PP1 assignment
- 1. 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
- 2. Contents Introduction.......................................................................................... 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
- 3. Introduction Taylor’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.
- 4. Procurement System Procurement 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 Method Traditional 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. Consultants Client Contractor Domestic Sub- Contractors Nominated Sub-Contractors
- 5. 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 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.
- 6. Design and Build Method Client 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 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. Employer Design& build Main Contractor Consultants Sub- contractor& Suppliers
- 7. 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. Managementcontracting A 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.
- 8. 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.
- 9. 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 Management Construction 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
- 10. 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.
- 11. 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.
- 12. 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
- 13. 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
- 14. 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.
- 15. 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
- 16. 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
- 17. 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.
- 18. 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.
- 19. 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.
- 20. 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,
- 21. 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.
- 22. Schedule of Work