Assessment of bonds utilisation in the Nigerian construction industry

Abstract

Default by contractors in meeting the time and cost performance of a project is usually counterproductive. Considering safety from the high financial burden of construction projects, clients are compelled to seek a level of guarantee in bonds to safeguard them from financial problems and provide incentive for proper and timely completion of the project by the contractor, thereby minimising failures and risks. Therefore, the study assessed the level of bond utilization in Nigerian construction industry, with a view to examining the benefits of its utilisation in construction projects. Survey method was adopted in which questionnaires were used to collect data from respondents. With a response rate of 45.30% (164 of 362), the collected data were analysed using descriptive and analytical scientific method. It was found that the level of bond utilisation in construction contract is high, with performance bond and Advance payment bond being most commonly used construction bond types. Assurance of performance and financial security are the major benefits of bond utilisation. The study recommends that there is need for more enlightenment of construction participants on the various types bond used in construction contracts