Group strategic

1. SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
BACHELOR OF QUANTITY SURVEYING (HONS)
STRATEGIC MANAGEMENT
(MGT60703)
GROUP ASSIGNMENT
LECTURER: MR LEONG BOON TIK
Name Student ID
Lee Lin Hui 0322797
Farah Aida Sham 0322962
Maybelle Wang Sze Kher 0327553
Mohamed Haroon Faleel 0322197
Muhammad Fareez 0322961
Wendy Teo Siew Yen 0328242

2. Table of Content
PART A.......................................................................................................................................... 1
History of Building Information Modeling (BIM)............................................................... 1
Building Information Modeling (BIM) Defined .................................................................. 2
Competitive advantages of using BIM technology .............................................................. 7
Optimized delivery: Advantage from predictability............................................................. 8
Business alignment: Advantage from added value .............................................................. 8
BIM can open new opportunities ......................................................................................... 9
BIM can enhance staffing..................................................................................................... 9
BIM can build better client relationships ............................................................................. 9
BIM is a business strategy.................................................................................................. 10
PART B ........................................................................................................................................ 11
Company profile................................................................................................................. 11
TCCM’S Competitors ........................................................................................................ 13
SWOT Analysis.................................................................................................................. 18
Porter's Five Forces Analysis ............................................................................................. 20
Competitive advantage ....................................................................................................... 22
Competitive strategies for QS firms................................................................................... 23
Differentiation strategy....................................................................................................... 23
Growth strategy.................................................................................................................. 25
PART C........................................................................................................................................ 27
Definition............................................................................................................................ 27
Benefits and disadvantages of PPP/PFI towards Malaysia ................................................ 30
Precautionary steps needed before awarding a PPP/PFI project........................................ 33
References.................................................................................................................................... 36

3. 1
PART A
Assuming you are the director of an established QS consultant firm that has 50 chartered
quantity surveyors. Name and define one technology in your industry. I.e.: Building
Information Modeling (BIM). Discuss how the technology can give competitive advantage
to your company.
History of Building Information Modeling (BIM)
Globally, BIM has already existed more than twenty years. The idea of BIM was led by
the United States where the US General Services Administration or GSA was responsible to
promote and provide strategic implementation to US public projects. In United Kingdom, the
common strategic framework which consists of four strategies such as leadership, vision,
collaborative framework and client and industry capability and capacity is developed in order to
assist public sectors to implement BIM successfully.
Other leaders in BIM adoption and implementation are Norway, Finland, and Denmark.
There are various activities organised by these three government bodies in order to increase the
BIM adoption. Singapore is active in BIM agenda as its Construction and Real Estate Network
(CORENET) provides various strategies in BIM implementation. In Japan, the engagement and
the implementation of BIM showed a positive return in investment or ROI especially for the
contractors. Meanwhile, the Australian government rigorously implement various strategies in
BIM implementation through proposed work programs. However, currently there are mandates
of BIM noted from the Australian government. In Hong Kong, the Hong Kong Housing
Authority has its standards and requirements in BIM adoption and implementation such as
collaboration, incentive and proven benefit, standard and common practice, legal and insurance,
information sharing and handover, promotion and education, compliant BIM tool, audit and risk
management and global competitiveness.
Hence, the experience by prior BIM industries is necessary to identify and avoid the
shortcoming problems especially for new BIM comers such as Malaysia. The Malaysian Public
Work and Department (PWD) introduces BIM into the construction industry early 2007.

4. 2
However, the adoption and implementation of BIM in Malaysia took a long time. Only in 2010 it
first took place, where the National Cancer Institute construction project was to be built. As it is
the national agenda to embrace new technology, recently many private sectors also have taken
actions by adopting and implementing BIM in their organizations.
This step was a result of the government’s awareness of the potential of BIM to reduce
construction cost and avoid design problems in planning phase. Moreover, BIM also has been
seen as a concerted action to ensure collaboration between construction players such as
architects, engineers, project managers and contractors.
Nowadays, the government encourages construction players to apply BIM to projects
because BIM has a huge potential to facilitate solving problems of construction projects. For
instance, BIM can prevent disputes between construction players, manage the right quantity for
each structure, decrease construction cost and avoid project delay.
Building Information Modeling (BIM) Defined
BIM or Building Information Modelling is a process for creating and managing
information on a construction project across the project lifecycle. One of the key outputs of this
process is the Building Information Model, the digital description of every aspect of the built
asset. This model draws on information assembled collaboratively and updated at key stages of a
project. Creating a digital Building Information Model enables those who interact with the
building to optimize their actions, resulting in a greater whole life value for the asset.
BIM is an intelligent 3D model-based process that gives architecture, engineering, and
construction (AEC) professionals the insight and tools to more efficiently plan, design, construct,
and manage buildings and infrastructure.

