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UNIVERSITY OF NAIROBI.

COLLEGE OF ARCHITECTURE AND ENGINEERING.

DEPARTMENT OF REAL ESTATE AND CONSTRUCTION MANAGEMENT.

AN INVESTIGATION TO THE IMPACTS OF CHALLENGES THAT FACED THE CONSTRUCTION OF THE STANDARD GAUGE RAILWAY PHASE 1 IN KENYA.

BY
NGATIA DENNIS GITHUI.

RESEARCH PROJECT SUBMITED IN PARTIAL FULFILLMENT FOR THE REQUIREMENT FOR THE AWARD OF DEGREE IN BACHELOR OF QUANTITY SURVEYING
APRIL 2018

DECLARATIONI hereby declare that this thesis is my original work and has not been presented at any other University.

Ngatia Dennis Githui………………………………………… Date ……………………
This thesis has been submitted for examination with our approval as University Supervisors
Department of Real Estate and Construction Management
Signature………………………………………….. Date ………………..……
DEDICATION.ACKNOWLEDGEMENTABSTRACT.The Standard Gauge Railway is biggest construction project witnessed in Kenya since independence. The construction of the 472 km railway (phase 1) began in October 2013 and completed in 2017. Kenya, being a developing country, is characterized by numerous construction projects which are faced by quite a number of challenges. These challenges are mainly socio-economic stress, institutional weakness, resource inadequacy and poor overall supervision when dealing with key hindrances. There is also evidence which clearly indicates that these challenges have become greater in extent and severity with respect to the SGR. This paper takes into account some of these challenges by studying the SGR Phase 1 in Kenya, being one of the MCP’s through review of academic journals related to MCP’s and construction project Management studies and comparing the differences of those challenges. Moreover, this research aims to develop a conceptual framework for the stated challenges. The researcher applied survey research design by randomly selecting other construction projects of similar characteristics so as to investigate if any case of similarity between construction projects. The results of this study generally provided the potential information, characteristics of megaprojects and an overall context of MCP’s studies in developing countries such as Kenya. This study can support the future of research of MCP’s in developing countries. Some of the proposed measures to address these challenges were mass education of the positive impacts of infrastructure, awareness of globalization especially in the construction industry, creation of local employment opportunities in such projects and impacts of vandalism of infrastructure. Having in mind of the future construction of the SGR phase 2, this research exposes the hindrances and possible solutions of mitigation measures.

Keywords- MCP’s, developing countries, challenges, conceptual framework, Kenya, SGR phase 1 and Sustainable development
TABLE OF CONTENTS
TOC o “1-3” h z u DECLARATION PAGEREF _Toc517255869 h iDEDICATION. PAGEREF _Toc517255870 h iiACKNOWLEDGEMENT PAGEREF _Toc517255871 h iiiABSTRACT. PAGEREF _Toc517255872 h ivCHAPTER 1 PAGEREF _Toc517255873 h 11.1Introduction. PAGEREF _Toc517255874 h 11.2 Background of the Study. PAGEREF _Toc517255875 h 11.3 Statement of the Problem. PAGEREF _Toc517255876 h 31.4 Objective of the study PAGEREF _Toc517255877 h 31.5 Research Questions PAGEREF _Toc517255878 h 31.6 Research Hypothesis PAGEREF _Toc517255879 h 31.6.1 Alternative Hypothesis (HA) PAGEREF _Toc517255880 h 31.6.2Null Hypothesis (HO) PAGEREF _Toc517255881 h 31.7 Scope of the study. PAGEREF _Toc517255882 h 31.8 Significance of the study. PAGEREF _Toc517255883 h 31.9 Research Methodology. PAGEREF _Toc517255884 h 31.9 Organization of the study PAGEREF _Toc517255885 h 4
CHAPTER 1Introduction.This section of the proposed study will give an overview of the research study in terms of what the study intends to cover. It will give a consummate discussion on the study background tracing what prompted the researcher to focus on the topic. Through this, the study aims to state the problems that led to the development of the study and the manner in which the inferences that shall be made in the proposed study shall contribute to solving the problem. In addition, this section of the proposed research study will state the research objectives together with the overarching aim of the study as well.

1.2 Background of the Study.With reference to the Human Development Report, about 85.4% of humans live in developing countries that are characterized with high levels of illiteracy, low technology levels, high population growth rate compared to the infrastructure’s growth and massive political instability which has an overall effect in productivity levels. This has led to most governments, in such countries, viewing MCP’s as part of the solution to the urgent need of sustainable development (Zeybek and Kaynak, 2006). They indulge in provision of affordable housing, transport and other relevant infrastructure (Othman, 2013) as part of building the nation.

