PP1 assignment

32
SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN Bachelors of Quantity Surveying (Hons) Professional Practice I Lecturer: Ramar Group Member: Yee Algel 0315890

Transcript of PP1 assignment

Page 1: PP1 assignment

SCHOOL OF ARCHITECTURE,

BUILDING AND DESIGN

Bachelors of Quantity Surveying (Hons)

Professional Practice I

Lecturer: Ramar

Group Member:

Yee Algel 0315890

Wong Geng Sen 0321690

Page 2: PP1 assignment

ContentsIntroduction....................................................................................3

Traditional Method.........................................................................4

Design and Build Method................................................................6

Management contracting...............................................................7

Construction Management.............................................................9

Tendering Method…………………………………………………………………….12

Open Tender……………………………………………………………………………..12

Selective Tendering……………………………………………………………………15

Negotiate Tendering………………………………………………………………….17

Recommendation………………………………………………………………………20

Schedule of Work………………………………………………………………………22

Page 3: PP1 assignment

IntroductionTaylor’s University Sdn. Bhd has appointed our company which is Innovative

Cost Consultant Sdn. Bhd to provide advice on the procurement system and the

tendering methods on their project to launch a branch campus in Kota Kinabalu

as cost to completion to be within the budget fixed and timely delivery of the

facility in order to commence operation in mid- 2019 as the priority of the project.

As to provide a professional procurement system to suit our client’s project, we

would prepare a detailed report that advice on procurement system and the

tendering methods on their project base on all the factors and criteria.

Page 4: PP1 assignment

Procurement SystemProcurement is ‘acquiring or obtaining by care or effort’. In construction industry, there are several ways to procure the construction project. There are many factors to be considered before selecting the procurement strategy such as

quality of work, time frame, nature of the project, project’s budget, local political

conditions, availability of procurement system locally and more. Each procurement method has its own advantages and weakness.

List of types of Procurement system:

1. Traditional methods

2. Design and Built

3. Management Contracting

4. Construction Management

Traditional MethodTraditional method is the most common that widely used in construction industry.

Firstly, client appointed a design consultant (architect) to design a building and

prepare the relevant documentations such as the drawings and building details.

Client would appoint a main contractor to construct the building at a priced which

agreed by both parties after all the architectural drawings and documentation are

produced.

Page 5: PP1 assignment

Advantages

1. Easy to be adopted

Traditional method is most widely used procurement system in the

construction industry. The contractor and the consultants are familiar with

the procurement system which provides minimum risk during procurement

state of a construction progress.

2. Permits use of specialist contractor

A nominated sub-contractor can be hired in the construction process

which allows a lower budget or better quality of work at special work.

3. Independent design& cost advice to employer from consultant

Consultant which is familiar which construction cost and progress can

advice client which is a layperson in construction industry. Besides, client

can look for experienced consultant to design building according to client’s

needs.

4. Allow design certainty & greater cost control while award the construction

project to particular contractor.

In tendering process, client is able to choose the lowest cost tender submit

from various tenderer on their project.

Disadvantages

Consultants

Client Contractor

Domestic Sub-Contractors

Nominated Sub-Contractors

Page 6: PP1 assignment

1. Slower procurement speed

The design state and construction progress is carried differently which

leads to a longer time for procurement progress.

2. The building may less accommodate to the needs of client

The building design may unfit to the purpose of the building due to

miscommunication between the client and architect and design failure.

3. Occurrence of Them& Us behavior between the contractor and consultant

Uncooperative between the contractor and consultant leads to possible

delay of project.

Design and Build MethodClient only needs to appoint a design& build main contractor for the construction

process. Hence, the contractor is fully responsible in the designing and

constructing of the building project. The design& build main contractor must

perform his obligation by designing and constructing the building by of the

“Employer’s Requirements” sections as stated in the contract.

Advantages

1. Single point responsibility

Employer

Design& build Main Contractor

ConsultantsSub-

contractor& Suppliers

Page 7: PP1 assignment

It minimizes risks for the project owner bringing clearest contractual

remedies for the clients because the DB contractor will be responsible for

all of the work on the project, regardless of the nature of the fault.

2. Better Buildability

The contractor is capable to building according to the designed

architecture.

3. Product fit for purpose

The building

4. Simplified contractual agreement.

The client only has to involve and form a contract with one design and

build contractor.

