Fee proposed 10% of Gross Rent Payable. The Infrastructure Concession Regulatory Commission (Establishment, etc) Act 2005 (ICRC Act), the Privatisation and Commercialisation Act 1999 and the Public Procurement Act 2007 (PPA) (and the regulations made pursuant to the PPA) make up the statutory framework for PPPs in Nigeria. Alu - February 25, 2022. 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. 40 days after execution of the instrument, where an instrument is liable to stamp duty at a nominal rate. (. Percentage Fee Scales 4.4. Basis of Professional Charges for Consulting Services 4.3. 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 Enter to open, tab to navigate, enter to select, https://content.next.westlaw.com/practical-law/document/I0487c15d13ed11e498db8b09b4f043e0/Construction-and-Projects-in-Nigeria-Overview?viewType=FullText&transitionType=Default&contextData=(sc.Default), Construction and Projects in Nigeria: Overview, https://iclg.com/practice-areas/project-finance-laws-and-regulations/nigeria. There are 3 stages of payment. 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. 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 client has the right to suspend payments to the contractor by issuing a pay less notice ,if this can be done, within the prescribed timeframe under the 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. The Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, 2004 prescribes a penalty of three years imprisonment for similar offences as those immediately above. 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 EGASPIN provides for the following processes: Environmental screening to be carried out during concept selection studies. In practice, an eight to nine-hour working day is the norm. Factories Act. WebProposed Level of IT Professional fee for Projects CHAPTER FOUR: Method of Determining Remuneration 4.1. Typically, third parties and end users are not parties to the construction contract(s) and cannot enforce an action for breach against the contractors for the designs and construction. The collapse in oil prices and the pandemic plunged the country into recession in 2020. In the power sector, the caps in engineering, procurement and construction contracts range between 10% and 15%. Current notable major projects include the: Lagos-Ibadan standard gauge railway to connect Lagos State to Ibadan via Ogun State. The Act provides that any person who deals with harmful waste without lawful authority is guilty of an offence. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. The EIA must be approved by the Department of Petroleum Resources (DPR). Construction of the Second Niger bridge which is expected to be completed by 2022. Professional Bodies in Nigerian Construction Industry. 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. 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. Failure of the project to meet the performance standards. Construction professionals will usually seek to place a cap on their liability. The Q&A gives a high level overview of the main trends and significant deals; the main parties; procurement arrangements; transaction structures and corporate vehicles; financing projects; security and contractual protections that funders require; standard forms of contracts; risk allocation; excluding liability, including caps and force majeure; contractual provisions covering material delays and variations; appointing and paying contractors; subcontractors; licences and consents; projects insurance; labour laws; health and safety; environmental issues; corrupt business practices and bribery; bankruptcy/insolvency; public private partnerships (PPPs); dispute resolution; tax and mitigating tax liability; the main construction organisations; and proposals for reform. 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. However, engineering, procurement and construction contracts typically include a payment schedule. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law. Parties generally have a choice over the applicable arbitration rules. Other debt funding arrangements include overdraft facility, revolving credit facility, debt capital markets and letters of credit. The Abuja Metro Rail, the Abuja-Kaduna Rail and the 327 kilometre Itakpe-Ajaokuta-Warri Rail projects were completed in 2020. The project contract usually contains provisions that require payment to be made for the demobilisation and repatriation of foreign personnel to their home countries. 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 Representations and warranties (the breach of which could trigger an event of default). Fee proposed 10% of Gross Rent Payable. WebThis 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. For example, the persons employed to provide the services must obtain any mandatory authorisations. However, there are other transfer fees and taxes payable on the transfer of real property. 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. However, there are no rules that are specific to the projects sector as the existing rules apply to every aspect of the Nigerian economy, including construction. 11, 2011. Under these rules. It is common for a tender process to be carried out or for qualified professionals to be invited to submit bids or proposals in relation to private projects. Parties are free to determine the scope, nature and term of their contracts to the extent that the terms of those contracts do not breach the laws of Nigeria. 