Background- current & alternative 2.docx

CONTRACTOR’S PRIVING RISK IN CONSTRUCTION PROCUREMENT SYSTEMS- A SURVEY OF BAUCHI METRPOLIS, BAUCHI STATE INTRODUCTION 1.1 Background to the study Contracting is a business (Harris and McCaffer, 2005); it owners’ are referred to as contractors’. Their participation in building construction projects in the construction industry can be in the form of Main/General Contractors’, Subcontractors’ or Prime contractors’ (Laryea and Mensah, 2010; Onwusonye, 2002; Ricketts, 2000). The concept of ‘general contracting’ as reported by Laryea and Mensah (2010) refers to the professional practice or system where an organization or individual undertakes to supply the resources and services required to executes a project in accordance with the contract document. General contractors usually assume responsibility for an entire construction project, but may subcontract to Subcontractors’ all of the actual construction works or those portions requiring special skills or equipment (Popescu, et al., 2003; Ricketts, 2000). Legally; Subcontractors’ are in contract with the General contractors’ rather than the client even when the client has stipulated which subcontractor is to be used (Baily, et al., 2008; Popescu, et al., 2003; Onwusonye, 2002; Ricketts, 2000). The essence of subcontracting according to Baily, et al., (2008) is to augments the general contractor’s limited resources and skills while enabling the general contractor to concentrate on their main area of expertise. Sometimes (Ricketts, 2000), in addition to a general contractor, the owner (client) contracts separately with specialty contractors, such as electrical and mechanical contractors, who perform a substantial amount of the work required for a building. Such contractors are called prime contractors’. Their work is scheduled and coordinated by the general contractor, but they are paid directly by the owner (Ricketts, 2000). Basically contractors’ are required by virtue of their business to provide materials or a service to another (clients’) for a set of fee (The New International Webster’s Pocket Business Dictionary, 2002). From the above explanation it is clear that a contractor runs a business enterprise that is established to provide a product or service in the hope of earning a profit and such enterprise may be sole proprietorship, a partnership or a corporation (for detail see: Harris and McCaffer, 2005; Hillebrandt, 1991). At the heart of every construction business (Roper and McLin, 2005), is project execution and the quest for attaining project success in the construction industry involves many parties amongst which are contractors’ (Usman et al., 2012; Gollenbeck, 2008); they are one of the major parties concerned with the monitoring and control of projects in construction and as such responsible for executing the works that form the contract (Idoro, 2012). However, the complexity of the construction industry is a fundamental issue that must be understood for any business within its domain to succeed (for detail see: Hamilton, 2006; Ashworth and Willis, 1994). This complexity poses serious management problems for the operatives of the industry. Hamilton (2006), therefore opines that caution must be properly guided if an organizational objective is to be achieved Besides, the management of enterprise resources is very fundamental to the achievement of any enterprise objectives (Omole, 2001). In a construction firm, as in any other firm, the primary responsibility of management is to ensure that all resources namely, manpower, machinery, materials and money are employed optimally to produce maximum profit for the investors in the enterprise (Olateju, 1992 cited in Fagbenle et al., 2011). According to Smith (1986) the aspect of resource management to a construction contractor is in twofold: resources required for running the enterprise and; resources required for the execution of a project (contract). The ability of the contractor to relate and estimate the cost of these two resources as a basis in determining its project price in a competitive market is very fundamental in attaining success in a construction contracting business. The issue of pricing in any business organization is very fundamental; it is the basis in meeting the business economic, social and human objectives. The most important of these objectives is the economic objective which all other objectives depend on. This objective is for business to make financial return (money) and it is the first reason why businesses exist. This objective enables the business to generate money to: pay profit to those who invest their money in the business; pay wages and salaries to workers and; keep the business going, as there must be money to buy materials, more machines and expand to meet the growing needs of customers (Adeagbo, 2005). To measure the level of meeting this