5. Shorter procurement time

The design and construction process are overlapped and hence reduce

the project period.

Disadvantages

1. Higher contract price

As the contractor carries a higher risk and more obligations, they tend to

charge higher fees for a building project that adopted D&B procurement

system.

2. Compromise in quality of works and design

Some works and design may not be that high quality as the D&B

contractor is not the specialist in the work and resulted in a poor quality of

work.

3. Employer’s involvement is minimal

Unlike traditional method, there is no nominated sub-contractor in this

procurement method.

4. Pending of design approval affect commencement of works

The construction work cannot be started until the design of the project is

finalized.

Page 8: PP1 assignment

Management contractingA Management Contract is an agreement between an owner and a Building

Contractor. The building contractor carry out his duty by planning, supervising,

organizing the whole construction process of the entire construction project.

Similar to traditional procurement method, the client appoints a design consultant

to design the building and prepare the relevant documentation. Meanwhile,

management contractor (M.C.) is employed by the client at this early stage.

Generally, a lump sum fixed charges or quoted percentage management fees will

be pay to the management contractor.

Besides, the M.C. will advise on the building design on it “buildablity” then

organize a construction plan. M.C. does not undertake the construction process

by himself but by appointing trade contractor and manage them.

Advantages

1. Lower construction cost

The individual trade packages help in lowering the construction cost as the

tender is very competitive.

2. Early participant of management contractor in Designing stage

This beneficial client as management contractor can provide his

professional knowledge in construction industry which makes the building

more fit to its purpose.

3. Shorter construction period

Construction can commenced at earlier stage as the designing and

construction are overlapped

Page 9: PP1 assignment

Disadvantages

1. Greater changes in designing stage

Greater opportunity to make changes in design during construction

therefore it leads to re-measurement and need of changes in

documentation.

2. Cost uncertainty until trade contract is let

The cost is uncertain as there are many trade contractors are involved in

the project. The cost of the project only can be known after all trade

contracts is let.

3. Wide distribution of design& construction liability

There are many consultants and trade contractors are participate in the

project and cause the liability spread over all the trade contractors and

consultants.

Construction ManagementConstruction management has most similarity like management contracting

procurement method which is the construction manager takes part in early stage

of the construction with the consultants to provide his expertise and assist the

construction process. In this procurement method, the client enters contractual

relationship with the entire trade contractor unlike management contracting; the

construction manager enters into various Trade Contracts directly with Trade

Contractors.

ADVANTAGES

1. Cooperation between contractor manager and design team

Enhance build ability of the design as contractor manager could advise on

the relevant subject.

2. Lower construction cost

Page 10: PP1 assignment

The individual trade packages help in lowering the construction cost as the

tender is very competitive.

3. Early participant of management contractor in Designing stage

This beneficial client as management contractor can provide his

professional knowledge in construction industry which makes the building

more fit to its purpose.

4. Shorter construction period

Construction can commenced at earlier stage as the designing and

construction are overlapped

DISADVANTAGES

1. Client enters into various trade contracts

Client has to deal with entire trade contractors as client has a direct

contractual relationship with them.

2. All risk is bound to client

As mentioned as subject above, client takes all the risks particularly in the

construction management.

3. Cost uncertainty until trade contract is let

The cost is uncertain as there are many trade contractors are involved in

the project. The cost of the project only can be known after all trade

contracts is let.

Page 11: PP1 assignment

Conclusion

As according to several criteria of the project of Taylor’s University Sdn.

Bhd, we would like recommend the traditional procurement system to be

engaged in their project after careful considered all the criteria including the cost

budget and the commencement of operation in mid of 2019 which is

approximately 3years from now (May 2016).

First of all, this procurement system is suitable to be implemented in this

project as it suited to client’s requirement. The cost of the project is certain with

good quality and control of works. Besides, usually cheaper as design risk is

taken up by the employer. From this point, our client Taylor’s University can

minimize their risk as they already have a few campuses in Klang Valley. The

consultant can take references about the design of the existed campus and

Page 12: PP1 assignment

making improvement of it. Traditional procurement method enables the client

from getting a independent design and cost advice from the consultant.

Traditional procurement system may requires a longer time for the entire

construction progress as it has no overlapping between the design stage and

construction stage like Design& Build procurement method. Since Build

Information System (BIM) and Industrialised Building System (IBS) are getting

more widely used in our country, the construction process could speed up by

implementing BIM and IBS in the project. Therefore, the entire project can

finished in the given 3years time frame and meet requirement of Taylor’s

University Sdn. Bhd.