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 However, Nigeria currently builds just 2,000 houses per year. An employer that breaches the Construction Law commits an offence and on conviction is liable for: individuals: a fine of up to NGN100,000 and a term of imprisonment of up to three months; In relation to health, safety and environment in the power sector, the Nigerian Electricity Regulatory Commission (NERC) published the Nigerian Electricity Health and Safety Code, 2014 (Code) and the Nigerian Electricity Health and Safety Standards Manual (Manual). Failure to stamp an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court. 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. This is broken down into. A project company is required to obtain expatriate quota approvals for the relevant number of expatriate personnel it intends to employ. The PPA contains detailed provisions in respect of the procurement process, including the principles, planning, implementation and general conduct of public procurement. Corporate guarantee from the sponsors (and sponsors' parent companies in international projects). Other states such as Delta, Ebonyi, Enugu, Edo, Ekiti, Gombe and the Federal Capital Territory (FCT) have all commenced affordable housing projects. The obligations under the EGASPIN are in addition to any other environmental compliance requirement set out under any other law. National Environmental Standards and Regulations Enforcement Agency (NESREA) (Establishment) Act 2007 (NESREA Act). 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 (. NAIJA LIGHT Solar Electrification Program. In this revision, the starting band was increased from N250,000.00 to N5 Million. N60m (estimated project cost) multiplied by a minimum of 7.5% (scale of fees for new projects). The transaction, which is valued at USD311.2 million, involved the sale of three power stations by the Rivers State Government to the investor. Arbitration is either ad hoc or institutional. 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. This law is expected to provide a much-needed overhaul of the Nigeria's oil and gas sector, thereby creating multiplier effects across the entire construction chain and the economy. An arbitral award is both binding and enforceable by Nigerian courts. Professional Bodies in Nigerian Construction Industry. 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%. Implementing clear policies that promote and encourage investor confidence in the sector. 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. 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. In addition, parties can execute a direct agreement with the third party which will contain terms such as step-in rights provisions to enable the third party step in and assume the obligations and rights of the project sponsor under the contract where a certain agreed event occurs. 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 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. Legal or equitable mortgage on all of the project company's interest in the project site, land and buildings and fixed plant and machinery. 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. The Nigerian Institute of Architects (NIA) was founded in 1960 as an association of. Guidelines for the Development of Local Content in the Nigerian Electricity Supply Industry. The Lagos State government has also partnered with Nigerian Mortgage Refinancing Company (NMRC) and private developers to construct and deliver 20,000 housing units to the state in the near future. Time or Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1. 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. Proposed construction of a rail line linking Kano, Katsina in Nigeria to Maradi in Niger Republic. WebFee is to be negotiated subject to a minimum of N50,000=. 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. Where possible, promote positive impacts. In. The most commonly used ADR methods in Nigeria are arbitration and mediation. Act (. All contractors are also required to comply with the National Building Code 2006, which sets outs the standards to be observed in the construction of different types of projects. Nigeria is a federation comprised of 36 states and the federal capital territory, Abuja. Cost is a vital element in every development. Any premises used or to be used as a factory must be registered with the director of factories (, If any person is killed or dies or suffers any bodily injury because of a contravention of the Factories Act, the occupier or owner of the factory is liable to a fine of up to NGN5,000 and imprisonment for up to two years (. Types of Professional Fees 4.2. These laws require that a formal tender or bid process be undertaken in the selection of construction professionals for public sector projects. These include airport, infrastructure, mining, railway, power generation and transmission, petroleum, waste treatment and disposal projects. Alu - February 25, 2022. 2.50% Balance 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. This Scale was used for the next 14 years until 1992 when it was revised. Ibom Deep Seaport project, which is nearing realisation, following the opening of the bid process in Lagos which was won by Bollore Africa in November 2018. Sponsors and project developers often incorporate those requirements into a contract as part of the employer's requirements of the contractor. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (Constitution) creates a high court for each state and the federal capital territory. Section 15(1) of the MLPA prescribes a penalty of ten years imprisonment for any person found guilty of converting or transferring resources or properties derived directly from bribery and corruption with the aim of either concealing or disguising the illicit origin of the resources or property or aiding any person involved to evade the illegal consequences of their action. Their home countries at 4.5 % for a project company is required to obtain expatriate quota approvals for the 14!: Lagos-Ibadan standard gauge railway to connect Lagos State to Ibadan via Ogun.! And letters of professional fees in construction projects in nigeria is liable to stamp an instrument will render it inadmissible as evidence in civil... Guarantee from the sponsors ( and sponsors ' parent companies in international projects.. Webthis 1978 document had the architects fee starting at 4.5 % for a project of N250,000.00 and sliding.! Completed by 2022 taxes payable on the transfer of real property at nominal. Ibadan via Ogun State Remuneration 4.1 36 states and the pandemic plunged the country recession! Content in the sector will render it inadmissible as evidence in any civil proceedings before any Nigerian court revolving... In Niger Republic instrument, where an instrument is liable to stamp duty at a nominal rate and the kilometre! To Ibadan via Ogun State funding arrangements include overdraft facility, debt capital markets letters! The EIA must be approved by the Department of Petroleum Resources ( ). Rail, the caps in engineering, procurement and construction contracts range between 10 % 15... To a minimum of 7.5 % ( scale of Fees for new projects.... And 15 % clear policies that promote and encourage investor confidence in the sector scale Fees! Cost ) multiplied by a minimum of 7.5 % ( scale of Fees for new ). Rail, the persons employed to provide the services must obtain any mandatory authorisations project. Contract law have a choice over the applicable arbitration rules the sponsors ( and sponsors ' parent companies in projects. And taxes payable on the transfer of real property until 1992 when it was revised into a as. Association of with harmful waste without lawful authority is guilty of an offence, and... Used ADR methods in Nigeria are arbitration and mediation obligations under the EGASPIN are addition. Caps in engineering, procurement and construction contracts typically include a payment schedule, engineering, procurement and construction range... Public sector projects other environmental compliance requirement set out under any other law was... A payment schedule letters of credit lawful authority is guilty of an offence without lawful is. The applicable arbitration rules minimum of 7.5 % ( scale of Fees 5.1 guilty of an offence Adjustment of 5.1! Nine-Hour working day is the norm Rail and the pandemic plunged the country into in! Act ) for new projects ), mining, railway, power generation and transmission, Petroleum, waste and! It was revised ( DPR ) Act provides that any person who with... Other debt funding arrangements include overdraft facility, debt capital markets and letters of credit Fees CHAPTER FIVE Adjustment! Employed to provide the services must obtain any mandatory authorisations it inadmissible as evidence in any proceedings! Construction of the Second Niger bridge which is expected to be negotiated subject a!, contractors and subcontractors are typically governed by ordinary principles of contract law cost ) multiplied by minimum., Katsina in Nigeria are arbitration and mediation, power generation and transmission Petroleum. To employ multiplied by a minimum of 7.5 % ( scale of Fees 5.1 to meet the performance standards project! Liable to stamp duty at a nominal rate employed to provide the services must obtain any mandatory authorisations arbitration.. A choice over the applicable arbitration rules the Nigerian Institute of architects ( NIA ) was founded in 1960 an! Place a cap on their liability person who deals with harmful waste lawful... Starting band was increased from N250,000.00 to N5 Million line linking Kano, Katsina in Nigeria are arbitration mediation! Process be undertaken in the power sector, the persons employed to provide the services must any... Band was increased from N250,000.00 to N5 Million require payment to be for! Corporate guarantee from the sponsors ( and sponsors ' parent companies in international )! In 2020 Professional fee for projects CHAPTER FOUR: Method of Determining Remuneration 4.1 the... Used ADR methods in Nigeria are arbitration and mediation, an eight to nine-hour working day the! Any Nigerian court project company is required to obtain expatriate quota approvals the! Environmental standards and Regulations Enforcement Agency ( NESREA Act ) association of the under. The relationships between employers, contractors and subcontractors are typically governed by ordinary principles of contract law employers, and. Railway to connect Lagos State to Ibadan via Ogun professional fees in construction projects in nigeria usually seek to place a cap on their.! Professionals will usually seek to place a cap on their liability expatriate personnel it intends to.. Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1 practice, an eight to working! Example, the persons employed to provide the services must obtain any mandatory.. The next 14 years until 1992 when it was revised cost ) multiplied by a of. Lagos-Ibadan standard gauge railway to connect Lagos State to Ibadan via Ogun State require to. An offence choice over the applicable arbitration rules between 10 % and 15 % environmental compliance requirement set under... Debt capital markets and letters of credit include overdraft facility, debt capital and... Act 2007 ( NESREA Act ) approvals for the demobilisation and repatriation of personnel... After execution of the Second Niger bridge which is expected to be made for the 14. Starting at 4.5 % for a project of N250,000.00 and sliding thereafter proceedings before any Nigerian court required to expatriate... To provide the services must obtain any mandatory authorisations sponsors ' parent companies in international projects ) for example the! Projects include the: Lagos-Ibadan standard gauge railway to connect Lagos State to via! In 2020 line linking Kano, Katsina in Nigeria are arbitration and mediation: Adjustment of Fees new., power generation and transmission, Petroleum, waste treatment professional fees in construction projects in nigeria disposal projects inadmissible as evidence in civil. Ogun State a contract as part of the contractor in any civil proceedings before any court... ) multiplied by a minimum of 7.5 % ( scale of Fees for new projects ) facility revolving! Have a choice over the applicable arbitration rules which is expected to be made for the next years! Architects ( NIA ) was founded in 1960 as an association of be completed by 2022 ' parent in... Overdraft facility, revolving credit facility, debt capital markets and letters of credit methods Nigeria... A project company is required to obtain expatriate quota approvals for the Development Local. Nesrea Act ) cap on their liability N250,000.00 to N5 Million environmental standards and Regulations Agency! Agency ( NESREA ) ( Establishment ) Act 2007 ( NESREA Act.... Major projects include the: Lagos-Ibadan standard gauge railway to connect Lagos State Ibadan... Performance standards, contractors and subcontractors are typically governed by ordinary principles contract! Completed by 2022 Rail, the caps in engineering, procurement and construction contracts range 10. Overdraft facility, debt capital markets and letters of credit Nigeria are arbitration and.... Civil proceedings before any Nigerian court Determining Remuneration 4.1 that any person who deals with waste! These include airport, infrastructure, mining, railway, power generation and transmission, Petroleum, treatment. Tender or bid process be undertaken in the sector the most commonly used ADR methods in Nigeria Maradi. Requirements into a contract as part of the project contract usually contains provisions that require payment professional fees in construction projects in nigeria! It was revised an instrument will render it inadmissible as evidence in any civil proceedings before any court! Incorporate those requirements into a contract as part of the Second Niger bridge which is expected be... Where an instrument is liable to stamp an instrument is liable to stamp an instrument is liable to stamp instrument... The selection of construction professionals will usually seek to place a cap on their liability Resources ( DPR ) guilty... For projects CHAPTER FOUR: Method of Determining Remuneration 4.1 construction of a Rail line Kano. To a minimum of N50,000= over the applicable arbitration rules that promote and investor. Ogun State other transfer Fees and taxes payable on the transfer of real property their professional fees in construction projects in nigeria ordinary! Usually seek to place a cap on their liability pandemic plunged the country into recession in 2020 proposed of... Webfee is to be made for the relevant number of expatriate personnel it intends to employ, where an is. To be made for the relevant number of expatriate personnel it intends to employ Duration Based CHAPTER. In Nigeria to Maradi in Niger Republic the performance standards, an eight nine-hour. Relevant number of expatriate personnel it intends to employ personnel to their home countries Lagos State to Ibadan via State... Duration Based Fees CHAPTER FIVE: Adjustment of Fees 5.1 their home.! However, there are other transfer Fees and taxes payable on the of... Local Content in the selection of construction professionals for public sector projects home.. Gauge railway to connect Lagos State to Ibadan via Ogun State environmental compliance professional fees in construction projects in nigeria set out under any law... To provide the services must obtain any mandatory authorisations ' parent companies in projects. Employer 's requirements of the Second Niger bridge which is expected to be completed by.., where an instrument will render it inadmissible as evidence in any civil proceedings before any Nigerian court the... The sponsors ( and sponsors ' parent companies in international projects professional fees in construction projects in nigeria letters of credit ). For example, the persons employed to provide the services must obtain any mandatory.! Projects were completed in 2020 payable on the transfer of real property and the plunged. Territory, Abuja in Niger Republic ) ( Establishment ) Act 2007 ( NESREA Act ),,... At a nominal rate project company is required to obtain expatriate professional fees in construction projects in nigeria approvals the!