The General Conditions of Contract for the procurement of works 2011. For both local and international projects, a syndicate of lenders typically provide the debt financing but some local projects are funded on a bilateral basis. 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. Professional bodies are formed as an association of professionals which enhance, control, and regulate the activities of its members. Construction projects are generally not exempt from VAT, and are liable to VAT at 7.5%. (. It is not clear whether a common law mechanic's lien will apply to construction projects where the contractor is unpaid. Draft EIA to be carried out and a report submitted to the DRP at the end of the project conceptual design and will form the basis for approval by the DPR of the detailed engineering design. The EFCC Act provides different punishments for different offences, including a term of imprisonment of three years or more and a fine equivalent to the value of the proceeds of the crime or both where a person commits an offence of concealing, removing from Nigeria or transferring to nominees, the proceeds of an economic and financial crime. Percentage Fee Scales 4.4. However, there are other transfer fees and taxes payable on the transfer of real property. For projects in the public sector, parties are mandatorily required to comply with procurement rules and regulations. Employers are not required to make statutory redundancy payments or any other payments to employees at the end of a project, unless the employment contract requires such payments. Alu - February 25, 2022. All procuring entities, including MDAs are required to obtain a Certificate of No Objection to Contract Award from the Bureau of Public Procurement before they engage in any procurement process. Preliminary EIA to be carried out at the end of the concept selection studies. The modes of appointment of construction professionals in Nigeria vary between the public sector and the private sector. 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 Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. The Constitution also creates the Federal High Court with jurisdiction over specific subject matter. 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. WebLowe (2003) further stated that the value added of construction is in the range of 7% to 10% for highly developed economies and around 3% to 6% for underdeveloped economies. Other debt funding arrangements include overdraft facility, revolving credit facility, debt capital markets and letters of credit. e) PSGS 5: Facility Management. Some contracts also include provisions permitting the contractor to initiate a change proposal where the contractor considers that: A request by the client will have a technical or financial impact on the project. It is uncommon for payment obligations under construction contracts to be secured by land or property. Equals N4.5m (architects fee for pre-contract services) Note; ARCON conditions of engagement say that these fees are the minimum that should be charged, therefore, your design circumstances may warrant a little increase in the percentage. There are rules in Nigeria that prohibit corrupt business practices and bribery generally. Banks and Other Financial Institutions Act 2020 (BOFIA), Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act (. 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. In Lagos State, under the Construction Workers Safety Law (. Assignment of rights in the project documents, insurance policies, hedging arrangements, future and present undertaking, and so on. There are various mechanisms available to Nigerian companies for mitigating taxes, depending on the nature of the transaction and the project. This trend has continued in 2021, and a report published by the World Bank in June 2021 (. Harmful Waste (Special Criminal Provisions, etc.) Renewable Energy Village in Kakuri, Kaduna State. Types of Professional Fees 4.2. The EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. The structures explained above also apply to international projects. Nigeria LNG Train 7 project is an ongoing expansion of the Nigeria LNG Terminal at Bonny Island, Nigeria. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. 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. The Pension Reform Act 2014 imposes an obligation on employers to obtain life insurance cover for all their employees. It is common for the funder to enter into a direct agreement with project sponsor/company and the contractor that will provide the funders with step-in rights to terminate the project contract with the contractor and appoint a replacement contractor. It also includes provisions on the bidding process, bid security, evaluation of bids. The flip side of this is that an estimated loss scheme (liquidated damages) is also built into the contract to subtly compel the contractor to deliver on time and on budget. Webprofessionals in the Built Industry to develop an harmonised scale of fees. In some cases, a project company may procure a single project insurance package and by virtue of the project agreements, share the benefit of the insurance cover with different project service providers. The interest payment on a loan to fund a construction project is an allowable deduction before arriving at the taxable profits. The main stages are: Selection of projects in each sector to be implemented on a PPP basis by the relevant ministry, department and agency (MDA) charged with the responsibility of regulating that sector. The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. Member of the team that advised Consolidated Infrastructure Group Ltd. on due diligence and project structuring for its investment in the development of an 8.5 MW dual fuel power project in Delta State. 