chapter2

1. SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
Bachelor of Quantity Surveying (Honours)
LITERATURE REVIEW
BUILDING COST COMPARISON BETWEEN
CONVENTIONAL METHOD AND INDUSTRIALIZED
BUILDING SYSTEM (IBS) IN MALAYSIA
STUDENT NAME: THAN LEK MEI
STUDENT ID NO: 0315538
SUPERVISOR: MR. MOHAMMED RIZAL
DATE OF SUBMISSION: 30 NOVEMBER2017

2. BUILDING COST COMPARISON BETWEEN
CONVENTIONAL METHOD AND INDUSTRIALIZED
BUILDING SYSTEM (IBS) IN MALAYSIA
THAN LEK MEI
(0315538)

3. TABLES OF CONTENTS
CHAPTER TITLE PAGE
2 2.1 Introduction 1
2.2 Definitions and Principles 2
2.2.1 Conventional Construction System 2
2.2.2 Industrialized Building System (IBS) 3
2.3 Comparison between Conventional Construction
System and IBS
5
2.4 IBS Involvement Worldwide 6
2.5 Types of IBS 7
2.6 Cost Comparison between Conventional
Construction System and IBS in Malaysia
12
2.7 Factors Affecting the Cost of IBS 14
2.8 Summary 18
2.8.1 Findings in relation to the first objective 18
2.8.2 Findings in relation to the second objective 19
2.8.3 Findings in relation to the third objective 19
REFERENCES

4. LIST OF TABLES
PAGE
Table 2.0 Categorization of IBS terminologies 4
Table 2.1 Comparison between Conventional and IBS Construction 5
Table 2.2 Daily IBS installer wage rates in Selangor in 2017 14

5. LIST OF FIGURES
PAGE
Figure 2.0 IBS Involvement Worldwide 6
Figure 2.1 Precast Concrete Framing 8
Figure 2.2 Steel Formwork System 9
Figure 2.3 Steel Framing System 10
Figure 2.4 Timber Framing System 11
Figure 2.5 Blockwork System 11
Figure 2.6 The Number of IBS Manufacturer and IBS Products 16

6. CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
The Malaysian construction firms are always encouraged to do more with less. More
speed, more efficiency with less manpower, costs and delays. In another words, productivity
needs to be increased. CIDB has championed IBS through a variation of initiatives, which
include crediting IBS courses, hosting seminars to promote IBS and providing support for
trainings (CIDB, 2016). Notwithstanding, there still sees reluctance of local construction
industry to take up IBS as most of the contractors are get used to the conventional method as
well as the abundance of cheap foreign labour available in Malaysia. While the cost of IBS
implementation is not clearly outlined by any official institutions, this research paper aims to
identify the factors affecting cost of IBS and the cost differences between IBS and
conventional method in residential building.

7. 2.2 Definitions and Principles
2.2.1 Conventional Construction System
Over the decades, conventional building system has been broadly practiced
worldwide and locally in Malaysian construction industry as the contractors are familiar with
its procedures and limitations. This method has also displayed a reasonable level of
performance which encourages the contractors to stay with the system. The ground of
conventional construction is not from engineering analysis; instead it is from the historic
methods of construction with wood members. Conventional system in Malaysia consists of
reinforced concrete frames with brick in-fill walls, timber or cold formed metal trussed roof
with either clay or concrete tiles, or sheet metal roofs. The building frame components are
pre-fabricated on site by means of 4-steps course (Ramli et. al., 2016):
i. Erection of timber or plywood formwork and scaffolding
ii. Installation of steel reinforcement
iii. Pouring of fresh concrete
iv. Dissemble of formwork and scaffolding
There sees how crucial it is to realize that the original structures from which these
methods of construction were derived are relatively small, with small horizontal spans and
moderate wall heights. The floor plans for these building were typically rectilinear.
According to Resat (2007), conventional, also recognized as traditional construction
method possesses its characteristics which are the basic construction methods in construction
industry in the world. The characteristics of conventional method include:

