- Information
- AI Chat
MBEA1403 Assignment 1 Group 3
Construction Law and Contract II (SBEQ4413)
Universiti Teknologi Malaysia
Preview text
MBEA 1403 CONTRACT LAW & PROCUREMENT
ASSIGNMENT 1 : COMMON PROBLEMS AND IMPACT IN
CONTRUCTION PROCUREMENT
MASTER OF ARCHITECTURE
BUILT ENVIRONMENT AND SURVEYING
UNIVERSITI TEKNOLOGI MALAYSIA
LECTURER : AR DR. LIM YAIK WAH
GROUP 3
MUHAMMAD FIRDAUS BIN FUAD MBE
ZULKEFFLEE BIN AHMAD MBE
KHAIRUL NIZAM BIN ZUHRY MBE
Table of Contents
ABSTRACT 1
KEYWORDS 1
1 INTRODUCTION 2
1 An overview on Construction Procurement 1 Choosing the best procurement method
2 REVIEW APPROACH / METHODOLOGY 6
3 FINDINGS 7 3 Reliable Cost in Construction Procurement 3 Construction procurement overview 3.2 Obtaining information 3.2 Preliminary examination 3 Different procurement system’s effect on project performance in term of cost, time and quality 3.3 Traditional Procurement Methodology 3.3 Design and Build and Turnkey Procurement Systems 3.3 Procurement route affecting factor
4 DISCUSSION 15 4 The Great Option of Construction Procurement 4.1 Reliable Cost in Construction Procurement 4.1 Quality Control in Construction Procurement 4.1 A Quick Turnaround in Construction Procurement 4.1 Avoiding Risk in Construction Procurement
5 CONCLUSION 17
6 REFERENCES 18
7 APPENDIX 19
1 INTRODUCTION
In order to achieve goals and produce value, procurement, in any field, It's all about finding the right balance of risk and reward.. In building projects, procurement processes go beyond just obtaining It all boils down to striking the correct balance between risk and return thought of as a support system for a short-term production process. Any The procurement function in a building project is similar to that of a small factory manufacturing a single item guarantees that the project is completed on time, within budget, and within scope. If a projector meets these criteria while still earning a profit for the contractor, it is considered "successful."
Designer-build, often known as design-bid-build (DBB), is a classic building procurement approach. The project is developed by an architecture, engineering, or both under this paradigm, who then submits tender documents for quotes from relevant contractors. The construction contract is usually awarded to the lowest bidder who can meet the project's specifications. Following that, the contractor manages the purchase of the materials and services needed to finish the project, preferably with the highest level of quality even while enabling for the most effective use of resources - and a modest profit ratio. Moreover, Different goals among candidates and designers in the design-build paradigm, as well as the possibility of disparities in between bidder's best possible price when submitting to an RFP and their capacity to finish the project on time and within scope, has resulted in the rise of alternative construction procurement methods. strategies, such as;
Engineering, Purchasing, and Construction (EPC) single contractor handles all three sectors via construction management, resulting in a unified and simplified approach to project completion. This is already recognized as primary procurement entails one or more contractors who are in charge of monitoring the procurement process at all phases of the project (this is known as multi-prime contracting). A strong and well-vetted supplier chain should be brought in by prime contractors. (including subcontractors and professional services), a strong track record of previous accomplishments, and, in some cases with large projects, the ability to finance multi-year construction cost up front while receiving incremental payments that assist reduce the overall project cost. Contracting by Job Order (JOC) In public works projects, this is a common method. If public owners and/or public agencies publish a detailed request for requirements in the public domain, contractors who meet the specifications (subject to approval by the originating agency) can compete on open contracts. JOC Contractors who fulfil the qualifications and have a record reputation for excellence could bid on small tasks inside larger projects or whole projects.
The number of people will be the same regardless of whatever approach is chosen "balls in the air" When it comes to procurement, supervisors have to juggle a lot of things dealing with construction projects that are difficult to complete, large or small, presents a variety of challenges to project accomplishment within measurements, For both clients, this includes profitability, value creation and building contractors.
1 An overview on Construction Procurement
The design and construction processes are progressively being integrated under the principles of Public Private Partnership (PPP), Private Finance Initiative (PFI), and privatization; The source or sources of funding are no longer confined to the client and/or their financier, but private investors, and even end-users are included, especially for public projects. These newer approaches, also known as Life cycle Costing (LCC), Pay attention to the whole costs of the project a over the course of the facility's lifespan, and a contract for a built facility can last anywhere from 20 to 60 years, taking into account financing, reimbursement, and revenue group, construction and design, activation and completion of completed infrastructure, as well as maintenance and operation delivery of the services, redevelopment, handover, and possibly even deconstruction (Khairuddin, 2009).
