Infrastructure delivery systems governance and implementation issues

The failure of other economic sectors in Nigeria to achieve considerable backward linkage withthe oil and gas industry, as evidenced by the reported failure of local suppliers toenter th

Infrastructure

Delivery Systems

Bankole Osita Awuzie

Peter McDermott

Governance and Implementation Issues

Management in the Built Environment

Series Editor: Low Sui Pheng

Series Editor

Low Sui Pheng, National University of Singapore, Singapore, Singapore

Editorial Board

Abdul Rashid Bin Abdul Aziz, University Science Malaysia, Penang, Malaysia

An Min, Salford University, Salford, UK

Azlan Shah Ali, Faculty of Built Environment, University of Malaya, Department

of Building Surveying, Kuala Lumpur, Malaysia

Faisal M Arain, Niagara College, Makkah Campus, Welland, ON, CanadaFang Dongping, Tsinghua University, Beijing, China

Gao Shang, University of Melbourne, Parkville, VIC, Australia

George Ofori, London South Bank University, London, UK

Hamzah A Rahman, University of Malaya, Kuala Lumpur, Malaysia

Javier Cuervo, Department of Management and Marketing, University of Macau,Taipa, Macau, Guangdong, China

Liu Junying, Department of Construction Management, Tianjin University, Nankai,Tianjin, China

Oluwayomi K Babatunde, Construction Economics & Management, University

of the Witwatersrand, Johannesburg, Gauteng, South Africa

Oswald Chong, School of Sustainable Engineering and the Built Environment,Arizona State University, Tempe, AZ, USA

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Peter McDermott

Infrastructure Delivery Systems

Governance and Implementation Issues

123

Department of Built Environment

Central University of Technology

Bloemfontein, Free State, South Africa

School of the Built EnvironmentUniversity of Salford

Manchester, UK

Management in the Built Environment

https://doi.org/10.1007/978-981-13-7291-9

© Springer Nature Singapore Pte Ltd 2019

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Upon the realisation of procurement’s significance in driving the implementation ofsocio-economic policies, successive governments across the globe are increasinglydemanding more from suppliers as it pertains to the delivery of associated benefits.This has resulted in a significant shift in what constitutes success in the respectiveprojects which they commission; from factors related to the ‘iron triangle’ tocontributions of the project to the growth of the local economy Policies such as theSocial Value Act, and the Nigerian Oil and Gas Industry Content Development Act(NOGICDA) in the United Kingdom and Nigeria, respectively, readily come tomind Judging by the plethora of literature bemoaning the prevailing high povertyand unemployment rates in developing and resource-rich countries such as Nigeria,the implementation of such policies has failed to deliver the expected outcomes.This opinion is affirmed by several studies which point to the possibility ofimplementation failure in such countries Surprisingly, none of these studies hasmade any attempt to explore the way implementation is organised and governed.Obviously, the seeming absence of a veritable platform for implementation analysisposes a challenge As a result of this, previous investigations have failed to properlytackle this problem from a holistic and systemic perspective.

To bridge this gap, this study reported in this book embarked upon an evaluation

of the implementation process using the NOGICD Act as an exemplar The failure

of other economic sectors in Nigeria to achieve considerable backward linkage withthe oil and gas industry, as evidenced by the reported failure of local suppliers toenter the supply chains of major infrastructure projects contributed to this choice.The Viable Systems and Temporary Multi-Organisations theoretical lenses wereapplied in the conceptualisation of complex interorganisational relationships, thusresulting in the development of a Viable Infrastructure Delivery Systems Model(VIDM), a model premised on systemic and cybernetic principles The VIDMwas then applied in conceptualising and evaluating extant interorganisationalrelationships within selected infrastructure delivery system case studies in Nigeriaand the United Kingdom

vii

It was observed that the VIDM was better positioned to conceptualise andevaluate the influence of various interorganisational interactions within infrastruc-ture delivery systems on implementation success Furthermore, the application

of the VIDM within the selected cases enabled the discovery of various issueswithin the IDS capable of undermining successful implementation such asnon-alignment of goals within the IDS, excessive government interference, lack ofappropriate criteria for measurement of benefits and cognition-related issues

It is expected that the VIDM will be deployed by implementation advisors inconceptualising and evaluating interorganisational relationships during policy orstrategy implementation cycles and/or for (re)designing implementation processesfor viability within the Nigerian oil and gas industry and beyond