objective (economic), a contractor must be able to evaluate the cost he incurs in the course of his business, so as to enable the firm establish a competitive project price. However, construction projects pricing in Nigeria is highly exorbitant, due to reasons found in Laryea(,2007) contractors are unable to effectively price risk in construction projects and as such, portrays the country as having the highest cost of construction in the world, as a result, it has been of serious concern to scholars of development economics (Anago, 2012; Dikko, 2012; NIQS, 2003). It is often said that there is total absence of value-for-money in Nigeria’s project development matrix (Dikko, 2012). Some stakeholders and scholars attributed this to the contractors had no knowledge of the formal risk modeling techniques. For instance, Baloi and Price, (2003) and Ahmed et al., (2002) have argued that contractors are ineffective in managing risk, and unable to analytically explain the psychology of their risk response mechanisms Laryea, (2007). Formal and analytical risk models that contractors can incorporate into the bidding process for the purpose of allocating risk contingencies have proliferated in recent years (for example, a fuzzy set model by Zeng et al., 2007; a fuzzy logic-based artificial neural network model by Liu and Ling, 2005; a fuzzy set model by Paek et al., 1993; a fuzzy set model by Tah et al., 1993; and an influence diagramming-based technique by Al-Bahar and Crandall, 1990). Several empirical studies of contractors have shown that they are rarely used in practice: seven contractors in UK studied by Tah et al. (1994); 30 in UK by Akintoye and MacLeod (1997); 12 in US by Smith and Bohn (1999); 84 in UK by Akintoye and Fitzgerald (2000); 38 in Hong Kong by Wong and Hui (2006); and 60 in Hong Kong by Chan and Au (2007). Shows that the relationship between risk and price in the process used by contractors to calculate their bids for construction work is not articulated sufficiently in the literature (Laryea & Hughes, 2008). However, years of contracting experience provide them an intuitive understanding of the construction industry economics that they apply to adjust price and resource based on perceived risks and opportunities. This empirical knowledge witnessed can be formalized to improve the practices of arbitrary contingency allocation. Risk analysis in bid preparation helps not only to evaluate uncertainty about tasks required under contract, but also to formulate bids that gives appropriate balance between risk of not getting the contract and associated with potential profit and losses if contract is obtained, Chapman et al,. (2000).This background sets the context within which the needs for bridging the gaps between the theory and practice of risk assessment in construction industry for an appropriate pricing of risk by the contractors. 1.2 Statement of the Problem In recent years, formal and analytical risk models that contractors can incorporate into the bidding process to assess project risk have proliferated. However, they are not patronized in practice. Contractors traditionally rely on unsystematic mechanisms such as intuitive judgment, expert skill, and experience to assess and allow for project risk when pricing tenders. Experimental studies of 30 contractors in the USA sought to investigate two issues: (1) the effect of risk on contractor bid markups; and (2) how contractors measure or compensate for project risk. They found that although risk apportionment influences bidding price by about 3% of the total cost of a project, most contractors had no specific way of measuring or quantifying risk. Modern estimating textbooks, however, represent the contractor contingency generally as a fixed percentage of around 5-10% of direct cost. None of the 12 small-to-medium sized contractors in Ghana interviewed by Laryea, (2007) had any knowledge of the mathematical models used to formulate contingency, and they did not have any formalized technique they used for estimating contingency. Contractors normally apportion risk by applying a fixed percentage figure to the base costs of a project. But this approach can hardly be considered as logical and effective as every construction project is bespoke. Such practice can propel a construction company to grave losses, as sensible apportionment of risk should correspond to the extent uncertainty in a project. Similar studies of contractors in the UK and USA by Ahmed, Azhar and Ahmad, (2002) respectively corroborate the low take-up of analytical risk models in practice, including reasons why contractors sparsely patronize them. The former studies expose the need for systematic approaches to contractors risk assessment whilst the latter studies advocate for methodologies that are more realistic that contractors can incorporate into the bidding process. Furthermore, posited by (Laryea & Hughes,2011), in their investigation conducted, the actual process of how contractors and their clients negotiate and agree on price is complex, and not clearly articulated in the literature. Using participant observation, the entire tender process was shadowed in two leading UK construction firms. This was compared to propositions in analytical models and significant differences were found. 