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SCHOOL OF ARCHITECTURE,
BUILDING AND DESIGN
Bachelors of Quantity Surveying (Hons)
Professional Practice I
Lecturer: Ramar
Group Member:
Yee Algel 0315890
Wong Geng Sen 0321690
ContentsIntroduction....................................................................................3
Traditional Method.........................................................................4
Design and Build Method................................................................6
Management contracting...............................................................7
Construction Management.............................................................9
Tendering Method…………………………………………………………………….12
Open Tender……………………………………………………………………………..12
Selective Tendering……………………………………………………………………15
Negotiate Tendering………………………………………………………………….17
Recommendation………………………………………………………………………20
Schedule of Work………………………………………………………………………22
IntroductionTaylor’s University Sdn. Bhd has appointed our company which is Innovative
Cost Consultant Sdn. Bhd to provide advice on the procurement system and the
tendering methods on their project to launch a branch campus in Kota Kinabalu
as cost to completion to be within the budget fixed and timely delivery of the
facility in order to commence operation in mid- 2019 as the priority of the project.
As to provide a professional procurement system to suit our client’s project, we
would prepare a detailed report that advice on procurement system and the
tendering methods on their project base on all the factors and criteria.
Procurement SystemProcurement is ‘acquiring or obtaining by care or effort’. In construction industry, there are several ways to procure the construction project. There are many factors to be considered before selecting the procurement strategy such as
quality of work, time frame, nature of the project, project’s budget, local political
conditions, availability of procurement system locally and more. Each procurement method has its own advantages and weakness.
List of types of Procurement system:
1. Traditional methods
2. Design and Built
3. Management Contracting
4. Construction Management
Traditional MethodTraditional method is the most common that widely used in construction industry.
Firstly, client appointed a design consultant (architect) to design a building and
prepare the relevant documentations such as the drawings and building details.
Client would appoint a main contractor to construct the building at a priced which
agreed by both parties after all the architectural drawings and documentation are
produced.
Advantages
1. Easy to be adopted
Traditional method is most widely used procurement system in the
construction industry. The contractor and the consultants are familiar with
the procurement system which provides minimum risk during procurement
state of a construction progress.
2. Permits use of specialist contractor
A nominated sub-contractor can be hired in the construction process
which allows a lower budget or better quality of work at special work.
3. Independent design& cost advice to employer from consultant
Consultant which is familiar which construction cost and progress can
advice client which is a layperson in construction industry. Besides, client
can look for experienced consultant to design building according to client’s
needs.
4. Allow design certainty & greater cost control while award the construction
project to particular contractor.
In tendering process, client is able to choose the lowest cost tender submit
from various tenderer on their project.
Disadvantages
Consultants
Client Contractor
Domestic Sub-Contractors
Nominated Sub-Contractors
1. Slower procurement speed
The design state and construction progress is carried differently which
leads to a longer time for procurement progress.
2. The building may less accommodate to the needs of client
The building design may unfit to the purpose of the building due to
miscommunication between the client and architect and design failure.
3. Occurrence of Them& Us behavior between the contractor and consultant
Uncooperative between the contractor and consultant leads to possible
delay of project.
Design and Build MethodClient only needs to appoint a design& build main contractor for the construction
process. Hence, the contractor is fully responsible in the designing and
constructing of the building project. The design& build main contractor must
perform his obligation by designing and constructing the building by of the
“Employer’s Requirements” sections as stated in the contract.
Advantages
1. Single point responsibility
Employer
Design& build Main Contractor
ConsultantsSub-
contractor& Suppliers
It minimizes risks for the project owner bringing clearest contractual
remedies for the clients because the DB contractor will be responsible for
all of the work on the project, regardless of the nature of the fault.
2. Better Buildability
The contractor is capable to building according to the designed
architecture.
3. Product fit for purpose
The building
4. Simplified contractual agreement.
The client only has to involve and form a contract with one design and
build contractor.
5. Shorter procurement time
The design and construction process are overlapped and hence reduce
the project period.
Disadvantages
1. Higher contract price
As the contractor carries a higher risk and more obligations, they tend to
charge higher fees for a building project that adopted D&B procurement
system.
