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.

Procurement method

Traditional

Traditional

Brief Design Competition(tendering)

Construction

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

Procurement method

Management Contracting

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.

3 Major Form of Contract PAM Contract 2006 (With/Without

Quantities)

JKR/PWD 203A

FIDIC

PAM Contract 2006 Widely used in Malaysia

Mainly for private sector projects

Usually through Traditional Procurement route

PAM Contract 2006

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

Traditional Procurement Remeasurement Contract

• Based on Approx BoQ

• Quantities are subjected to remeasurement

• Works may proceed before design has been finalized

Traditional Procurement

Traditional Procurement Drawing And Specifications

• Based on Drawings and Specs

• No BoQ provided

• Works may proceed before design is finalized

Traditional Procurement

Traditional Procurement Cost Reimbursement Contract

• Uncertain

• Difficult to estimate final contract sum

• Used when cost is not a concern.

Traditional Procurement

Critical Analysis +

Recommendation

Steps to determine procurement method:

1) Analysis of client’s needs and objectives

2) Selection of possible procurement methods

The Procurement Triangle

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

Project Risks 4 ways to handle risks:

• Terminate• Treat• Transfer• Tolerate

Client’s Resources Carrying out of a project requires:

• Expertise• Experience• Knowledge• Skill

Capability of human resources to commit

Client’s Resources Our client is an experienced firm Ample Resources Traditional Method

Conclusion Traditional Procurement Method

Why?• Priority on cost and quality• Ability to monitor and involve• Lower risks portion• Adequate financial resources

Design and build procurement method for the new project +

Comparisons

Project information 20 storey condominiums Project location : TBD Project duration 2016-2018

Design and build

Design and build

Comparison between D&B and other basic procurement method

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.

THANK YOU