This document provides an overview of traditional procurement and two-stage selective tendering processes for construction projects. Traditional procurement involves four stages - brief, design, tendering, and construction - and offers benefits like on-time completion, cost certainty, and full design control but has drawbacks like increased timeframes and risk of design variations. Two-stage selective tendering invites pre-qualified contractors to tender and aims to be transparent while eliminating non-performing contractors and reducing costs. Lump sum contracts define the requested work to minimize price variations, while PAM contracts from 2006 establish legal obligations and quality standards for building projects in Malaysia. Health and safety plans should appoint advisors, propose site management, and allow separate safety specifications.
Types of Contract in Construction ManagementShahin MB
Types of Contract in Construction Management
Lump Sum Contract
Cost plus Fixed fee
Cost plus bid fee contract
Guaranteed Maximum
Negotiated
Unit price Contract
Design build
turn key contract
Types of Contract in Construction ManagementShahin MB
Types of Contract in Construction Management
Lump Sum Contract
Cost plus Fixed fee
Cost plus bid fee contract
Guaranteed Maximum
Negotiated
Unit price Contract
Design build
turn key contract
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1. Professional
Practice 1
Group Members:
Nicole Thain Huey Wei
Phon Kit Poi
Pui Chun Shian
Ranee Leow Kai Yen
Satesh Raj A/L P. Devaraj
Sew Yue Ling
Soo Ping Zheng
Soo Yon Li
Tam Zhao Wei
Tan Jia San
Farah Aida
3. WHY TRADITIONAL PROCUREMENT ?
Completion on time (5 years)
Variation in design
Minimum variation in Contract Sum
Deal with minimum parties
Full control of design
7. CONCLUSION
- ↑ Time frame
- Construction cost certainty
- ↓ Price variation
- Partial / Full control of
design
- ↓ Design Variation
- ↓ Parties to deal with
10. TWO STAGE SELECTIVE TENDERING
Open to only
selected numbers
of “Pre-qualified”
contractors
Reduce tender
cost, saves time &
resources
Low risk but high
reward
Lower risk of
buildability issue
11. Reasonably transparent
✔
STAGE 1
❏ An advertisement will be placed
on major newspaper/social
platform
❏ Interested tenderers will submit
their companies particulars in a
“Pre-qualification Form”
13. TWO-STAGE SELECTIVE TENDERING
TIMELINE
Invitation To Tender
● Advertisement
● Pre-Qualification
Form
Pre-Qualification Stage
● Based on experience,
financial capabilities
and competencies.
Collection of Tender
● Charged with
documentation fees
Tender Closing
● Submit into a “tender
box”
● QS submit Pre-Tender
Estimate
Tender Opening
● Tender figures are
recorded and jointly
verified
Tender Evaluation
● Check for major
arithmetical errors
● Prepare tender report
● Call lowest 3 tenderers for
tender interview
Tender Interview
● Queried on any issues
● May be requested to
submit a revised
tender
Tender Award
● Prepare and issue
Letter of Award
● Return within 14
days
15. LUMP SUM CONTRACT
WHY LUMP SUM CONTRACT?
● Construction designs are completed > Requested work is well-defined
● Minimize variations during construction > minimize variation to price
as well
● Reduce owner risks
● Contractor has greater control over profit expectations
16. LIQUIDATED ASCERTAINED DAMAGES (LAD)
● Client’s Requirement : Imposed Liquidated Damages of RM
250,000.00 a day.
Ensure project to complete on time
✔
Include early completion
compensation for the
contractor
Early completion might
produce higher savings
for the project owner
LUMP SUM CONTRACT
17. PAM CONTRACT 2006 (WITH QUANTITIES)
● Home base form : Risks are known to be local industry
● Intended to be used as a building contractor and not as civil
engineering contract
● It is estimated that 90% of the building contracts in the private sector are
based on the PAM Contract 2006
18. Functions of PAM Contract 2006 (With Quantities)
● Evidences legal relationship between parties in the contract
● Provides the administrative procedure
● Incorporate all special requirements and circumstances of a project
● Expresses the obligation of the parties
● Set out reasonable clarity of the project
PAM CONTRACT 2006 (WITH QUANTITIES)
19. Clause 6.1 - Standards of works, materials, goods and workmanship
● Materials, goods and workmanship shall be according to the standards
described in the contract documents
● If there is any discrepancy, the contractor can instruct sub-contractors to
demolish and rectify the defect works
Clause 15.4 - Schedule of defects
● Sub-contractor must provide defect liability period after completion of works
and correct the defects within 28 Days from receipt of schedule of defects
from contractor.
QUALITY
20. HEALTH & SAFETY
OSHA (Occupational Safety & Health Administration)
- The Occupational Safety & Health Act 1970
- To keep their work environment safe
- < 10 workers X file injury / illness report
- Compulsory training to the workers as a guarantee to
the employer
21. 1. Appoint a Safety
Advisor
HOW TO ENHANCE HEALTH & SAFETY ?
Essential to give professional
advices.
