PP1 Tutorial 3 Presentation

ANDY CHIN 0326973 l BENJAMIN NG KIEN FUNG 0324541 l CHAI JIA ERN 0324653 l CHEAH MAN YEE 0324743
BACHELOR OF QUANTITY SURVEYING (HONOURS)
PROFESSIONAL PRACTICE I (QSB 60604)
PRESENTATION 2 (QUESTION 3)
Group members:
Andy Chin
0326973
Chai Jia Ern
0324653
Benjamin Ng Kien Fung
0324541
Cheah Man Yee
0324743

QUESTION 3: The dictionary definition of procurement is :” the obtaining of goods and services”. Put in a construction context this can be
taken to mean obtaining the whole spectrum of goods, materials, plants and services in order to design, build and
commission a building that delivers the best possible value for money for the client over its life-cycle.
Mr Tan is considering building a private hospital in Subang Jaya. You are a quantity surveyor and as a
good friend you are asked to provide advice on the procurement system and the tendering methods that
are to be adopted in carrying out the project.
You are considering Design and Build and management contracting method of procurement. Discuss the
advantages and disadvantages of both types of procurement before making your recommendations.
Mr.Tan is a car manufacturer. Would you consider construction management in your recommendation?
Give reason to support your advice.
As for tendering methods, you shall consider all the three methods: i.e. open, selective and direct
negotiation methods. Similarly, you are to describe the advantages and disadvantages of each method
before arriving at your recommendation.
MR TAN
OPEN
TENDERING
SELECTIVE
TENDERING
NEGOTIATION
TENDERING
OR OR
DESIGN
AND BUILD
MANAGEMENT
CONTRACTING
CONSTRUCTION
MANAGEMENT
OR OR

ADVANTAGES AND DISADVANTAGES OF DESIGN AND BUILD METHOD
Potential Cost Savings
• Possible to cut down over all undertaking cost
• Can come up with a design that is less expensive to construct
Earlier Project Completion
• No dead clip between completion of design and start of
building
Reduced Administrative Burden
• May cut down administrative load on the proprietor because
there is one solicitation, one award and one contract to
administrate
Cost
• The employer may pay more if they ask the contractor to
take on an unreasonably high level of risk due to a lack of
design clarity at the point of tendering
• Requires that bidders list their subcontractors with
their commands.
Compliance with subcontractors
• Keep everyone in-house and do no typically contract
with outside entities
Fewer customized choices
DESIGN AND BUILD METHODADVANTAGES DISADVANTAGES

ADVANTAGES AND DISADVANTAGES OF MANAGEMENT CONTRACTING METHOD
Budgeting
• It allows easier budgetary control with minima variation
Process
• Can participate in the early stage of design process
Saving Time
• Can design work in a sequence which enable MC to commence
work before overall design is completed, thus overlapping the
design and construction and shorter overall development time
Lack of control
• Give up some control when you turn over your
operation to a management company.
• Delay the construction time because of the greater
opportunity to make changes in design during
construction period
Construction Time
• Required to enter into a contract with each work
package contractor
Contract
MANAGEMENT CONTRACTING METHODADVANTAGES DISADVANTAGES

DESIGN & BUILD OR MANAGEMENT CONTRACTING?
MR TAN
DESIGN & BUILD OR MANAGEMENT CONTRACTING METHOD? REASON.
MANAGEMENT
CONTRACTING
REASONS
-appointed the
management contract
at early stage
-flexible on design
matters
Lack knowledge of
Building & Environment
Car manufacturer

CONSIDERING CONSTRUCTION MANAGEMENT AS OUR RECOMMENDATION? INTRODUCTION TO CONSTRUCTION MANAGEMENT
WHAT IS CONSTRUCTION MANAGEMENT?
Project management techniques to manage the planning, design,
and construction of a project.
The purpose of CM is to control a project's time, cost and quality.
Compatible with all project delivery systems, including design-
bid-build, design-build
Responsibility is to the owner.
Professional construction managers may be reserved for lengthy,
large-scale.

CONSIDERING USING CONSTRUCTION MANAGEMENT METHOD AS OUR RECOMMENDATION?
MR TAN
CONSIDERING CONSTRUCTION MANAGEMENT AS OUR RECOMMENDATION? YES OR NO? REASONS.
YES NOOR
REASONS
High degree of client
ownership of risks
associated with design
including impacts of
late/incomplete and
uncoordinated design
Client position at
center of management
requires effective
decision-making
Added complexity of
one-to-one contractual
relationships of client
with all team members
The client’s financial
commitment is uncertain
until the last of the
works contracts has
been signed.