On the other hand, it also allows use of specialist contractors sought after

by the client. Traditional method is the most common procurement system in the

construction industry, as there is no worry of unfamiliarity of the procurement

system the industry in east Malaysia.

Page 13: PP1 assignment

Tendering Methods

Tendering, it is a most common word that will used in construction.

Tendering is a process of a contractor submitting a tender or proposal to

undertake the project of the client. It is the process by which bids are invited from

interested contractors to carry out specific packages of construction work

including cost estimate and materials take off. At the beginning of the process

employer will prepare the tender document and send out the invitation to

employees who are interested. When the employees get the invitation they will

start preparing their own tender and bill of quantities and submit back to the

employer in a certain period. Next, the employer will study every tender

submitted by the employees and choose the best for the project. There are three

types of tendering methods: open tender, selective tender and negotiation

tender. These are the most common tendering method in construction.

Open tender

Open tender is a bidding process that is open to all qualified bidders, the

bids will posted on the public and at the end the winner is chosen based on the

price and quality. It is one of the most common tender methods for the

government and private sector. In construction, employer will place an

advertisement in the public like newspaper or website inviting every contractor

who is interested to tender the job. In the advertisement is provided with the type

of work, requirements and also detail of submission. Employer will open a

certain period of time for contractor who wish to tender collect and buy the tender

document. After the contractor got the tender document, they are required to

finish and return the tender by the stipulated time and date by the employer.

During this period, if there are any changes regarding to the project, employer

will inform at the public and all tenderers. After collecting all tenders the

consultant will have to record every tender price and post in public. Consultant

will also have to study and evaluate every tender submit a report to the employer.

Hence the employer will choose the most suitable tender and the contractor who

tender it will win the job. Some of the company will like to use this tendering

Page 14: PP1 assignment

method because it brings lot of benefits to the company. However, there is

nothing perfect hence at the same time it also have it restricted.

Advantages

1. No Favourism

In open tender, every contractor is able to tender the work as long as they

are interested. There is no restrictive list of tenderer hence result a fair

competition along all tenderers. Open tender able to avoid favourism

which the job can be won by any tenderer based on their tendering.

Besides that, open tender also allow new tenderer participate in tendering

where might be using difference technology and construction method.

Hence during selection employer will have more choices and different

outcome.

2. High Competition

Open tendering secures maximum competition, this results a high

competitive environment and employer will not have to worry about the

respond. To win the job, contractors will have to lower their profit and

manage their total cost thus employer will get a lower cost for the project

which allow to save money. Open tender given employer more control

power where employer able to choose any tender is suitable for the

project regarding price.

3. Fairness and Transparent

Open tender provide transparent and fair competition among all tenderers

because everything will be published. After collecting all tenders, employer

will list out the total cost of every tenderer and post out in the public so

every tenderer will know there position in the competition and only the

reasonable price will win the job.

4. Traditional Method

Open tendering is also knows as traditional way of tendering and it is the

most common choice of tendering method in construction hence all

Page 15: PP1 assignment

tenderers are familiar with the system where they will not find difficulties to

the system and process.

Disadvantages

1. High cost

Open tender will result more tenderers participate thus the company will

have to prepare more and extra tender document for the tenderers. In this

case employer will have to spent more money on printing extra document.

Besides that, employer will have to spend money on advertising the

project and post on the public. All these actually need an extra cost where

end up the employer will need spend a higher cost.

2. Risk of Unexperienced Contractor

Using open tendering, the most reasonable price will win the job but it

might be won by contractor who never work before or maybe a new

contractor. In this case, employer do not have any past experience with

the contractor where employer do not do not know how the contractor

works. There is a risk where the contractor might be not enough

experience to carry out the job which will also lead to poor workmanship

and organization and result delay or failure of project.

3. Underpriced Work

In open tendering, normally the lower price will win the job but it may come

from underpriced work contractor. To win the job, some of the contractor

might changing the materials or compromise on the quality of the building

to reduce total price of the building. Besides that, the contractor might face

financial difficulties due to underpriced and hence result delaying work.

4. More Time Consuming

Open tendering consume more time for the entire progress. After

collecting every tender, the consultant will have to take time to evaluate

every tender and also prepare a report to the employer. This evaluate take

more time when there is more tenderer involve in the open tender. Hence

the project progress might be late compare to the other method.