670 hours of work observed in both firms revealed three stages of the bidding process. Bidding activities were categorized and their extent estimated as deskwork (32%), calculations (19%), meetings (14%), documents (13%), off-days (11%), conversations (7%), correspondence (3%) and travel (1%). Risk allowances of 1-2% were priced in some bids and three tiers of risk apportionment in bids were identified. However, priced risks may sometimes be excluded from the final bidding price to enhance competitiveness. Thus, although risk apportionment affects a contractor’s pricing strategy, other complex, microeconomic factors also affect price. Instead of pricing in contingencies, risk was priced mostly through contractual rather than price mechanisms, to reflect commercial imperatives. The findings explain why some assumptions underpinning analytical models may not be sustainable in practice and why what actually happens in practice is important for those who seek to model the pricing of construction bids. The problem under investigation is: how do [sms] contractors assess and price risks when tendering? According to Laryea,(2007) .Many formal and analytical risks models that contractors can incorporate into the bidding process have proliferated in uniformity with growing Project Risk Analysis Management discipline, but they are unemployed in practice due to reasons found in Ahmed et al(2002). Introducing more models correspondingly may therefore not necessarily useful. Usta(2005) as cited in Onukwube(2009) observed that, it is pretty difficult to estimate productivity level and potential delays without a basis for making the estimate. He asserted further that rather than including contingency, contractors adjust their productivity rates or unit costs to reflect anticipated difficulties. In design and build or construction management, it is common to add additional sums for unknown and difficulties. This form of contingency is not allocated to overall project risk but for specific work related risks. The submission was supported by Laryea and Hughes (2009) in a research carried out, reporting that risk allowances made by contractors in their estimates seemed to be guided by concerns about competition and winning the job rather than the true cost of risk. Estimating in construction as a variable in the construction process whose variation results in uncertainty as to the final cost, duration, and quality of the project. Odeyinka et al(2009) in a research conducted on the budgetary reliability of bills of quantities( BOQ) for procurement of building projects, opined that the differences between the budgeted cost and the final cost incurred differed greatly depending on the project type. It is also supported by Khumpaisal(2007) who focused on construction industry and opined that maximum possible risk to the contractors occurs in the Lump Sum contract in which the extent of the work is moderately well identified and the cost of the work is tendered as a non-possible change project. Lump-sum contracts as a contract where an agreed price has been determined for the execution of the work and performance of the obligations by the parties before the execution of the contract. Taroun et al.(2011) posited that risk assessment is probably the most difficult component of the Risk Management Process, it is potentially the most useful. As most of the project considered for the research are public project executed using Lump-Sum contract and the gaps noticed was that contractors do not have a definite way of taking care of inherent risks in their pricing system. They are only concerned about winning contract ( Laryea and Hughes,2009). This hinders the performance of not only contractors but also the project as it is evident by the spate of abandoned projects and adversarial or acrimonious relationship project stakeholders’ exhibit (Aje, 2008). So there is need for better understanding of how contractors arrive at a price, and how that price is influenced by the apportionment of risk. Contractors had their own customary ways of responding to risks and somehow formalized into practical models for project risk assessment and pricing. Research gaps There is little or no much research on contractor’s pricing risk that addresses [sms] contractor’s issues of pricing risk particularly in the study area. Despite many literatures that had proliferated on risk pricing in construction industry. Assessment, valuation and price for measurable risk at tender