8. i. Use cast in-situ system. All building components are being built and cast on site with
high usage of construction materials and load of site works.
ii. Labour-intensive practices.
iii. 3-D syndrome which are Dirty, Difficult and Dangerous. Conventional system is
known with the 3-D syndrome. All sites work that being done which involved many
types of construction materials and machineries and high number of workers will
make the construction sites messy and crowded. This will lead to dirty and dangerous
environment.
2.2.2 Industrialized Building System (IBS)
Kamar et. al. (2011) provide a clear understanding on IBS’s etymology and
classification for practitioners and policy makers. In the perspective of construction.
Council for Research and Innovation in Building and Construction (CIB) defined
industrialized construction as a generic process of standardization and rationalization of
the work processes in the industry to reach cost efficiency, higher productivity and quality.
Further, Abdullah and Egbu defined IBS as a construction method developed due to
human investment in innovation and on rethinking the best ways of construction work
deliveries based on the level of industrialization. The level of industrialization in IBS can be
classified as pre-building system, modern construction, advance automation and
volumetric construction. On the other hand, Hassim defined IBS as an organizational process-
continuity of production implying a steady flow of demand, standardization, integration of
the whole production process, a high degree of organization of work mechanization to replace
human labour. IBS also defined by Rahman and Omar as a construction system using pre-
fabricated components. The manufacturing of the components is systematically organized
using machine, formworks and other forms of mechanical equipment. The components are
manufactured in the factory and once completed will be delivered to construction sites for

9. assembly and erection. However Pan (2006) outlined other terminologies used globally as
presented in Table 2.0, where all these terms are all representing IBS in this paper.
Table 2.0: Categorization of IBS terminologies. (Pan, 2006)
Terminology Category Term
OS
Offsite Production (OSP)
Offsite Manufacturing (OSM)
Offsite Fabrication (OSF)
Offsite Construction
PRE
Pre-assembly
Prefabrication
Prefab
MM
Modern Methods of Construction
Modern Methods of House Construction
Modern Methods of House Building
Building
System Building
Non-traditional Building
Industrialized Building
In Malaysia, CIDB defines IBS as a system of construction whereby building
components are produced at factories or off site, transported and consequently bring together
into a structure with slightest work. According to CIDB, systems to be accepted as part of
IBS need to portrait all six essential characteristics as listed below to warrant the realization
of the claimed benefits. (MIDFR, 2014):
1. Industrial production of components though pre-fabrication;
2. Highly mechanised in-situ processes i.e. slip-forms, post-tensioning, tunnel
shutters;
3. Reduced labour during prefabrication of components and site works;
4. Modern design and manufacturing methods i.e. involvement of Computer Aided
Design (CAD) and Computer Aided Manufacturing (CAM);
5. Systematic Quality Control i.e. ISO 9000 principles;
6. Open Building Concept i.e. permitting hybrid applications, adaptable to
standardisation and Modular Coordination (MC).

10. The Construction Industry Master Plan 2006–2015 in Malaysia has given significant
importance to the off-site manufacturing. The term used is Industrialised Building System
(IBS) and is defined as a construction technique in which components are manufactured in a
controlled environment (on- or off-site), transported, positioned, and assembled into an on-
site structure with minimal additional site works.
2.3 Comparison between Conventional Construction System and IBS
Different approach of construction provides different outcomes. In fact, there are some
differences between conventional construction method and IBS, which can be measured from
the perspective of productivity, value chain, construction time, reduction on dependency on
foreign labour, cost of construction and construction wastages as shown in Table 2.1
( Natasha et. al., 2016) :
Table 2.1: Comparison between Conventional and IBS Construction
Component Approach
Conventional Construction IBS Construction
Cost Require higher cost in terms of:



 Overhead costs
Reduce construction wastage and
increases the cost savings as follows:



 Overhead costs
Speed 
 Delay completion of the
project due to the on-site
 Components are disaggregated
and difficult to assemble and
erected.
 Shorter construction period.
 Permit a faster completion of
the project because of its rapid
and all-weather
construc
 The components are easy
assembled and erected.

11. Wastage Wastage of steel, followed by brick,
cement, concrete and timber are
closed to 10% of the total material
used in the construction project.
Wastage of timber, followed by
cement, brick, soil and concrete is less
than 5% of the total material used.
Quality  Low quality and poor finishes
due to workmanship.
 Require higher maintenance
expenses due to low quality.
 Provide higher quality and
better finishes with production
in sheltered environment or
factory.
 Better quality reduces the
maintenance expenses because
prefabricated components
required less repair and
preventive maintenance.
2.4 IBS Involvement Worldwide
IBS is widely used in developed countries. Although statistics are not readily
available, in 2002, most IBS systems in Malaysia were found to have originated from the U.S,
Germany and Australia with market share of approximately 25%, 17% and 17% respectively.
Malaysia-owned IBS accounted for only 12%. This indicates that there is a considerable
room for improvement in the area of research and development of IBS in Malaysia. Diagram
2.0 indicates the IBS involvement worldwide.
Figure 2.0: IBS Involvement Worldwide (Source: MIDFR, 2014)
25%
8%
17%4%
17%
12%
17%
U.S. Austria Germany U.K. Australia Malaysia Other countries