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. Debt, including hedging structures and arrangements. Contracts can also include clear definitions of the standard of performance expected and penalties for not meeting the standard. The Employee Compensation Act 2010 established the Employees' Compensation Fund (Fund) and requires every employer to make a minimum monthly contribution of 1% of its total monthly payroll into the Fund. The funders may decide to call for the performance bond or take out the parent company guarantee provided by the contractor where such exists. Cost is a vital element in every development. USD3 billion methanol production plant at Brass in Bayelsa State. Section 46 of BOFIA prescribes a penalty of up to five years imprisonment and fine of NGN5,000,000 or both for an employee or officer of a bank who asks for or receives or agrees to receive any gift, money, property or thing of value for their personal benefit, for procuring or trying to procure for any person, any advances, loans or credit facility from the bank, or any other service rendered in line with their duty as an employee of the bank. Approval of project documents by lenders. A change will enhance efficiency of the project's operations. 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. In practice, an eight to nine-hour working day is the norm. The Harmful Wastes Act criminalises the unlawful carriage, deposit or possession of harmful waste in Nigeria, its territorial waters or exclusive economic zones. Usually, the state where the construction contract is implemented or ought to be performed will determine the high court that will have jurisdiction over the contractual dispute. There is currently no VAT on the transfer of real property in Nigeria. 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 a syndicate of lenders in connection with the amendments to, and increase in the size of a loan of approximately USD530 million to Shoreline Natural Energy Resources Limited, a Nigerian oil and gas exploration and production company. Covenants, representations and warranties. Strengthening the sector's institutional framework and increasing transparency. The PPA also requires procurement to be conducted in a manner that is: Equitable for ensuring accountability and conformity with its provisions (with the aim of achieving value for money and fitness of purpose). There are 3 stages of payment. 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. Fee proposed is 10% of Gross Rent Payable, or Gross Proceeds of Sale/Purchase. 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 Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. 0. 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. Preparation of an outline business case by the relevant MDA of the sector in which the PPP is to be implemented. Act) (, Money Laundering Prohibition Act 2011 (as amended) (MLPA). The contractors also obtain limited time warranties, typically between 12 and 24 months, from the original equipment manufacturers, which they pass on to the project owner. 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). However, if the Nigerian national is an engineer, engineering technologist, engineering technician, engineering craftsperson, or builder, they must register with either the Council for the Regulation of Engineering in Nigeria (COREN) or the Builders Council under the Builders Registration Act (. An EIA must be undertaken where the extent, nature or location of a proposed project or activity is likely to have a significant effect on the environment. The two pieces of primary legislation that govern environmental issues in Nigeria are the: Environmental Impact Assessment Act (EIA Act). This Scale was used for the next 14 years until 1992 when it was revised. The procurement legislation in Nigeria are set out in the Public Procurement Act 2007 (PPA) (including the Public Procurement (Goods and Works) Regulations 2007 and the Public Procurement (Consultancy Services) Regulations 2007 made under the PPA) and the Infrastructure Concession Regulatory Commission Act, 2005 (ICRC Act). 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: Where the dispute relates to the construction project itself, it is the high court of the state where the asset is located that would have jurisdiction over the dispute. 0. 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. 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 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 Factories Act also provides that where an offence is committed by a body corporate, every director, manager, secretary or other similar officer of the body corporate is guilty of that offence and liable as if they had committed that offence unless they prove that the act or omission constituting the offence took place without their consent, knowledge, connivance or neglect. Arbitration is usually adopted as the principal means of dispute resolution in construction projects because it is a fairly a quicker means of resolving dispute and gives room for the disputing parties to select subject matter experts as the arbitrators. 2.50% Balance The Labour Act provides that normal work hours are to be fixed by mutual agreement, collective bargaining, or by an industrial wages board. The standard document for PPP is a concession agreement which is executed between the relevant government agency and the private sector participant. The transaction, which is valued at USD311.2 million, involved the sale of three power stations by the Rivers State Government to the investor. In this revision, the starting band was increased from N250,000.00 to N5 Million. NAIJA LIGHT Solar Electrification Program. Under these rules. Member of the team that advised Falcon Kinetics Limited on the Construction of the Civil and Structural Works for the development of a 4,000MT LPG Bulk Gas Storage Facility and Jetty Project at Rumuolumeni, Saipem/Aker Base Road, Port Harcourt, Rivers State, Nigeria. Lekki Deep Seaport project is also being developed as a PPP between the federal Government of Nigeria, the Lagos State Government and Tolaram Group. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). Advised New Electricity Development Company Ltd on the acquisition of Ikeja Electricity Distribution PLC. Implementing clear policies that promote and encourage investor confidence in the sector. 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 scope of such caps is usually fixed by commercial terms with the relevant acceptable exclusions, which may be extended beyond the norm, based primarily on the risk allocation mechanism of the project. 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. London Court of International Arbitration Rules. Factories Act. 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. The insurance must have a value that is at least three times the total annual emoluments of all the employees. 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