Pp report

School of Architecture, Building and

Design

Bachelor of Science in Quantity

Surveying

Professional Practice 1 Report

Group: Liew Yong Sheng 0315108

Lee Kim Thiam 0310710

Lecturer: Mr. Ramar A/L Subramaniam

Table of Contents

Introduction

Part A. Procurement System

Traditional

Design and Build

Recommendation

Part B. Tender Method

Open Tendering

Selective Tendering

Negotiated Tendering

Recommendation

Schedule of Project

Reference

Introduction

Taylor’s University is one of the top universities available in Malaysia. It is noted that

students from all around Malaysia would travel from their hometown to the heart of

Subang Jaya for the high quality of education from Taylor’s University. The amount

of students, as surveyed and interviewed as well as observed, has drastically

increased over the years. Not only is the efficiency of the facility began to drop due

to the tremendous amount of students in the school such as the insufficient amount

of parking in the free parking lots, the amount of restaurant available to fit at least

thirty per cent of the students in the campus, the reduction of space available in

library and so on. The students from Sarawak and Sabah would have to spent

additional transportation fee to travel from their hometown to the campus. The poor

would have to negate their option to either somewhere nearer and cheaper where

even the rich would need to spent a lot of money travelling back and forth for

holidays and school, as well as spending even more for apartment and dorm.

It is, therefore, a decision made by the principal that a branch would be built in Kota

Kinabalu of Sabah. Planning to have the branch be operational in mid-2019, the

university have entrusted us, Innovative Cost Consultant Sdn Bhd to provide advice

over the procurement system and tender method best suited for their requirement,

which are:

1. Cost to completion to be within the budget

2. Timely delivery of the facility in order to commence operation in mid-2019

In this report, discussion will be made upon the commonly used procurement system

as well as tender method available in the construction industry. The report will also

provide recommendation based on the advantages and disadvantages listed out that

would be best suited for our client, Taylor’s University, for their construction plan and

also schedule will be planned out in later section of the report.

Procurement Method

Traditional or Conventional Method

figure 1.1 Traditional or Conventional Procurement Method

Traditional or conventional method is the procurement method in which the client

accepts design works that are separated from construction; consultants are

appointed for design, cost supervisory and produce document needed for tendering

such as architects, engineer, and quantity surveyors. On the other hand, contractors

would then be invited to price the complete set of document and designate proposed

building to its entirety. The document would demand the architect to coordinate

design instructions to variety of specialist. The main difference between traditional

method and design and build method is that the contractor do not have responsibility

for design. Offered prices are based on the bill of quantity.

Advantage

Cost certainty

In traditional method, cost certainty can be accomplished before contractor begin

work on site or at the award of the contract unless redesign is issued by the designer.

Cost certainty cannot be achieved when contracts are awarded before design is

completed making the design priced based on estimation which is uncertain.

Direct Influence

Client is able to have direct influence towards the design of the building. Thus, the

ability to have direct influence allows facilitation in greater level of functionality as

well as improvement of quality in overall design for the building.

Flexibility in Change

Making changes in contract are easy to arrange and manage. If changes are to be

made after awarding the contract to the contractor, the price of the design would

then be based on estimation from agreed price, making the price of the design

uncertain.

Familiarity

Due to how often conventional method is used in the construction industry, the

familiarity in the method becomes greater and applicable to even those new to the

industry. The familiarity in the method makes workload faster as a lot of the process

is understood with little to no announcement. It is also a tested method in which

making the method safe to apply provided that no mistakes are made and double

checking are constantly made.

Competitive Equity

Due to the information given to the contractor are all the same, the tenderer bidding

become fair. This makes the cheapest price on the building the most valuable among

the rest since the information such as material cost and MEP are more or less the

same in quality.

Disadvantage

Time

Traditional approach, as mentioned earlier, are divided into a group of specialist, in

most cases are from different companies and contractor. Due to this fact,

coordination between each specialist takes more time, ultimately takes longer time to

produce full contract documentation. Although a tender document with an incomplete

design can be produced but it may, as mentioned before, lead to weaker cost and

time certainty, possibly causing unnecessary dispute.

Involvement

Contractor, in this method, do not have any involvement in the design process. While

the design could be aesthetically or in quality perfect, client would take more risk

during construction period because contractor, who is experienced on site, do not

provide advice to the design that is certain during construction period.

Dispute

The separation in workload could cause dispute often. Designers would find issue in

the workmanship as well as choice of material of the contractor on the building

whereas the contractors would question that applicability or the design of the building.