5. 3
Building Information Modeling refers to a collaborative method of working which is
based on the generation and exchange of data and information between the various project
parties. For effective functioning, BIM requires integration of the following five elements:
Processes, Policies, People, Information and Technologies
1. Processes refer to the specific order of work activities with a beginning, an end, and a
clear identification of the inputs and outputs of each stage.
2. Policies refer to the principles and rules to guide the decision-making process. Policies
are framed to develop standards and best practices to minimize disputes between the
parties involved.
3. People make the difference and therefore are the most important. Effective management
by people can only lead to successful BIM. Important people in Building Information
Modeling usually include: BIM director, BIM manager, BIM consultant, BIM
technologist.
4. Information: There are two types of information: models and documents. Models are
digital data that are the representation, reproduction, or simplified version of an object,
road, bridge, building etc. They are stored in a file format and can be exchanged and
shared to support the decision-making process for the construction of the infrastructure,
buildings etc. Documents are the digital version of papers, drawings, prints, images and
video.
5. Technologies refer to the software and hardware tools used to manage the various stages
of the Building Information Modeling process.
In the past, blueprints and drawings were used to express information about a particular
building plan. This 2D approach made it very difficult to visualize dimensions and requirements.
Next came CAD (Computer Aided Design), which helped drafters see the benefit of plans in a
digital environment. Later on, CAD turned 3D, which brought more realistic visuals to
blueprints.

6. 4
Now, BIM is the standard— but it’s more than just a 3D model. There are now 3D, 4D,
5D, 6D, and 7D models available. The 3D BIM's visualizations capabilities enable participants to
not only see the building in three dimensions before ground is ever broken, but also to
automatically update these views along the project life cycle, from earliest conception to
demolition. BIM 3D helps participants to manage their multidisciplinary collaboration more
effectively in modelling and analysing complex spatial and structural problems. Furthermore,
because accurate data can be collected along the project life cycle, and stored in the Building
Information Model, new value can be added to predictive models allowing to resolve issues
proactively.
4D BIM is used for construction site planning related activities. This model allows
participants to extract and visualize the progress of their activities through the lifetime of the
project. The 4D BIM technology can result in improved control over conflict detection or over
the complexity of changes occurring during the course of a construction project. 4D BIM
provides methods for managing and visualizing site status information, change impacts as well as
supporting communication in various situations such as informing site staff or warning about
risks.
Next, 5D BIM is used for budget tracking and cost analysis related activities. This model
associated with 3D and 4D (Time) allows participants to visualize the progress of their activities
and related costs over time. The utilization of 5D BIM technology can result in a greater
accuracy and predictability of project's estimates, scope changes and materials, equipment or
manpower changes. 5D BIM provides methods for extracting and analyzing costs, evaluating
scenarios and changes impacts.
6D BIM helps perform energy consumption analyses. The utilization of 6D-BIM
technology can result in more complete and accurate energy estimates earlier in the design
process. It also allows for measurement and verification during building occupation, and
improved processes for gathering lessons learned in high performance facilities.

7. 5
7D BIM is used by managers in the operation and maintenance of the facility throughout
its life cycle. This model allows participants to extract and track relevant asset data such as
component status, specifications, maintenance/operation manuals, warranty data etc. 7D BIM
provides processes for managing subcontractor/supplier data and facility component through the
entire facility life cycle.
Every software that is under BIM has its own greatness and benefits, depending on what
a company favors more in terms of simplicity and functionality. In our firm, we emphasize on
construction management and measurement for our project more efficiently. Therefore, as a
consultant QS firm, we adopt the BIM softwares that is Glodon and CostX which are the two
main tools mainly used in the Malaysia construction industry.
1. Glodon
Glodon Company Limited is founded in 1998 in Beijing, China. The products of Glodon
have been widely used in such three major sectors which are house building, industrial
engineering and infrastructure. It helps quantity surveyor in various stages of construction such
as cost estimating, value engineering, project tendering, tender bidding, project post contract
administration and final account re-measurement. The Glodon BIM software available in the
market includes Cubicost Takeoff for Rebar (TRB), Cubicost Takeoff for Mechanical and
Electrical (TME) and Cubicost Takeoff for Architecture and Structure (TAS). 3D measurement
and calculation rules like British Standards and UBBL are available in the software to
standardize the way users carry out taking off. Less data and formulae are required to insert in
calculation of the quantity, therefore the probability of error occurs are lower.

8. 6
Cubicost provides the construction industry with a highly efficient, precise and
convenient BIM integrated solution. This software stands out in a sense that it does not only
apply to global calculation rules, but it can also be applied to local calculation rules.
Furthermore, highly realistic 3D models that contain vast amounts of data can be created and
cutting-edge technology that deals with multiple variations can be used.
2. CostX
CostX is a construction digital takeoff software which is developed by Exactal. CostX
enables one to quickly and accurately take off quantities from 2D drawings and generate
automatic quantities from 3D models / BIM using the most advanced electronic takeoff system
available. Prepare estimates, bills of quantities and tenders easily and all in a fraction of the time
and cost. CostX is Exactal’s top-of-the-range product where more companies are using CostX for
their complete estimating solution and are demonstrating strong returns on their investment. It
can reduce take off time by up to 80%. Supports a range of 2D drawings, including scanned,
PDF or CAD. CostX can measure areas, lengths and counts with a single click. It also supports
BIM by using digital design data to accurately estimate quantities and costs. Powerful
spreadsheet based workbooks are live-linked to the drawings. Unique revision mode compares
drawings and highlights the changes and subcontractor comparison workbooks can be generated
with associated reports. Report writer produces customized professional reports and codes &
zones which allow work to be sorted and regrouped.

