ESTIMATINGSEMINAR 2

Aishath Hussain 0320429Andrew Mah Koon Yan 0318798Ervinna Endela 0327508

Maybelle Wang Sze Kher 0327553Wendy Teo Siew Yen 0328242

Question‽

You are working for a house builder at Kuala Lumpur. Your company has recently received an invitation to tender a low cost apartment in Kajang, Selangor. You are required to make a recommendation whether to accept or decline the tender invitation. What are the 5 main factors you will consider before making the recommendation? Explain how these factors influence your decision.

COMPANY’S BACKGROUND

■ Date of Establishment : June 2008■ Completed Projects : Low to medium cost residential

buildings/shoplots■ In-house Employees : Quantity Surveyors, Engineers, Project

Manager etc.■ Capital / Assets : RM250,000 in bank■ No. of Site Workers : 20■ Machineries Owned : 2 excavators

TYPE OF PROJECT

TYPE OF PROJECT

Site location and accessibility :-■ Low cost apartment is suitable to be constructed around Kajang■ Existing road to provide safe access and egress ■ 35km away from our office

Past experience with similar projects ;-■ Projects undertaken include low to medium range residential buildings

TYPE OF PROJECT

Is the project within the company boundaries?■ Yes, capable of delivering the project due to past experiences. Method of construction?■ Adopt traditional construction method. (eg. Timber formwork)

TYPE OF PROJECT

Is the project complexity beyond the capability of the company?■ No, it involves simple and typical designs only

The risk involved considering the nature of the work?■ Accidents and injuries might occur at site due to traditional method of

construction■ Exterior work such as concreting and painting depends on weather

condition

PROJECT SIZE AND VALUE

PROJECT SIZE AND VALUE

Project Size :-■ 4 units x 5 storeys x 4 blocks

Project Value :-■ RM 100,000 per unit x 4 units x 5 storeys x 4 blocks = RM8 million

PROJECT SIZE AND VALUE

Projected cash flow required during execution :-■ Standard S Curve on Graph – past cost information and details of

completed. ■ Critical Path Method (CPM) – technique for project planning made up

of a number of individual activities.

PROJECT SIZE AND VALUE

Is the project size beyond the capability of the firm?■ Yes. It is within our boundaries as it is a medium scaled project.

Equipment, Labour and Plants :-■ Equipment(s) – owns 2 excavators.■ Labour(s) – 20-30 workers available.

PROJECT SIZE AND VALUERisks of project :-■ Force majeure (construction risk)■ Late changes / additional work ■ Site access■ Labour productivity (performance risk)■ Defective work – latent defects■ Vandalism (security)■ Intrusion■ Delays ■ Liquidated ascertained damages (LAD)

PROJECT SIZE AND VALUE

Conditions of contract :-■ Date of possession, deferment of possession, progress, delays,

completion date■ Liquidated ascertained damages■ Partial possession■ Quality of works ■ Testing and defects (Defects Liability Period)

TYPE OF CLIENT

TYPE OF CLIENT

Public Sector or Private Sector■ Private Sector – Kelly Jeners

Financial capability of the client :-■ Financially strong, reliable and has good financial records.

TYPE OF CLIENT

Reputation of the client :-■ Well known among the peers in the industry. ■ Kelly Jeners delivers on its promises to the customers and is worthy of

respect and trust.

Relationship with the client :-■ Has an existing and positive relationship with the client.

TYPE OF CLIENT

Expectations of the client :-■ Client expects contractor to focus on their requirements, all of their

needs and how to solve their problems.

Form of contract :-■ PAM Contract 2006 (With Quantities)

CURRENT AND PROJECTED

WORKLOAD OF THE COMPANY

CURRENT AND PROJECTED WORKLOAD OF THE COMPANYThe need for work :-■ The need for work is present since the company is only dealing with a

medium range cost residential project at the moment.

Other projects currently out for tender :-■ Currently bidding for 2 projects and one of them is the Kajang low-

cost apartment project.

CURRENT AND PROJECTED WORKLOAD OF THE COMPANYForecast for upcoming projects :-■ To be able to secure at least 5 projects in the next 2 years.

Availability of in-house staff :-■ Yes. Quantity Surveyors, Engineers, Project Managers, etc.

CURRENT AND PROJECTED WORKLOAD OF THE COMPANYLabour force availability :-■ 20 workers.

Availability of equipment owned by the contractor :-■ 2 excavators.

REGIONAL MARKET

CONDITIONS

REGIONAL MARKET CONDITIONS

Economical situation overall and the construction industry :-■ Have to look into the economic factors of the country, such as GDP

growth rate, or GDP for construction (July 2016 – RM11899 million)

• How many projects are currently available in the market?• How many competitors are expected to tender?• How competitive are they and what is the experience of estimators?• What are the status of the competitors?

REGIONAL MARKET CONDITIONS

Amount of work currently available in the industry :-■ The lesser the work, the more likely contractors are forced to bid for

works which may be partly out of their competence and therefore more risky in terms of successful implementation.

Availability of skilled workers and equipment needed :-■ Not always available due to high demand at peak periods (January –

April)

REGIONAL MARKET CONDITIONS

Rate of price escalation in labour/materials price :-■ Different price between tender period and obtaining actual material

period. Unforeseeable circumstances which affects the final costs.Codes and standards applicable in the region :-■ Different area, different standards and procedures. Eg: Noise level

cannot exceed certain decibels in residential areas.Reliability of subcontractors :-■ Finding a good subcontractor would be a tough job without

connection.

CONCLUSION5 factors to consider:■ Type Of Project ■ Project Size And Value ■ Type of Client■ Current and Project Workload ■ Regional Market Conditions

Final Verdict : OUR COMPANY IS RECOMMENDED TO ACCEPT THE TENDER FOR THE PROJECT.

THE END