Client, generally, would have hard time solving the dispute and ends up delaying the

project, making the project even more expensive. In worst case scenario, the project

is put on hiatus or cancelled.

Flexibility in changes

While making change in design is easy, it is important to consider the consequence

of doing so. The change in design would, as mentioned above, create an uncertainty

in the price of the project. Another issue to consider is the addition in cost and time

for the specialist to redesign. Most designer would consider redesigning of the

building as a new one thus charging clients a large percentage from the old one.

Procurement Method

Design and Build Method

"An arrangement where one contracting organisation takes sole responsibility,

normally on a lump sum fixed price basis, for the bespoke design and construction of

a client's project."

(Masterman, 2002)

The approach allows design build developer to accept responsibility in supplying

expertise to supervise the design as well as the construction of project for owners

who do not have the required in-house staff. It is important that the responsibility is

stated within the contract with the extent of design liability as clearly as possible. The

simplicity makes the approach more suitable towards owner who have no

construction experience, do not have a lot of contact for specialist that can be trusted

or already owns a lot of other projects and do not have time to manage project.

Advantage

Singularity

With the singularity of performance by the contractor and the designer, the client

have the advantage of dealing with one single organisation that is responsible for all

aspect of the project.

Efficiency

This improves communication for not only between client and contractor but also

contractor and designers since the contractor is in control in the design element of

the project. Due to this, the operational efficiency of the project becomes significantly

efficient since communication have greatly improved, allowing flexibility in changes

of design.

Cost and Time

The simplicity in the approach reduces time and cost for the project significantly.

Provided that the client clearly specifies the requirement accurately, the certainty of

the final project cost can be attained. Design and Build also allow client to know the

financial commitment before commencement of work on site.

Reduction in Disputes

Since both designer and contractor are on the same side, there are generally less

likely for dispute to happen. Clients will have no risk of having the need to choose

side and place his/her project on hiatus or even cancelled.

Accountability

Unlike traditional approach in which the aspect of responsibility is never clear since

it’s composed of specialist either from different company or same and contractor

separately, Design and Build allows client to hold one part accountable for design

and construction of the entire project, relieving legal disputes.

Flexibility in Change

The flexibility of the project allows contractor to change design by client’s command

much faster than even traditional method. It is suggested that most design builder

are more willing to charge client at a lower fee than a combined fee for designer and

contractor.

Disadvantage

Quality

Compared to traditional method, the quality of design in Design and Build tend to be

lower. This is because the design is also influenced by the contractor who may focus

more onto the cost and applicability to build the project than the aesthetic or

structural of the project.

Bidding

There is difficulty in bidding since information provided is different. This means that

the cheapest price do not mean best value since there are variation in design and

detail. Thus bidding would also need to consider the price with the different quality of

design and detail.

Competition

Due to the fact that this approach requires experience, not every company can make

an effective design-build team. This would mean that client would have weaker

bargaining power which leads to difficulty in securing performance and payment

bond.

Influences

Client would have lesser influences in the design of the project since the design

aspect of the project is controlled by the contractor. The only thing the client does in

regard to design is that conveying his/her requirement so that the project may start

according to what the client need.

Recommendation

As mentioned in the introduction, it is required that the project be done within cost

budget and also delivery of the facility on time so that the university may commence

operation in mid of 2009.

Based on the advantage and disadvantage analysis made, we have come to a

conclusion that the most suited procurement method for the project is Design and

Build method.

It is perhaps important to emphasize on the simplicity of the system will reduce the

time needed to get the project done significantly and also allow flexibility to changes

quickly. The reduction in cost for the system also can ensure that the project would

stay within budget. While there maybe a few reductions in quality of design for the

building, it is also important to note that the efficiency of the construction and design

stage would increase the value of the project.

Traditional method on the other hand, is not suited for the work mainly because of its

complexity of the system for the project. With the amount of specialists and

contractor needed to be dealt with, time would easily be an issue and the same goes

for cost. The lack of involvement of the contractor for the project is a great risk since

it may cause issue during the construction stage which will delay the time needed to

get project done. Ultimately, the project may suffer hiatus or cancellation due to

unresolved disputes between contractor and designers.

Tender Method

Open Tendering

Open tendering, also known as open competitive bidding, open competition or open

solicitation and the procurement notices is a one-stage bidding process in which all

interested and responding to the contract notice will be invited to submit tender after

an invitation for bids or invitation to tender. The tender is open to all public and

interested firms can apply for the contract. The contract notice will state where and

when to obtain said tender documents, due date of acceptance. Suggestively, open

tendering is popular in government sectors. To experts, the most preferred tendering

method for goods, services and infrastructure works is open tendering. It is most

widely used in Malaysia for governmental projects.

