What a serious project owner should be able to learn from a contractor’s history

A contractor’s project list is usually the first evidence a prospective client sees. It establishes that the firm has worked in a sector, occupied a site, built a particular type of asset or assembled a team for a defined class of work.

That is useful. It is also incomplete.

Dutum’s public project record shows work across building construction, civil engineering, design and build, and facility management. The list includes projects in Lagos, Abuja, Anambra and university environments, alongside projects identified as complete or still under construction. It gives a prospective client a directional sense of range and operating exposure.

It does not, by itself, answer the questions that determine whether a delivery record is reliable.

The serious questions are more specific:

·         What was the contracted scope?

·         What was the planned start and completion date?

·         What was actually completed and accepted?

·         How much did the final cost move from the approved cost plan?

·         Which variations were instructed, and which arose from an omission or error?

·         What happened to quality, safety, defects and handover obligations?

·         Were payments made when due?

·         Which delays were caused by the contractor, the client, an approval authority, a funding interruption or an external shock?

·         Would the client give a reference that covers the difficult part of the work, not only the finished photograph?

A record that cannot answer these questions is a catalogue of exposure. It is not yet a strong basis for judging delivery performance.

That distinction matters because physical completion can conceal commercial weakness. A building may be standing while the account is distressed, the programme has slipped, disputed variations remain unresolved, or the owner has absorbed a cost that the original contract never allocated clearly. A road may be open while maintenance obligations, defects and payment claims remain unsettled. The asset is visible. The performance record is in the underlying sequence of decisions.

The useful record is therefore not a collection of photographs. It is a traceable account of what was promised, what changed, who controlled the change and who carried the consequence.

The part of the record that volatility exposes

Exchange-rate movement is one of the clearest tests of whether a project was prepared properly.

The issue is not simply that the naira may lose value against a hard currency. The project must establish how that movement enters its cost, revenue and payment structure.

Consider a project that earns revenue in naira but relies on imported equipment, foreign-denominated debt or materials whose local price responds quickly to the exchange rate. The project now has a currency mismatch. If the naira weakens, the naira amount required to purchase the same dollar-priced input rises. If the project’s revenue or contract price cannot move, the margin absorbs the difference. If the sponsor passes the increase to a buyer without an agreed mechanism, the dispute moves downstream.

The Central Bank of Nigeria states that its Nigerian Foreign Exchange Market rate is derived from a volume-weighted average and serves as the official rate for the day. That does not settle every commercial question, but it demonstrates why a contract should identify the rate source rather than refer vaguely to “the prevailing market rate”. A clause needs a baseline, a source, a trigger and a calculation method.

An illustrative FX adjustment mechanism might work as follows:

1.    Identify the exposed cost. Separate eligible imported equipment, foreign-currency debt service or directly FX-sensitive inputs from local labour, fixed local overheads and costs that do not move with the exchange rate.

2.    Set the baseline. Record the agreed exchange rate, source and date at tender, financial close, contract signature or the relevant order date.

3.    Define the trigger. Decide whether adjustment begins after any movement, after a threshold, or only when a specified event affects procurement or payment.

4.    Apply the formula. For an eligible cost, an illustrative adjustment could compare the reference rate with the rate at the relevant payment or procurement date: eligible foreign-currency cost × (current rate ÷ reference rate − 1). The actual formula must reflect the contract, invoices, quantities, timing and any agreed cap or floor.

5.    Set the procedure. Require notice, supporting documents, a time limit for submission and a method for reviewing disputed calculations.

6.    Allocate the remaining exposure. State who bears movement below the threshold, movement above a cap, shortages in FX availability, delay caused by non-payment, and the cost of an agreed suspension or termination.

This is the mechanism that is often missing when projects say they have considered FX. Mentioning the risk is not the same as pricing it. A risk becomes operationally manageable only when the parties can determine when it has occurred, measure its effect and act without reopening the entire commercial relationship.

The same logic applies to inflation, approval delays and payment interruptions. The contract should show the trigger, the evidence, the owner and the consequence. A generic force-majeure clause rarely does enough work for a predictable commercial exposure such as currency movement.

What the WAPI conversation helps clarify

WAPI has long functioned as a convening platform for property and investment stakeholders in West Africa. Its published material has included the management of FX risk among the issues affecting property markets and investment decisions.

The useful lesson is not that a conference can solve currency risk. It is that property and infrastructure markets cannot discuss capital allocation separately from the mechanisms that protect, price or share currency exposure.

For a developer, this means testing the project’s revenue and cost currencies before approaching a funder. For a contractor, it means refusing to price a long-duration obligation as though imported inputs, local prices and access to FX will remain fixed. For a lender or institutional investor, it means asking whether the project’s repayment source moves with the obligation it is expected to service.

Local-currency financing can reduce a mismatch where project revenues are local. The World Association of PPP Units and Professionals describes the logic plainly: borrowing in the host-country currency can align debt obligations with local-currency revenues and reduce the effect of exchange-rate volatility. It also notes the structural limits: domestic markets may not offer the required tenor, depth or risk-sharing instruments. A project can therefore need both local-currency financing and a credible approach to imported inputs, external debt, liquidity and repatriation.

The World Bank’s work on exchange-rate risk reaches a similar conclusion from the infrastructure side. Currency risk can deter private investment, while poorly designed protection can create large fiscal or foreign-exchange liabilities for the public sector. The right answer depends on the project’s revenue model, capital structure, market depth and the party best placed to manage each exposure.

What Dutum’s record should become

The next useful version of Dutum’s delivery record should move from a project gallery to a controlled performance register. It should preserve confidentiality while showing enough evidence for a serious reader to understand the operating history.

For each reference project, the record should ideally establish:

·         asset type, location and scope;

·         Dutum’s role and the delivery method;

·         planned and actual programme milestones;

·         original cost basis and material approved variations;

·         the principal causes of delay or cost movement;

·         quality, safety, defects and handover position;

·         payment and claims context;

·         current status; and

·         whether the client has approved the reference for external use.

The point is not to make every project appear perfect. A credible record explains where conditions changed, how the firm responded and what its contracts, controls or decisions changed afterward.

That is more valuable than an undifferentiated claim of experience. It allows a client, funder or partner to judge the kind of risk Dutum has carried, the limits of the evidence and the situations in which its experience is relevant.

For any organisation preparing a project for capital, procurement or a major delivery appointment, the practical next step is to build this record before the next approach. The exercise will reveal whether the project has a delivery history that can be evidenced, or only a collection of names and images.