1 Introduction 1

1.1 Background 1

1.2 Rationale for the Study 4

1.3 Research Questions and Proposition 6

1.3.1 Research Questions 6

1.3.2 Research Propositions 7

1.4 Aim and Objectives of the Study 7

1.4.1 Aim 7

1.4.2 Study Objectives 8

1.5 Scope of the Study 8

1.6 Contribution to Knowledge 8

1.7 Chapter Outline 9

1.8 Chapter Summary and Link 10

References 10

2 Procurement as a Medium for Implementing Local Content Development Policies 15

2.1 Chapter Introduction 15

2.2 Local Content Development 16

2.2.1 What is Local Content? 16

2.2.2 Evolution of Local Content Development Policies (LCDPs) 17

2.2.3 The Case‘For’ and ‘Against’ LCDPs 18

2.2.4 Review of LCDPs in Literature 19

2.3 Procurement Systems 22

2.3.1 Procurement Systems—A Definition 22

2.3.2 Procurement Systems as a Medium for Policy Implementation 24

ix

2.4 Infrastructure 24

2.4.1 What is Infrastructure? 24

2.4.2 Relationship Between Infrastructure Capital and Economic Growth 25

2.4.3 Country Perspective—Nigeria and the United Kingdom (UK) 26

2.4.4 Nigeria—Country Profile 26

2.5 Chapter Summary and Link 44

References 45

3 Infrastructure Delivery Systems: An Organisational Viability Perspective 49

3.1 Chapter Introduction 49

3.2 Systems 50

3.2.1 Systems Thinking—A Definition 50

3.2.2 Evolution of Systems Thinking Practice 51

3.2.3 A Systems Approach to Policy Implementation 53

3.3 Cybernetics 54

3.3.1 Defining Cybernetics 54

3.3.2 Origin of Cybernetics 55

3.4 Complexity 56

3.4.1 Complexity Defined 56

3.4.2 Types of Complexity Encountered in Infrastructure Delivery Systems 56

3.4.3 Factors Causing Complexity in Infrastructure Delivery Systems 57

3.4.4 Infrastructure Delivery Systems as Complex Systems 58

3.5 Viability 58

3.5.1 Concept of Viability 58

3.5.2 Emergence of the Viable Systems Model (VSM) 60

3.5.3 Understanding Policy Implementation from a VSM Perspective 63

3.6 Organisations and Infrastructure Delivery 65

3.6.1 Relationship Between Theories of Organisation and Infrastructure 65

3.6.2 Infrastructure Delivery Systems as Temporary Multi-organisations 66

3.7 Governance 69

3.7.1 Definition of Governance 69

3.7.2 Governing Organisations—Transaction Cost Approach or Institution Theory? 71

3.7.3 Project Level Governance 72

3.8 Stakeholder Management 73

3.8.1 Who is a Stakeholder? 73

3.8.2 Stakeholders—A Classification 74

3.8.3 Significance of Effective Stakeholders’ Management to IDS Success 74

3.9 Critical Success/Failure (Pathologies) Factors 76

3.9.1 CSFs—A Definition 76

3.9.2 CSFs—A Review of Similar Literature 78

3.9.3 Failure (Pathologies) Factors—A Definition 79

3.10 Conceptual Model—A Viable Infrastructure Delivery Systems Model (VIDM) 80

3.11 Chapter Summary and Link 82

References 83

4 Model Development and Initial Validation 89

4.1 Chapter Introduction 89

4.1.1 The VSM as a‘Tool’ and a ‘Product’ 90

4.2 Stages of Model Development 94

4.2.1 Models—A Definition 94

4.2.2 The Role of Models in Representing and Understanding Complexity 95

4.2.3 Model Development, Verification, and Validation 96

4.3 Data Collection Process 101

4.3.1 First Stage: Background Details of Interviewees and Discussants (Experts) 101

4.3.2 Analysis of Data from the First Stage 102

4.3.3 Second Stage: Structured Face-to-Face Interviews 107

4.4 First Draft of the VIDM 108

4.5 Second Draft of the VIDM 110

4.6 Summary of Responses from Interviewees 111

4.7 Third Draft of the VIDM 111

4.8 Chapter Summary and Link 112

References 112

5 Organizational Diagnosis of Infrastructure Delivery Systems 115

5.1 Chapter Introduction 115

5.2 A Review of the Study’s Propositions 116

5.3 Profile of Interviews from Policy Formulation and Implementation Agencies 117

5.4 Case One (IDS1) 118

5.4.1 Description of IDS1 118

5.4.2 Expert Interviewee Profiles 119

5.4.3 Intra-case Analysis of the IDS1 Data 120

5.4.4 Summary of Findings and Conclusion of IDS1 Case Study 122

5.5 Case Two (IDS2) 124

5.5.1 Description of IDS2 124

5.5.2 Details of Interviews and Interviewees’ Profiles 125

5.5.3 Intra-case Analysis of the IDS2 Data 125

5.5.4 Summary of Findings and Conclusion for IDS2 128

5.6 Case Three (IDS3) 130

5.6.1 Description of IDS3 130

5.6.2 Details of Interviews and Interviewees’ Profiles 132

5.6.3 Intra-case Analysis 132

5.6.4 Summary of Findings and Conclusions from IDS3 134

5.7 Summary of Findings from Cases 136

5.8 Chapter Summary and Link 136

References 142

6 Identification of Factors Influencing the Implementation of Socio-economic Benefits Through Infrastructure Delivery Systems 143

6.1 Chapter Introduction 143

6.2 Summary of Findings from the Intra-cases 144

6.3 Cross-case Analysis 145

6.3.1 Proposition One 145

6.3.2 Proposition Two 147

6.3.3 Proposition Three 149

6.3.4 Proposition Four 150

6.4 Emergent Findings 160

6.4.1 Problems Relating to Cognition 160

6.4.2 Problems Relating to Lack of Industrial Infrastructure In-Country 165

6.4.3 Poorly Resourced Government Agencies and Lack of Government Support 166

6.4.4 Problems Relating to the Lack of Skills in the Project Neighbourhoods 167

6.4.5 Poor Transparency and Accountability Within the Delivery Systems 167

6.5 Analytic Generalisations 168

6.5.1 Analytic Generalisation A—The Significance of the Contracting Strategy in Driving Implementation Success 168

6.5.2 Analytic Generalisation B—Issues Relating to Cognition are Pivotal to the Attainment of Successful Implementation Outcomes 169

6.6 Chapter Summary 170

References 170

7 Conclusion, Recommendations and Implications 173

7.1 Chapter Introduction 173

7.2 Conclusion 173

7.3 Reflections on the Study’s Objectives and Propositions 174

7.3.1 Determination of What Constitutes a Viable Infrastructure Delivery System (IDS) from a Policy Implementation Perspective 174

7.3.2 Assessment of the Capabilities of the Viable Systems Model for Evaluating Temporary Multi-organisational Structures Such as the IDS for Viability 176

7.3.3 Development and Validation of a Viable Infrastructure Delivery System Model (VIDM) 176

7.3.4 Understanding of the Existing Organisational Structures and Governance Modes and the Attendant Interrelationships Between Stakeholders Within the IDS 178

7.3.5 Identification of the Success and Failure Factors Affecting the Attainment of Viability Within Such Systems Using the VIDM 179

7.3.6 Recommendations on How to Attain and Maintain Organisational Viability Within Infrastructure Delivery Systems in Nigeria’s Oil and Gas Industry 180

7.4 Recommendations 180

7.4.1 The Need for the Adoption of Multi-layered, Interorganisational, and Systemic Approaches to Implementation Analysis 180

7.4.2 The Need for Effective Communication and Collaboration Between Parties During Policy Implementation 181

7.4.3 The Need for the Adoption of the Appropriate Organisational Structures and Governance Mechanisms 182

7.4.4 The Need for the Further Clarity on the Existing Legislation on Local Content Development in Nigeria and Redefinition of Key Areas of the Legislation 183

7.4.5 The Need for Government to Ensure Enhanced Transparency in the Procurement Process and the Provision of Adequate Infrastructure 184

7.4.6 The Need for Improved Partnerships Between the Various Organisations Towards Ensuring Skill Acquisition In-Country 185

7.5 Implications 186

7.5.1 Implications for Research 186

7.5.2 Implications for Practice 188

References 188

AIP Australian Industry Participation

CMC Computer-Mediated Communication

DCM Design Construct and Maintain

DfT Department of Transport

DPR Department of Petroleum Resources

E&P Exploration and Production

EPC Engineering, Procurement and Construction

EPCI Engineering, Procurement, Construction and Installation

EPCM Engineering, Procurement and Construction Management

FPSO Floating Production, Storage and Offloading

GATT General Agreement on Tariffs and Trade

GDP Gross Development Product

GST General Systems Theory

HDI Human Development Index

HSCB Human Social, Cultural Behavioural Model

IDS Infrastructure Delivery System

IDSL Integrated Data Services Limited

IMEG International Management and Engineering Group

IOC International Oil Companies

IPIECA International Petroleum Industry Environmental Conservation

Association

ITT Invitation to Tender

IUK Infrastructure United Kingdom

KRPC Kaduna Refinery and Petrochemical Company

LCDPs Local Content Development Policies

LST Living Systems Theory

M&E Monitoring and Evaluation

MDGs Millennium Development Goals

xv

MoEN Ministry of Environment

MPR Ministry of Petroleum Resources

NAO National Audit Office

NAPIMS National Petroleum Investment Management Services

NASS National Assembly

NCDMB Nigerian Content Development Monitoring Board

NEEDS National Economic Empowerment Development Strategy

NEP National Economic Plan

NETCO National Engineering and Technical Company

NGC Nigeria Gas Company

NGOs Non-Governmental Organisations

NIP National Infrastructure Plan

NIPEX Nigerian Petroleum Exchange

NIPP National Independent Power Plant

NOGICDA Nigerian Oil and Gas Industry Content Development Act

NPDC Nigerian Petroleum Development Company

ODI Overseas Development Institute

OECD Organisation for Economic Co-operation and DevelopmentOGC Office of Government Commerce