stage remains major concern in construction project, which informs the need for research to develop a better understanding of relevancies of pricing risk at tender stage in traditional procurement system in construction project. While literature review indicates the tender stage provides best chances for pricing risk (assessment & accounts) in project success and profitable contacting for [sms] contractors. Very little research has been done to show /give simple and practical method/model for pricing risk. This research aim to contribute to this knowledge with an emphasis on [sms] contractors in bauchi metropolis, bauchi state. Therefore, it becomes highly imperative to evaluate the impact of pricing risk on contractor’s tender sum with a view to ensure effective and efficient project delivery. To achieve this following questions require reasonable answers. What is the level of responsibility of [sms] contractors in pricing risk in traditional lump-sum contracting in the study area? What are the most significant factors considered in pricing risk by [sms] contractor’s tender figure in public building within bauchi metropolis? How [sms] contractors accounts (assess & price) for risk at tender stage in bauchi metropolis?. What method/model of pricing risk suitable for [sms] contractors in traditional lump-sum contract in bauchi metropolis. 1.3 Objectives of the Research Aim: To identify the effects of pricing risk on [sms] contractors in traditional construction procurement system. Objectives: Examine if (sms) contractors are responsible for pricing risk in traditional (lump-sum contract) procurement system. Examine the most significant factors considered in pricing risk. To ascertain how [sms] contractors account (assess & price) for risk during tender stage in traditional procurement system Determine/investigate how to curtail the effects of pricing risk in traditional procurement system. 1.4 RESEARCH QUESTIONS RQ 1 How [sms] contractor is responsible for pricing risk in traditional procurement system RQ 2 What are the most significant factors considered in pricing risk by [sms] contractors in traditional procurement system. RQ 3 How [sms] contractors account (assess & price) for risk at tender stage in traditional procurement system. RQ 4 What method/model of pricing risk suitable for [sms] contractors in traditional procurement system. 1.5 Significance of the Study This study will contribute valuable knowledge to the contractor’s project risk pricing in bauchi metropolis and Nigeria at large. The outcome of this research will be used to: enhance and facilitates Small & Medium Scale [SMS] contractor’s effectiveness and efficiency in pricing risk in bauchi; Enrich literature within academia for the training of construction professionals as well as eventually contribute to high performance in Nigeria construction industry. The significance of the study stems from the contribution that accrues from the construction industry to the economy at large. According to Oyewobi and Ogunsemi(2010),cited by Inuwa,(2014), an efficient construction sector is a pre-requisite to effective national development. Because the products, services & activities of construction sector helps in making economic activities of a nation vibrant and these benefits and others can only be achieve if construction industry’s activities & operations are properly functional through effective and efficient construction project delivery via appropriate pricing of risks by [sms] contractors within the industry. The study result and recommendations will contribute to the Nigeria Small & Medium Scale contractors fo attainment of best practices. The result shall be disseminated through; conferences, workshop, journals publication and academia teaching. 1.6 Scope of the Study This study shall examine and investigate the level of responsibility of [SMS] contractor’s pricing risk within traditional procurement system and examines its effects on them. The study shall be conducted in bauchi metropolis, bauchi state. The research shall delimited its investigation to small & medium scale [sms] contractor’s pricing of risk at tender stage in a traditional (lump-sum contract) procurement system. The [sms] contractors in this study relate to construction procurement system and centered on lump-sum contract/BOQ in all ramification but discretionary to building construction procurement system, risk factors mostly significant and considered by [sms] contractors in pricing risk, and curtailing effects of pricing risk. The scope of this study excludes non-traditional procurement system and does not include investigating subcontractor’s pricing risk. And it shall be restricted to bauchi metropolis. 