The construction industry has numerous characteristics that make it a key player in the country’s economy (Abubakar Warsame, 2011), largely involving economic activities of builders work and civil engineering works (Wells, 1986). For developing economies such as Kenya, the construction industry is a high contributor to GDP, formation of capital as well as creation of employment (United Nations Centers for Human Settlements, 1984). It greatly interlinks other sectors of the economy by demanding numerous inputs from the respective sectors.
According the Leading Economic Indicators by KNBS, the quantity of cement produced increased from 474,618 MT in February 2018 to 495, 793 MT in March. That depicts a significant rise in cement demand which clearly shows the increase of construction works. With an overall growth of 4.9% GDP in Kenya, the construction industry, compared to other sectors, witnessed 8.6% growth (Economic survey 2018). It can be said without doubt or contradiction, that Kenya’s construction industry has a remarkable expansion and probably, being a developing country, there will be a significant growth over the years.

Every industry, including the construction industry, faces challenges which vary from complexity, technicalities and mainly financial hindrances especially for mega projects. This study focuses on MCP’s. They mostly range from construction of airports, pipelines, roads and railways. The challenges these projects encounter range from the environment, scope of the respective works and current conditions of the project. Due to their complexity and lack of precedence, delivery of such MCP’s requires partnerships between public and private organizations. Mostly, developing countries such as Kenya, opt to involve a foreign design team and contractor for implementation. Construction projects of the SGR intensity (MCP’s) are mainly characterized by size, duration, uncertainty, complexity of construction, the environment influencing the project. MCP’s require high design of knowledge and technical skills, adequate human resource and management and not forgetting the high capital required in investing in these projects (Bent Flyvberg, 2014). These projects, due to their intensity, they have a mega impact on their countries in terms of infrastructure growth. In addition to) that, they impact the society direct or indirectly, the environment and the huge interest by key political interest.
The development of MCP’s in Kenya, as well as other developing countries have two wide perspectives. One side clearly denotes that they are characterized with high design knowledge and technical skills, competent human and managerial resources as well as intense investment. The other hand, Kenya being a developing country lacks most of these shortlisted requirements thus acting as an initial obstacle to the development of construction projects of the SGR’s intensity.

Kenya Railways Corporation developed a new 472 Km SGR line with the intent of ferrying passengers and largely cargo between Mombasa, the largest port in East Africa and Kenya’s capital city, Nairobi. That railway line is expected to connect the East African countries eventually so as to have a boost to the economic sectors in the regions stated. Construction began in October 2013 and was completed in June 2017. The passenger trains achieve speeds as high as 120km/hour making movement between the two towns approximately a four hour journey. The cargo train on the other hand is expected to move up to 22miilion cargo annually which will ease the shipment of goods from the port to Nairobi due to its cost and efficiency. This project indeed has a positive impact on the Kenya’s economy.

The research on the SGR phase one, as a MCP, tends to focus on their problems, challenges, complexity, cost overruns, delays in implementation and completion and stakeholder conflict. It aims to identify, validate and classify challenges that face MCP’s in Kenya, being a developing country, through literature review from respective journals and published literature on MCP’s. Lastly, a conceptual framework will illustrate the relationship between those challenges and also bring out the relevant impacts.

1.3 Statement of the Problem.As stated earlier, the Kenyan construction industry has experienced tremendous growth over the past years by MCP’s. It is evident that quite a number of mega projects have been executed in both private and public sector. Due to the complexity of MCP’s (Shore and cross, 2005) most of these projects were carried out by international contractors. Some of the MCP’s that are scheduled to start or are already executed include;
Thika super highway valued at approximately Kenya shillings 30Billion. It was executed by a Chinese contractor, China Wu Yi.

Outer ring road at a cost of 131.33 USD million.

Greenfield terminal at the JKIA Airport at a cost of 55.5Billion. It was also executed by the Chinese.

KCB complex by China Wu Yi at an estimate cost of Kenya shillings 2.1 Billion.

Standard Gauge Railway phase 1 by a Chinese contractor.

Standard Gauge Railway phase 2 to be executed by a Chinese contractor.

LAPSSET project that will cost about kenya shillings 2 trillion. This particular project hopes to increase the multitude of economic activities around the environs.

Konza Technology City. This project, in Machakos County, is identified as one of the key players in achieving vision 2030.

Nairobi Public Transport system jointly to be funded by the World Bank and the Kenyan government.

Kenya oil pipeline to be designed by a British firm, Wood Group Plc. It has an estimate cost of Kenya shillings 200Billion.

The stated project above are a clear illustration of Kenya’s growing infrastructure. Globalization has evidently made it easier for developing countries to implement these projects. It is evidently a positive resolution (Ridderstarle and Nordstrom, 2007) that has impacted the construction industry in Kenya. These projects are mainly financed by international lenders, as a debt, and partially by the government.

