Analysis of project financing sources and their effects on projects’ costs in Nigerian construction domain.

Abstract

This research is on Project Financing in Nigeria. It examines the problems of project financing in the country, which include the following: Lack of adequate sources of finance for the development of projects; lack of information on appropriate sources of finance for projects development; failure of applications to the appropriate finance sources which in most cases result to project abandonment and, or project cost over-run. In attempting to prefer solutions to these problems, a critical analysis of the collected data was carried out using the following decision criteria in carrying out the financial appraisal of the studied projects: Simple inspection method, Cost-Benefit analysis, Equivalent uniform annual cash flow (EUACF), Internal rate of return (IRR), Present value (Worth). The results of the study show that most public projects financed using direct financing method are abandoned due to one problem or another. Contractor financing was, therefore, applied in financing such projects. In conclusion, the research revealed that the economic system in operation determines the source(s), of finance for any project. In view of the findings of the research, it is recommended that a complete re-organization of the existing institutional framework of the project financing sector in the country be carried out.