1.7 Definitions of Terms LITERATURE REVIEW 2.1 Introduction Pricing risk is an important part of contractor’s bidding process in any construction procurement system. Various theories and models have been proliferated on the subject of risk pricing. Pricing risk has been object of attention because of cost overrun, abandonment of construction project and consequent losses on the both contractor and project owner. This chapter shall review literatures concerning Theory of Decision Making under uncertainty, most significant factors considered, risk assessment and valuation, how contractors accounts for risk in bidding. Also reviews literature related to independent and dependent variables of the study research. 2.2 Theoretical framework Decisions should ideally be made under conditions in which all factors of influence, and, the decision-making methods result in predictable outcomes. However, decision-making often happens under conditions of risk and uncertainty. Risk is hardly price under the ideal conditions of certainty. A decision is made under conditions of risk if the decision maker is able to assess intuitively, with a degree of certainty, the probability that a particular event will take place, using as a basis his information about similar past events or his personal experience (Ceric, 2003). Expected Value was one of the first theories of decision-making under risk. The expected value model did not consider the fact that the value that a particular pay-off held for one person was not directly related to its precise monetary worth (Cattell,2012). Bernoulli introduced the concept of systematic bias in decision-making and assumed that people tried to maximize their utility and not their expected value (Cattell, 2012). In Von Neumann and Morgenstern’s model of subjective utility, one person may not share the same utility curve as another, but each follows the same normative axiom in striving toward their individually defined maximum subjective utility (Neumann & Morgenstern, 1953) as cited in( Gitau,2015). Prospect theory is a theory of decision-making under conditions of risk (Cattell, 2012). Decisions involve internal conflict over value trade-offs. This theory is designed to better describe, explain, and predict the choices that typical person makes in a world of uncertainty. The theory addresses how these choices are framed and evaluated in the decision making process. Prospect theory advances the notion that utility curves differ in domains of gain from those in domains of loss. Prospect theory is designed to explain a common pattern of choice. It is descriptive and empirical in nature. Prospect Theory looks at two parts of decision making: the framing phase and the evaluation phase (Cattell et al., 2010). Framing refers to the way in which a choice, or an option can be affected by the order or manner in which it is presented to a decision maker. The evaluation phase of a prospect theory encompasses two parts, the value function and the weighting function. The value function is defined in terms of gains and losses relative to the reference point not in terms of absolute wealth. In prospect theory, value is a function of change with a focus on the starting point so that the change is either negative or positive. Prospect theory predicts that domain affects risk propensity. Losses have more emotional impact than an equivalent amount of gains and therefore weighted more heavily in our decision- making (Tversky & Kahneman, 1992). In making a decision, a decision maker multiplies the value of each outcome by its decision weight. Decision weights do not serve solely as measures of perceived likelihood of an outcome but also represent an empirically derived assessment of how people actually arrive at their sense of likelihood. An important function of weighting function is that low probabilities are overweighed while high and medium probabilities are subjectively underweighted (Tversky & Kahneman,1992). Risk is an exposure to the possibility of economic or financial loss or gains as a consequence of the uncertainty associated with pursuing a certain cause of action (Gitau,2015). Many scholars have defined risk: Wideman (1986), Godfrey (1996) Kliem and Ludin (1997) and Smith (1999). Most definitions include the factors of chance or probability of events and the negative impact on the objectives or project. In mathematics, probability of an event is expressed statistically using the mean, dispersion, confidence interval and other statistical parameters. Relevant data must be available for a statistical analysis. When no data exists, the experience and knowledge of the decision maker is important in assessing the probability of an adverse event. Price of risk impacts on bidding and tendering process by adversely affecting the project cost, procurement system and project delivery. Risk pricing impact is often calculated both quantitatively and qualitatively. Risk exposure is the product of risk probability and risk impact. Risk pricing is the process that, when carried out, ensures that all that can be done will be done to achieve the objective of the bidding price and get the award (Laryea & Hughes, 2008). The contingency amount has for a long time been added to the estimated construction cost to cover for all risk events and uncertainties. This amount is often an arbitrary figure of 10% to 20% of the estimated contract amount or project cost. This approach however does not take into consideration the specific features of each project and can thus not be said to be suitable for pricing risk ( Laryea & Hughes, 2008). Laryea,(2011) has discussed the use of contingency approximation as strategies in pricing risk in bidding & tendering for construction project. 