Regulatory Requirements for Starting a Construction Business

By Kingsley Effiong | 2 min read
20th October 2017
Regulatory Requirements for Starting a Construction Business

If you are planning to set up a construction business, you should also plan to comply strictly with the regulatory requirements involved as the business entails erecting structures that house or accommodate people. Failure to comply with regulatory requirements could lead to an increase in collapsed buildings and loss of lives and properties.

While you may venture into this business as an entrepreneur without a professional background in construction, you will need to work with construction professionals on your team and comply with regulatory requirements.

In compiling the regulatory requirements for starting a construction business, we reached out to a FATE EEP participant and engineer, Mr Abayomi Omofaiye to collaborate some of our findings. The regulatory requirements for starting a construction business include:

Licenses/ Permits

  • Business registration: You must register your business with the Corporate Affairs Commission (CAC). This is important if you intend to scale your business.
  • Certificate/ Practicing License
    • NSE Certificate: All engineers are expected to have a Nigerian Society of Engineers (NSE) corporate membership certificate. This is issued on induction into the umbrella organisation for engineers in Nigeria and is subject to annual renewal. It is important to note that this license can be withdrawn from you if you err or violate the engineering code of practise in any way[1].
    • COREN Registration: With the NSE certificate, you are also expected to register with the Council of the Regulation of Engineering in Nigeria (COREN) in order to obtain a COREN certificate that qualifies you as a registered engineer.
  • Insurance: This is very essential in the construction business. You must ensure you have Insurance coverage for workers on your site that include health, safety, environment, equipment etc. You should also ensure that the insurance company you choose to work with can provide coverage for the volume of workers on your proposed project.

Educational Qualification and Staffing Requirements

  • Professionals: Professionals like Architects, Engineers, Surveyors etc. should possess a minimum educational qualification of a university or polytechnic degree and professional licenses/certificates e.g. an NSE certificate for Engineers.
  • Craftsmen: Hiring craftsmen is usually dependent on the employer's skill requirement.

Equipment Base Requirement

This is an important requirement especially for major projects. A potential contractor would need to inspect your equipment base even before requesting for your tender. This is to ensure that you have the required equipment capability to carry out the intended project.

Capital Requirement

There is no exact amount for starting a construction business. Your entry point would determine your start-up capital. If you are entering the business with a major project then your capital requirement would be higher compared to when your entry point is with a minor project.

There are two categories of ownership in the construction business:

  • Business owned by a professional
  • Business owned by a non-professional

Business Owned By a Non-Professional

A non-professional in the construction business is simply an entrepreneur that has no background qualification in construction or its related field but is interested in this line of business. In cases like this, it is extremely important to have professionals on board your management team.

Why do you Need a Professional on-board your Team?

As a non-expert in the business, you need professionals to make up for the skills you lack. For instance you might know the rudiments of running the business but you will need an engineer to handle the technicalities involved in constructing houses, roads, bridges etc. Also, when undergoing pre-qualification exercises for construction jobs, you will have to show that your team has professionals with the right qualifications, experiences and licenses to stand a chance of getting the job.

Conclusion

Compliance with regulatory requirements and upholding the expected standard both ethically and professionally is highly important in the construction business particularly to forestall the seeming rise in collapsed buildings within the country and the destruction that comes with it.

Information for this article was also gotten from http://www.coren.gov.ng 

[1] National Building Code, http://sdngnet.com/Files/Lectures/FUTA-ARC-807-Professional_Practice_and_Procedure/CD%202013-2014/National%20Building%20Code%20of%20Nigeria%202006.pdf accessed Apr 21, 2017

Kingsley Effiong
A brand & communications specialist with over 3 years of experience in business, organizational and product branding, visual communications, and helping businesses understand and use marketing to grow.
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