2. Compromise in quality of works and design
Some works and design may not be that high quality as the D&B
contractor is not the specialist in the work and resulted in a poor quality of
work.
3. Employer’s involvement is minimal
Unlike traditional method, there is no nominated sub-contractor in this
procurement method.
4. Pending of design approval affect commencement of works
The construction work cannot be started until the design of the project is
finalized.
Management contractingA Management Contract is an agreement between an owner and a Building
Contractor. The building contractor carry out his duty by planning, supervising,
organizing the whole construction process of the entire construction project.
Similar to traditional procurement method, the client appoints a design consultant
to design the building and prepare the relevant documentation. Meanwhile,
management contractor (M.C.) is employed by the client at this early stage.
Generally, a lump sum fixed charges or quoted percentage management fees will
be pay to the management contractor.
Besides, the M.C. will advise on the building design on it “buildablity” then
organize a construction plan. M.C. does not undertake the construction process
by himself but by appointing trade contractor and manage them.
Advantages
1. Lower construction cost
The individual trade packages help in lowering the construction cost as the
tender is very competitive.
2. Early participant of management contractor in Designing stage
This beneficial client as management contractor can provide his
professional knowledge in construction industry which makes the building
more fit to its purpose.
3. Shorter construction period
Construction can commenced at earlier stage as the designing and
construction are overlapped
Disadvantages
1. Greater changes in designing stage
Greater opportunity to make changes in design during construction
therefore it leads to re-measurement and need of changes in
documentation.
2. Cost uncertainty until trade contract is let
The cost is uncertain as there are many trade contractors are involved in
the project. The cost of the project only can be known after all trade
contracts is let.
3. Wide distribution of design& construction liability
There are many consultants and trade contractors are participate in the
project and cause the liability spread over all the trade contractors and
consultants.
Construction ManagementConstruction management has most similarity like management contracting
procurement method which is the construction manager takes part in early stage
of the construction with the consultants to provide his expertise and assist the
construction process. In this procurement method, the client enters contractual
relationship with the entire trade contractor unlike management contracting; the
construction manager enters into various Trade Contracts directly with Trade
Contractors.
ADVANTAGES
1. Cooperation between contractor manager and design team
Enhance build ability of the design as contractor manager could advise on
the relevant subject.
2. Lower construction cost
The individual trade packages help in lowering the construction cost as the
tender is very competitive.
3. Early participant of management contractor in Designing stage
This beneficial client as management contractor can provide his
professional knowledge in construction industry which makes the building
more fit to its purpose.
4. Shorter construction period
Construction can commenced at earlier stage as the designing and
construction are overlapped
DISADVANTAGES
1. Client enters into various trade contracts
Client has to deal with entire trade contractors as client has a direct
contractual relationship with them.
2. All risk is bound to client
As mentioned as subject above, client takes all the risks particularly in the
construction management.
3. Cost uncertainty until trade contract is let
The cost is uncertain as there are many trade contractors are involved in
the project. The cost of the project only can be known after all trade
contracts is let.
Conclusion
As according to several criteria of the project of Taylor’s University Sdn.
Bhd, we would like recommend the traditional procurement system to be
engaged in their project after careful considered all the criteria including the cost
budget and the commencement of operation in mid of 2019 which is
approximately 3years from now (May 2016).
First of all, this procurement system is suitable to be implemented in this
project as it suited to client’s requirement. The cost of the project is certain with
good quality and control of works. Besides, usually cheaper as design risk is
taken up by the employer. From this point, our client Taylor’s University can
minimize their risk as they already have a few campuses in Klang Valley. The
consultant can take references about the design of the existed campus and
making improvement of it. Traditional procurement method enables the client
from getting a independent design and cost advice from the consultant.
Traditional procurement system may requires a longer time for the entire
construction progress as it has no overlapping between the design stage and
construction stage like Design& Build procurement method. Since Build
Information System (BIM) and Industrialised Building System (IBS) are getting
more widely used in our country, the construction process could speed up by
implementing BIM and IBS in the project. Therefore, the entire project can
finished in the given 3years time frame and meet requirement of Taylor’s
University Sdn. Bhd.