9. 7
Competitive advantages of using BIM technology
In the current era, everyone is operating on a BIM level playing field, but the decisive
component is that the companies have to use BIM strategically if they are to gain any
competitive advantage.
Building Information Modelling (BIM) is everywhere these days and it is more of a
challenge to use it to your advantage in a hostile industry where there is no room for error.
BIM is known for reducing cost, cutting schedule, improving quality and providing
further productivity benefits. But what happens when the majority of companies – your
competitors – all have easy access to that capability?
Early BIM adopters have the advantage for the time being. But as more companies turn to
BIM-based delivery, either through choice, or in response to client demands the industry will
reach a tipping point. How will you manage BIM for advantage in a BIM-saturated market?
BIM’s efficiency and productivity benefits won’t change. But to gain a sustained
advantage BIM must be used in a more strategic way: taking it out of the project and into the
boardroom.
The key components to such a strategy will be something each company needs
determine for themselves. But, areas to consider are: how consistently you use BIM across
your projects and how you exploit BIM-based information.

10. 8
Optimized delivery: Advantage from predictability
Repeatable, consistent, optimized use of BIM to deliver projects will help differentiate
you from a company that uses BIM, but does so differently on each project. How confident are
you that you have known inputs, benefits and costs before you implement BIM on a project? It
is very common for the benefits gone to waste and costs escalated over the course of a project.
In the same way as you have existing project delivery models and processes, you can
create “BIM-enabled” versions. These provide the confidence to respond to tender invitations
knowing that for a prescribed investment of time, money and people, you’ll get a predictable
result.
Business alignment: Advantage from added value
The very nature of BIM makes it an ideal platform for experimentation. When you see
an opportunity to expand your reach and add value, consider how BIM could support this.
Consider how BIM might improve management decisions. With so much project information
‘under one roof’, how might it be plugged in to both your project controls functions and
ultimately rolled up to your enterprise control functions?
The BIM process enables enhanced communication of conceptual design intent,
fabrication and construction detail, and everything in between. The BIM process increases
collaboration across multiple disciplines where the net result is that the entire design team,
construction team, and owners have better metrics to make informed decisions about projects.
By using an integrated BIM model, it is far easier to predict issues and optimize construction
schedule and cost savings.

11. 9
BIM can open new opportunities
Once your team has executed BIM on a complete project, it will become widely apparent
that BIM can open new opportunities. A well-defined BIM business strategy will include a
detailed review of your current business practice to determine how BIM can open up new niche
opportunities for your current and future clients. BIM opportunities grow with each project that
you complete as the customer begins to fully understand the value of a BIM model and all of its
potential uses. BIM projects are an ecosystem, and many of these projects provide opportunities
to extend your participation beyond the normal scope of delivery. BIM content and BIM
execution planning are valuable intellectual property, and in most cases they can become new
sources of project revenue that otherwise would never have been realized.
BIM can enhance staffing
One direct way to establish an industry edge is to attract the very best talent by using
BIM as a way to enhance staff. BIM integration means your current and future staff will have
new and more modern ways to work and collaborate. BIM learning paths will be necessary to get
your staff up to a baseline level of knowledge for the process to work effectively. Investing in
training and mentoring for your staff will demonstrate a commitment to personal development
and staff retention. BIM introduces new opportunities for staff to develop and grow
professionally, with added avenues for upward mobility as BIM-focused positions grow with
your BIM strategy.
BIM can build better client relationships
At its core, BIM is a communication tool for design intent. It is an effective way to
develop a more valuable relationship with your clients who may not fully understand your design
intent using traditional methods of communication (2D drawings, static story boards, etc.).

12. 10
Using 3D modelling and visualization software can be a good means to present changes
on a new project. The movies allow them to virtually drive down the streets and fly over the
project area to get a clearer understanding of a project proposal.
There can be better client feedback with BIM and this can result in a better competitive
advantage, any changes that they want can be easily dealt with into the final product.
BIM is a business strategy
In addition to everything else, BIM is ultimately a business strategy. Developing a
framework for your BIM strategy will be essential to overall success. Vision, leadership, and
incremental change are the three pillars to the success of your BIM strategy — which will evolve
as your BIM practice matures.
It is important to review and update your strategy to keep pace with the overall BIM
maturity of your company and its client’s. BIM will impact and change your marketing efforts,
your project delivery, and your technology needs.