The environment of a building project is comparable to that of a corporation. Even more so, given its resemblance to a melting pot. A typical building project might entail include a wide range of activities, the use of financial resources, the involvement of individuals that possess a diverse set of abilities, skill, and experiences the client's goals, the interests of several parties contractual arrangements, conditions of the location, and restraints, risk, politics, commercial, and other natural forces, and so on. First and foremost, the work need to be finished within a time frame provided, at a certain performance level, and at a specific price. It needs the most efficient and effective document production process management, Khairuddin (2002) The function of the procurement system, according to some, is to manage the entire procurement process.
Traditional Design-Bid-Build (DBB), Design and Build (D&B) or turnkey, and Management Contracting (MC) are the three most dominant procurement processes in Malaysia, with dominant referring to the most frequently utilised.
Those are the procurement type :
a) Traditional system of procurement
The Traditional System (DBB) of The assumption behind procurement is that the seven procurement procedures are followed in order, that the design and construction processes are segregated, and that each party: Clients, contractors, and consultants are solely responsible for their own concerns. The DBB This method allows for a cheaper contract price to be set ahead of time, reducing construction- related risks. This method typically demanded a longer development timeframe, and the possibility structure encourages rivalry among the participants. The DBB it fits the requirements for procurement transparency and responsibility by all parties involved, it is the most widely used by the public sector.
1 Choosing the best procurement method
Most clients in Malaysia, according to Khairuddin (2002), are uninformed of the alternatives available to them in terms of alternative procurement processes, and they lacked the skills and knowledge to analyse the system thoroughly.
The old method is familiar to most consultants, and it fits the public sector's openness and accountability criteria. In addition, the design consultant will be expected to work under the contractor's supervision.
Methods for assisting clients in identifying the right procurement method have been developed elsewhere. The Procurement Assesment Criteria (PAC) of the UK's National Econimics Development Oddice (NEDO) is one such mechanism (NEDO,1985).
2 REVIEW APPROACH / METHODOLOGY
2 Literature Review
A desktop study was conducted to search the relevant arcticles to the issue of common problem and impact in construction procurement, which analysed and categorized the finding through the desktop analysis. This contains a library and website based on the project's purpose and space requirements. This article's initial phases will provide an overview of the problem before it is further investigated.
In addition, the method “reference by reference” or “snowball sampling” approach is a sampling approach that is not based on probability present research prospective research volunteers are chosen from among those who are interested in participating in the study. acquaintances. The chosen articles are based on needing more elaborations or explanations in answering unanswerable questions and facts. All selected articles were filtered and gathered from multiple resources due to the different observers to extract the variables keyword used. Most of the articles are from Google Scholars and research gate.
To stay profitable, you need to spend strategically. Thanks to cloud-based, centralised procurement software, construction workers can buy online from their phones and tablets, whether they're on the job site or in the office. They can request approval for one-time purchases and add new vendors for approval in a matter of seconds. You may use current vendor agreements to safeguard important relationships and ensure that you pay the greatest price for the best goods and services provided on time whenever possible.
In addition to one-time purchases, procurement software can help you eliminate the need for one-time purchases by:
It is strategic and successful to pre-qualify subcontractors and suppliers at two stages. Allowing purchases from pre-qualified vendors to be approved by your purchasing system can help to ensure total Spending data transparency. If contractors are obliged to meet all before submitting a project a proposal, they will be less risky from the outset. It will also be simpler to monitor and assess performance.
The most cost-effective sources of information. Suppliers should be judged on how much value they add to the project and your business as it progresses, not only because of the cost. Prices at the bottom of the barrel are pointless if the suppliers can't be counted on to meet the deadline or meet basic safety regulations. Procurement software allows users to track supplier overall performance and generate a picture of the value they deliver.
c. Flexibility Is Lacking Construction necessitates the certain level of flexibility as well as complexity tolerance Codes can change at any time. The needs of clients alter throughout time. Delays caused by bad weather can be costly. Strikes or labour shortages can derail even the best-laid intentions can go awry.
Machine learning in procurement software could assist you in rolling with the punches Instead of Instead of being trapped within the constraints of an initial bid and struggling to meet the timetable and budget, you can use project information to cooperate with clients and suppliers to change deadlines, negociate contract terms, and build relationship to ensure the work is delivered on time and on budget.
