Track: Project Management

Abstract

Within the past 12 years in Ondo State, Nigeria, three different percentages (60%, 50% and 30%) of the contract sum have been adopted as advance payment (AP) for construction contractors. This paper therefore investigated the sustainability of AP to construction project based on the survey of 127 respondents. The data used were collected via questionnaire with high reliability values of 0.830 and 0.780The results of the study revealed that advance payment had positive and significant effects on the contractors’ net cash flows including cost and time performance of projects thereby implying AP’s sustainability. It is hereby recommended that the clients and consultants should continue the usage of advance payment on construction projects as it has solved the financial problem of contractors while the current government policy of 30 percent of the contract sum as AP should be maintained because majority of the contractors have cash surplus at an average of 28 percent of the contract sum. Also advance repayment deduction should be made to span through the contract duration or when the actual performance on site reaches 85% as against the contractual provision for four equal instalment repayments of 25%. Lastly, the contractors should be made to stock-pile materials that are susceptible to price fluctuation immediately the contract is signed and AP granted.