13. 11
PART B
By listing out necessary assumptions, you are required to access your company competitive
advantage in the industry. There is no limitation on the analysis tools. Hence derive
strategies to ensure you gain a better competitive position in the industry.
Company profile
Taylors Cost Construction Management (TCCM) is a firm of Consultant Quantity
Surveyors. The Practise was established in 1998.
TCCM specialises in the financial management of construction and engineering projects,
large and small, from inception to completion and has available extensive experience to service
both domestic and overseas clients.
TCCM is registered with Lembaga Juruukur Bahan Malaysia, Permit No. 1992/FP00026.
TCCM has over 160 administrative staff, quantity surveyors, Partners and Associates. Thus, it
belongs in large size firm.

14. 12
Scope of Services of TCCM:
● Preliminary cost advice including the preparation of feasibility studies, preliminaries
estimates and cost plan.
● Preparation of cash flow forecasts.
● Preparation of detailed estimates and cost plans including providing proactive advice on
possible alternatives to achieve the optimum balance between value and cost.
● Preparation of tender documents.
● Assistance in the calling and closing of tenders.
● Evaluation of and reporting on tenders received.
● Negotiation with Contractors and finalizing contract sums and related issues.
● Interim valuations of work executed including comparing actual and forecast expenditure
to monitor financial progress.
● Preparation of financial statements on estimated final cost.
● Settlement of the final construction cost with the Contractor and subcontractors.
● Advice on and ascertainment of any loss and expense claims.
● Advice on any disputes leading to arbitration or the courts.
● Application of full scope of Quantity Surveying services to turnkey or Government
privatization projects.
● Project management.

15. 13
TCCM’S Competitors
JUBM Perunding NFL Sdn. Bhd
Staff Resources 180 staff 190 staff
Size of Firm Large Large
Establishment 1976 1972
Core Services Construction Cost Management &
Quantity Surveying
Quantity Surveying
Branches/ Offices Kuala Lumpur, Penang, Johor
Bahru, Kuching and Kota
Kinabalu
Kuala Lumpur, Johor Bahru,
Types of Projects ● Mixed Use Development
● Hospitality, sports and leisure
● Transport and infrastructure
● Commercial
● Retail
● Civil Engineering,
● Office and Commercial
development
● Retail and Industrial
development

16. 14
● Residential
● Private Educational
● Private Healthcare
● Industrial
● Public Buildings
● Religious Buildings
● Residential
● Shopping and Office Complex
● Hotel, Leisure development
● Transport buildings, including
Airport Terminal and Railway
Stations
● Hospital and Medical Centres
● Public buildings including
Museum, Mosque
● Educational buildings and
Institutions.
Services ● Cost Management & Quantity
Surveying
● Project Management
● Cost Engineering
● Due Diligence
● Project Monitoring
● Insurance Valuations
● Legal Support
● Management Consultancy
● Research Studies
● Sustainable Construction
● Capital Tax Allowances
● Life Cycle Costings and
studies on economics of
alternative designs
● Valuation/ Auditing of
Contractual Claims
● Auditing of Contracts and
their related budget and
expenditure
● Value Engineering Works
carried out before or after the
award of tender
● Taxation Advice on Capital
Allowances
● Quality Management
● Quality Assurance
● Facilities Management
● Preparation and Attendance

17. 15
for Arbitration/ Mediation/
Litigation/ Adjudication
● Certification of project
accounts
● Evaluation on Contractual
Claims
● Technical and Construction
Costs Auditing
● Risk Management
● Construction Management
● Condition Survey
● BIM Management and
Modelling Services

18. 16
Based on BQSM’s official website there are a total of 362 numbers of Registered
Consultant QS Practice. There is an existence if different firm size (small, medium and large) of
QS firms which results in a stronger competition among them and medium firms can be seen to
dominate the market (refer to Table 1)
Table 1 Percentages of QS firms in Malaysia according to size of firm
Size of firms Total Workforce Percentage (%) of firms
Small ≤ 10 40.4
Medium 11-30 50.0
Large >30 9.6
Total 100.0
Source: Abdullah and Haron (2007)

19. 17
How can Taylors Cost Construction Management (TCCM) stand out to win over projects
and remain relevant in the industry?
Based on Table 1 there are only less than 10% of large firms in Malaysia as QS firms that
dominants the construction industry are from medium sized company.
TCCM is a large size firm, therefore we can conclude that the amount of competitors
among larger firms are lesser than smaller firms.
The concept of firm competitiveness leads to that of competitive advantage. According to
the largely consolidated view of competitive process, a firm’s performance is affected by its
competitive advantages. In its turn, the nature of such advantage results in one or more
specific sources of competitive advantage which a firm controls. The concept of
competitive advantage is central in strategic management studies. A competitive advantage refers
to the position of superiority within an industry that a firm has developed in comparison to its
competitors.

