Effective Procurement Risk Management in Construction Projects for the Federal Inland Revenue Service in Nigeria

Effective Procurement Risk Management in Construction Projects for the Federal Inland Revenue Service in Nigeria

Abstract

In many developing economies, procurement is commonly perceived and treated as a peripheral administrative task, resulting in challenges for government procurement bodies to efficiently execute projects within limited budgets. This situation exposes public construction projects to an array of procurement-related risks, encompassing issues such as fraudulent activities, lack of transparency, competitiveness, cost-effectiveness, and professionalism in the procurement process. Consequently, this research investigates the management of procurement risks within the context of constructing buildings for the Federal Inland Revenue Service (FIRS) in Nigeria.

This study employed questionnaires distributed randomly among various stakeholders including clients, procurement officers, contractors, and consultants, yielding a robust response rate of 78.256%. The collected data underwent analysis using percentile assessments, mean item scores (MIS), and relative importance indices (RII). The investigation unveiled the principal procurement-associated risks associated with FIRS building projects. These encompass kickbacks (where contractors provide monetary incentives to procurement officials), deficiency in cost-effective tenders among bidders, presence of shadow vendors (submitting inflated invoices for services not rendered), alterations to submitted bids after formal receipt, and concerns surrounding potential conflicts of interest. Additionally, the study highlighted risks such as collusive behavior among bidders to stifle competition, leakage of internal information to bidders, submission of exaggerated invoices by shadow vendors, and receipt of eligibility envelopes beyond the submission deadline. These risks significantly impact project cost, timeline, quality, and the involved stakeholders in FIRS projects.

The research also pinpointed pivotal strategies for mitigating procurement risks in FIRS building projects. These strategies encompass addressing the root causes of risks, narrowing the scope of contracts, allocating additional resources or time to contracts, avoiding engagement with contractors lacking a proven track record, and favoring established approaches over untested ones. To enhance the integrity of FIRS building projects, it is advisable to institute a robust system of checks and balances, curbing inherent corruption tendencies. Furthermore, the engagement of contractors and consultants who uphold ethical standards is recommended to ensure the successful execution of FIRS projects.

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