2.3 CONCEPTUAL FRAMEWORK The conceptual framework of this study shall be derived from literature review that has identified the relevance of pricing risk at tender stage and suggested risk pricing method/model most suitable for [sms] contractors. According to (PMI, 2004), Risk management is mostly defined as a logical process of risk identification, risk analysis and evaluation, and risk monitoring and control. Posited by Laryea and Hughes, (2008) contractors have often been portrayed to be poor at managing risk by for example, authors such as Baloi and Price (2003), Ahmed et al. (2002) and Kangari and Riggs (1989). In developing an analytical model for modeling global risks, Baloi and Price (2003) said: "…many contractors are unfamiliar with these risk factors and do not have the experience and knowledge to manage them effectively. As a consequence, conflicts, poor quality, late completion, poor cost performance and business...Contractors have traditionally used high mark-ups to cover risk but as their margins have become smaller this approach is no longer effective. Contractors rarely use these techniques and tools in practice. More often than not construction contractors and other practitioners rely on assumptions, rules of thumb, experience and intuitive judgment which cannot be fully described by prescriptive or normative models. Individual knowledge and experience need to be accumulated and structured to facilitate the analysis." According to Ahmed et al. (2002), "The construction industry has a poor reputation in coping with risks, many projects failing to meet deadlines and cost targets." Risk analysis and pricing is either ignored or done subjectively by simply adding a contingency. As a result many major projects fail to meet schedule deadlines and cost targets with attendant loss to both contractors and owners." Contractors have used various means to survive risks in construction industry. Most contractors are minimizing risk by declining work perceived as too risky, subcontracting large portions of their work to others, and apportioning risk in wage structures. In essence, they are passing on risk to others. Cited in Laryea,( 2008), A questionnaire survey of 19 contractors in Australia by Bajaj et al. (1997) identified five of the ways used by contractors for identifying risk at the tender stage of projects: (1) Risk review (by senior staff at the start of the tender pricing); (2) Contact (discussions with subcontractors, architect and client); (3) Research (ascertaining information about subcontractors, client, consultants, economic climate, etc); (4) Site visit (visiting site to ascertain the access situation, location, obstructions, etc); and (5) Finance (issues regarding payment and financial obligations). Evidentially, this informs that, contractors pricing risk at tender stage requires experience and intuitive judgment , Identification & profiling of most significant factors in pricing risk, Accounts for the risks( Analysis, Assessment and Valuation of risks at tender stage) and curtailing the effects of risk pricing. Contractors pricing risk entails bidding for a risk free contract by way of apportionment (spread) of risk in the bill components using appropriate (simple & easy) model for a profitable contracting venture and successful project delivery. CONCEPTUAL FRAMEWORK INDEPENDENT VARIABLES DEPENDENT VARIABLES [SMS] CONTRACTORS RISK PRICING EXPERIENCE AND INTUITIVE SIMPLE & EASY PRICING MODEL -PROFITABLE CONTRACTING VENTURE - SUCCESSFUL PROJECT DELIVERY MOST SIGNIFICANT FACTORS IN PRICING RISK (IDENTIFY) ANALYSIS, ASSESSMENT AND VALUATION OF RISK AT TENDER STAGE. (ACCOUNTS FOR RISK) CURTAILING THE EFFECTS OF RISK PRICING 2.4 Empirical Review This section shall review literature related to the research problem and the Independent and Dependent variables of the research study. [as itemized below]. 2.4.1 [sms] contractor’s risk pricing 2.4.2 Most significant factors in pricing risk at bidding process 2.4.3 Analysis, Assessment and valuation of risks at tender stage 2.4.4 Curtailing the effects of risk pricing at tender stage. 2.4.5 Simple & easy pricing model for [sms] contractor. 2.4.6. Profitable contracting venture. 