OPEC Organisation of Petroleum Exporting Countries

PDP Productive Development Policies

PMBOK Project Management Book of Knowledge

PPMC Petroleum Pipeline Marketing Company

PPP Public–Private Partnerships

PPPI Purchasing Power Parity Index

PQQ Pre-Qualification Questionnaires

PRPC Port-Harcourt Refinery and Petrochemical Company

PSC Production Sharing Contract

QCA Qualitative Content Analysis

SiF System in Focus

SME Small and Medium Enterprise

SSM Soft Systems Methodology

TCE Transaction Cost Economics

TMOs Temporary Multi-Organisations

UN-ESCAP United Nations Economic and Social Commission for Asia and the

Pacific

VfM Value for Money

VIDM Viable Infrastructure Delivery System Model

VSM Viable Systems Model

WRPC Warri Refinery and Petrochemical Company

WTO World Trade Organisation

Fig 2.1 Potential benefits from efficient local content development.

Source Wells and Hawkins [1] 22

Fig 2.2 A governance structure of the nigerian oil and gas industry Source Authors’ compilation (2014) 32

Fig 2.3 Financing of infrastructure in the UK (1981–2011) Source [77] 42

Fig 3.1 Conceptual model (author’s concept) 81

Fig 4.1 Model development process Source Fellows and Liu [15] 97

Fig 4.2 Initial conceptual model 109

Fig 4.3 Second draft of conceptual model 110

Fig 4.4 Final draft of the conceptual model 112

Fig 5.1 Relationships between the organizations in IDS1 117

Fig 5.2 Relationships between organizations within IDS2 126

Fig 5.3 Relationships between organizations within IDS3 133

xvii

Table 1.1 Relative poverty indicator (%) 5

Table 1.2 OPEC countries with highest and lowest HDI index for 2013 5

Table 2.1 Ownership structure for UK infrastructure 41

Table 3.1 Four generations of systems thinking evolution 52

Table 3.2 Differences between reductionist and systems approaches 54

Table 3.3 Characteristics of complex systems 59

Table 3.4 Basic parts of viable systems model 62

Table 3.5 Difference between VSM and LST 63

Table 3.6 Critical success factors for viability 78

Table 4.1 Model verification and validation approach for HSCB models 100

Table 4.2 Profile of interviewees (unstructured interviews) 102

Table 4.3 Profile of discussants (online discussion forums) 103

Table 4.4 Profile of interviewees (structured interviews) 108

Table 5.1 Profile of Nigerian oil and gas industry regulatory interviewees 118

Table 5.2 Profile of IDS1 interviewees 120

Table 5.3 Profile of IDS2 interviewees 126

Table 5.4 Profile of IDS3 interviewees 132

Table 5.5 A summary of thefindings from the cases 137

Table 6.1 Definition of local suppliers according to two broad approaches 164

xix

Abstract Infrastructure delivery systems have been identified as a veritable

plat-form for implementing socio-economic objectives like social value, local contentdevelopment, etc This has become prevalent in resource-rich developing countries.Effective implementation of such policies through infrastructure delivery systems hascontinued to elude these countries because of implementation challenges which havebeen cited in different fora Evidence of poor implementation can be deduced fromthe burgeoning levels of poverty and socio-economic underdevelopment observed

in these countries Yet, to date, few studies have sought to explore the capability ofthese infrastructure delivery systems to engender optimal implementation of socio-economic objectives Even fewer studies have tried to investigate the governancechallenge and its impact on the delivery systems ability to enable effective imple-mentation This observation led to the development of this study As such, this studycontributes towards bridging this gap This chapter provides a background to theresearch problem being investigated citing contemporaneous literature and high-lighting the gap It provides an insight into the structure and content of the entirebook It is expected that this chapter will enable readers to gain an understanding ofthe study’s background and contribution to the body of knowledge and practice

Effective infrastructure asset delivery and management remains central to the growth

of several economies across the globe [1 5] This is even more so the case withinfrastructure having been described as largely responsible for engendering improvedproductivity [5 8] Recently, these economies have shown increasing concern withinfrastructure asset delivery and management processes in their bid to boost produc-tivity [5] Their areas of concern include the following, whilst not being limited tothese issues; financing, procurement, effective and efficient delivery, transparencyand accountability issues, project governance and management, administration andpartnership-oriented issues

The attention to infrastructure delivery has become prevalent within developingeconomies, as these countries have continued to grapple with inadequate and/or

© Springer Nature Singapore Pte Ltd 2019

B O Awuzie and P McDermott, Infrastructure Delivery Systems, Management

in the Built Environment, https://doi.org/10.1007/978-981-13-7291-9_1

1

obsolete infrastructure stock These countries, knowing the impact of adequateinfrastructure investment and asset provision, have sought to attract substantialinvestments in their infrastructure sectors The attainment of regional integrationand economic cooperation among neighbouring countries has also been central tonew infrastructure-based public policy initiatives [9] Through the enactment of newinfrastructure delivery policies, they have sought to deliver socio-economic benefitssuch as job creation, improved access to employment centres and skill acquisitionthrough apprentices [10].