Bearing in mind that time and cost are vital to construction clients, in this case the national government, however, the variations in the initial cost of the project and final cost is alarming. These challenges faced by these projects might have an impact in the variations. In this case, the SGR had an initial contract sum of Kenya shillings 220Billion and the final contract sum was 327Billion. This paper intends to find out what challenges the SGR phased and if these challenges impacted the rise of the contract cost.

1.4 Objective of the study.

The study aimed at investigating the challenges that faced the construction of the SGR phase 1. In pursuant of this study, the study seeks to:
To establish the challenges that faced the construction of the SGR phase on in Kenya.

To establish the impacts these particular challenges had on the construction project.

To establish the mitigation measures that will minimize the impacts of these challenges on the construction of phase 2 of the SGR.

1.5 Research QuestionsThe research tries to address the following questions:
What are the challenges that faced the construction of the SGR phase one?
What are the impacts of the challenges that faced the construction of the SGR phase one?
What measures should be taken to avoid such challenges in the construction of the SGR phase 2?
1.6 Research HypothesisFor the purpose of this study, the hypothesis will be as follows:
1.6.1 Alternative Hypothesis (HA)There were no challenges that faced the construction of phase one of the SGR
1.6.2Null Hypothesis (HO)There were challenges that faced the construction of phase one of the SGR
1.7 Scope and Limitations of the study.

This proposed study aims at exploring the challenges that faced the construction of the Standard Gauge Railway (phase 1) bearing in mind that the government intend to construct phase 2A, Nairobi to Naivasha, phase 2B, Naivasha to Kisumu and phase 2c Kisumu to Malaba. This study will give an overview of these challenges and the respective relationship to the overall cost of the project and the challenges themselves. The discussion of MCP’s having the SGR in this case will be essential since Kenya is witnessing various MCP’s that will render them into huge debts to facilitate these project. A proper investigation will indeed help foresee or rather overcome some of these mutual problems and reduce the contract sums of these project which has a ripple effect in the country’s expenditure.
However, in the course of undertaking the proposed research, several limitations are expected.

They might include:
Time constraints: undertaking a quantitative research study will entail the development of a data collection tool – questionnaire which will be administered to the relevant research population and the relevance inferences made. Obviously, data collection and analysis will consume plenty of time, leading to the selection of a reasonable research sample to represent the population to be studied. Therefore, the results of the studied sample will be extrapolated to represent the whole population sample.

The selection of the sample might seem biased since it is a stratified random sampling technique.

Availability of data: in collection of secondary data, it is notable that not much has been published to explore the MCP’s in Kenya.

1.8 Significance of the study.As earlier mentioned in this study, Kenya has witnessed numerous MCP’s and since it is a developing country, more of such projects are fore coming. However, the magnitude of these projects is alarming. Currently, Kenya, with a national budget of about 3 trillion Kenyan shillings (Budget statements, 2018) is facilitating an annual debt of 800Billion. This shows that about a quarter of the national budget facilitates loans for these MCP’s and infrastructure in general, making the variations in these contract a possible cause escalation of the final cost. By establishing the challenges that faced the phase one of the SGR, the research will address the relationship amongst these challenges and their impact on the cost of the projects therefore recommending mitigation measures to avoid these cost implicating challenges. This enables infrastructure development at a reasonable cost and Kenya will largely benefit by using the deficit of variations to start other projects.

1.9 Research Methodology.Data for this study was obtained from primary sources through interviews, observation and questionnaires. Secondary sources were also considered including newspapers and journals. The sampling method used for this study was stratified random sampling technique. Data analysis was done using Statistical package for Social Scientists to both analyze qualitative and quantitative data. This yielded descriptive statistics in the form of percentages and frequencies which were presented in the form of pie charts, frequency tables and bar charts.

1.9 Organization of the studyThis study constitutes five chapters.

Chapter one covered the background of the study, the research problem, the study objectives, the research questions, the research hypothesis and the significance of the study. The scope of the study and finally the overall organization of the study.

Chapter two covered the literature reviewed. This expounds on facts related to the subject matter of the research.

Chapter three covered the research methodology section and give the target population, sample and sampling techniques used, the research design, a description of tools in collecting the data, measurement of variables and techniques used in analyzing the collected data. Procedures used in both primary and secondary data collection, analysis and presentation have been discussed.

Chapter four covered the data presentation and analysis section. Information collected in the field is analyzed and presented in the form of graphs, tables, pie charts among others. The responses of various groups of people to whom questionnaires were administered as well as oral interviews are presented and analyzed. A summary of findings is given and problems encountered in the field also mentioned.

Chapter five covered summary of findings, discussions, conclusions and recommendations. It clearly explains the outcome of the objectives and suggests areas of further research.

References.

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Al-Maghraby, R. (2012). Mega Projects on Egypt’s Horizon. PM World Journal, I, (3). Online. Available from: http://pmworldjournal. net/?article=mega-projects-on-egyptshorizon

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