On the other hand, it also allows use of specialist contractors sought after
by the client. Traditional method is the most common procurement system in the
construction industry, as there is no worry of unfamiliarity of the procurement
system the industry in east Malaysia.
Tendering Methods
Tendering, it is a most common word that will used in construction.
Tendering is a process of a contractor submitting a tender or proposal to
undertake the project of the client. It is the process by which bids are invited from
interested contractors to carry out specific packages of construction work
including cost estimate and materials take off. At the beginning of the process
employer will prepare the tender document and send out the invitation to
employees who are interested. When the employees get the invitation they will
start preparing their own tender and bill of quantities and submit back to the
employer in a certain period. Next, the employer will study every tender
submitted by the employees and choose the best for the project. There are three
types of tendering methods: open tender, selective tender and negotiation
tender. These are the most common tendering method in construction.
Open tender
Open tender is a bidding process that is open to all qualified bidders, the
bids will posted on the public and at the end the winner is chosen based on the
price and quality. It is one of the most common tender methods for the
government and private sector. In construction, employer will place an
advertisement in the public like newspaper or website inviting every contractor
who is interested to tender the job. In the advertisement is provided with the type
of work, requirements and also detail of submission. Employer will open a
certain period of time for contractor who wish to tender collect and buy the tender
document. After the contractor got the tender document, they are required to
finish and return the tender by the stipulated time and date by the employer.
During this period, if there are any changes regarding to the project, employer
will inform at the public and all tenderers. After collecting all tenders the
consultant will have to record every tender price and post in public. Consultant
will also have to study and evaluate every tender submit a report to the employer.
Hence the employer will choose the most suitable tender and the contractor who
tender it will win the job. Some of the company will like to use this tendering
method because it brings lot of benefits to the company. However, there is
nothing perfect hence at the same time it also have it restricted.
Advantages
1. No Favourism
In open tender, every contractor is able to tender the work as long as they
are interested. There is no restrictive list of tenderer hence result a fair
competition along all tenderers. Open tender able to avoid favourism
which the job can be won by any tenderer based on their tendering.
Besides that, open tender also allow new tenderer participate in tendering
where might be using difference technology and construction method.
Hence during selection employer will have more choices and different
outcome.
2. High Competition
Open tendering secures maximum competition, this results a high
competitive environment and employer will not have to worry about the
respond. To win the job, contractors will have to lower their profit and
manage their total cost thus employer will get a lower cost for the project
which allow to save money. Open tender given employer more control
power where employer able to choose any tender is suitable for the
project regarding price.
3. Fairness and Transparent
Open tender provide transparent and fair competition among all tenderers
because everything will be published. After collecting all tenders, employer
will list out the total cost of every tenderer and post out in the public so
every tenderer will know there position in the competition and only the
reasonable price will win the job.
4. Traditional Method
Open tendering is also knows as traditional way of tendering and it is the
most common choice of tendering method in construction hence all
tenderers are familiar with the system where they will not find difficulties to
the system and process.
Disadvantages
1. High cost
Open tender will result more tenderers participate thus the company will
have to prepare more and extra tender document for the tenderers. In this
case employer will have to spent more money on printing extra document.
Besides that, employer will have to spend money on advertising the
project and post on the public. All these actually need an extra cost where
end up the employer will need spend a higher cost.
2. Risk of Unexperienced Contractor
Using open tendering, the most reasonable price will win the job but it
might be won by contractor who never work before or maybe a new
contractor. In this case, employer do not have any past experience with
the contractor where employer do not do not know how the contractor
works. There is a risk where the contractor might be not enough
experience to carry out the job which will also lead to poor workmanship
and organization and result delay or failure of project.
3. Underpriced Work
In open tendering, normally the lower price will win the job but it may come
from underpriced work contractor. To win the job, some of the contractor
might changing the materials or compromise on the quality of the building
to reduce total price of the building. Besides that, the contractor might face
financial difficulties due to underpriced and hence result delaying work.
4. More Time Consuming
Open tendering consume more time for the entire progress. After
collecting every tender, the consultant will have to take time to evaluate
every tender and also prepare a report to the employer. This evaluate take
more time when there is more tenderer involve in the open tender. Hence
the project progress might be late compare to the other method.
