Professional practce assignment report
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This document discusses different types of tendering and procurement methods for construction projects. It begins by defining tendering and describing open, selective, and negotiated tendering methods. It then defines procurement and discusses the traditional/conventional procurement method and design-build procurement method. For each topic, the main advantages and disadvantages are outlined. In the recommendation section, the document suggests using selective tendering for a proposed multi-storey car park project due to the need for high quality and safety. It provides reasons for recommending selective tendering over open and negotiated tendering.
Professional practce assignment report
- 1. REPORT ASSIGNMENT (Group Project) PROFESSIONAL PRACTICE 1 (QSB60604104837) SCHOOL OF ARCHITECTURE. BUILDING. DESIGN BACHELOR OF QUANTITY SURVEYING (HONOURS) NAME: STUDENT ID: CHUA JIA CHENG 0315260 HJ MUHD SYAFIQ BIN HJ ABD ZARIFUL 0314702 LECTURER : Ramar Subramaniam
- 2. 1 Tendering Tendering is a process made by contractor to client, usually in competition, which if accepted by the employer, will form a binding contract. Different types of tendering leads to different benefits and limitations 1.1 Open Tendering Under open tendering the employer advertises his proposed project, giving notice that the contract is being tendered, offering an equal opportunity to any organisation where the employer permits as many contractors as are interested to apply for tender documents. On larger projects, there may then be a pre-qualification process that produces a short-list of suitable suppliers from the respondents expressing interest in the contract. This short list will then be invited to prepare tenders. The selection of a short list can include pre-qualification questionnaires and interviews. This sort of pre-qualification process is not the same as selective tendering. Selective tendering only allows suppliers invited from a pre-selected list to take part in the tender process. Open Tendering can be said to be wasteful of contractors’ resources since many may spend time preparing tenders to no effect. Also, knowing their chances of gaining the contract are small, contractors may not study the contract in detail to work out their minimum price, but simply quote a price that will be certain to bring them a profit if they win the contract. As a result it can waste a great deal of time, effort and money. However, open tendering offers the greatest competition and has the advantage of allowing new or emerging suppliers to try to secure work and so can facilitates greater innovation. 1.1.1 Main Advantages: All contractors can tender for work: It gives opportunity for an unknown contractor to compete for the work. Allowing the tender list to be made without bias. Client will obtain the bargain possible. No favouritism in selecting contractors. Promotes fairness. Difficult to reject lowest bid: Client does not bind to accept the lowest or any offer but public accountability may be questioned if the lowest offer is not accepted. Familiar with the system: Traditional method of tendering, familiar to all sector of the engineering and construction industry. 1.1.2 Main Disadvantages: The tender list can be long as too many contractors tendering for one job: This does not attract established contractor unless they are forced to, due to lack of work. Risk of selecting new/unknown contractor: The project will be at risk if it happens to be a contractor with poor workmanship, poor organisation and especially no experience on the type of works being tendered. Longer tender process: with too many contractors to deal with it might take longer to finish the tender process which includes the pre-qualification process.
- 3. 1.2 Selective Tendering Certain Contractors are invited to tender. These Contractors are selected on their integrity, ability and characteristics before they are invited to tender. It follows those only firms of sufficient standing and experience in that particular type of work will be approached. The lowest tender will generally have to be accepted since contractors have all pre-qualified where it is difficult to reject the lowest bid, evenif it appears dubiously low, unless that is due to some obvious mistake. Consultants or experienced clients may maintain ‘approved’ lists of prospective suppliers appropriate for particular types of contract and then regularly review performance to assess whether they should remain on the list. The advantage to the employer is that he can select only those contractors, who have adequate experience, are financially sound, and have the resources and skills to do the work. Selective tendering will tend to be faster than open tendering, and can be seen as less wasteful, as there is no pre-qualification process as part of the tender procedure itself. It can also give clients greater confidence that their requirements will be satisfied. Whilst often seen to be more efficient, selective tendering can exclude potential suppliers, it can be seento introduce bias into the process, and it can result in prospective suppliers continually contacting clients and consultants to check that they are on the appropriate lists. 1.2.1 Main Advantages: Only properly qualified tenderers will be tendering: This reduces the availability of work for other contractor especially new contractors. It reduced the cost of tendering: Reduces the cost of economic use of resources, reduced tender documentation, shorter tender periods, better management of the tender process. Less wasteful: No pre-qualification process which saves time for the project and can be considered less wasteful 1.2.2 Main Disadvantages: Longer tendering period: It involved two distinct stages (Two Stage Selective Tender) Higher price: Tender Price may invariably higher than would have been in open tendering. Preparation of lists: This may undergo more resources by the employer.