2.4.7 Successful project delivery. 2.4.8 Critique of existing literature. 2.4.9 Summary 2.4.10 Research gaps RESEARCH METHODOLOGY 3.1 Introduction This is the general procedure, technique and methods to be adopt in conducting the research work. It will includes the following : Research Design which shall covers plans that will be used to generate answers to the research problem and it shall includes description of research methodology, survey area population, sample and sampling procedures, questionnaire design and data collection & analysis techniques. The study shall use research design that will enable it to have a logical structure for gathering data that will be sufficient for answering the research questions in order to ascertain correctness of data in answering the questions (Mc Nabb, 2009). 3.2 Research Design The research objective is to examine if [sms] contractors are responsible for pricing risk in traditional lump-sum contract at tender stage and to identify the most significant factors considered when pricing risk in the procurement system; ascertain how [sms] contractors accounts for risk; method/model apply in pricing risk; challenges faced by contractors in pricing risk at tender stage. Based on above briefly stated research objective, the approaches shall be through an initial search to get an insights & idea of research problems and variables through a literature search and preliminary interview ( ie explorative design) (Mc Nabb,2009) then carry out other necessary set of events and design the require questionnaires to be use (descriptive method) and also engage[sms] contractors in discussion & further interview and also refer to some tender/bid records of [sms]contractor and public office/MDA historic data/ documentations. In summary, the research design to be adopted shall be of quantitative design and qualitative design to achieve study objectives. 3.2.1 Area of the Study The study shall be carry out in bauchi metropolis bauchi state, with about 49,119 sq km land size and over 4,653,066 people (NPC, 2006). Data collection shall be within bauchi metropolis reasons for it high concentration of both construction and commercial activities in the state (Usman et. al, 2012) . 3.2.3 Population of the Study The target population for the research shall be mainly small & medium scale [sms] contractors registered within categories C & D in bauchi state. But to have a balanced, fair and free information on [sms] contractors, independent consultants( Arch, Builder, Engr, QS) and public building professionals( staff/civil servant who supervises work). For the reasons that government are the major clients in construction industry in the study area with about 75% share (Inuwa, 2014). The target population for the study shall comprises mainly [sms] contractors, public building professionals[pbp] and consultants in the study area. 3.3 Sample size and Sampling Techniques Owing to the incidence of marginal and inactive [sms] contractors in the study area, leading to non-availability of authentic records of [sms] contractors and their actual population size cannot be ascertained, the study shall employ a non-probabilistic sampling technique of purposive sampling. The choice of purposive sampling technique was hinged on the reason that, the study is directed towards a defined group of respondents who are best able to respond to the research issues(Ibrahim, 2011) cited in Inuwa,( 2014). This technique shall enable the study to target and administer questionnaires to [sms] contractors for a reliable data and information for the study. Purposive sampling is a useful sampling method, which allows a researcher to get information from a sample of the population that one thinks knows most about the subject matter (Walliman, 2011). 3.4 Method of Data Collection The method of data collection shall be determined via the method of research : Explorative (literature review), descriptive & explanatory by way of data collection through questionnaires and possible interview, which according to Mc Nabb,(2009) cited in Inuwa,(2014) are the most appropriate means to obtain data for descriptive and explanatory method of information gathering and data collection. 3.5 Research Questionnaires 3.6 Pre-Testing Questionnaire 3.7 Method of Data Analysis The study shall be of structured questionnaires approaches to generate quantitative and qualitative data from respondents. The data analysis shall be conducted with SPSS( for window) for all analysis of data for the research work for the reasons that it is user friendly and easier in presentation of data in various forms. 3.6 Ethical Consideration The study shall follow all the ethical principles in research: truthfulness, thorough, objectivity and relevance. All data, information, documents etc, obtain for the study shall be handle with high confidentiality and respondent will be assured of confident. 18