12. According to Khalfan and Maqsood’s (2014) off-site manufacturing (OSM) is a
construction technique in which prefabricated and standardised components/modules are
manufactured in a controlled factory environment (either on- or off-site), transported, erected,
and assembled into the on-site structure. OSM requires rethinking about the entire project
development process, in order to take full advantage of both on- and off-site activities.
Construction industry players in many countries started to think about innovative ways of
construction by integrating the off-site production with the on-site activities. In the UK, off-
site manufacturing has seen huge momentum since the Egan report; the size of off-site
construction industry in the UK grew from £2.2 billion in 2004 to £6 billion in 2006.
Likewise, the Australian construction industry has identified off-site manufacturing as
a key vision for improving the industry in the coming decade. In China, in order to increase
the uptake of sustainable practices, off-site manufacturing has been repeatedly promoted as a
potentially viable alternative.
2.5 Types of IBS
Based on Construction Industry Development Board (CIDB), there are 6 types of IBS
most commonly used in Malaysia, which are precast concrete system, reusable formwork
system, steel framing system, prefabricated timber framing elements such as wall, slab,
column, beam and roof truss, blockwork system and innovative system (MIDFR, 2014).

13. i. Precast Concrete System
This IBS consists of precast concrete columns, beams, slabs, walls, “3- D”
components (e.g. balconies, staircases, toilets, lift chambers, refuse chambers),
lightweight precast concrete and permanent concrete formworks.
Figure 2.1: Precast Concrete Framing (Source: The Constructor)

14. ii. Steel Formwork System
This IBS is made up of tunnel forms, beams and columns moulding forms, and
permanent steel formworks. This system is the least pre-fabricated among the IBS, as
it normally involves site casting. Therefore, it is subject to structural quality control,
high-quality finishes and fast construction with less site labour and material
requirement.
Figure 2.2: Steel Formwork System (Source: DirectIndustry)

15. iii. Steel Framing System
This IBS is commonly used with precast concrete slabs, steel columns/beams and
steel framing systems, and is used extensively in the fast-track construction of
skyscrapers. Apart from that, it is extensively used for light steel trusses consisting of
cost-effective profiled cold-formed channels and steel portal frame systems as
alternatives to the heavier traditional hot-rolled sections.
Figure 2.3: Steel Framing System (Source: ECOCMI)

16. iv. Timber framing system
It consists of timber building frames and timber roof trusses. Although the latter is
more common, timber building frame systems also offer interesting designs from
simple dwelling units to buildings such as chalets for resorts.
Figure 2.4: Timber Framing System (Source: Setia-Wood)
v. Blockwork System
It includes of interlocking concrete masonry units (CMU) and lightweight concrete
blocks. The block system is mainly used for non-structural wall as an alternative to
conventional brick and plaster.
Figure 2.5: Blockwork System (Source: CIDB)

17. vi. Innovative System
This is the latest IBS type which incorporates various “green” elements, which are
considered innovative in the industry. An example of the innovation is the mixture of
two elements such as polystyrene and concrete, to produce IBS components for use in
the construction of a wall which has better heat insulation properties. Indeed, with the
advancement in technology and innovation, new materials are being introduced at the
fabrication stage. Some of the new materials introduced in IBS include gypsum, wood
wool, polymer, fiberglass and aluminium-based IBS components.
2.6 Cost Comparison between Conventional Construction System and IBS in
Malaysia
There is always questions on whether IBS can reduce cost, yet there is no any
organized body that is able to provide a clear ready benchmark on this issue. In other
countries the construction labour rates are relatively higher which makes the implementation
of IBS appears to be contributing to cost saving when most of the works are done off-site.
Unlike other countries, one of the main reasons that inhibit the growth in IBS implementation
within Malaysia is due to the availability of cheap labours (Kamar et. al., 2009).
During the past decade a large number of such studies has been carried out and
published. In the existing studies three principal approaches for comparing costs of building
projects among countries can be distinguished (Haron et. al., 2005):
 Comparison of standardized identical buildings
 Comparison of standard buildings with local modifications
 Comparison of functional similar buildings