20. 18
SWOT Analysis
Strength
● Technology up to date
● Skillful workers
● Professional workers in various fields
● Experienced mega projects
● Work Efficiency in projects
● Knowledge on various types of project
● Work capabilities
● Huge operation capacity
● Quality in measurement
● High knowledge in estimating and pricing
● Client relationship management
● Good knowledge of construction technology
● Flow of Information about Projects
● Knowledge in construction law and contracts
Weakness
● Limited time to carry out measurement
● Low brand awareness
● Huge workload
● Tax rate high due to high profit
● New to the market
● Low experience in the market compare to our competitors

21. 19
Opportunities
● Expand business strategy with local and international projects
● Worldwide branding
● Open business branches to other countries especially to nearby countries
● Expand use of technology to improve efficiency work
● Marketing and advertising for private projects
Threats
● Comparing with our competitors, our company is still early established compare to our
competitor which gives our competitor the advantage of the client's favour
● Since our competitors are more experienced this may cause our staff to be in favour of
our competitor which is a big threat to our company
● Local competitors are catching up in terms of knowledge, and technology and offering
their services for much lower professional fees
● High customer expectation, where some client's expect the same level of service from our
smaller company with a bigger company which can lead to client's dissatisfaction
● Economic environment may cause a threat to our company if there is an economic
turndown.

22. 20
Porter's Five Forces Analysis
Porter's Five Forces Framework is a tool for analyzing competition of a business. It draws
from industrial organization (IO) economics to derive five forces that determine the competitive
intensity and, therefore, the attractiveness (or lack of it) of an industry in terms of its
profitability. An "unattractive" industry is one in which the effect of these five forces reduces
overall profitability. The most unattractive industry would be one approaching "pure
competition", in which available profits for all firms are driven to normal profit levels. The five-
force perspective is associated with its originator, Michael E. Porter of Harvard University.
Threat of new entrant - Low
● In order to start a consultant firm requires a high capital which makes the chances of new
entrant low.
● New entrant must meet the requirements such as licenses to set up a firm
● Our technology is up to date which make the threat of new entrant to be low
● In terms of cost we have lower cost services compare to new entrants
● In the industry we have advantage of distribution channel where new entrants will find
hard to have access
● There are many players in the industry with big names compare to us which causes high
threat of new entrant
Threat of substitute – Low
● In this modern generation, client's are expecting QS to use technology which is an
advantage to our company. Since our company provide such services this may help us to
reduce the threat of substitute.
● BIM technology is a big threat of substitution to our company but in order to use such
technology requires a professional with a QS background. This makes the threat of
substitute to be medium.

23. 21
Bargaining power of buyers - High
● Nowadays clients have a good knowledge in construction which can make negotiation
much more better in a project
● The differences between other competitors is low where both big players and small
player have the same services
● Since our company does not apply switching cost this may lower the cost of change
● The number of customers are high
● Our competitor offers the same service which can increase the substitution level
Bargaining power of suppliers - High
● Qs surveyors are limited then the number of supplier is low
● Ability to substitute is low because it is hard to find someone with same ability
● Switching cost are very low due to the uniqueness of services
Competitive rivalry - High
● Rivalry competition is high when there are just a few businesses equally selling a product
or service, when the industry is growing and when consumers can easily switch to a
competitor's offering for little cost.
● Due to the similar nature of work this may result a high intensity of rivalry.
● High strategic stakes because Quantity surveyor may cause mistake which can make
competitors to overtake market position
● Commitment to industry is high because big players are making hard for new entrant
enters the market, it will find it hard to exist in the market for long.
● Low differentiation because there are competitor providing similar services which causes
high competition.

24. 22
Summary
1. Threat of new entrant - Low
2. Threat of substitute - Low
3. Bargaining power of buyers - High
4. Bargaining power of supplier - High
5. Competitive rivalry - High
Competitive advantage
● Making sure the satisfaction of client
● Differentiation strategy which promotes creativity in offering services, i.e.,
diversification. For a firm, diversification includes applied services, new knowledge, new
technology application, marketing, innovation and much more.
● The cost leadership strategy focuses on the reduction of cost in productivity or
administration to offer a lower price to customers. In QS firms, this strategy refers to how
the firm can offer their services at lower fees than others through the ability to control the
cost of the firm's administration while increasing productivity.
● Growth strategy is the expansion of business. By branching out, either locally or
internationally, they would have a wider market and more opportunities that could lead to
a strengthened position in the industry

25. 23
Competitive strategies for QS firms
Adoption of suitable strategies will enable TCCM to compete well with their rivals.
TCCM can shape their strategies to meet the demands of competitive environments and develop
capabilities according to these needs. There are many ways of competing and most can be
rationalized into one of three generic strategies as suggested by Porter (1985) i.e., cost
leadership, differentiation and focus. These strategies have been widely expanded, used and
applied in different types of settings including healthcare, finance and service-based firms.
Some researchers stressed that the size of a firm attributes to the choice of strategy used on the
positioning of the firm in the in industry. In TCCM’s case, TCCM is large size firm which is
suitable for the differentiation strategy and growth strategy.
Differentiation strategy
The differentiation strategy promotes creativity in offering services, i.e., diversification. For a
firm, diversification includes applied services, new knowledge, new technology application,
marketing, innovation and much more. A differentiation strategy would be suitable for large firm
size as it would require strong financial resources, good credibility, high reputation and the
ability to make high risk moves. This strategy focuses on five elements
● Marketing
● Reputation
● Branding
● Relationship
● Innovation.
The elements focus on offering services that assist the client in optimizing the economic
value of the project rather than offering the client a lower cost but a restricted service.