Page 16: PP1 assignment

Selective Tendering

Selective tendering only allows contractors to submit tenders by

invitation. It is the one alternatives developed to address the limitations of the

open tendering procedure. In this method, a list of contractors is list out by the

employer and consultant and they are invited to tender the project. A pre-

selected list of possible contractor is prepared that are known by their track

record to be suitable for a contract of the size, nature and complexity required.

Selective tendering can divided into single stage selective and two stage

selective tendering. In single stage selective tendering, a list of contractor is

proposed by consultant and the final list of tenderers is selected by the employer.

On the other hand, two stage selective tendering will start with initial selection

progress which also knows as pre-qualification. During pre-qualification stage the

tenderers are vetted based on their experience and capacity. Besides that,

during selection employer and consultant will also take consider of their

workmanship, size of company and grade class, reputation, past experience,

management strength and so on. After the prequalification stage, those

contractors who are qualified will then be included in the final tender list and

invited to tender the job. After the invitation is send, contractor will have the

choice to accept or reject the invitation from the employer. Lastly, after every

tenderer submit their tender, the consultant will have to evaluate all tender and

prepare a report for the employer. Hence, the most reasonable and normally the

lower will win the job.

Advantages

1. Pre-selection qualified contractor

At the beginning of this method, employer already filter the list of

contractor through the pre-qualification stage. During the qualification

stage, employer will evaluate every tenderer on their workability and

capacity where at the end only those qualified and capable tenderers will

be tendering the project. Hence there is guarantee of quality work and

Page 17: PP1 assignment

building. Employer does not have to worry on the workability and capacity

of the contractor, the chances of default is minimized.

2. Time Saving

Selective tendering will have less amount of tenderers compare to the

open tender because of the prequalification stage. The number of tender

documents is lesser so the tender period is shorter. Employer is able to

proceed to the next stages faster and complete the project earlier.

3. Quality Guarantee

All contractors have already go through the prequalification stage, which

mean only capable contractor will be tendering. Hence, there is a quality

guarantee for the project and building. Better quality of workmanship and

management skill can be expected from every contractor in the list.

Employer does not have to worry about cutting corner and low quality

outcome.

Disadvantages

1. More Initial Work

Selective tendering required employer and consultant have more starting

work which they have to evaluate and study every contractor before

choosing the tenderer list. Employer and consultant are required to go

through every detail of the contractor for example their pass experience,

reputation and workmanship, evaluate the contractor and decide to put in

the list or not. By doing all this, it may take a longer tendering process and

given more work for the consultant and employer. It may also delay the

start time of the project due to complexity of initial work.

2. Higher cost

In this method of tendering, employer will have a lower bargaining power

compare to the contractor because employer request the expertise of work

from the contractor. In selective tendering, the numbers of tenderers is

less and all contractors are experienced and repeatable. Hence, the price

will be higher compare to other new contractor where do not have the

Page 18: PP1 assignment

expertise. In this method only those professional player are tendering the

project, thus they are able to increase the cost for their professional work

and expertise.

3. Favourism

In this case, the tenderer list is provided by the employer and consultant

who may have the risk of favourism happen during the selection. During

selection of contractor list, employer or consultant might include company

they like in the tender list because of previous work experience or

relationship. Hence, it may also affect the final result of the tendering

where it may affect the final choice of the employer and consultant.

4. Not Transparent

In selective tendering, the prequalification requirement is fixed by the

employer. Public do not know what is the qualification set by the employer

while selecting the contractor. It may have the rick where the employer will

purposely give the job to the certain contractor due to relationship or

favourism.

Negotiate Tendering

Negotiate tendering is where the employer only approach to one

contractor and invite for tendering project due to his reputation and skills. When

the contractor accepted the tendering offer, he will start prepare tendering and

priced BQ for the project. After pricing employer and contractor will have another

meet up for negotiation on the price and detail until both parties come into an

agreement. Normally in this method employer will only approach contractor who

have good reputation, certain level of skills and contractor who have past working

experience. This type of tendering method mainly used for specialist work where

there might be a limited number of contractors can do it. This method can be use

when the employer wanted to complete the project in a very short period.