- 4. 1.3 Negotiated Tendering Negotiated tenders are obtained by the employer inviting a contractor of his choice to submit prices for a project. Negotiating with a single supplier may be appropriate for highly specialist contracts (where there may be a limited number of potential suppliers), or for extending the scope of an existing contract. It can give the client the confidence of working with a supplier they already know, can reduce the duration and costs of tendering and can allow early supplier involvement. Often the services of a Quantity Surveyor is used to advise on rates and prices during negotiations. When invited to tender the contractor submits his prices, and if there are any queries these are discussed and usually settled without difficulty. Thus mistakes in pricing can be reduced, so that both the engineer advising the employer and the contractor are confident that the job should be completed to budget if no unforeseen troubles arise. Most of the reasons for applying negotiated tender are when there is a very tight deadline, emergency works are necessary, the employer's resources are either limited or constrained thereby making the use of the other tendering impractical, technicalities around the design and development of details can require the specialist knowledge of the Contractor, or where the final cost requires to be estalished at an early stage of development and the design will be controlled by the costs. A negotiated tender has a good chance of being satisfactory because, more often than not, the employer and the contractor base it on previous satisfactory working together. Negotiated tendering can be seen as anti-competitive and exclusive, with the potential for ‘cozy’ relationships to develop between the client and the supplier. Negotiated tendering may not be permitted by some organisations due to the perceived lack of accountability. Negotiated tenders for public works are rare because the standing rules of public authorities do not normally permit them. But a private employer or company not subject to restraints such as those mentioned in the next section can always negotiate a contract, and many do so, particularly for small jobs. 1.3.1 Main Advantages: Only reputable contractor are invited for negotiation: With proven experience, the employer does not have to worry about the risks of the project being in danger because of the high quality of workmanship that can normally be expected. Higher buildability: The contractor can contribute his expertise during design stage Early commencement of work on site: It shortens the period involved in appointing the contractor. 1.3.2 Main Disadvantages: Opposite effect (Backfired): Should the negotiations prove unsuccessful, this causes wastage of valuable resources on both sides and loss of time for the employer, which delays the overall selection of the contractor. Cost of Work: Generally resulting in higher prices than other methods of tendering. Public matters: Lack of accountability and integrity may be in question.
- 5. 2 Procurement Procurement is define as the action of obtaining or procuring something. It also means acquiring military equipment and supplies. In construction the term procurement refers to a system which includes determining the condition of the project, setting the contractual framework, setting tender, tender selection and evaluation and also awarding of contract to contractor. Procurement is the primary steps of the construction, a correct procurement system will lead to a success projects and different procurement system allows different benefits and different restriction. The four method that we learned in professional practice 1 is conventional procurement system, design and build, managing contracting and, construction management. 2.1 Traditional/ Conventional Procurement Construction process is separated from design process. The procurement system starts with the employers approaching the design consultants to generate a full detail set of tender documents with BQ, drawings, specifications & addendum specifications, form of contract and many more. Then the employers will call for tender by using one of the various method of tendering. The selected tenderers will be assigned will a Letter of acceptance and the main contractor will have full responsibility on the construction based on the drawings and specifications. Through this procurement system the employer will have direct contractual relationships with 2 parties which are the consultant for design and advices, and contractor to carry out the construction work. 2.1.1 Advantage of Traditional Procurement Familiar with its working: Since it is the traditional method, this procurement system started a few decades before alternative procurement system was even born. Therefore, all the parties like QS, Architects, Engineers, and even contractors are familiar with the system and understand how to work with each another understanding each other needs and motives. It also smooths the procurement process due to the experience of all party in this procurement method. Better Control of Work: The construction work is restricted and the contractor that is awarded need to construct the building base on the consultant design and specification which ensure the quality of the construction because the works are pre-calculated and determined to be safe and higher workability. The employer can also have a greater involvement in the project. 2.1.2 Disadvantages of Traditional Procurement Creates “Them and Us” attitude: When a bad situation happens, the employer will have trouble in putting the blame because he has two direct contractual relationship with two main parties which are the consultants and the main contractor. The main contractor will have their finger pointed on the consultant to blame them on their bad design which creates the accident while the consultant will blame the contractor on cutting corners to safe cost and budgets, thus the employers will need to bring the disputes to the court.