26. 24
Elements of Differentiation Strategy
Marketing Strategies ● Build relationship with existing clients
● Attracting new clients
● Providing broader range of services to clients
Reputation Strategies ● Best known on honesty and responsibility
● Widely known on delivering high quality of
services
Branding Strategies ● Improve quality of services offered
● Establish good image and reputation in the
minds of clients
Relationship Strategies ● Identify clients’ requirements and maintain
good relationship with them
● Offering additional services to clients
Innovation Strategies ● Development of in-house software
● Implementation of new knowledge

27. 25
Growth strategy
The main objective of this strategy is the expansion of business. By branching out, either
locally or internationally, they would have a wider market and more opportunities that could lead
to a strengthened position in the industry. Langford and Male stated that firms may decide to
expand their business into a new market or geographic place because of stagnant existing
markets, booming markets in a new geographic location and the competitive use of resources.
Before applying a growth strategy, firms should be aware of the potential new challenges: the
need to enhance skills and resources and the need to understand new cultures, competitiveness,
societal needs and business environments.
This strategy focuses on three elements
● Internationalization
● Expanding firms/services
● Diversification
The QS firms may pursue this strategy if they intend begin a new business with strategic
alliances that would offer new services to clients, tap into foreign markets or branch out into
different locations within the country. The growth strategy is vital to expand the roles of QS
firms and to safeguard the future of the QS professions as it is now threatened by a number of
challenges.

28. 26
Elements of Growth Strategy
Internalization Strategies ● Venture in internalization
● Joint venture with a firm in a foreign country
Expanding Firm/ Services Strategies ● Expand firm by increasing number of staffs to
develop scope of services
● Expand scope of services to cater to foreign
market demand
● Set up more branch offices
● Joint venture with a firm in Malaysia
Diversification Strategies ● Other consulting services
● Entry into new types of construction projects
● Engaging in new business (real estate, oil and
gas and others)

29. 27
PART C
As an experienced person in construction industry, especially the contract relevant expert,
you are appointed by the government as consultant in policies making. You are request to
define Public Private Partnership (PPP) and Private Finance Initiative (PFI), and then
discuss the benefits and disadvantages of PPP / PFI towards Malaysia. You are required to
give advice to the government what is the precautionary steps needed before award a
PPP/PFI project.
Definition
A public private partnership (PPP) is a joint venture effort between government and
private sector for completing any project and it is very useful for handling large public projects.
It is a type of agreement between both sectors to work together, share resources, risks and
rewards, where it typically involves the private entity taking part in government projects aimed
at benefiting the public. Usually, the private partner involves in designing, construction and
funding the project, whilst the public partner focuses on making sure that the project is in
compliance with the requirements. The private sector determines the required input to obtain the
desired outcome as specified and they can come up with innovative ideas for the projects to
reduce the overall costs.
The payment is either on an agreed amount by the government or indirectly from users
over a certain period of time of the constructed project. PPP is usually implemented for projects
that involves large sum of money such as infrastructure works, hospitals, schools and more. For
instance, the construction of tolls for highways where the collected fares by the users will be
used to pay the private entity in exchange for the completion of project. In terms of risks, it is
distributed between the partners based on their capabilities to handle them. A careful design and
management of PPP contract is very effective in sharing and allocation of financial burden and
operational risk of project between both sectors. There are several types of PPP contract with
their own distinct arrangements.

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1. Build-Operate-Transfer (BOT)
Basically, the private entity is responsible to finance, design, construct, operate and maintain the
project along the concession period. Once the period ended, the project is to be transferred back
to the government.
2. Build-Own-Operate-Transfer (BOOT)
As for this, the private company is permitted to finance, build, operate and manage the project.
They are also allowed to collect the fees from the end users for a certain period that is agreed in
the contract for them to pay back investment. As usual, the facility is to be transferred back to the
public authority once the contract has ended.
3. Build-Own-Operate (BOO)
This is similar as BOOT and the only difference is that the private company will be able to retain
their ownerships of the facilities for long period.
4. Lease Purchase
This approach can be applied in a situation where the local government may not be in the
position to fork out a large sum of investments for the required facilities due to limited funding,
thus this allows the private entity to be involved in the project and finance for the construction.
The facilities are then leased out to the government for a specified period of time as agreed in the
contract and when the contract ends, the ownership will shift to the local government.
The PPPs are a broad range of partnership and private finance initiative (PFI) is a part of
the partnerships where both sectors collaborate for mutual benefits. As for PFI, it offers an
alternative to the conventional procurement of public service infrastructure. Basically, it is a
form of PPP to contract the private firms to complete and manage public projects according to
the specification defined by the public sector. It is one of the methods of providing funds for any
major capital investments by the private sector. Generally, it is suitable for large-scale projects.
Under PFI, the government commissions the private entity, that is the contractor, to deliver any
public projects. The private company is to be responsible for the up-front costs and thus, borrows
from finance provider to fund for the construction either wholly or partly. Therefore, the