18. Comparison of Standardized Identical Buildings: With the first method exactly the same
building work is priced on the basis of the same drawings and specifications. This is possible
only in theory, largely as a result of national (or even regional) differences which exist in
architecture, standards, availability of products, etc. The building and the costs will be
comparable, but they are not necessarily representative.
Comparison of Standard Buildings with Local Modifications: Better representative can be
achieved when modifications for local circumstances, like building codes, standards,
specification levels, are taken into account.
Comparison of Functionally Similar Buildings: With the third approach, typical,
functionally similar buildings are compared: this means building types, which are
representative. Not only locally divergent circumstances and quality-levels are taken into
account, but also various performances and aesthetic criteria, which reflect typical client
requirements or tenant expectations for a building in that sector. The buildings and the costs
are representative, but not necessarily comparable. Arguably ‘apples’ are being compared
with ‘oranges’.
A meaningful cost comparison must take into account all relevant (time-dependent and
quantity-dependant) cost components, classified as follows:
 Labour
 Materials
 Investment
 General expenses (site and plant)
 Transportation (for system construction only)
 Overhead

19. 2.7 Factors Affecting the Cost of IBS
Cost is the most important concern in any business endeavour, not least in the
construction industry. In order to promote the usage of IBS, it is important to exercise
foresight of the various determinants for IBS cost. The realization and understanding of cost-
determinants of IBS will enrich the cost estimator’s competence, hence, advising their clients
on the usage of IBS (Bari et.al., 2011). The factors that affect the cost of IBS are explained as
followed:
i. Labour
Malaysian construction industry is heavily dependent on unskilled worker foreigners
from countries like Bangladesh, Myanmar, Nepal, Indonesia and Vietnam as they are
cheaply available. The availability of cheap foreign labour which offsets the cost
benefit of using IBS is a root cause of the slow adoption in the past. As long as it is
easy for the industry to find foreign workers, labour rates will remain low and
builders will find it unattractive to change into simplified solutions such as IBS (Din,
2013). Table 2.2 shows the Daily IBS installer wage rates in Selangor.
Table 2.2: Daily IBS installer wage rates in Selangor in 2017. (Source: CIDB, 2017)
List of Labour Max. Min. Common
Precast Concrete Installer
Skilled, Local 150.00 80.00 102.50
Semi-skilled, Local 130.00 65.00 83.00
Lightweight Panel Installer
Skilled, Local 150.00 80.00 107.00
Semi-skilled, Local 130.00 70.00 88.00
Lightweight Blockwall Installer
Skilled, Local 150.00 90.00 109.50
Semi-skilled, Local 130.00 70.00 89.00
System Formwork Installer
Skilled, Local 150.00 90.00 111.80
Semi-skilled, Local 130.00 75.00 91.50
Roof Truss Installer (Timber)
Skilled, Local 180.00 60.00 85.50
Semi-skilled, Local 160.00 45.00 74.50
Roof Truss Installer (Light Gauge Steel)
Skilled, Local 180.00 60.00 106.30
Semi-skilled, Local 160.00 45.00 88.20

20. ii. Material
As compared to conventional construction method, IBS components cost higher.
However, in-situ construction contains hidden cots that usually lead to higher
expenditure, due to rectifications, wastages, etc. Furthermore, the IBS components
costs higher in Malaysia because there is still low demand and low standardization of
components. (RISM, 2015). The tailor-made components which do not fit into another
project will increase initial costs due to the cost of the mould and design. Lack of
standardisation was due to a lack of a certification and accreditation scheme on IBS
and the lukewarm response to Modular Coordination (MC) promotion under MS 1064.
There is also general consensus among practitioners that IBS needs mass production
to achieve economic viability, but currently in Malaysia, there is no assurance of
continuity of production (Din et.al., 2013).
iii. Investment
Implementation of IBS costs is about 12-13% higher compared with to conventional
methods. This is due to the high prices of IBS components that can be broken down to
purchase of new machinery, mould manufacturing, tax and machinery imported from
abroad as well as cost of training workers for the installation of the components and
operation of various high tech machines (MIDFR, 2014). To use a higher level of IBS,
the adopters require a huge volume of works to break even on the investment.
Although it creates more value to construction, it is literally a more expensive option
due to the paid up capitals and maintenance of machineries. Inconsistency of volume
over time and lack of business continuity resulted in the investment in latest
innovation not being commercially sustainable (Din et. al., 2013). In most cases,
builders have different requests in term of components’ specifications, which further
require the manufacturers to invest for new moulds. This scenario is deemed not
sustainable as the manufacturing companies usually have their own economic
strategic planning. It is because of the trend of mass production which requires the
customization of products and services that eventually leading to cost reduction
(Ariffin et. al., 2016). Hence, the high initial capital can be overcome by sufficient
volume and ability to reduce mould cost with repetition use of the design.