INTRODUCTION TO TENDERING METHODS
3 METHODS OF TENDERING
WHAT IS TENDER?
A 'tender' is a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods or services.
OPEN
TENDERING
SELECTIVE
TENDERING
NEGOTIATION
TENDERING
• one-stage bidding process, where
all interested and responding to
contract notice will be invited to
submit a tender.
• open to public & all the interested
firms can apply for the contract.
• Certain Contractors are invited to tender.
Integrity
Single stage Two stage
starts off where the
employer invites a
few known and
reputable contracts to
tender for the job.
starts off where the
employer choose a
few contractors by
pre-qualification.
• The Client will approach one
Contractor selected on merit to submit
a tender for the work.
Reputation
CharacteristicsAbility
Previous relationship with the client.
Skills

ADVANTAGES AND DISADVANTAGES OF OPEN TENDERING METHOD
ADVANTAGES DISADVANTAGES
No favouritism
• Prevent any unfair preferential treatment
• Offering an equal opportunity to any organization
High Competition in pricing
• Contractors submit competitive prices to obtain the
project
• Advantageous for the employer in getting value for
money
New firms can enter into market
• Can facilities greater innovation
New experience
• Client may be experience some new technology in
construction works, eg. Exoskeleton suits for
construction workers
Contractors get new client
• High tendency to find new promising contractors
• Provide a higher variety of options to choose
Open to all qualified bidders
Novice contractors
• The risk of possibly selecting a new and unknown
contractor is higher (no experience)
Inexperienced firms can enter into the market
• Contractors are trying to beat each other’s prices for
tender
• Underpriced tenders may include low quality
materials, poor quality of workmanship
Underpriced tenders
• the number of copies of tender will have to depend
on the number of participants tendering.
• the most tenderers, cost of tendering is generally high
High cost of tendering
• their consultant team have to check all the documents
which is time consuming
High evaluation time
OPEN TENDERING METHOD

ADVANTAGES AND DISADVANTAGES OF SELECTIVE TENDERING METHOD
Better quality of workmanship
• average quality of workmanship has been raised, it is natural
to expect better quality of workmanship than compared to
open tendering method
Simplified tender evaluation
• The contractors participating are all reputable contractors
• consultants can just focus on the price of which these services
come at
Shorter tendering process
• Less contractors involved means less time spends on evaluating
tender documents
Low cost of documentation
• Less tender documents are required to accommodate
the participating contractors, this lowers the printing
fee
Higher price
• since the average quality of materials and
workmanship is higher than the open tendering
method, the price of the project is bound to rise
• it can be seen to introduce bias into tendering as firms
may be excluded from approved lists for unknown
reasons, or because of personal preferences
Favoritism
• it can exclude smaller contractors or those trying to
establish themselves in new market, it can reduce the
potential and innovation
New firms cannot enter into the market
SELECTIVE TENDERING METHOD

ADVANTAGES AND DISADVANTAGES OF NEGOTIATION TENDERING METHOD
Quality Assurance
• Good chance of being satisfactory because based on
previous satisfactory working together or good reputation
of the contractors
Specialized knowledge of the contractor
• Some contractors are more familiar with a certain type of
building such as commercial, hospital or school.
Use in tight timeline / emergency works
• Early commencement of work on site as it shorten the period
involved in long process of open tendering and appointing
the contractor
Better Communication
• Experienced working together from previous projects
which already had understanding on both working
style
Corruption
• Create opportunities for dishonest/partial conduct which
could amount to corruption
• Favoritism, unfairness and secrecy may occur due to
relationship between the employer and contractor or
personal preference
Favoritism
• Absence of competition makes it difficult to ensure that
it is obtaining value for money
Value of money
NEGOTIATION TENDERING METHOD
• Without reputations, these small and new contractors are
hard to step into the market due to lack of experiences.
This reduce their chance of being chosen
Barrier for small and new contractor firm

RECOMMENDATION FOR TENDERING METHODS
MR TAN
OPEN TENDER
SELECTIVE TENDER
DIRECT NEGOTIATION
Select few contractors that have experience in hospital construction
Familiarity
Quality assurance
Shorter period of Tendering Process
More options for price through competition
SELECTIVE TENDERING METHOD REASON

BACHELOR OF QUANTITY SURVEYING (HONOURS)
THANK YOU !

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