SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

Bachelors of Quantity Surveying (Hons)

Professional Practice I

Group Member:

Melvin Lim Wei Jien 0315772

Table of Content

1.1 Traditional Procurement…………………………………………………………1

1.2 Advantages…………………………………………………………………..1-2

1.3 Disadvantages……………………………………………………………….2

1.4 Chart…………………………………………………………………………3

2.1 Design & Build Procurement……………………………………………………4

2.2 Advantages………………………………………………………………….4-5

2.3 Disadvantages……………………………………………………………….5

2.4 Chart…………………………………………………………………………6

3.1 Recommendation for Procurement……………………………………………...6-7

4.1 Open tendering…………………………………………………………………..8

4.2 Advantages…………………………………………………………………..8-9

4.3 Disadvantages ……………………………………………………………….9

5.1 Selective tendering……………………………………………………………….10

5.2 Advantages…………………………………………………………………...10

5.3 Disadvantages ……………………………………………………………….11

6.1 Negotiated tendering…………………………………………………………….12

6.2 Advantages…………………………………………………………………..12-13

6.3 Disadvantages………………………………………………………………..13

7.1 Recommendation for tendering………………………………………………….13-14

1.1 Procurement (Traditional method)

1.1.1 About

Traditional procurement method is commonly used in Malaysia. In the traditional

procurement system, the employer accepts that design work will generally separate from

construction, consultants are appointed for design and cost control, and the contractor is

responsible for carrying out the works. This responsibility extends to all workmanship and

materials, and includes all work by subcontractors and suppliers. The contractor is usually

appointed by competitive tendering on complete information, but may if necessary be

appointed earlier by negotiation on the basis of partial or notional information.

The client is in direct contractual relationship with the consultants on the one hand

and the contractor on the other. Any contractual links for only where they clients make

nominations is it advisable to recommend collateral agreements to protect his interests in

respect of any matters which might lie outside the building contract.

There are three types of contract under the traditional procurement method:

1. Lump sum contracts - where the contract sum is determined before construction starts, and

the amount is entered in the agreement.

2. Measurement contracts – where the contract sum is accurately known on completion and

after re-measurement to some agreed basis.

3. Cost reimbursement – where the contract sum is arrived at on the basis of the actual costs

of labour, plant and materials, to which is added a fee to cover overheads and profit.

1.2 Advantages

1.2.1 The quality of work

The quality and standards of work will be better because it is controlled by the Client. The

design team and contractor have to meet the requirements of the Client. Also, the design lead

and the client is able to have a direct influence which will facilitate a high level of

functionality and improve the quality in the overall design.

1.2.2 Flexibility of changes/variations

Variations/changes to the contract are relatively easy to arrange and manage.

1.2.3 Familiar to its working

Everyone in the construction industry will be very familiar with this procurement method

since it’s been one the longest and most commonly used method here in Malaysia. It’s also a

tried and test method of procurement which the market is very familiar with, which will

definitely benefit everyone when it comes to familiarity.

1.2.4 Usually cheaper

It is usually cheaper because of the design risk that is taken up by the employer because it is

done under the client’s requirement.

1.3 Disadvantages

1.3.1 Outdated

This method has been here for years and it’s an outdated procurement method, there can be

found a lot more types of procurement method in the construction industry market.

1.3.2 Creates the “Them & Us” attitude

If something goes wrong in the project, the consultants and contractor may blame each other

and push responsibilities as there is no single point responsibility in the traditional

procurement method, because both parties are under the Client.

1.3.3 Slow line of communication

Since the consultants and contractor has no contractual relationship communication between

these two parties are minimal. Which means the contractor have to communicate and report

anything to the Client, and then the Client will report back to the consultants and vice versa.

1.3.4 Long duration

Overall project duration may be longer than other procurement methods as the strategy is

sequential and construction cannot be commenced prior to the completion of the design.

1.4 Traditional Procurement Method

2.1 Procurement (Build & Design Method)

Employer

Consultants Main Contractor

Architect

Civil Engineer

M&E Engineer

Quantity Surveyor

Domestic Sub-Contractor & Supplier

Nominated Sub-Contractor & Supplier

Design Construction

2.1.1 About

Design and Build method is a system where a single organization undertakes the

responsibilities and risks for both the design and construction phased. Normally a contractor

is selected in competition to execute a project under the Design and Build option. Tenders are

invited on the basis of an Employer’s Requirements document prepared normally by the

Employer in consultation with his design team. The Employer’s Requirements set out the

project needs in terms specification, function and performance of the building required and if

applicable will also define planning and any other restrictions.

The contractor responds with a set of Contractor’s Proposals upon which the tender

bids are assessed. Assuming the Contractor’s Proposals fulfil the Employer’s Requirements,

the lowest bid is often accepted, but this may not be the case because subjective consideration

of the overall design and quality of the proposals may be considered more important than cost

alone. The typical payment method for D & B is a lump sum.

