PP1

1. PROPOSAL ON THE BEST PROCUREMENT
METHOD, TENDERING METHOD and CONTRACT
ARRANGEMENT
[ QSB 60604 PROFESSIONAL PRACTICE 1 ]

2. Group Members:
KO BOU SIM (0325271)
KONG YE XIANG (0323886)
LAU MAO HUA (0320249)
LEE KAILYN (0320273)
LEE SHZE HWA (0320053)

3. Introduction
★ Development of a RM600 Million Hotel and Shopping Complex in the center of the
Golden Triangle, Kuala Lumpur
★ Meet client’s satisfaction
★ Fit client’s requirement
★ Ensure project’s successfulness

4. Proposed Procurement Method :
Management
Contracting
Procurement
Method

5. Management Contracting Procurement Method
★ Both design and construction process proceed in parallel.
★ Shorten the overall construction time.
★ Involvement of Management Contactor (MC) in the early design stage.
★ Responsibility of MC :
- Manage all the works package contractors.
- Coordinate all the construction activities.
- Act as advisor to improve the constructability of the design.

6. Management Contracting Procurement Method

7. Recommendation of Procurement Method
Time saving
★ The design and construction process overlapped.
★ Plan the work in sequence to allow the commencement of construction work while the building
still designing.
Flexibility in design
★ Can be effective to the uncertainty of project requirement.
★ Able to cope with any variation of the design.

8. Recommendation of Procurement Method
Better cost management
★ MC required to submit a contract cost plan based on contract prime cost of work packages at the
beginning stage.
★ Enable MC to monitor and control the cost against the actual prime cost .
Competitive price
★ Competition between the package subcontractor arise.
★ Able to obtain a cheaper price from several work package contractors.

9. Disadvantages of Management Contracting Method
★ Greater variation.
★ Uncertainty of final cost until the last work package has been signed.
★ Require an experienced and capable MC to manage all the work package
constructors.

10. Proposed Tendering Process :
Two-Stage
Selective
Tendering

11. ★ Initial stage : pre-qualification
★ Second stage : negotiation between employer and contractor
★ Reasonably transparent.
★ Able to get rid of non-performing contractors.
Recommendation : Two-stage Selection tender

12. Advantages
★ Contractor’s knowledge of their previous experience on the similar scheme is available at the
early stage.
★ Relationship between contractor and their chosen team is more likely to have a better
understanding of the requirement through shared knowledge and good communication.
★ Eliminate the risks during implementation of the project.

13. ★ Better monitoring and programming on costing process and pre construction design
development.
★ Lead to the introduce of value engineering in the project and also provide a better
understanding of financial commitment.
★ Cost certainty is improved and the risk to the employer is reduced.
Advantages

14. ★ Contractor is able to suggest on practical issues and buildability issues at an earlier stage.
★ To identify and resolve any hurdles may occur during construction.
★ Enables client to have a clearer mind on the sustainability issues and environmental
restriction.
Advantages

15. Contract Arrangement :
Type of Contract

16. TYPE OF CONTRACT - COST PLUS FIXED FEE
★ Fixed service fee is derived from Contract Cost plan (estimated prime cost for various
subcontractor ) .
★ Works is awarded to work packages contractor on lump sum basis.
★ Estimated prime cost used to monitor against actual prime cost upon award.
★ Total Contract Sum= Prime cost of work packages + Fixed services fee for MC.

17. TYPE OF CONTRACT - COST PLUS FIXED FEE
BENEFIT FOR CLIENT
★ Service fee is fixed and it does not fluctuate with the actual cost.
★ Motivate to carry out work in faster way which shorten the completion time.
BENEFIT FOR CONTRACTOR
★ Conduct the work in diligent manner.

18. Contract Arrangement :
Form of Contract

19. FORM OF CONTRACT - PAM 2006 (WITHOUT QUANTITIES)
★ Amended provision to suits project setting-MC procurement.
Table above shows the organization chart of Management Contracting procurement method.

20. FORM OF CONTRACT - PAM 2006 (WITHOUT QUANTITIES)
★ Pre-tender stage: MC + Consultant team - Buildability and Feasibility of design.
★ Post-tender stage: Consultant team’s obligation transfer to MC - issuance of certificate
★ Example: Interim claim, Valuation of Variations.

21. THANK YOU