Contractor, after meeting the requirement stated by the client in the local newspaper,

will respond to the advertisement to collect tender document. The document is sold

only up to a week after the closing of tender. Should contractor interested in

participating the tender, the fee for tender documentation needs to be collected to

collect the tender document. Complete tender document are required to be handed

with a tender deposit to show interest of participating in the project upon closing date

of tender. If the tenderer failed to win the tender, it is, most of the time, refundable.

Once tender is submitted, tender evaluation will be made where consultant and

quantity surveyors will evaluate the tender. It will be based on the, arithmetical error,

completeness of the tender, reasonableness of rates and elemental cost and more.

Report will be submitted to the client. The client will make a decision as to whether or

not to award based on the consultant’s recommendation. Based on the instruction to

tender, the client is not forced to accept the lowest tender but by his/her own reason.

Advantage

Favours

There are no favours in open tender since everyone can enter and submit tender to

be awarded. This method is fair to tenderer and also easier for new firms to enter

into the market. The list of all the proposed price and contractors will be given to the

client after the opening of tender is completed. It would usually take a couple of

weeks to complete the list. Once the list was placed, the client will contact the

chosen contractor to collect the document.

Competition

Client will have more option to choose the best value in tender due to the amount of

tendered option available and how open it is. In other words, client will have the

opportunity to choose the lowest price yet able to provide a decent to a better quality

for the job.

Employment and Growth

For contractor, it provides opportunity for firm to grow and also gain experience

through the use of new technology and also practice in tendering. Employment rate

also increases in that regard, increasing higher quality of work in project and

efficiency over time.

Familiarity

This method has been used traditionally or conventionally and due to this, most firms

are familiar with how the system works. Thus, the familiarity making this system very

easy and quickly for firms to submit tender.

Disadvantage

Openness

The method of tendering is way too open to be an advantage but also as a

disadvantage. There are possibility where client may choose a contractor that is not

suited for the project such as inexperience to produce what is required by the client.

The contractor that is chosen may be a complete stranger making trust issue or team

working with the designers a problem and may lead to disputes or inner politics.

Innovation

Another disadvantage to consider is that this method tends to focus purely on least-

cost solution and thus suppresses innovation. Causing a reduction in quality of the

building constructed due to the consideration of cost and its applicability.

Time

The method is generally lengthy in time to work with because of how the method

requires consultant and quantity surveyor to spend time checking the tender

document before approval. Most of the time are spent on both evaluation, waiting for

tenderers to submit tender and also make list for client.

Cost

Higher aggregate cost for tender and also advertising invitation to tender. Due to the

amount of tender allowed into the system, client will need to produce an amount of

copies of the tender document. Thus, the client is wasting resources if the number of

tenderer is lesser than the amount of tenders printed.

Tender Method

Selective Tendering

Selective tendering is a process of competitive tendering for award of the contract for

construction where client chooses the constructor who are invited to tender.

Contrasting with open tendering, the client selects contractor from limited list and

invitation to tender is made by the client to the contractor by a letter whereas open

tendering would have client uses local newspaper to advertise the invitation to tender

publicly.

There are two types of selective tendering; one stage and two stage selective

tendering. One stage selective tendering is where client advertise for contractor to

apply for short listing. Short listed contractor are considered to be suitable for the

work whereas approved list is maintained by the client through competition.

Two stage selective tendering was divided to two stages; the stage started off with

an invitation for tender. Once contractor is invited, they are to be informed that this is

a two stage tender. Client will start off by choosing the contractor through the simple

Bill of Quantity given by the contractor. The Contractor will then be give proposal for

the design of the project. The second stage involves both client and the contractor

negotiating the rates of the project for the second time.

Advantage

Quality

Due to the fact that the contractor chosen are with qualification, the building quality

will be done higher than new firms. They are publicly known to be professional

construction and will do their best to provide the best quality within given budget,

making the contractor not only effective in their experienced style of work but also

efficient in their use of resources provided.

Time and Resource

With the number of tenderers reduced, the time needed to assess the document

becomes much lesser and easier to deal with. The client also saves money on

printing lesser amount of document. With the reduction in assessment and saving of

cost, the project ultimately can proceed faster and also cheaper.

Qualification

Chosen contractors are usually reputable and qualified to take the job. Due to this

fact, contractor knows what’s best to get the project done more at a higher quality

and thus making productivity of the project improved. It’s quite certain that the

contractor will not attempt to cheapen the workmanship of the project because they

are, as aforementioned, reputable in the industry and trusted by the client enough.