Recently, governments in emerging economies have enacted several policiescentred upon granting patronage to local suppliers during infrastructure deliverycycles It was expected that this would lead to a greater retention of the procurementspend and allow for the acquisition of skills, in-country [11] Wells and Hawkins[11] maintained that effective management of investments in infrastructure and theinfrastructure delivery process within critical sectors of these resource–rich countriespossessed the potential for the creation of jobs for the citizenry of such countries.Nigeria has been severally described as one of such developing, resource-richcountries where a huge infrastructure deficit has been identified as hindering thecountry from attaining sustainable economic growth [12] With an estimated popu-lation of 154 million, Nigeria’s population accounts for 47% of the total population

of Sub-Saharan Africa [13] It’s estimated reserve of more than 36.2 billion barrels

of crude oil in 2007 makes it the second largest oil producing nation in Sub-SaharanAfrica, behind Angola [14] The country also has a preponderance of gas reserves,measuring about 184tcf, thus making it the world’s 7th largest gas reserve Despitethese proven reserves of oil and gas resources in the country, production outputswithin the sector have remained at a low level over the last couple of decades [15],thus contributing little to the development of local (in-country) capacity to servicethe nation’s oil and gas industry [12] This shortfall has been blamed on violence andethnic strife by the host communities as well as the absence of the necessary infras-tructure to boost production [16] Iwayemi [17] argued that the perennial inability ofthe oil and gas industry to meet its supply obligations and other customer needs wascaused by the non-availability of the required infrastructure stock for improved pro-ductivity and associated output He stated that an effective oil and gas infrastructurenetwork in the country was imperative for the development of local content Ekebafeand Joledo [18] agreed with the views posited by Iwayemi [17], stating that the oiland gas industry in Nigeria was a viable platform for the attainment of local capacitybuilding targets as contained in the local content policy guidelines This is due tothe sector’s technological edge, huge potential for job creation, and transferability

of industry capabilities through linkages to other sectors of the economy [17].However, this has not been the case Evidence abounds in contemporary studies onthe subject matter, indicating that there has been no strong linkage between the hugeoil and gas reserves in the country, its exploration and exploitation and other sectors

of the Nigerian economy [19,20] The Nigerian government, through several policydocuments and legislations since the commencement of oil and gas exploration inthe country, has sought to ensure that subsequent investments made in the oil and gassector have impacted positively upon the local economy It was expected that such

impacts would include the development and sustenance of stronger cross-sectoriallinkages between the oil and gas sector and other sectors.

The Vision 20:2020 and the NEEDS policy of the government [15,21] size the creation of employment and cross-sectorial linkages between the oil and gasindustry and other sectors of the Nigerian economy, particularly the development ofthe local supplier competencies and capabilities This drive by the government hasculminated in recent legislation such as the Nigerian Oil and Gas Industry ContentDevelopment (NOGICD) Act of 2010 Warner [22] attributed the increased advocacyfor local content development in countries such as Nigeria, as being borne out of theirintention to use such investments in infrastructure to develop indigenous competen-cies and industries It is expected that the development of local industries alongsidethe associated competencies would create more jobs and lead to increased employ-ment, as well as increased competitiveness of such countries among the community

empha-of countries around the globe In the last decade, the Nigerian government has ated several energies related infrastructure projects such as the National IndependentPower Plant (NIPP) projects and the oil and gas pipeline infrastructure to enhanceproductivity and to provide employment [15,21] This singular act, it was expected,would enable the nation to attain the Millennium Development Goals (MDGs) andprovide socio-economic benefits to its populace [23] Surprisingly, these policieshave failed to achieve these objectives, as the high unemployment rates and rampantcases of abandoned projects persist, despite increasing investments in infrastructure[24–26] Ineffective implementation has been blamed for such failures [24,27].Extant studies have pointed out that the lack of an effective public policy imple-mentation strategy in most developing and resource-rich countries has remained thebane for the attainment of economic growth in these countries [24,28] Furthermore,Lopez-Acevedo et al [29] identified the absence of effective policy monitoring andevaluation (M&E) systems in most countries across the globe, particularly the devel-oping ones For Africa and most of the resource-rich undeveloped or developingcountries, public procurement and policy implementation cycles have been associ-ated with unbridled corruption and lack of transparency [30,31], hence renderingthem incapable of being used as a tool to effectively drive government policies insuch climes

initi-These scholars blamed corruption and the lack of transparency as constitutingbarriers to effective policy implementation Foster and Pushak [26] reveal that most

of these investments in infrastructure and public policies concerning infrastructuredelivery have failed to deliver the desired results, especially when it concerns theattainment of socio-economic goals They attributed this to the lack of an effectiveregulatory and legal framework, the presence of adversarial relationships, the absence

of standard contracts and incessant duplication of tasks by contracting authorities.Other factors identified include the lack of project management expertise, and lack

of transparency in the procurement process These reasons have been adduced to

as contributing to the government’s inability to successfully pursue its local contentdevelopment policy in Nigeria [32,33]

The attainment of a programme or implementation success is generallyattributable to the way such an endeavour is organized and governed [34–38] Sim-ilarly, achieving optimal implementation of Local Content Development Policies(LCDPs) in a country through infrastructure delivery would be dependent upon theway relationships between the various organisations within the procurement sys-tem are organised and governed In Nigeria, there has been an absence of a properevaluation of these procurement systems to establish their inherent capability todeliver the client’s (government’s) objectives Surprisingly, a proper scrutiny of theprocesses and interorganisational relationships involved in implementing the poli-cies, especially in the face of recent literature pointing to the occurrence of possibledisjuncture within the policy implementation cycle, has often been neglected [39,40].This neglect is borne out of the absence of an approach for conceptualising interor-ganisational relationships and evaluating the impact of such interactions on com-munication, control and collaboration within the implementation cycle [41,42] As

a result, the implementation process has been treated as a ‘black box’ This studytakes the lead in this area by developing an approach for conceptualising the vari-ous relationships existing between the multiple organisations within the oil and gasInfrastructure Delivery System (IDS) and evaluating how these relationships impactupon its role as a medium for policy implementation [43]

To achieve its objective, this study is positioned along the lines of systems ity as propounded by Beer [44] and the Theory of Temporary Multi-Organisations

viabil-by Stringer [45] The term ‘viability’ within the context of this study is used to

refer to the organizational capacity to “exist and thrive in sometimes unpredictable

and turbulent environments” [46: 133] This criterion requires organisations toexhibit ultra-stability; that is, the capacity to adapt to its selected environment,

or even re-configuring this environment to suit them [46] For them to attain thisfeature of viability, organisations and systems alike must possess six characteristicattributes and strong relationships which encourage information flow and seamlesscommunication between parties [7,47,48] These characteristic attributes include:operation, control, monitoring*, coordination, intelligence, and policy

Quite understandably, the policy implementation process within the realm ofinfrastructure delivery, consists of several contractual arrangement(s) which bindvarious actors together and, defines their responsibilities towards ensuring successfulimplementation However, it has been established that the actual relationships whichexist between these actors often differ from these contractual agreements [49].They reiterate the disparity between the actual relationships of these actors and theexpected relationships stated within contract For such delivery systems to performoptimally, an understanding of these actual relationships between actors and itsimpact upon the implementation process becomes imperative This study sets out

to conceptualize these actual relationships and to subsequently evaluate them forviability from a systems viability perspective.