When submitting bids for jobs, you may also leverage your previous performance data to create valuable and targeted reports that highlight your credentials, industry-specific experience, safety record, customer satisfaction ratings, and cost-effectiveness. As a result, it will be easier for you to under-promise and over- deliver for your clients. You might even discover previously undiscovered possibilities to bid in areas you hadn't considered.
3 Construction procurement overview
Figure 1
The procurement strategy is influenced by a number of elements.
"Time duration - The majority of projects should be finished within a specified length of time that has been agreed upon by all parties involved. It It is vital to provide sufficient design time, particularly if the designs must be completed prior to the start of construction. It's crucial to have assurances about the project's resources from the design team. Planning permissions may have an impact on the Project's progress.
Given the time gap between first estimation and the receipt of proposals, it's important to examine the client's requirement for pricing certainty. The cost will be influenced by the amount which the project is completed at the tender stage.
Project characteristics - The size, location, complexity, and originality of the project should all be considered because they will effect cost, risk, and time. As a result, a procurement plan suited to the demands should be designed in order to get the greatest results.
There are four main stages in the development process.
Opportunities, uncertainties, and hazards in terms of design, scope, and quality
d. Project dangers
All significant overall hazards and possibilities indicated in the project's 'Risk Management Plan,' such as site difficulties, permits, design, materials, and constructability, are incorporated. As a result, project managers should make sure that risk assessments are done on a regular basis.
e. Capability of the agency
Project sizes and delivery methods vary necessitate different degrees of understanding, skill, expertise, and required resources, such as personnel available resources and ability, are all important considerations.
f. Position on the market
The present market situation aids in the selection of a procurement strategy.
3.2 Preliminary examination
Once the project goal has been established, a proper analysis must be carried out earlier as feasible in the portfolio formulation operation to evaluate as anticipated type of funding needs and to finish the projects, make a shortlist of possible delivery options.
3.2 Evaluation of procurement possibilities
Selecting an ineffective delivery model for a project can raise project dangers and challenges reduce the possibility of obtaining a good value for money result. Careful review of acquisition possibilities can greatly lessen the chances of this happening.
3.2 Determining the best service model and procurement technique
Very big projects may be broken down into several components, each with its own delivery strategy and procurement approach. In the procurement plan, the interface between any such components should be well described.
3 Different procurement system’s impact on project outcomes in terms of cost, timeliness, and satisfaction
3.3 Traditional Procurement Methodology
a. Timeline / Duration
Because of The traditional procurement process has been identified as the worst project delivery method due to its continuous or sequential approach. This strategy, but at the other hand, is recommended since it ensures obvious accountability as well as more customer design and construction control. The client and project team have more time to examine and Because of pre- contract phase of this technique is longer, review the design before it has been built.
b. Spending / Cost
This method provides greater price certainty to the client at an early stage of the project. The client benefits from firmer and more competitive pricing because the design, as well as all working drawings, have been thoroughly developed and written up prior to tendering. It eliminates any design or construction ambiguity or uncertainty, allowing contractors to raise prices without justification. Bidding tends to be more fair when a bill of quantities is used, resulting in a lower project cost. Cost rises due to fluctuations are prevented because to the system's greater cost management. Work is usually disrupted when there are too many variations (due to unanticipated issues), and the system tends to collapse as a result.
c. Satisfaction / Quality
In the traditional procurement technique, quality assurance and functional standards are very high. It's also a framework that enables the building owner to assemble the best design, management, and construction expertise from consultants and contractors. It also offers the client and consultants more time to assess and finish the design and specification, which allows for better documentation preparation. Contractors, on the other hand, are unable to add
methods. This is consistent with the observation that the design can be overseen and contributed to by the same management contractor. It permits the project's constructability or buildability to be improved by the management contractor.
The technology also provides for a faster start to construction than the traditional method. The preparation of a simple or basic bid (bidding) document, as well as the migration of the conceptual and detail design processes to the construction phase, allow for an early start to building. As previously indicated, designing process (shop drawings) is produced during the construction stage using these two processes. All of these qualities led in a considerable reduction in total project time when compared to conventional or indeed design and implement contracting methodologies.
3.3 Procurement route affecting factor
a. External aspects - when choosing a procurement technique, economic, commercial, technological, political, social, and legal considerations should be taken into account. b. Client attributes - The procurement approach employed will be influenced by the customer's experience and knowledge in procuring building projects. The culture of the company and the anticipated amount of customer involvement influence procurement decisions. c. Characteristics of project - Scale, difficulty, location, and uniqueness of the project The culture of the company and the anticipated amount of customer involvement influence procurement decisions.. d. Changeability - Project changes are unavoidable. The procurement technique chosen will be influenced by the planned level of customer freedom to make changes during the project.