Disadvantage

Favour

Unlike open tendering where all are welcome to tender equally without the reputation

placed into consideration. This method are more in favour towards firms more

experienced than other firms through evaluation of the companies’ background,

financial statement and previous works. Not only that, because of the fact that client

have greater power in choosing the contractor personally, the client may choose

contractor whom he/she are more familiar with or comfortable with.

Tendering Process

The tendering process will take longer because of the divided stages of pre-

qualification stage and qualification stage before the actual tender. The consultant,

similar to open tender, will go through the information provided by the tenderers such

as the financial statement, contractor background and past projects to ensure that

these contractor are legitimate for the project. The additional evaluation in each

contractor extends the tender process.

Cost

Greater expense will be paid to the contractor since these contractors are qualified

and professional for the project. Even though the tendered document may be priced

at a cheaper rate, the higher cost would be placed on the professional themselves

rather than the actual cost of the project.

Competition

Since Selective tendering process narrow down the amount of tenderer to only a few

unlike open tendering process where everyone are welcome to tender. Client would

then only have very few documents to choose, thus making the evaluation of the

document and the contractor and also time needed for decision making longer.

Tender Method

Negotiated Tendering

Negotiation tendering is majorly applied in the fields of engineering and construction

industry commencing from tendering to dispute resolution. The method is usually

done with only one contractor but it may up to three contractors.

The tender begins with the identification by the client of a suitable contractor to

assign with. The contractor selected can be either from client’s own list of preference

or from the advice of the professional consultant team. The selected contractor

would then be issued with the details such as the scope of work involved, relevant

drawings, design and information to satisfy the contractor needs as well as for the

contractor to fully appreciate the extent of obligation.

Some client would prepare and issue the contractor proper tender document with

nominated bills of quantities included to assist the contractor in pricing the project for

negotiation.

Advantage

Contribution

Contractor can contribute his expertise during design stage. This means that

contractor can also provide advisory aid to the designer as to how the project would

work best during construction before the design is finalize. The project, due to this,

becomes even more applicable and also cost-saving.

Experienced Contractors

Only experience and reputable contractor are invited for negotiation. The project

would now be done in higher quality and also with an amount of integrity. The project

will not suffer a change in cheaper and lower quality material or workmanship for

contractor’s own benefit because the contractor will need to maintain his reputation

as a professional contractor in the construction industry.

Risk

Owing to the fact that these contractors are chosen based on their profession and

reputation in the industry, contractor will take further step in making sure that the

project will construct with lesser to no risk of failure.

Dispute

Based on experts, negotiation tendering has lesser dispute and claim during the

construction stage. This is due to the fact that contractor have contribution in the

design stage and ensure that the project can be carried out realistically.

Time

Work can commence on site earlier with the method because of how negotiated

method shorten the period involved in appointing the contractor for the job. The

simplicity ultimately leads to using lesser amount of time needed to complete the job.

Disadvantage

Cost

The cost work tends to be higher than even both open and selective tendering

method since the work involves reputable and professional contractor for the job.

The contractor will negotiate only with the Quantity Surveyors for the price of the

project.

Transparency

Negotiated tendering is not publicly announced, it’s a private negotiation between

parties involved in the project. Due to this, the contractor, although integrity publicly

assured, may price the Bills of Quantity to suit his own benefit.

Recommendation

These are the three tender methods that is commonly used; Open tendering,

Selective tendering and Negotiated tendering. While all of them have their own

advantages and disadvantages, it is recommended that selective tendering fits my

client’s, Taylors University, requirement more in their production of a new branch

with a limited cost budget and time commencement.

The tender we advise our client to use would be Selective Tender. Open Tender’s

main issue is its openness to the public. With the amount of tenderers allowed to

submit their document, it costs more to hire specialists to evaluate the document

submitted to them and also printing copies of the document. Time is also ultimately

spent on evaluating the tender document, leading to starting the project much later.

Negotiated tendering, on the other hand, is more suited for civil works more than

architectural works. Client may risk integrity issue with the contractor since the work

is not publicly announced and also the cost of work would be higher and may cause

the budget to suffer.

In the end, Selective tendering is best suited for the project since it consumes less

time to start work thanks to the reduction in tenderers. The evaluation of document is

simplified and saves cost and resources to print lesser document. It is also important

to note that the contractor chosen are qualified to get the job done and also do not

face integrity risk since the job application is done semi-publicly.

Schedule of Works

Table 1:

Schedule of

works

Reference

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