This study is imperative considering that in recent times, various studies haveblamed ineffective policy implementation for the dismal performance of severalsocio-economic policy initiatives being introduced by successive governments acrossthe world The impact of these failed policies is mostly felt within the community ofdeveloping and underdeveloped countries Nigeria belongs to this league of develop-ing countries where unemployment and poverty levels are presently soaring, despitethe prevalence of socio-economic interventions

Nigeria is currently grappling under severe economic hardship, with more than60% of its populace living below the poverty threshold even though it remains one

of the world’s oil producing nations [5,50] This fact is buttressed by the recentstatistics report on poverty released by the National Bureau of Statistics in 2011.This report (see Table1.1) indicates a continuous rise in the poverty rates over theyears

From Table1.1, a trend showing a steady increase in the percentage of moderatelyand extremely poor Nigerians can be established Table1.1indicates that about 69%

of the Nigerian citizenry were either moderately poor or extremely poor in 2010.Not a lot seems to have changed considering the report on the Human DevelopmentIndex (HDI) for countries within the OPEC community which was released in 2013.The country ranks lowest on the Human Development Index, (see Table1.2) despiteits huge resource-based income

Table 1.1 Relative poverty

indicator (%) Year Non-poor Moderately poor Extremely poor

Table 1.2 OPEC countries

with highest and lowest HDI

Table1.2OPEC Countries with the Highest and Lowest Human DevelopmentIndex for 2013.

To the left of Table1.2is the list of countries with the highest HDIs, whereascountries with the lowest HDIs are listed on the right The low human developmentindex as highlighted in Table1.2portrays the failure of government to deliver on itspromises despite vast resources accruing to it from escalating oil and gas prices inthe international market

The oil and gas sector of the Nigerian economy remains the most significant,contributing an estimated 86% of total revenue [52] This major contribution inrevenue terms pales in significance upon the assessment of the impact of the sector

on local employment and human development initiatives [17,32,53] Nigeria’s oiland gas industry has a history of absorbing investments worth approximately $8

bn annually, for servicing of its infrastructure and this is projected to hit $15 bn in2016–2017 [17] Yet, this sector does not possess strong linkages to other sectorscapable of generating jobs locally, neither has it enabled local suppliers to developsuch competencies which will render them competitive in the international market[19, 54, 55] Also, this sector currently provides employment to less than 1.3%

of the total employed population despite the increased effort of the government

to drastically reduce the unemployment gap in the country through several policyinitiatives [32,52]

The Gas Master-plan inaugurated by the previous administration, consists of thedevelopment of a gas infrastructure portfolio estimated to cost $16 billion over afour-year period, from 2010 to 2016 [15] This forms part of the government’s pub-lic expenditure and renders the oil and gas industry as a prime candidate for thedelivery of socio-economic benefits This observation has necessitated the need for

an evaluation of the entire procurement system as represented by the InfrastructureDelivery System (IDS) in this study A timely evaluation of the interorganisationalrelationships and development of modalities for the attainment of organisational via-bility within the IDS will enable the Nigerian citizenry to exploit the benefits accruingfrom the increasing investments in oil and gas infrastructure

Within the context of this study, the IDS serve as a policy implementation platform,providing the linkage between policy formulation and policy outcomes within therealm of infrastructure delivery It is the vehicle which brings about the outcomesexperienced by the population being targeted by the policy

1.3.1 Research Questions

(a) What is a viable infrastructure delivery system?

(b) Has the current mode of delivering the oil and gas infrastructure in Nigeria tributed to the attainment of government targets on local content development?

con-(c) What are the challenges to the development of viable delivery systems for theoil and gas infrastructure in Nigeria?

(d) How can the current system of oil and gas infrastructure delivery be made toattain and maintain viability?

1.3.2 Research Propositions

The propositions for this research include:

i Enhanced local contractor/supplier development and participation in the ery of infrastructure remains a recognized approach to engendering economicgrowth within the local economy

deliv-ii Effective procurement remains pivotal to the successful implementation ofsocio-economic policies through infrastructure delivery systems

iii There is an apparent disconnect between policy and implementation within theIDS

iv A viable infrastructure delivery system would lead to effective procurement andthe attainment of desirable policy objectives

v Infrastructure delivery systems can only attain viability if the organisational relationships are effectively organised and governed in such amanner that all the participating organisations share a common objective

inter-vi For the IDS to attain and maintain viability there must be excellent nication and collaboration between all parties to the delivery, usually rangingfrom the policy formulation through to the subcontractors within the deliveryenvironment

commu-These initial propositions were developed between two distinct periods: duringthe author’s period of engagement in the procurement of infrastructure, and duringthe review of literature on the subject-matter They remain initial propositions as thedevelopment of propositions and continuous testing of propositions is an on-goingactivity within the realm of qualitative research projects such as this [56]

1.4.1 Aim

This study seeks to (i) develop a model for conceptualising and evaluating

inter-organisational relationships within infrastructure delivery systems for viability and (ii) to identify implementation gaps within such systems and proffer recommendations for the attainment of viability using the model developed in (i).

1.4.2 Study Objectives

To achieve its set aims, the study will achieve the under-listed objectives, namely:

1 To determine what constitutes a viable Infrastructure Delivery System (IDS) from

a viable systems perspective

2 To assess the capabilities of the Viable Systems Model (VSM) for evaluatingtemporary multi-organisational structures such as the IDS for viability

3 To develop and validate a Viable Infrastructure Delivery System Model (VIDM)

4 To develop an understanding of existing organisational structures and governancemodes and the attendant interrelationships between stakeholders within the IDS

5 To identify success and failure factors affecting the attainment of viability withinsuch systems, using the VIDM

6 To proffer recommendations on how to attain and maintain organisationalviability

This study is situated within the context of procurement and eventual delivery ofoil and gas infrastructure in Nigeria The term ‘oil and gas infrastructure’ is used toconnote all those facilities utilised for the enhancement of productivity within theupstream and midstream sectors of the oil and gas industry It applies to facilitiessuch as the Floating Production Storage Operating (FPSO) platforms, refineries andpipelines [57] and excludes other kinds of infrastructure such as roads, bridges andrailways which might prove essential for oil and gas industry productivity, albeit in

a secondary manner The study evaluates the impact of the relationships between thevarious organisations within the delivery system for these infrastructure projects and,the governance mechanisms deployed therein, on the successful implementation ofgovernment’s policy on local content development within the Nigerian oil and gasindustry As a result, the scope of this study shall be confined to these interorgani-sational relationships as epitomized by the IDS Therefore, the IDS is described asthe representation of all types of interorganisational relationships existing betweenvarious stakeholder organisations during the procurement and subsequent delivery

of an infrastructure asset The scope of this study revolves around these relationshipsand evaluating their impact on the tenets of systems/organizational viability Thedelivery process as used within the context of this study excludes operations andmanagement