With D & B, it is likely that in the absence of in-house professional staff, the client

will wish to engage outside consultants to advise on the preparation of requirements and to

evaluate and select tenders etc. the main contractual link is between client and the contractor

and the client's agent or representative has only a limited role.

The contractor might also have a contractual link with his own design consultants, and

with sub-contractors and suppliers. As the contractor is wholly responsible for their

performance, both in terms of design and construction, there might be less need for collateral

agreements between them and the clients 

2.2 Advantages

2.2.1 Single point responsibility

The labour, material and even design are all responsible to the main contractor because the

Client only hires a contractor in D&B, then the contractor is responsible for getting the design

team and the sub-contractors. The contractor is also responsible for organizing and

programming the design’s team activities.

2.2.2 Saving in time

The speed of procurement will be faster as the contractor can start working already even

though the design of the whole building is not complete. The contractor can construct the

building level by levels as the design and construction is overlapped.

2.2.3 Fixed amount

A fixed lump sum is already established onset, subject only to any Employer changes.

2.2.4 Easy line of communication

The Client has only one person to liaise with, which is the main contractor in the project,

because the main contractor is responsible for everything.

2.3 Disadvantages

2.3.1 Compromise in quality of works and design

Design possibilities are not fully explored and tend to be restricted by the D&B Contractor’s

standard design and construction method.

2.3.2 Higher professional fee outlay

A higher professional fee is needed as the Client must select only D&B Contractor with good

reputations and track record. Other than that, it isn’t recommended to hire.

2.3.3 Employer’s involvement

The Employer’s involvement will be minimal when it comes to D&B method, because the

main contractor will be responsible for organizing and controlling every other parties in the

project. Therefore, the Employer can’t always be on site to check and gives the Employer less

control power over the works.

2.4 Design and Build Procurement

3.1 Recommendation for procurement

As SuperQS consultant Sdn. Bhd. Director, I would recommend choosing the

traditional procurement method over design & build. This is because the advantages of

Traditional procurement looks much better.

First of all, the quality of work would be much better since the drawings of the project

are completed before tender as compared to Design & Build method, it has an overlap

between the drawings and construction. Although it may be quicker in time but quality over

speed is a much better option. Besides that, everyone is much more familiar with the

Traditional procurement method since it is commonly used here in the construction industry

so it would benefit everyone working in the project.

Another beneficial thing that Taylor’s can receive is that Traditional procurement is

that it is usually has a cheap cost of construction and the design of the building is usually

done under the Client’s requirements. In conclusion, Traditional procurement method is a

much better procurement system compared to the other.

Employer

Design & Build

Main Contractor

Consultants Sub-Contractors & Suppliers

4 months

2 months

6 months

Design & Doc phase

Tender phase

Construction phase

Consultants appointed

Design & Doc complete

Contractor appointed

Construction complete

12 months

4.1 Tendering (Open Tender)

4.1.1 About

Open tendering is the main tendering procedures employed by both the government

and private sector. The client advertises the tender offer in the local newspaper, websites or e-

procurement giving detail and key information of the proposed works and inviting interested

contractor to tender. The advertisement would include pertinent details such as type of work,

requirements of tender, details of submission.

Contractors who are interested to tender shall respond to the advertisement to collect

the tender document. This tendering method will also ensure and cause competitiveness and

best price over performance for the awarding body. A tender document fee is also required in

order to collect the tender document. Besides that, the contractor is also required to submit

the tender deposit and tender bond.

The client and consultants will record the tender prices of each tenderer upon tender

opening. In order to reduce number of enquiries, earnest money is deposited (for private

project). Until the receipt of a bona fide tender selected then it will be returned. The client

then award based on consultants’ recommendation after evaluating. The Client does not bind

to accept the lowest or any offer.

4.2 Advantages

4.2.1 Familiarity

All tenderers in the construction industry are familiar with this method if tendering since it

widely commonly used around the country.

4.2.2 High competition

Open tendering ensures maximum competitiveness and will result in a long list of responds

So the Client does not need to worry about the amount of responds he/she will get and the

Client is able to pick the good prize among so many.

4.2.3 No favourism

New contracting firms are able to enter the market. Any and all kinds of contracting firms

able to respond to the tender. Promotes fairness.

4.3 Disadvantages

4.3.1 Cost

Cost of tendering may be high since it will generally be a lot of tenderers, therefore it requires

many copies of the tender documents.

4.3.2 Risk

This method risks of selecting a new/unknown contractor. This can cause poor workmanship,

poor communication, and might not suit the type of project due to the lack of experience.

4.3.3 Does not attract reputable firms

Generally it does not attract reputable or established contractors unless they are forced to, due

to lack of work.