21. iv. General expenses (Site and Plant)
Enormous capital cost also includes setting up the plant. Most of the IBS
manufacturer was concerned on the value obtained from the project before the setting
up the IBS precast manufacturing plant and rule of the thumb for the profit margin
IBS project is around 10%. Usually the large IBS manufacturer player will target a
minimum production value of RM100 million annually and for the new player will
target a minimum project value of at least RM10 million annually. The new IBS
manufacturer player will preferable choose the mobile manufacturing plant which
require a lower initial capital and the average initial cost for the setting up of the plant
is about RM1 million. Although, the big IBS player have the capacity for setting up a
permanent manufacturing plant, but the initial capital will cost about RM15 million to
RM25 million and it is 15 to 25 times the cost for setting up a mobile IBS
manufacturing plant (Azman et.al., 2013). The high cost of IBS can also be due to a
mismatch in supply and demand for IBS components as there are limited numbers of
IBS suppliers in the industry against the backdrop of a rising demand for IBS
components. Figure 2.6 shows the number of IBS products according to the
classification groups (Azman et. al., 2010).
Figure 2.6: The Number of IBS Manufacturer and IBS Products
According to Pan et al., (2004) site specifics or constraints also cause additional costs
in the IBS construction process since IBS components required additional space for
storage, mobilization and circulation of machines and equipment (Jabar et.al., 2013).

22. v. Transportation
Transportation cost high affect cost of IBS implementation due to difficulties to
access to site and difficulties to transport big components from factory to construction
site. The expenditures of transportation process can amount to 3%-5% of the total cost
for distances not exceeding 50km – 100km (Qays et.al., 2010). According to CIDB,
the majority of IBS manufacturers are located in industrial zones in urban areas. If a
construction site is located too far away from the IBS manufacturers or suppliers,
this will indirectly increase the logistics and shipping costs in a construction project
budget (Wong & Lau, 2015). On the other hand, the transport used to carry IBS
components need to be redesign to be able to carry larger panels. Lorries that are
redesigned must meet the suitability and at the same time to follow the road
regulations. Currently, the transporters can carry limited weight, length and depth of
IBS components stated in the road regulations therefore the optimum carrying
capacity is not met, causing the transportation and delivery cost to be expensive.
vi. Overhead
According to CIDB, with less labour involved in the IBS construction, overall
construction time is shorter. This will enable the constructor to save on the overhead
cost involved in the construction. Kadir (2006) also agreed that shorter construction
time of IBS implies lower site staff overhead and cost saving on equipment rental.

23. 2.8 Summary
The literature review has outlined insights into the current thinking on IBS. Moreover,
related works of researchers in the past have been studies with a view to visualize the gaps in
the literature where the current study may contribute to fill in.
In regards to the research objectives, the reviews have provided part answers as
proffered by the researchers in the past. They are then discussed as below.
2.8.1 Findings in relation to the first objective
The first objective of the study is to determine the most common type of IBS used in
Malaysia. Outcome from the literature review has identified the six categories of IBS adopted
by Malaysian construction industry. However, there is still lack of information on evaluating
and rank a range of six IBS types frequently used in Malaysia. Therefore this study is
important to identify the most regularly implemented IBS type hence focus on its value to be
promoted to local construction industry player.

24. 2.8.2 Findings in relation to the second objective
The second objective is to identify the factors affecting the cost of IBS construction
method in Malaysia. A clearer understanding of the cost determinants is vital to achieve the
desired level of accuracy of anticipated labour costs, material costs, investment cost, general
expenses, transportation cost and overhead cost in total cost estimation, hence add value to
Malaysian construction industry while deciding whether to adopt IBS in their respective
projects.
2.8.3 Findings in relation to the third objective
The third objective is to compare the cost differences between IBS and conventional
construction method in residential building. In order to carry out meaningful comparison,
various considerations must take into account, which include time-dependent and quantity-
dependent cost components. There are three types of comparison as suggested in the literature
review, which are comparison of standardized identical buildings, comparison of standard
buildings with local modifications and comparison of functional similar building. In this
research, the first and third approaches are adopted simultaneously.

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