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PROFESSIONAL PRACTICE I (QSB 60604) Group Assignment
Pang Khai Shuen 0318423Lee Ren Jet 0319058Ng Seng He 0323037
Yap Jia En 0319550Yeo Dor Een 0316224
Introduction The construction industry has been playing a significant role
in aggregate economy of the country in term of its contribution to revenue generation, capital formation and employment creation which ultimately support the gross domestic product (GDP) and the socio-economic development of Malaysia.
Research has been done that Malaysian construction industry has suffered high proportion of business failure during economic downturn compared to other industries.
Construction industry in general respond slowly to environmental changes that cause the economy downturn.
Advantages Accountability of contractor due to a
competitive selection Competitive fairness Reduce low quality or design risk Easy to manage and arrange changes to
the contract
Disadvantages
Disputes Time consuming People who deliver the project lack of
opportunity to give suggestion do not give any advantages for
contractor
Management Contracting In management contracts, the client usually
starts by appointing a consultant team to prepare project drawings.
A management contractor is appointed to participate in the planning and construction of the project.
Management contractor plans the programme, makes decisions on the contents of each package to be sub-contracted, organizes and manages the construction of all the works which are undertaken by sub-contractors.
Advantages Able to achieve early commencement of construction for multi-
phase projects due to overlapping of design and construction.
Consultants are able to gain more buildability advice or input from contractors and subcontractors.
The overall development time will be shorter and lead to early completion.
It allows the client to change the design during construction because drawings and detail matters can be adjusted as the construction work proceeds.
Disadvantages Poor certainty of final cost until the last works of
contract has been signed.
The number of variations and amount of remeasurement may be greater than traditional method due to insufficient design development.
Returned tender price may be high since time is rush and members of tenderer are limited.
Standard Form of Contracts
agreements that employ standardized, non-negotiated
provisions, usually in preprinted forms.
PAM Contract 2006 Widely used in Malaysia
Mainly for private sector projects
Usually through Traditional Procurement route
JKR/PWD 203A Formed by Public Works Department,
now known as Jabatan Kerja Raya (JKR)
Mainly used for public works projects such as highways, railway roads, public infrastructures etc.
FIDIC Known as Fédération internationale des
ingénieurs-conseils.
Consist of the Red Book, Yellow Book and Orange Book.
Usually used for foreign-funded and foreign joint-venture project.
Not commonly used for local projects.
Procurement Strategies Traditional Procurement
• Fixed Price Contract• Remeasurement Contract• Drawing and Specifications• Cost Reimbursement Contract
Management Contracting• Management Fee
Traditional Procurement Fixed Price Contract
• Firm Price
• Based on Complete BoQ
• Complete design required
Traditional Procurement Remeasurement Contract
• Based on Approx BoQ
• Quantities are subjected to remeasurement
• Works may proceed before design has been finalized
Traditional Procurement Drawing And Specifications
• Based on Drawings and Specs
• No BoQ provided
• Works may proceed before design is finalized
Traditional Procurement Cost Reimbursement Contract
• Uncertain
• Difficult to estimate final contract sum
• Used when cost is not a concern.
Steps to determine procurement method:
1) Analysis of client’s needs and objectives
2) Selection of possible procurement methods
The Procurement Triangle 1) The client’s primary concerns can
be made known
2) “Highest Quality, Lowest Cost, Shortest Time”
Cost + Performance Cost price can not fluctuate too much
Affects profit obtained from each units sold
Building quality should meet customers’ expectations
Project Characteristics Project size, location, and expected
quality
Outlining special requirements:• Specially built plants and equipment• Key challenges (site accessibility)• Elements that might impact the project time
scale
Project Characteristics Example:
20-storey condominium:• Heavy machineries such as tower cranes
and temporary lifts• Transportation and erection• Ingress & Egress• Resources needed for proper planning• (permits, road carriage weight limits etc)
Project Risks 4 Categories of risks that should be
identified:• 1. Strategic risks• 2. External risks• 3. Project risks• 4. Discovery risks
Client’s Resources Carrying out of a project requires:
• Expertise• Experience• Knowledge• Skill
Capability of human resources to commit
Conclusion Traditional Procurement Method
Why?• Priority on cost and quality• Ability to monitor and involve• Lower risks portion• Adequate financial resources
Comparison between D&B and other basic procurement method
DESIGN AND BUILD TRADITIONAL METHOD
Contractual Relationship : Contractor and Client
Responsibility - The contractor handles the construction of the project - The designer handles the design work of the project based on client’s requirement
Effectiveness : The contractor and designer are working together throughout the entire process. Usually cost higher due to the high risk and responsibility to the contractor.
Contractual Relationship : Client – Consultants Contractor
Responsibility - The contractor handles the design and construction of the project
Effectiveness: The contractor and designer are working together throughout the entire process and will be comparatively cheaper
Conclusion Traditional Procurement Method
Why?• Priority on cost and quality• The risk and responsibility are spread evenly• Easy to manage and arrange changes to the
contract • Most of the contractors are more familiarize
with traditional procurement method compared to D&B.