OSHA Clause 8.1
- Training & Competency
2. Proposed Site
Management Plan
(SMP)
Compliance to Occupational Safety
and Health in Construction Industry
(Management)
- Ensure a safer working
environment
3. Allow Separate
Specification for
Health & Safety
The Health & Safety
Specification may include any
details regarding health and
safety matters
Based on BQ and drawings( contractor qs has to estimate)
The type of contract that we have chosen is the lump sum contract. Why lump sum contract? The reason being is because lump sum contract is based on completed construction design. This allow a well defined work scope to be delivered to the contractor. Hence, the variation during the construction can be minimize and eventually the variation of price will be minimized too.
By using lump sum contract, the risk of the owner will be transferred to the contractor. And the contractor will have greater control over profit expectations.
Based on BQ and drawings( contractor qs has to estimate)
So for the Clients requirement for LAD, the client would like to impose RM250,000 a day which is a big amount.
By using the lump sum contract, one of the its characteristics is that it includes early completion compensation for the contractor by this means the project owner can have higher savings.
For form of contract, we chose the PAM Contract 2006 (With Quantities). This is because it is a home base form where the risks are known to local industry.
Besides that, it is intended to be used as a building contractor and not as civil engineering contract unlike FIDIC which can only be used for civil engineering projects such as oil rigs etc. And by using the PAM Contract, its obviously gives flexibility to the employer and the contractor
It is estimated that 90% of the building contracts in the private sector are based on PAM Contract 2006, because it includes relevant clauses to assure the rights for the involved parties. This is the reason why PWD Contract is not our choice for this project.
As for the functions of PAM Contract, it gives and evidences legal relationship between parties in the contract so that if either side of the party breach the contract, legal actions can be made. With this, it reminds the parties to follow the contract whenever the project is ongoing.
It also provide administrative procedure so qthat any professions that would look at the PAM contract would not get lost or would know what to do if let’s say there’s a claim for extension of time.
And the PAM contract has also written clearly all the special requirements and what are the circumstances of a project. What to do if something happens and so on.
Sometimes, parties do not know what actually is their obligations towards the job but by referring to PAM contract, the obligations of the parties will be stated clearly in the Contract.
As mentioned that most of the times claims happen due to different type of reasons like extension of time, late site possessions and so on. To look for what should be done or what are the clarifications, contractors can refer back to the PAM contract and the clarifications are definitely reasonable.
The employer has also mentioned about the quality of the works carried out. And we can guarantee the standard of works, materials, goods and workmanship under clause 6.1 of the PAM Contract. It also says that if there is any difference in the works, the contractors or the subcons are liable to change the demolish the works and changed it into the original plan.
Basically the employers do not need to worry about it because under clause 15.4 of the PAM Contract, it has stated that the contractor must issue the DLP after the completion of works and the contractors need to amend the defects within 28 days from the receipt of schedule of defects from contractor.
A single construction has lots of management that need to be handled appropriately, one of the most concern factor while the construction is going on is the safety of everyone near to the site, mainly the workers on site. So the one that we will introduce to the employer is the Occupational Safety & Health Administration which is also known as OSHA.
Well, to know more about them, they actually practice the Occupational Safety & Health Act which is published in 1970. The main reason they have established the act is to keep the workers’ and the working environment safe. By that, they could save more lives by reducing the accidents that will happen.
They have also mentioned that if the company has less than 10 workers, there’s no need for filing an injury or illness report to them. And the employer can communicate plans made orally to the workers. But, the plan must be written if there are over 10 employees. The written plan should be kept in the workplace, and must be always available for employee review. The main purpose of OSHA is they provide compulsory trainings to the worker as a guarantee to the employer. In such way, the workers would work professionally and diligently in the construction site.
So there are ways to enhance healthy & safety. But first, the Employer should appoint a safety advisor. A safety advisor is extremely essential for the construction works to give professional advices on the precautions and safety measures and by that, there will be a huge improvement in the Site’s health and safety standard. OSHA has mentioned clearly about the safe environment in a working place.
Under clause 8.1 of OSHA, Training and Competency has been one of the most highlighted part for them as they only prefer workers who have learnt about the safety precautions and make sure workers will apply them on site. Sometimes, workers are not aware of the safety signs but the safety signs are one of the ways to help workers to know what is going on on the particular work site.
So the second step is to Propose a Site Management Plan. As you have already appoint a safety advisor, he/she will help you in doing the management plan. But make sure it is compliance to OSHA in construction industry and it is to ensure a safer working environment for all involved individuals such as employees, contractors, visitors and the community.
It is a documented safety plans for a specific construction workplace that should include the following matters:
(i) General principles of prevention
(ii) Minimum welfare facilities required for construction sites
(iii) Work involving particular risks
Last step is to Allow Specification for Health & Safety. Besides specifications for building designs, a separate specifications for health and safety can be developed to enhance the Health & Safety requirement of the project. The Health & Safety Specification may include any details regarding health and safety matters that needs extra attention from all relevant parties.