31. 29
introduction of this is an effort by the government to boost and encourage private entity to
participate in the public development project. As a result, this helps in reducing the government’s
expenditure in providing public services and infrastructure.
In the Malaysian context, the government defines PFI as engaging both private and public
sectors in transferring of the responsibility of financing and managing capital investments and
services. The contractors involved in the PFI projects will only be responsible during the
construction stage and they do not have the obligation in operating the facilities. The agreement
will be continued between the government and special purpose vehicle (SPV). After the end of
the concession period, the projects are to be transferred back to the public sector at zero cost.
Basically, the SPV is to manage and oversee the overall funding mechanism in PFI projects.
Majority of the financing sources are from bank loans and a minority of it is financed internally
by the special-purpose vehicle’s (SPV) own investment. The government has also announced
that the Employees Provident Fund (EPF) is to be the source of finance for PFI projects, which
makes it different from other Malaysian PPP models where the money is derived from the
taxpayers. Government allocates a certain amount of EPF for SPV to finance for the PFI
projects. However, there are two types of PFI models practiced in Malaysia. The first model is
mainly aimed for small to medium scale such as the building of schools, hospitals, police stations
and more. With that scale, the private entity involved may not be from large organizations, thus
less experience which could cause the finance provider to be reluctant in lending such amount
for a long period of time. Due to the possibility of being unable to fund for the construction, the
EPF is to be used as the financier of such projects. As for the second model, it involves large-
scale projects such as bridges.
When the private companies take on a PFI project, the risks are deemed to be transferred
to them. Companies that have undertaken such projects are often better at managing the works
with their experiences in the industry. Essentially, the contractors ensure that the projects built
are functional. In return, the private company is paid on performance basis and is comparable
with the quality of services provided. Payments may be withheld or deducted if quality of
performances are not up to the agreed conditions. Sufficient amount is ensured as returns on
investment, as a way to encourage more private companies to take part in public projects.

32. 30
Benefits and disadvantages of PPP/PFI towards Malaysia
BENEFITS DISADVANTAGES
1. Better certainty in quality
PPP/PFI projects are open for bidding and thus,
innovative and improved designs will be
proposed by the contractors in order to win the
bid for the project. High quality standards are
better obtained and maintained throughout the
life cycle of the project. The projects are usually
based on the performances provided by the
contractors through the Key Performance
Indicator (KPI) to avoid any poor or non-
conforming quality. The output specifications are
clearly defined in the contract and in the event
there are any shortcomings, the private entity is
to resolve it quickly in order to restore its
earnings potential. In the off chance that the
government is not content with the outcome, the
contractor may not get paid for the services.
2. Better certainty in timing
Higher chances for the projects to be completed
faster and reduce delays because the contractors
are paid based on their performances. Payment to
the private sector only starts when the services
start, which creates a strong incentives for them
to deliver on time, if not earlier. This
1. Costly
Due to the risks accepted, private entity
might expect to be compensated and results
in the increase of costs. Besides, the
infrastructure or services delivered could be
more expensive and the profits depends on
the competition between different firms, the
scope and complexity of the projects.
2. Operational concerns
Lower-than-expected usage, for instance
tolls, can result in decrease of available
revenue. If the government agreed to pay the
minimum fee no matter the demand of usage,
they bear the risk.
3. Financing risks
EPF will be used for the funding of PFI
projects, the government is more at risks in
terms of financing.

33. 31
procurement is able to deliver the project under
or on time.
3. Efficiency
May include early completion incentives which
could increase the efficiency. Other than that, the
private entity has more expertise and experience
in the work which can be utilized in the projects,
eventually making it a smooth and efficient
progress.
4. Reallocating funds
Government will be able to allocate their funds
to be invested in other important socioeconomic
areas. Especially useful when local government
has limited funding for the facilities.
5. Value for money
The private entities are responsible for the
design, construction and maintenance of
infrastructure for the long run. Thus, the whole-
life cycle costing approach should yield total
cost efficiency. In the open tendering process for
the projects, the contractors need to provide the
innovative and improved designs in terms of
whole life cost to enable them to compete with
other candidates in the bidding.
4. Tendering process
Most of the projects go through direct
negotiation instead of open tendering. This
causes unfairness in the award of the projects
as it eliminates the competition of other
candidates to bid for the works. It is very
important that open competitive tendering
process is to be applied fully to select the
qualified and experienced contractor.

