INTRODUCTION

• Client’s informationoWW (M) Sdn. Bhd. is a private property developer.oHas 6 years’ experience in the construction

industry.oInvolved in the construction of offices, warehouse,

apartments and residential houses.

INTRODUCTION

• Project’s detailoType: 3-storey shopping malloTotal area: 100,000m²oProposed construction period: 24 monthsoSustainable features are to be added to the building oClient lack knowledge in constructing sustainable

building

BASIC PROCUREMENT METHODS

Traditional method Management ContractingPrinciples -Involves client, consultant team,

main contractor and sub-cons.-Consultant team prepares design; main contractor responsible for whole execution of work.

-Involves client, consultant team, management contractor (MC) and work packages contractors.-MC appointed at early stage to advice, plan, manage and oversee construction activities.

Advantages

-Scope of work is well defined at early stage.-Client knows total contract sum before the work starts.

-Faster completion time as design and construction can overlap.-Experienced MC can provide useful advice.-Flexible to design changes.

Disadvantages

-Requires longer time to prepare detailed design before tendering process.-Completion time is longer as contactor can only start constructing after design is prepared.

-Contract sum is uncertain until design is completed.-More Variations lead to more works to be done (eg. remeasurement).

TYPE OF CONTRACT FORMS

• Lump Sum Contracts• Measurement Contracts • Cost Reimbursement

Contracts

Cost Reimbursement Contracts

• Contractor is being paid the actual cost they incur in carrying out the works plus

additional payment to allow profit.

• Nature and scope of the work cannot be well defined at the beginning.

• Include some provision to allow profit which are :

- Cost plus percentage contract : additional amount of money is expressed as percentages

which pay to the contractor.

- Cost plus fixed fee contract : a negotiated fee that is fixed at the outset of contract

forming will be provided to the contractor.

- Cost plus fluctuating fee contract : client has to pay contractor actual construction cost

plus an additional variable fee which agreed by both parties at the outset.

Choice of Contract Form

CHOICE OF CONTRACT FORM

Cost Reimbursement Contracts

• Best choice for project which cannot be well defined.

• Advisable to use when time if of essence.

• Flexible to change designs and materials during construction.

Cost Plus Fluctuating Fee Contract

• Provide incentives to contractor.

• Good relationship between both parties.

• Allows flexible and efficient building experience.

VIABILITY OF DESIGN AND BUILD AS COMPARING TO

BASIC PROCUREMENT METHODS

D&B

• Design and build is a generic term describing a procurement route in which the main contractor is appointed to design and construct the works, as opposed to a traditional contract, where the client appoints consultants to design the development and then a contractor is appointed to construct the works.

Management contracting

• Management contracting is a procurement method in which the works are constructed by a number of different sub/works contractors who are contracted to a management contractor.

Design and build Management contracting

• D&B reduced project duration by the overlapping of the design and construction phases.

• Allow the early involvement of the management contractor.

• Client’s financial commitment is capped. D&B contractor is required to submit a Guarantee maximum price (GMP) based on the approximate bills of quantity by means of a percentage addition on the price arrived.

• Lower the risk and challenges (in the aspect of building technology) that might encounter during the construction phase.

• Client has lesser ability to control the design of project

• Accommodates later design decisions.

• D&B method increase the difficulty in comparison of tenders.

• Suitable for fast track project. Construction work can start as soon as sufficient work has been designed and approved by the local authorities.

CRITICAL ANALYSIS OF ALTERNATIVE BASIC PROCUREMENT METHODS TO

THE PROPOSED PROJECT

Not single procurement strategy is suitable for all projects and all employers

CRITICAL ANALYSIS OF ALTERNATIVE BASIC

PROCUREMENT METHODS TO THE PROPOSED SUBJECT

1. Shopping malls are different from all other retail store construction projects, it is large and complex.

a. The Management Contracting is suitable for large-scale and complex project

b. The traditional procurement method is suitable for project which relies on full design.

CRITICAL ANALYSIS OF ALTERNATIVE BASIC PROCUREMENT METHODS TO

THE PROPOSED SUBJECT2. The shopping complex construction projects are scheduled quicker than ordinary construction projects

a. The Management Contracting is suitable for fast track project

b. The traditional procurement method relies on full design information, it result in long time pre-contract preparation

3. The building of a sustainable shopping mall requires knowledgeable contractor or owner

> In construction management procurement, the client are require to have experiences in the certain project

CRITICAL ANALYSIS OF ALTERNATIVE BASIC PROCUREMENT METHODS TO

THE PROPOSED SUBJECT

4. A great deal of variation appear when site conditions are difficult

> The Management Contracting allows flexibility where programme and design are not final and can change.

CRITICAL ANALYSIS OF ALTERNATIVE BASIC PROCUREMENT METHODS TO

THE PROPOSED SUBJECT

CONCLUSIONProcurement method to be used:

Management contracting procurement-Allows early access of management contractor

-Speed up or reduce construction period

-Employer has more time for new business

Contract form to be used:

Cost reimbursement contract-Efficient when scope of works are not certainty

-More flexible in amendment of designs

-Allows provision profit for contractor