4 DISCUSSION
4 The Great Option of Construction Procurement
Match the best procurement choice to the risk and responsibility of the project. Each alternative has its own advantages and disadvantages, and there is no one-size-fits- all solution in every situation. Each one offers a different amount of assurance and danger, and the option is yours to make based on your preferences and the design of your current house.
4.1 Reliable Cost in Construction Procurement
a. Design and Build
A predetermined cost contract with the building contractor for both the design and construction process of your construction provides cost certainty. Comparing prices on a fixed - price contract can be challenging, specifically if the tenders are not comprehensive. According to the research, advantages in both time and cost may be accomplished by combining the complete extension work schedule, standard procurement, and fast track development with mild design crashes. Time and expense have a considerable influence on the construction process, according to study.
b. Construction Management
Each subcontractor is hired directly by the project manager. Negotiating the costs of each component through a competitive tender allows you to keep expenses and quality under control. It takes time to set up and requires knowledge.
c. Traditional Method
Determine the price for the construction work with a BOQ or have the builder price it based on plans. Any design changes will have an impact on costs, which will be determined through such a contract price fluctuations.
d. Management Contracting
A design team will be hired by the client, and a management business will be hired to hire all of the suppliers and contractors. The contract amount plus a management fee must be paid by the responsible customer. Costs must be managed within a set of criteria to avoid overspending.
c. Management Contracting
Might take longer since the client depends on your construction manager to set up all of the various contract packages.
d. Traditional Method
Setting up the project takes the most time. At the start, time is spent finalising the design, preparing a specification, and putting the project out to bidding. The complexity of the tendering method may also generate a delay in the construction process, which is problematic whenever you need something resolved immediately.
4.1 Avoiding Risk in Construction Procurement
a. Design and Build
The majority of the risk must be taken away by all parties. The contractor is in charge of the entire structure's design, construction, and any deficiencies. Reduced threat since the contract outlines the customer's needs as well as the contractor is able to assure that they are really met.
b. Construction Management
Construction development is hazardous. The builder issues contracts to a variety of professionals, therefore there is no one point of responsibility.
c. Management Contracting
In building procurement, management contracting is also risky. This is the case because the contracts are within the client's project manager and also the subcontractors rather than with us directly.
d. Traditional Method
The traditional methods are the most riskiest. Any faults or missing elements are the developer's responsibility. Split responsibility for flaws might lead to confusion about whether the issue is due to a design flaw or poor workmanship. There's a greater chance that the design team will blame the construction team and vice versa.
5 CONCLUSION
There are many main factors in our discussion whereas determining the type procurement approach, which are the project's scale, expense, intensity, and period, as well as the possibility of change during the design and development phases of development, the necessity of quality, and the ability of the contractors to undertake the project, and the main vital outcome design.
First and foremost, the pricing certainty for the duration of the building work will alter as the project’s progresses. Obtaining firm prices prior to project construction allows the client to make approximate estimates. The project's cost will be within the budget. Price certainty is less important to public employers. They also place a premium on the quality and functionality of their work. It is critical for private clients to maintain financial control by obtaining price certainty.
The design - and - build methodology, on the other hand, is the most appropriate method for taking into consideration buildability and producing a construction-ready design. In terms of design, the usual contract procurement process failed. The design is under the authority of several management contracting procurement methods. Clients benefited by approaching a same contractor for a significant duration. The core design criteria examined include purpose, sustainability, design and construction, conventional design, design before construct, and design samples.
Somehow, the way of choosing procurement method is a risky option. Completion deadlines, constructability, design efficiency, liability or deficiencies, protection, performance, and labour are the key risks faced by clients, builders, subcontractors, a design professional, and suppliers during in the project. Contractors or consultancies are recruited through a competitive procedure or through a single organization's discussion. Tenders were shortlisted based on their financial health and records, limited experience with long term contracts, qualified management, and capacity.
Lastly, if the project is relatively easy, Design & Build is an excellent alternative. In other cases, the Traditional Method could be a preferable alternative if the project is more extensive, such as constructing on a structure in a nature preserve or adapting a physical and operational. The building projects can be delayed due to unanticipated technical challenges, material availability, and tradesman coordination. Projects can occasionally run exceeding expense, and there's always the possibility of squabbles among involved parties. The more experience and skills you have, the more alternatives you'll have when it comes to selecting your procurement method.
MBEA1403 Assignment 1 Group 3
Course: Construction Law and Contract II (SBEQ4413)
University: Universiti Teknologi Malaysia
- Discover more from:
