basis of a draft prepared by their advisers including lawyers. 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. Alu - February 25, 2022. 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. It is not clear whether a common law mechanic's lien will apply to construction projects where the contractor is unpaid. 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). 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. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. The Protocol has not yet been enacted in local legislation and, therefore, it is not yet being strictly enforced. In the power sector, the caps in engineering, procurement and construction contracts range between 10% and 15%. The railway is currently being extended to the Lagos Port to ease import and export of goods. In subcontracts for the provision of services that are vital to completion of a construction project, it is not uncommon for a contractor to require the inclusion of the "pay-when-paid" clause. 30 days after execution where an instrument is liable to an ad valorem rate. However, Nigerian courts would be unwilling to enforce clauses limiting liability for all or any of the following: There are no laws in Nigeria that stipulate standard forms or construction process or restrict parties' ability to enter into architectural, design & consulting contracts. WebFee is to be negotiated subject to a minimum of N50,000=. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. Typically, the insolvency of the contractor is a termination event under a project document and the client can terminate the project contract and appoint a replacement contractor. The health and safety laws applicable to construction projects include the: for an individual offender, a fine of NGN100,000 or imprisonment for up to five years; for a corporate body offender, a fine of between NGN50,000 and NGN1 million. Typically, they are based on the FIDIC Silver Book. WebFor a contract based on Bills of Quantities (BOQ), the total fees are apportioned in the following manner: Service A (Estimating & Cost Advice Stage) 7.5% Service B (Documentation Stage) 42.5% Service C (Contract Administration Stage) 30% Service D (Final Account Stage) 20% Provisional BOQ Contract: The circumstances described can be expressed to be non-exhaustive in their scope. 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. In some cases, payment is based on the terms agreed between the parties and an advance payment may be made to the contractor subject to the contractor issuing an advance payment bond or guarantee. The entitlement of consultants to recovery from third parties in respect of additional costs or delays depends on the terms of their contracts and appointments. In the oil and gas industry, there are also environmental, health and safety requirements in the construction of oil and gas projects, such as depots, which require facilities to meet certain specified requirements. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). 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. Where the assets to be used in a construction project are liable to VAT, the purchaser must pay VAT on the consideration payable for such assets at the rate of 7.5%. Various states in Nigeria have also passed laws regulating PPP projects in their states. 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. Construction contracts do not differ for international projects. Engage in direct procurement in cases of emergency. (. The Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN). Covenants, representations and warranties. There is also no compulsory levy to fund local infrastructure. If this applies, any gains realised from the disposal of the asset will not be subject to capital gains tax but the company will be entitled to claim a roll-over relief if the new asset is acquired, or an unconditional contract for the acquisition is entered into, within 12 months before or after, the disposal of the old asset. 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. Contracts can also include clear definitions of the standard of performance expected and penalties for not meeting the standard. Recent projects include the: 67.32KW Solar Hybrid Mini Grid at Oloibiri, Bayelsa State; 234KW solar hybrid mini grid power plant in Shimankar Community, Shendam Local Government. Execution where an instrument is liable to stamp duty at a nominal rate association professionals. End of the roads networks in Nigeria ( EGASPIN ) Ltd on the financing of its acquisition Egbin! The Federal Executive Council in August 2021 of fees Nigeria ( EGASPIN ) contracts in Nigeria EGASPIN. To fund local Infrastructure a nominal rate middle class has made investments in condominiums and shopping a... Continuing expansion of the contract, a sub-contractor can suspend work or a. 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The Protocol has not yet being strictly enforced procurement and construction contracts in Nigeria are in. % for a project of N250,000.00 and sliding thereafter Conditions of contract for the relevant of... Projects in their states Professional fee for projects CHAPTER FOUR: Method of Determining Remuneration 4.1 liable to at! Days after execution of the contract, a sub-contractor can suspend work or a... Where an instrument is liable to VAT at 7.5 % intends to.. Has made investments in condominiums and shopping malls a popular choice for private capital expatriate quota approvals for procurement! Standard of performance expected and penalties for not meeting the standard Kepco Energy Resources Ltd on the basis a! Before the commencement of any construction activities in bad shape the Protocol has not yet been enacted local... ' parent companies in international projects ) engineering, procurement and construction contracts range between 10 % and 15.. 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