Selective Tendering
Selective tendering only allows contractors to submit tenders by
invitation. It is the one alternatives developed to address the limitations of the
open tendering procedure. In this method, a list of contractors is list out by the
employer and consultant and they are invited to tender the project. A pre-
selected list of possible contractor is prepared that are known by their track
record to be suitable for a contract of the size, nature and complexity required.
Selective tendering can divided into single stage selective and two stage
selective tendering. In single stage selective tendering, a list of contractor is
proposed by consultant and the final list of tenderers is selected by the employer.
On the other hand, two stage selective tendering will start with initial selection
progress which also knows as pre-qualification. During pre-qualification stage the
tenderers are vetted based on their experience and capacity. Besides that,
during selection employer and consultant will also take consider of their
workmanship, size of company and grade class, reputation, past experience,
management strength and so on. After the prequalification stage, those
contractors who are qualified will then be included in the final tender list and
invited to tender the job. After the invitation is send, contractor will have the
choice to accept or reject the invitation from the employer. Lastly, after every
tenderer submit their tender, the consultant will have to evaluate all tender and
prepare a report for the employer. Hence, the most reasonable and normally the
lower will win the job.
Advantages
1. Pre-selection qualified contractor
At the beginning of this method, employer already filter the list of
contractor through the pre-qualification stage. During the qualification
stage, employer will evaluate every tenderer on their workability and
capacity where at the end only those qualified and capable tenderers will
be tendering the project. Hence there is guarantee of quality work and
building. Employer does not have to worry on the workability and capacity
of the contractor, the chances of default is minimized.
2. Time Saving
Selective tendering will have less amount of tenderers compare to the
open tender because of the prequalification stage. The number of tender
documents is lesser so the tender period is shorter. Employer is able to
proceed to the next stages faster and complete the project earlier.
3. Quality Guarantee
All contractors have already go through the prequalification stage, which
mean only capable contractor will be tendering. Hence, there is a quality
guarantee for the project and building. Better quality of workmanship and
management skill can be expected from every contractor in the list.
Employer does not have to worry about cutting corner and low quality
outcome.
Disadvantages
1. More Initial Work
Selective tendering required employer and consultant have more starting
work which they have to evaluate and study every contractor before
choosing the tenderer list. Employer and consultant are required to go
through every detail of the contractor for example their pass experience,
reputation and workmanship, evaluate the contractor and decide to put in
the list or not. By doing all this, it may take a longer tendering process and
given more work for the consultant and employer. It may also delay the
start time of the project due to complexity of initial work.
2. Higher cost
In this method of tendering, employer will have a lower bargaining power
compare to the contractor because employer request the expertise of work
from the contractor. In selective tendering, the numbers of tenderers is
less and all contractors are experienced and repeatable. Hence, the price
will be higher compare to other new contractor where do not have the
expertise. In this method only those professional player are tendering the
project, thus they are able to increase the cost for their professional work
and expertise.
3. Favourism
In this case, the tenderer list is provided by the employer and consultant
who may have the risk of favourism happen during the selection. During
selection of contractor list, employer or consultant might include company
they like in the tender list because of previous work experience or
relationship. Hence, it may also affect the final result of the tendering
where it may affect the final choice of the employer and consultant.
4. Not Transparent
In selective tendering, the prequalification requirement is fixed by the
employer. Public do not know what is the qualification set by the employer
while selecting the contractor. It may have the rick where the employer will
purposely give the job to the certain contractor due to relationship or
favourism.
Negotiate Tendering
Negotiate tendering is where the employer only approach to one
contractor and invite for tendering project due to his reputation and skills. When
the contractor accepted the tendering offer, he will start prepare tendering and
priced BQ for the project. After pricing employer and contractor will have another
meet up for negotiation on the price and detail until both parties come into an
agreement. Normally in this method employer will only approach contractor who
have good reputation, certain level of skills and contractor who have past working
experience. This type of tendering method mainly used for specialist work where
there might be a limited number of contractors can do it. This method can be use
when the employer wanted to complete the project in a very short period.
Advantages
1. Experience contractor
In this method, the contractor approached normally is those who have
very good reputation and specialties skills which the employer do not have
worry the quality of work and outcome. In this case, the quality of the work
is guaranteed by the contractor, better workmanship and quality can be
expected from the contractor. The expectation of employer also can be
met at the end of the project.