- 6. Less flexible: The contractor assigned may not use to the construction method use by the consultant in their drawing. Even though the contractor is not experience with the listed method but he still need to follows the outline and brief set by the consultant. Thus creating much more chances for the construction to be delay or collapsing which means the risk of accident is higher. Slow and long duration: Traditional procurement system are slow, this is because the employers needs advice from the consultant and participate to produce the full outlined set for the contractor to construct. The design and planning has comes before the construction phase and the construction phase will start after the award of tender where the full design is completed with certain specification. Hence the design and construction phases are consequential and resulting a slower completion of the project.
- 7. 2.2 Designand Build Procurement Unlike traditional procurement system where the employer can choose to outsource the design process by appointing the consultants for designs and advice on the project during design stage and after the need statement create by architect is done then the employers will call for tender where tenderers offer tenders for the project. Design and Build procurement system can have both the design and build parallel, the full design will be complete as the construction completes. In Design and Build procurement system, the employer would 1st hire an architect to come out with preliminaries design. This design is just a rough design where the tenderers will complete to detail during the tendering process. After the preliminaries design is done, the employers will call for tender. Tender evaluation will take much time because there will be different prices as usual but also different design with different specification. So as a consultant QS this will be the most crucial part to evaluate the best tender but the final decision is still belongs to the employer. When the tender is awarded the contractor will employed an architect or the employer’s architect will change the contractual relationship from the employer to the contractor, this process is call novation. 2.2.1 Advantages of Design and Build Fast completion of construction: As construction period is able to overlap with the design phase therefore it allow much time saved compare to the conventional method. This is because the main contractor himself is in full control of the construction, nobody is more familiar to oneself. As an example the main contractor design team may generate the design for only 1st floor and the main contractor can coordinate the subcontractor to come to perform their works based on the available drawing and on the mean time the design team will prepare design for the next part of the building. Eliminate “Them and Us” attitude: Due to the main contractor single point of contractual relationship with the employer. Employer can always search for contractor when the construction does not go well. The main contractor which has full responsible in both quality, cost, and schedule adherence will have to bare the mistake and unable to point finger to another party. Main contractor has full responsibility over the project, he is in charge of the design, the engineering works, subcontractor’s works, M&E works, and many more. Therefore the contractor will be more familiar with the design and concept of the building which result in a better buildability of the project. Improve risk management: All the cost, construction schedule and quality of construction and responsibilities are appropriately balanced and all the fault is on the Main contractor which greatly reduce the risk of the employer. Changing in plans and0 orders due to “errors and omissions” are totally eliminated, because the main contractor had full responsibility for developing drawings and specifications as well as constructing a fully-functioning facility.
- 8. 2.2.2 Disadvantages of Designand Build Higher contract price: Peter parker says greater power required greater responsibility, Mr Ramar says greater risks required greater pay. As the main contractor bare all of the responsibility in the construction, the contractor will have a higher tender price and higher budget as they include all the elements to complete the total construction. The price is the total construction cost instead of total building cost. It is also an uneconomic use of resources because of the relatively high price of the contract. Difficulty in evaluation of tender: Evaluation is no longer just numbers, but also includes design, specification, time, qualities and many more factor. This is very important as the tenderers has full responsibility in the total construction so they have the power to manage and design the whole building which the employer need to carefully evaluate to avoid lost and bad qualities of products.
- 9. Before any tendering process can be done, professional team and employer must make sure all necessary tender documents have been prepared, checked and approved. RECCOMENDATION What types of tendering that employer want to choose depends on the nature of contract, complexity of the construction, expertise needed and several reasons. But usually for the government project all over the world tends to make open tender to ensure the procurement and works to be done in fairly manner without prejudice. However, Taylor's University is considering building a multi-storey car park building in the vicinity of the campus to overcome the seious shortage of car park space, which is one of the reasons why we prefer to use selective tendering because of the needs for high quality to avoid any dangers/risks towards the students. They're many reasons why we reccomend choosing selective tendering other than open tendering and negotiated tendering. - - - - A problem with both open and selective tendering is that a contractor’s circumstances can change after he has submitted his tender. He can make losses on other contracts which affect his financial stability; or may be so successful at tendering that he does not have enough skilled staff or men to deal with all the work he wins. Neither method of tendering nor any other means of procuring works can therefore guarantee avoidance of troubles.
- 10. Reference 1) AWARD-WINNING. (2010). Retrieved October 12, 2015. 2) Natasa, T., Mladen, R., & Diana, C. (2007). "DESIGN AND BUILD" IN COMPARISON WITH THE TRADITIONAL PROCUREMENT METHOD AND THE POSSIBILITY OF ITS APPLICATION IN THE CROATIAN CONSTRUCTION INDUSTRY. RetrievedOctober 12, 2015.