Whereas the effectiveness of the VSM in anticipating, diagnosing, planning for,and implementing large scale organisational change has been severally cited[58–62], there has been no mention of the application of the model in temporary

multi-organisations in developing countries, to the knowledge of this author It is the

intention of this study to bridge this gap by developing a model for anticipating,

diagnosing and evaluating temporary multi-organizations for viability based

on the tenets of the VSM The IDS is a clear manifestation of a temporary

multi-organisation

The study fills the gap established by Proctor et al [41] within the realm ofpolicy implementation research They observed that there was an absence of a clear

conceptualization of policy implementation processes and an approach for the

evaluation of implementation process outcomes Furthermore, they argued that thevarious researchers have ended up assessing and evaluating policy implementationfrom the quality of services delivered by the implementation process or serviceoutcomes, instead of assessing the implementation outcomes in themselves Theymaintain that this error has led to the lack of adequate insight into the hindrances expe-rienced during policy implementation This argument is akin to the argument by Vives

et al [63] where they attempted to distinguish between project management successand project success Although different models have been developed by El-Hasia [64]for understanding the policy implementation process, it is expected that, whilst align-ing with the views of Proctor et al [41], this research will provide a model which will

conceptualize the interactions, both formal and informal, between various isations involved in the implementation process, thus allowing for an enhanced comprehension and thorough evaluation of the impact of these interactions on the attainment of implementation success from an organisational/systems viability perspective.

organ-Furthermore, it is expected that this research would assist policy makers and

implementing agencies and especially infrastructure clients in developing tries, such as Nigeria, to understand the actual relationships within the delivery chain and to identify the barriers to effective policy and project implementation.

2 Chapter 2 marks the commencement of the literature review section of thethesis Literature related to the critical aspects of the study, namely: policyimplementation, socio-economic benefits, infrastructure delivery, and localcontent development Furthermore, it reviews scenarios of socio-economicpolicy implementation in Nigeria and the United Kingdom

3 Chapter3discusses the rationale for adopting the system’s thinking methodology

as the most appropriate methodology for the conduct of the investigation intothe IDS Furthermore, the relevant theories are also highlighted and reviewed,particularly the theories of viable systems, complex organisations, temporarymulti-organisations, and stakeholders

4 Chapter 4describes the initial steps to the development and validation of theVIDM These steps consist of an analysis of the data gathered from expertunstructured and semi-structured interview sessions and the online discussionforums The data so obtained assisted in the refinement of the conceptualmodel developed through the literature and provided a platform for the furthervalidation of the model through the case studies

5 Chapter5consists of the intra case analysis of the data obtained in the multiplecases used, and this allowed for the generation of new propositions which would

be tested at the cross-case analysis stage of the research

6 Chapter 6 deals with the cross-case analysis and the testing of propositionsgenerated during the intra-case analysis stage

7 Chapter 7 reviews the validation of the VIDM, providing a conclusion and

a set of recommendations for future infrastructure clients and policy ers/implementers in developing countries, as well as making recommendationsfor further studies

This chapter has provided the platform for the subsequent sections of the study.This platform was premised on the problem areas highlighted in the backgroundand research rationale The aim, objectives and research questions as well as therelationship between the objectives and the research questions were expressed withinthis chapter, to ensure increased levels of clarity This was followed by a highlight

of the study’s relevance and contribution to the body of knowledge This chapterconcluded with an insight into the remaining part of the thesis The next sectioncomprises the extant literature as it concerns the implementation of socio-economicpolicies within the Nigerian and United Kingdom contexts

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Procurement as a Medium

for Implementing Local Content

Development Policies

Abstract Local content development policies (LCDPs) have become a dominant

feature in socio-economic developmental discourse within and beyond the comity ofdeveloping countries Proponents of LCDP policies have advocated for a transfor-mation in the extant mode of LCDP implementation in developing countries Theymaintain that the current form of implementation through targeted procurement poli-cies and trade embargoes have led to the emergence of a rent-seeking culture among

a cross-section of the citizenry of these countries leaving most of the populace,unskilled, unemployed and poor However, these anomalies are not only experienced

in the developing country context but also in the developed country context In thischapter, a review of the state-of-the-art literature as it pertains to the LCDP regimes

in different countries and the role of different procurement systems in engenderingimplementation Of significance is the review of the Nigerian and United KingdomLCDP policies and implementation strategies within the realm of infrastructure deliv-ery systems It is expected that the chapter will enable effective comprehension of thevarious modalities being deployed in LCDP implementation through infrastructuredelivery systems

Having introduced the context of this study in the previous chapter, albeit briefly, thischapter shall proceed to provide an in-depth description of the contexts within whichthis study is situated—local content development implementation and infrastructuredelivery systems respectively It is expected that at the end of the chapter, a com-prehensive understanding of the extant relationship between infrastructure delivery,policy and local content development implementation would have been developed

© Springer Nature Singapore Pte Ltd 2019

B O Awuzie and P McDermott, Infrastructure Delivery Systems, Management

in the Built Environment, https://doi.org/10.1007/978-981-13-7291-9_2

15

2.2 Local Content Development

2.2.1 What is Local Content?

Local content, a widely used terminology within the global oil and gas industry, can

be described as:

The involvement of local enterprises and labour in planning, design and construction services,

as well as the locally added value in transactions occurring throughout the contractors supply chain [ 1 : 7].

In a report for the Nigerian government, Heum et al [2] defined ‘local content’

as comprising of any value-adding activity which takes place within the shores ofNigeria being executed by a Nigerian owned company In addition, IPIECA [3]defined local content as added value brought to a host nation (and regional andlocal areas in that country) through the activities of the oil and gas industry Thismay be measured by project, affiliate, and/or country aggregate and, undertakenthrough: workforce development—employment of the local workforce, and training

of the local workforce; investments in supplier development—developing suppliesand services locally and procuring supplies and services locally

According to Nwokeji [4], the term ‘local content’ can be used to refer to thedegree of existing linkages between the oil and gas industry and other sectors of theeconomy Local content from this perspective includes: promotion of local factorinput; increment in the percentage of locally available administrative and techni-cal capacity; utilization of local raw material and components; and the promotion

of cross-sectoral linkages between the oil and gas sector and other sectors of theeconomy [4]

Munson and Rosenblatt [5] and Tordo et al [6] differ on the number of underlyingdefinitional factors for achieving a concise definition of local content development.Whereas Munson and Rosenblatt [5] identified local content as being defined based onvolume or value, Tordo et al [6] listed six dimensions which influence the definition

of local content development From Munson and Rosenblatt’s viewpoint, a based content protection scheme requires a fraction of the total number of components

volume-or raw materials used to produce the final goods to be locally sourced, whereas avalue-based content protection scheme requires the value of locally manufacturedcomponents to be at least as large as a specified percentage of either the value of allpurchased parts or of the final value of the goods

According to Tordo et al [6], these six dimensions need to be taken into eration when defining local content These definitional dimensions include:

consid-• Local content policy as being concerned with the need to achieve both an immediateincrease in the percentage of locals employed in the oil and gas sector and aculmination of issues, such as training or cluster developments which are expected

to lead to the provision of future local manpower to service the industry;

• Proper determination of what the term ‘local’ in local content connotes ‘Local’could be used to describe the ownership of a company from which a commodity

is purchased, or it could be used to describe the location of the company, eventhough such a company may be owned by foreign interests;