34. 32
6. Risk distribution
Appropriate allocation of risks according to their
own capabilities enables to reduce the risk
management expenditures. The government will
be able to reduce their risk level as risks will be
transferred to the private companies. For
instance, the government will be relieved from
the operational and execution risks as they have
less expertise and knowledge in the matter. It
may not mean all the risks associated with the
projects to be borne by the private entities, but
risks that are related to the performance, design
or construction. This means that the government
as a party to the contract could bear some of the
risks according to their own capabilities in
handling them.
7. Long-term relationship
The contract is usually between 20 to 30 years,
which means both the sectors will be in a long-
term contract for the project. This could help
them to grow in the industry by sharing
knowledge in their line of work and be able to
come up with innovative ideas to improve
performances for the projects.

35. 33
Precautionary steps needed before awarding a PPP/PFI project
PPP aims to encourage cooperation between public and private sectors to stimulate the
investment of private sector in development projects. Precautionary steps need to be taken so that
the purpose of PPP will not be defeated.
Firstly, the government is responsible to clearly establish the objectives and methods of
implementation of all PPP to identify proper direction of development, and to ensure its
compliance. One of the ways to do this is to establish a schedule which clarifies the expectations
from the public sector. It serves to inform private sector as well as other stakeholders regarding
the goals of the development so they know the expected outcome. Creating a long term shared
vision with the private sector is necessary as most PPP projects span over a long time.
Lack of government guidelines and procedures regarding PPP projects is one of the main
constraints in adopting PPP in Malaysia (Ismail, S., & Harris, F. A., 2014). It is claimed that the
existing guidelines provided by the government is too general in which it may not be useful to
the people involved. To ensure smooth implementation of PPP, standardized guidelines with
sufficient details from initial to post completion stage should be outlined clearly by the
government to the service provider. It is an urgent need for Malaysia to improve its current
guideline if a better service delivery is desired.
Another important element in PPP projects that needs to take precaution is the pre agreed
Key Performance Indicator (KPI), which is the performance measurement tool. It is important to
ensure the private sector provides services and facilities that are in accordance to standards
stipulated by the public sector. It has to be specifically stated in writing to ensure compliance and
is to be used for continuous monitoring. By being specific, output specifications are described in
details to avoid possible misinterpretations in future. KPI can be determined based on 5 areas
namely (1) physical characteristics of projects, (2) financing and marketing indicator, (3)
innovation and learning indicator, (4) stakeholders indicator and (5) process indicator.

36. 34
While private sector is deemed to make profit out of PPP projects, the amount of profit
earned should be contemplated wisely to ensure the public does not feel burdened to pay for the
cost. It is important for the government to enhance PPP practice in Malaysia to ensure the needs
of public is provided at the best cost to the government. PPP, as a mode to deliver public
services, should not be used as a tool by any party to deprive benefits from the public
community. To prevent this from happening, the government has to create a win-win situation
with the private sector provider and at the same time provide desired facilities to the end user at
affordable cost.
Whereas in terms of contract, it should be drafted out without any ambiguity to avoid
misinterpretation. It should outline the rights and responsibilities of each party that are suitable in
current situation. On the other hand, risk allocation, risk sharing and risk transfer need to be
identified properly and recorded in writing contract between the parties before awarding a PPP
project to ensure no one shirks their responsibilities. Risks should be distributed to whichever
party that is able to manage them more efficiently. Some of the risks that may be encountered
include excessive cost of development, failure to perform by private sector, public opposition
and unexpected extension of time. All of the possible predicted conflicts or other uncertainties,
as well as the solutions to overcome the problem must be distinguished early to avoid unwanted
outcome. Other than risk allocation, clear contract terms should be laid out regarding other
matters such as the payment mode and consequences of variations.
The financial background of private sector needs to be very strong to finance long term
PPP projects. The private sector is required to submit their financial plans, which can reflect their
financial stability and capability as part of PPP proposal. To ensure a private sector is financially
stable to undertake the project especially under risky situations, a careful assessment should be
done against their detailed cost schedule, financial structure, potential partner’s sources of
funding, how improvements, upgrades and modifications will be financed and financial
statement. The failure of completing a project successfully is very likely to result in great
inconvenience, unnecessary delay and significant amount of cost.

37. 35
Technical feasibility also has to be evaluated before awarding any PPP projects as it
provides information of probable technical solutions. Private sector is to submit a feasible
and deliverable proposal of technical solutions based on reliable technologies which fulfill
the technical requirements of the project and are consistent with the cost allocated. A
technically feasible project is able to improve the value of facility and prolong its operation
period. This can ensure the facility is still maintained in good condition after being
transferred back to public sector at the end of concession period. Normally a technical
evaluation considers the quality of work plan that consists of services to be provided,
construction methods, innovations and improvements. Other than that, competencies of the
staff involved in the project is also assessed to ensure the team is capable of handling the
whole project, thus the experience and professional qualifications of key staff are to be
checked against their curricula vitae.
In conclusion, Malaysia is still considered new in the implementation of PPP
projects, thus many issues need to be overcome and one of the ways to prevent failure is to
take these precautionary steps before awarding a project. The whole system can be better
improved through a more systematic management. Also, Malaysia may learn from other
countries which have more successful experience in adoption of PPP projects such as
Australia, UK and Canada.

38. 36
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