e) PSGS 5: Facility Management. 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! There is currently no VAT on the transfer of real property in Nigeria. 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. 2.50% Balance Basis of Professional Charges for Consulting Services 4.3. It allows government agencies to: Request quotations or expressions of interest. 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 power sector, turnkey engineering, procurement and construction contracts between the project company and the contractor, continue to be popular, with the project having separate operation and maintenance arrangements. However, there are other transfer fees and taxes payable on the transfer of real property. In addition to these laws, various states have passed laws that regulate environmental issues in their state. Debt providers include Development Finance Institutions, multilateral agencies, commercial banks, Export Credit Agencies. Extensive rehabilitation of the Lagos-Ibadan expressway, one of the largest road networks in Africa, the oldest expressway and busiest inter-state route in Nigeria. 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. The structures explained above also apply to international projects. 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! 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 rates payable will depend on which of Nigeria's 36 states the real property is located in. 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. The PPA requires all procurement of goods and works by a public entity to be done by way of open competitive bidding. Some of the penalties under Nigerian anti-corruption laws include the following: The Corrupt Practices Act prescribes a penalty of seven years imprisonment for any person who, being a public official: corruptly asks for, receives or attempts to receive or obtains any property or benefit of any kind before or after doing or omitting to do something in an official capacity; gives, confers or procures, or promises or offers to give, confer, procure or attempt to procure, any property or benefit of any kind to or for a public officer, or any other person on account of any act performed in an official capacity. Types of Professional Fees 4.2. 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 preferred developer is selected through an open competitive bidding process in compliance with the PPA. Percentage Fee Scales 4.4. The project contract usually contains provisions that require payment to be made for the demobilisation and repatriation of foreign personnel to their home countries. In July 2012, the Central Bank of Nigeria issued the Sustainable Banking Principles under which banks and other financial institutions undertook to integrate environmental and social considerations into business decision making. There is no limit to the number of hours an employee can work in a day. The two major funding models for local and international projects in Nigeria are: Equity, including mezzanine finance. Sponsors and project developers often incorporate those requirements into a contract as part of the employer's requirements of the contractor. The Borno state government has commenced an Owner Occupier scheme for 2,787 housing units in the state. Advising a leading energy company in connection with the restructuring of loan facilities worth an aggregated USD723 million, aimed at mitigating the impact of the devaluation of the Naira on its business. This is, however, a contractual right and can only be exercised if it is included in the project document. 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 Where the FGN or any of its agencies is a party to the proceedings or where the dispute relates to the executive, administrative or managerial action or inaction of the FGN (other than a simple breach of contract), the Federal High Court would have jurisdiction. Types of Professional Fees 4.2. 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. 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%. In July 2020, the Nigerian President approved the payment of EUR15.21 million and NGN1.708 billion as counterpart funding for the PPI. 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. The proposed project is submitted to the Federal Executive Council (FEC) for approval. Standard forms of contracts prepared by the Joint Contract Tribunal (JCT). Alu - February 25, 2022. Where there is a third party with an interest in the project, it is standard practice for the consultants to be required to provide specific collateral warranties in favour of the third party. 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. However, engineering, procurement and construction contracts typically include a payment schedule. Guidelines for the Development of Local Content in the Nigerian Electricity Supply Industry. There are no specific laws in the Nigerian construction industry that give a contractor the right to maintain a lien on the employer's property or over the project where there is a payment default. Act (. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. e) PSGS 5: Facility Management. In February 2021, the World Bank Group approved USD500 million support for the FGN for improving the electricity distribution sector and boosting access by improving the performance of Electricity Distribution Companies (DISCOs) through a large-scale metering programme. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. 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 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. The EIA must be approved by the Department of Petroleum Resources (DPR). In this revision, the starting band was increased from N250,000.00 to N5 Million. The continuing expansion of Nigeria's middle class has made investments in condominiums and shopping malls a popular choice for private capital. Construction contracts typically include caps on liability. Advised NG Power-HPS Limited in connection with the acquisition of majority shares in First Independent Power Limited. 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. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. There is currently a bill at the Nigerian National Assembly in connection with the development of local expertise and capacity in the Nigerian construction industry. It also includes provisions on the bidding process, bid security, evaluation of bids. The EIA Act makes it an offence for any person to embark on any activity or project that may have significant environmental effects, without having first undertaken, and submitted to the relevant government environmental agency, an Environmental Impact Assessment Report (EIA). 1 Percent of General Construction Total General Construction Estimate = $50,000,000 25% of Total General Construction = MEP Portion of the Construction = $12,500,000 MEP Design Fee: as Percentage of the MEP Construction (4%): Design Fee = $12,500,000 x 4% = $500,000 as Percentage of General Construction (25% x 4% = 1%): The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. Improving power supply reliability to meet growing demand. This was intended to: Avoid, minimise or offset the negative impact of their business operations on the environment and local communities in which they operate. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. Service fees are also liable to VAT at 7.5%. The parties through their project documents usually provide for a dispute resolution mechanism to be adopted in the event of dispute. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. The REA's mandate is to increase electricity access to rural and underserved communities through public and private sector engagement. Apapa-Wharf concrete road completed by AG Dangote Construction Company Ltd. Construction of the Lekki Deep Sea Port (. The interest payment on a loan to fund a construction project is an allowable deduction before arriving at the taxable profits. However, the application of these fee scales is usually not mandatory and parties can instead agree that a lump sum will be paid in instalments at agreed milestones or generally agree on a satisfactory fee payment structure. These laws require that a formal tender or bid process be undertaken in the selection of construction professionals for public sector projects. It is uncommon for payment obligations under construction contracts to be secured by land or property. Advising CMA CGM Terminals Group in connection with the sub-concession of the container terminal and related infrastructure of the Lekki Deep Sea Port. The Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN). In addition, the foreign nationals being employed must obtain a residence and work permit on entry into Nigeria to enable them to both live and work in Nigeria. The Federal Government of Nigeria (FGN) is committed to growing the infrastructure industry including modernising and expanding the existing power production capacities in the country, both on-grid and off-grid. d) PSGS 4: Property Management. The Nigerian construction industry struggled in 2020 due to disruptions caused by the COVID-19 outbreak and the subsequent lockdown measures. This was submitted by the Association of Consulting Engineers in Nigeria and the Nigerian Society of Engineers to the Council for the Regulation of Engineering in 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. These include the: Abia State Public Private Partnership and Investment Promotion Law of 2016. One of the functions of the Bureau of Public Procurement is to prepare and update standard bidding and contract documents. For example, in Lagos State, the transfer fees payable on a transfer of land total 3% of the assessed fair market value of the property. Advised Daniel Power Plants Company Nigeria Ltd and a consortium on the acquisition of an 80% equity stake in Ogorode Power Generation Company Ltd in Delta State, Nigeria. Corporate guarantee from the sponsors (and sponsors' parent companies in international projects). 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. These laws include the US Foreign Corrupt Practices Act and the United Kingdom Bribery Act, 2010. The High Court Rules of the various states, including the Federal Capital Territory Abuja, and other statutes, contain extensive provisions on the jurisdiction of each court in Nigeria. The NESREA has primary responsibility of enforcing compliance with laws, guidelines, policies and standards on environmental matters in Nigeria, such as water quality, noise, ozone protection, air and atmospheric protection and has issued various regulations on compliance requirements. In addition to local Nigerian laws, some foreign anti-corruption and anti-bribery laws have extra-territorial effect and may apply to certain categories of persons in relation to actions that are connected with Nigeria. Act) (, Money Laundering Prohibition Act 2011 (as amended) (MLPA). In. Factories Act. WebConstruction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. 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. USD3 billion methanol production plant at Brass in Bayelsa State. Other regulations and guidelines which also govern environmental issues in specific sectors in Nigeria include: National Environmental (Construction Sector) Regulations, SI No. This paper concerns an investigation into the causes of high costs of construction in Nigeria. Due to the increasing cost of key infrastructure projects in the country and dwindling government financing, the government has used public private partnership (PPP) arrangements to finance projects for which the government is not able to secure debt financing, for example the: Highway Development and Management Initiative, a PPP, which is expected to attract over NGN1 trillion in private investment for the development and maintenance of road networks. 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 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. Under Nigerian Law, certain professionals must have obtained the relevant licences to engage in construction projects: Engineers must be licensed by the Council for the Regulation of Engineering in Nigeria (COREN) under the Engineers (Registration, etc) Act) (, Quantity surveyors must be licensed by the Quantity Surveyors Registration Board of Nigeria under the Quantity Surveyors (Registration, etc.) Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. There are other non-compulsory insurance products, such as erection all risk insurance, that a contractor or project company will typically procure. 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