• Local content as being used to refer to those activities resulting from the activities

of a major oil and gas company within a locality which add value to the locality’simmediate economy;

• It could also be used to refer to instances where oil and gas companies providesocial and economic infrastructure for the locality;

• Local content as assessed from a variety of standpoints within the oil and gas valuechain, thus making it subjective according to the aspect the assessor is viewing itfrom; and

• The variance in the levels of implementation and actualization of local contentdevelopment targets over the lifecycle of the oil and gas production activity isanother factor to be taken into consideration when defining and setting local contentdevelopment targets

2.2.2 Evolution of Local Content Development Policies

(LCDPs)

The emergence of LCDPs has been traced by Tordo et al [6] to the post World WarTwo era They stated that this era witnessed the advent of several import substitutionpolicies These policies were enacted by various governments across the globe withthe intent of correcting observed instances of market and government failures Owing

to the burdensome nature of these policies to competitiveness [6], the policies weredismantled in quick succession by various governments, thus paving way for theemergence of a new wave of policies termed the Productive Development Policies(PDPs) These PDPs are described as policies which were promulgated to strengthenproduction activities within economies [6] It was expected that such policies wouldstimulate the local economy, thus leading to improved levels of national competi-tiveness and living conditions for its citizenry They stated that the LCDPs formed

an integral part of these PDPs

Meanwhile one of the renowned scholars on content protection theory, Grossman[7], maintained that content protection possessed a long and continuing history ofapplication, particularly in developing, resource rich countries He attributed theevolution of content protection (a precursor to LCDPs) to the need to protect inter-mediate stages of production while avoiding some of the domestic and internationalopposition which added tariffs may attract Describing the phenomena, he agreedthat content protection required the inclusion of a certain level of domesticallygenerated value-add or components in a product

LCDPs have come to stay, at least for the foreseeable future, as they have tinued to dominate contemporary discourse within the global oil and gas industry,particularly in the resource-rich nations [8] Warner [8] attributed this to the fact thatseveral trillions of dollars’ worth of goods and services is being purchased across the

con-globe to support activities within the global oil and gas industry for exploration andproduction activities, by private and public institutions alike as well as for the provi-sion of the requisite infrastructure Furthermore, Warner [8] acknowledged that there

is a common desire within the policy-making realm, for their economies to attaininternational competitiveness and attract necessary investments required to sustainand grow the local economy whilst allowing for indigenous technology development.However, commercially run private and public contracting entities want guaranteesthat their expenditures are having the desired effects on the local economy througheffective and efficient management thus ensuring that prices, delivery schedules andquality are on the same scale as it would have been if foreign suppliers were engaged

An essential question to be answered by policy makers as it concerns local contentremains; will their interventions to leverage economic growth from procurementexpenditure lead to more skilled and competitive domestic suppliers, or will theyserve to perpetuate inefficient and uncompetitive national industries?

2.2.3 The Case ‘For’ and ‘Against’ LCDPs

LCDPs have not always turned out as a favourable option for countries seeking toeither achieve or optimize their levels of competitiveness [8] Warner [8] observed thatalthough the attainment of lofty benefits such as the development of local suppliersseemed possible through the adoption of LCDPs, the results emanating from variousquarters have pointed to the fact that these policies have in some instances, madematters worse for the host country Furthermore, Warner advocated for a great deal

of care to be exercised when formulating and implementing local content policies as:

it is not inevitable that higher levels of local content invariably lead to economic benefits for the host economy….as the success of achieving local content targets in creating new jobs and filling local order books may be dampened by a concurrent deleterious impact on the country or region’s long-term industrial competitiveness, or may introduce new risks and higher costs to investment projects, or even reduce the volume or timeliness of government revenues from these investments.

Agreeing with Warner’s assertion, Watermeyer [9] stated that LCDPs such astargeted procurement, should be properly planned and implemented in a manner thatensures that the expected benefits are attained

In their comprehensive study of the implementation of LCDPs across the globe,Tordo et al [6] identified the ‘pros’ and ‘cons’ of LCDPs In highlighting the advo-cacy for increased use of these LCDPs, they listed the following; improvement ofdomestic value-addition levels through enhanced host country activities, correction

of instances of market failure, provision of socio-economic benefits for the hostcountry, and its propensity to act as a medium for compensating for the adversesocio-economic impacts of the oil and gas activity within the host community

On the other hand, they identified factors which deride the case for the adoption ofLCDPs, namely: the misallocation of resources and/or inefficiencies and the impact of

this on welfare standards; misalignment between policy objectives and instruments;the presence of several internal regulations like the GATT to which most countrieswhich are either seeking to or already implementing these PCDPs belong to; andthe kind of institutional frameworks existing in host countries seeking to adopt suchpolicies, as the absence of effective institutional frameworks would lead to zeroinfluence of such a policy as it concerns achieving the stated objectives.

These factors notwithstanding, LCDPs are being implemented in resource-richcountries, and new countries such as Ghana, Kenya and Tanzania have joined thefray in recent times Warner [8] even reiterated the salience of such polices, as hestated that they have become a strategic consideration in project delivery within theoil and gas industry

A highlight of instances of LCDPs across the world has revealed the prevalence

of mixed results; a success in certain areas and a failure in other areas

to domestic suppliers within the Asian continent was pivotal to the astronomical rise

of the economic growth rate in those climes, as these licenses served as a boost toproductivity levels

Another example is the indigenization of the Brazilian national oil company,Petrobras and a further declaration that the indigenized entity will employ onlylocal workers and know-how in 1953 The Republic of Venezuela’s hydrocarbon lawpassed in 1944 compelling oil majors operating in the country to commence refiningactivities in-country was cited as another example In Norway, oil majors operating

in Norway handed down jobs to local suppliers in the early days of oil explorationand production in the country, even where this was not deemed to be cost effective[6] In China, the PDPs as instituted by the government, focused on the formation ofJoint Ventures between local suppliers and foreign companies with the sole mandate

of engendering technology transfer Tordo et al [6] asserted that this was one of theunderlying causes of China’s economic prosperity in recent times

Attention was drawn to other examples which sit outside the realm of the oil andgas industry by Munson and Rosenblatt [5] They cited several instances where con-tent protection had been applied across industrial sectors For instance, they differentstudies which attested to a historical increase in value-add percentages across severalcountries These increments range from 40% in the Philippines, 50% in Mexico, 54%

in Thailand, 60% in China, 70% in Taiwan, 75% in Pakistan, to 85% in Australia.Instances of LCDPs have also been experienced in Argentina, Brazil, Canada, Chile,India, Spain, and the United States [7] and penalties have been utilized to drivecompliance In Australia, a 35% duty on imported components has been enacted