2. Flexibility
Negotiate tendering provide the flexibility for employer and contractor to
negotiate on the detail and make changes. It provided the opportunities for
adjustments and improvements of need during construction. When the
employer wanted to make any changes, they can negotiate on the detail
and price until a point both parties come to an agreement.
3. High Success Rate
The project given to the contractor will have a high success rate due to the
greater offer from the employer. In negotiate tendering, both parties can
try to persuade each other until both parties come to an agreement on
prices and services.
4. Fast Progress of Work
Negotiate method is the suitable when the employer wanted to complete
the project in a short period. This is because the employer able to
persuade the contractor fastens the work with offering a better profit to the
contractor. Besides that, when both parties come to an agreement in a
very short time, the construction time can be start earlier which mean the
project can be start earlier as well.
Disadvantages
1. Higher Cost
In this method employer will have the less bargaining power compare to
the other methods. In negotiate tendering employer required the
specialties of work from the contractor, which it may cost more compare to
the other contractor. Besides that, there is only one tender which mean
the employer have no other choices of tender. Employer can only try to
negotiate with the contractor.
2. Not Transparent
In this method, contractor might be chosen based on cozy relationship
between employer and contractor. No tender is called out to the public
where the no one will know the standard of choosing contractor for the
project. Furthermore, there is only one tender where the contractor might
simply increase the BQ price because employer does not have any other
comparison. Thus, lack of accountability and integrity may be in question
by the public.
Recommendation
In this case, as a director of the Innovative Cost Consultant Sdn. Bhd, I
will suggest the managements of Taylor’s University use the selective tendering
method for Taylor’s University branch campus in Kota Kinabalu, Sabah. As we
know that the branch campus is required to operational in mid of 2019, which
mean our company will have 3 year time to complete the project. By using
selective tendering method, it could help the company to find a most suitable
price from contractor which also place within the budget cost and allow the
building be constructed and operated within the time given.
In short, the managements of Taylor’s University are very concern about
the cost completion must be within in the budget fixed. By using selective
tendering method, our employer will be able to get the most reasonable price
with a good quality of work. Because of the pre-qualification stage, we are able to
set the requirement for the tenderer. For example Taylor’s university are very
concern with cost and time, hence during the selection of tenderers, employer
can only short list those company who have good reputation, good workmanship
and punctual contractor. In this case, all contractors who are invited to tendering
the project are already full of experienced. This could avoid the any failure or
delay of work due to bad management skill by the contractor. During the pre-
qualification stage, our company will suggest few reputable contractors to
Taylor’s University provide with their background study and pass project
experience where do not have delaying or failure of work.
Next, selective tendering also allow the building be constructed and
operated within the time period given or even earlier. Selective tendering does
not take so much time for tender compare to the open tendering method. For
open tendering, employer will have to advertise their project in the public, giving
a period of time for the public to take the offer and collect the tender document.
After collecting the document tenderers will only then start preparing the tender.
This may consume more time on waiting public to respond to the offer and
completing the tender, hence it also consider as not very efficient. However,
using selective tendering, Taylor’s University does not have to wait for public
respond to the project. It will directly send an invitation to the selected contractors
ask for tender. This actually allows the employer has a shorter and efficient
tender progress and once the contractor is selected, the construction work is able
to start in a few days which also mean the construction work is able to start
earlier compare to the open tendering method which also mean the construction
have a higher chance to finish within the given period or even earlier.
Besides that, all short listed contractors are full of working experienced
and good reputation. Every contractor could provide a guaranteed quality of work
and building outcome which employer do not have to worry on the product
because every tenderer is short listed by certain of standard required. In this
case, employer is able to get a good quality of product with a cheaper price
which may reduce the overall cost of the project and achieve a cost effective.
In conclusion, selective tendering is the most suitable tendering method
for Taylor’s University branch campus in Kota Kinabalu, Sabah. It could meet all
requirement of the employer which able to control the cost within the budget,
ensure the project able to finish within the period given and also provide a good
quality of product with a cheaper and reasonable price.
Schedule of Work