4.3.4 Longer period

Open tendering relatively requires a longer tendering process this is due to the large amounts

of tender documents that needs to be evaluate since it is publicly advertised.

5.1 Tendering (Selective Tender)

5.1.1 About

Selective tendering only allows suppliers to submit tenders by invitation. A pre-

selected list of possible suppliers is prepared that are known by their track record to be

suitable for a contract of the size, nature and complexity required. Consultants or

experienced clients may maintain ‘approved’ lists of prospective suppliers and then regularly

review performance to assess whether suppliers should remain on the list.

Besides that, selective tendering can also give clients greater confidence that their

requirements will be satisfied and should reduce the wasted effort that can be involved

in open tendering. It may be particularly appropriate for specialist or complex contracts, or

contracts where there are only a few suitable firms.

There can be single stage selective tendering or even two stage selective tendering. In

single stage selective tendering, a list of reputable or established contractors are proposed by

the consultants to tender the job. The final list of tenderers will be selected by the Client.

For the two stage selective tendering, there is an initial process known as the Pre-

qualification. These qualifications are all based on their experience and capacity from the

company profile submitted. There are few criteria for selection such as:

(i) standard of workmanship

(ii) size of company

(iii) reputation to meet completion dateline

(iv) financial capability

(v) capacity for current workload

(vi) past experience on similar works

(vii) management strength

5.2 Advantages

5.2.1 Qualified tenderers

It would be beneficial for the client since only properly qualified tenderers will be tendering.

Therefore, the tenderers would be trustable in this case.

5.2.2 Better quality

Since all the tenderers are properly qualified and has a reputation in the construction industry,

a better quality of workmanship can be expected and also employer can only select those

contractors who have adequate experience, financially sound, and have the resource and skills

to do the work.

5.2.3 Better management

Since selective tendering would have a proper list of qualified tenderers, it means the

numbers of tenderers would be lesser, lesser documentation, and also better management in

the tendering process.

5.3 Disadvantages

5.3.1 Higher Price

Generally prices are higher in selective tendering compared to open tender since only

reputable tenderers are qualified.

5.3.2 Longer tendering process

Requires relatively longer tendering process.

6.1 Tendering (Negotiated Tender)

6.1.1 About

Negotiated tendering occurs when the client approaches a single supplier based on

their track-record or a previous relationship and the terms of the contract are then negotiated.

Negotiating with a single supplier may be appropriate for highly specialist contracts,

or for extending the scope of an existing contract. It can give the client the confidence of

working with a supplier they already know, can reduce the duration and cost of tendering and

can allow early supplier involvement.

The selected contractor is issued with details such as the scope of work involved,

relevant drawings, design and information to enable him to appreciate the extents of

obligations and the employer's actual needs. Some employers prepare and issue to the

contractor proper tender documents inclusive of a nominated bills of quantities to assist

contractor in pricing the works for the forthcoming negotiations.

6.2 Advantages

6.2.1 Trustable

In most cases, reputable contractors with proven experience and track record would only be

approached/engaged.

6.2.2 High Quality

Better quality of workmanship will normally be expected since only reputable contractors

with good track record are selected.

6.2.3 Success rate is high

Working with a reputable and known contractor will definitely be less worrisome and

trustable thus success rate will be high in most projects.

5.2.4 Used for emergencies

Sometimes negotiated tenders can be used when there is a very tight deadline, or emergency

works are necessary.

6.3 Disadvantages

6.3.1 High in price

Negotiated tendering will definitely lead to high pricings due to the fact reputable contractors

with good track records are only engaged.

6.3.2 Long time to award

It requires a long period of time to negotiate before a letter of award can be awarded.

6.3.3 Risky

Should the negotiations be deadlock or prove eventually unsuccessful, this causes wastage of

valuable resources on both sides and loss of time for the employer, thereby delaying the

overall selection of suitable contractor.

7.1 Recommendation for tendering

As a SuperQS consultant Sdn. Bhd. Director, I would strongly recommend using the

selective tendering method for this situation. Since Taylor’s University is planning on

building a multi-storey car park, it requires good quality and also a cost which is average.

First of all, selective tendering provides good quality of work since only properly

qualified are selected only. This would mean every tenderer is trustable with a good track

record and experience. Not only that, the tendering time is also shorter making the time of

construction will be finished faster hence students can occupy it sooner.

As for the single stage or two stage tendering, it depends on Taylor’s University if

they want the tendering process to be faster or shorter and also it depends if Taylor’s

University on how many reputable contractor they know. But in my opinion, I would

recommend the single stage tendering since it would be much faster in tendering stage but it

also does not lack in quality. In conclusion, Selective tendering would be a much better

choice.

2 weeks

4 weeks

2 weeks

Select Tenderers

Reputable Contractors

selected

Potential Contractors negotiation

Contractor appointed

8 weeks

Pre-qualifications

Tender Phase

Negotiation Phase