Page 19: PP1 assignment

Advantages

1. Experience contractor

In this method, the contractor approached normally is those who have

very good reputation and specialties skills which the employer do not have

worry the quality of work and outcome. In this case, the quality of the work

is guaranteed by the contractor, better workmanship and quality can be

expected from the contractor. The expectation of employer also can be

met at the end of the project.

2. Flexibility

Negotiate tendering provide the flexibility for employer and contractor to

negotiate on the detail and make changes. It provided the opportunities for

adjustments and improvements of need during construction. When the

employer wanted to make any changes, they can negotiate on the detail

and price until a point both parties come to an agreement.

3. High Success Rate

The project given to the contractor will have a high success rate due to the

greater offer from the employer. In negotiate tendering, both parties can

try to persuade each other until both parties come to an agreement on

prices and services.

4. Fast Progress of Work

Negotiate method is the suitable when the employer wanted to complete

the project in a short period. This is because the employer able to

persuade the contractor fastens the work with offering a better profit to the

contractor. Besides that, when both parties come to an agreement in a

very short time, the construction time can be start earlier which mean the

project can be start earlier as well.

Page 20: PP1 assignment

Disadvantages

1. Higher Cost

In this method employer will have the less bargaining power compare to

the other methods. In negotiate tendering employer required the

specialties of work from the contractor, which it may cost more compare to

the other contractor. Besides that, there is only one tender which mean

the employer have no other choices of tender. Employer can only try to

negotiate with the contractor.

2. Not Transparent

In this method, contractor might be chosen based on cozy relationship

between employer and contractor. No tender is called out to the public

where the no one will know the standard of choosing contractor for the

project. Furthermore, there is only one tender where the contractor might

simply increase the BQ price because employer does not have any other

comparison. Thus, lack of accountability and integrity may be in question

by the public.

Page 21: PP1 assignment

Recommendation

In this case, as a director of the Innovative Cost Consultant Sdn. Bhd, I

will suggest the managements of Taylor’s University use the selective tendering

method for Taylor’s University branch campus in Kota Kinabalu, Sabah. As we

know that the branch campus is required to operational in mid of 2019, which

mean our company will have 3 year time to complete the project. By using

selective tendering method, it could help the company to find a most suitable

price from contractor which also place within the budget cost and allow the

building be constructed and operated within the time given.

In short, the managements of Taylor’s University are very concern about

the cost completion must be within in the budget fixed. By using selective

tendering method, our employer will be able to get the most reasonable price

with a good quality of work. Because of the pre-qualification stage, we are able to

set the requirement for the tenderer. For example Taylor’s university are very

concern with cost and time, hence during the selection of tenderers, employer

can only short list those company who have good reputation, good workmanship

and punctual contractor. In this case, all contractors who are invited to tendering

the project are already full of experienced. This could avoid the any failure or

delay of work due to bad management skill by the contractor. During the pre-

qualification stage, our company will suggest few reputable contractors to

Taylor’s University provide with their background study and pass project

experience where do not have delaying or failure of work.

Next, selective tendering also allow the building be constructed and

operated within the time period given or even earlier. Selective tendering does

not take so much time for tender compare to the open tendering method. For

open tendering, employer will have to advertise their project in the public, giving

a period of time for the public to take the offer and collect the tender document.

After collecting the document tenderers will only then start preparing the tender.

This may consume more time on waiting public to respond to the offer and

completing the tender, hence it also consider as not very efficient. However,

Page 22: PP1 assignment

using selective tendering, Taylor’s University does not have to wait for public

respond to the project. It will directly send an invitation to the selected contractors

ask for tender. This actually allows the employer has a shorter and efficient

tender progress and once the contractor is selected, the construction work is able

to start in a few days which also mean the construction work is able to start

earlier compare to the open tendering method which also mean the construction

have a higher chance to finish within the given period or even earlier.

Besides that, all short listed contractors are full of working experienced

and good reputation. Every contractor could provide a guaranteed quality of work

and building outcome which employer do not have to worry on the product

because every tenderer is short listed by certain of standard required. In this

case, employer is able to get a good quality of product with a cheaper price

which may reduce the overall cost of the project and achieve a cost effective.

In conclusion, selective tendering is the most suitable tendering method

for Taylor’s University branch campus in Kota Kinabalu, Sabah. It could meet all

requirement of the employer which able to control the cost within the budget,

ensure the project able to finish within the period given and also provide a good

quality of product with a cheaper and reasonable price.

Page 23: PP1 assignment

Schedule of Work