The government of India had requested most foreign equity ownership turing ventures to obtain 90% local content within five years of establishment Inthe United Kingdom, Smith [10] alluded that oil companies in the North Sea werefavorably disposed towards extending patronage to British companies, even beforethe introduction of the IMEG (International Management and Engineering Group ofBritain Limited) report in 1973 The report encouraged the attainment of 70% Britishparticipation in the North Sea oil and gas supply chain.

manufac-In Africa, several countries are developing and implementing LCDPs This iscorroborated by Dynes [11], Schritt [12], Ovadia [13] and Siddique et al [14] whoobserved that there was an increasing effort by African governments to improveand/or develop local capacity through LCDPs This was traced to the notion that theextractive industry in Africa contributed significantly to export earnings but madelittle contribution to growth [11] Also, Wells and Hawkins [1] discovered that localcontractors, consultants, manufacturers and suppliers have not benefitted from themassive investments in infrastructure development in the developing countries asexpected, given the presence of the LCDPs They add that the kind of decisions taken

at the project identification and planning stages influences the effective tation of such policies The African export-import bank’s continental local contentestimate still stands at around an appalling 10% [11] Therefore, this is the timefor these nations to act to boost this percentage, especially in the face of the pre-diction from the Baker III Institute [4] which stipulated that within the next twentyyears, developing countries will play host to the production of about 90% of theworld’s needs The question remains thus, why have these developing countries,well endowed with natural resources failed to utilize this to their advantage, despitethe promulgation of several LCDPs in the distant and not so distant past?

implemen-Several reasons have been adduced for this seeming inability of certain rich countries to achieve the expected benefits According to the IPIECA report, thekind of regulatory environments and the attendant structure of the regulatory contextfaced by oil and gas companies, directly impacts on the abilities of these oil andgas companies to initiate, grow and develop new enterprises [3] This adds to thecost of doing business, ultimately negating the feasibility of implementing a localcontent policy Warner [8] agreed with the IPIECA report, as his findings established

resource-a direct relresource-ationship between cost escresource-alresource-ation of oil resource-and gresource-as projects resource-and locresource-al contentrequirements The participation of local firms within supply chains of the majorplayers within the oil and gas industry is portrayed as being critical to the attainment

of the local content development strategy These firms, according to the IPIECA [3],should be imbued with the strengthened capacity to compete globally

Esteves et al [15] identified four main barriers to the incorporation of local smallbusinesses into the supply chains of oil majors, namely:

• The information gap existing between small and very large companies;

• Perceived lack of capacity in small enterprises;

• Disincentives created by global supply chain management trends; and

• Barriers arising from nature of corporate policies

The absence of a proper definition of what constitutes ‘local’ is another ment to the implementation of local content strategy within supply chains [1] Keysuccess factors mentioned by the IPIECA report for the successful implementation

impedi-of the local content development policy include:

• Contextual analysis,

• Early start,

• Long term perspective, and;

• Free-flowing and transparent information streams

From the Nigerian context, Omenikolo and Amadi [16] attempted to cataloguethe various impediments confronting implementation of LCDPs Such impedimentsinclude:

• The absence of infrastructure,

• Political instability,

• Poor investment climate,

• Absence of project finance for local suppliers,

• Lack of transparency,

• Poor educational standards,

• Absence of effective environmental, fiscal and legal policies,

• Lack of efficient and effective resource management,

• Low levels of research and development activities, and;

• The organisational structure of the local suppliers, especially the majority whichare run as sole-proprietorships

Most of these problems identified by Omenikolo and Amadi [16] and Schritt[12] unarguably are like those experienced in other developing economies acrossthe world Taking a closer look at these issues raised, one may not be mistaken inattributing them to ineffective implementation processes Surprisingly, whereas cer-tain studies aimed at assessing the impact of LCDPs on the Nigerian economy sinceits introduction, none have attempted to evaluate it from an interorganisational multi-layered implementation perspective This has seen the exclusion of various salientfactors, as well as the views of certain organisational stakeholders from these assess-ments, thus rendering such studies incomplete from a system thinking perspective.From the foregoing, it can be observed that the development of LCDPs as socio-economic policies evolved from the need of several economies to become competitiveand provide better welfare conditions for their citizenry Although these LCDPs haveworked out well in several countries, it has not also fared well in other countries.Procurement of infrastructure has been cited as one of the most pronounced media forthe implementation of LCDPs [8,9,15,17,18] within local communities However,Warner [8] reiterated the need for procurement activities to be modified according tothe context and the expected objectives of the LCDPs for it to enhance the chances

of achieving the set policy targets Furthermore, Esteves et al [19], highlighted thebenefits for oil majors and major contracting companies to incorporate local contentdevelopment into their business strategies (Fig.2.1)

Fig 2.1 Potential benefits from efficient local content development Source Wells and Hawkins

[ 1 ]

Figure2.1highlights the potentials which can be derived from the effective mentation of the LCDPs through viable procurement systems

imple-Based on the observations made by Warner [8] Well and Hawkins [1] and Esteves

et al [19], it can be inferred that modified procurement systems are required to deliver

on local content objectives

2.3.1 Procurement Systems—A Definition

There has been some confusion as to what constitutes a procurement system and whatdoes not According to Rowlinson and McDermott [20], what is mostly referred to

as procurement systems namely; Design Build approach, Traditional approach andDivided Contract approach were not really procurement systems but rather contract-ing strategies They admitted that these contracting strategies alongside other vari-ables such as the national culture, organisational form, payment methods, overlap ofproject phases, selection process, source of project finance, contract documents, lead-ership, authority and responsibility and performance, form a procurement system

Corroborating this position, Thai [21] added that a procurement system consisted ofother components besides known procurement processes These components include:

• The overall strategy and policy of the client,

• The methods and procedures,

• The personnel and organisation, and;

• Source of project finance,

• Leadership and authority, and;

• Responsibility and performance

The delivery of infrastructure within the oil and gas industry has been adopted

as a policy implementation mode for the local content development policy of theNigerian government The procurement system will be regarded as the InfrastructureDelivery System (IDS) in this study given the study’s focus on infrastructure assetsdelivery The forms which these procurement systems assume is influenced by thegovernment’s budgetary decision to either buy the commodity or provide the neededservice through in-house departments, or to purchase the same service from otherentities In the case of the Nigerian oil and gas industry, the use of partnerships

to deliver infrastructure is commonplace and, the IDS conforms to the delivery ofinfrastructure and the attendant policy goals through partnerships

The tendency of procurement systems to negate the attainment of effective ery of socio-economic benefits if not effectively organised and governed has beenbuttressed [8,18,21] In an earlier work, Thai et al [22] identified the characteristics

deliv-of an effective procurement system from a performance perspective They assertedthat a sound procurement system should possess the capabilities to not only deliveraccording to the management requirements, but also to policy requirements Thesemanagement requirements include:

• Quality,

• Time and cost-effectiveness,

• Reduction of business, financial and technical risks, and;

• Maximization of competition whilst maintaining integrity

On the other hand, policy requirements include:

• Economic goals