The document summarizes information about a client who is a property developer constructing a new 3-story shopping mall. It discusses various procurement methods and contract forms, analyzing their advantages and disadvantages for this type of large-scale, fast-tracked project requiring knowledgeable contractors. It recommends using a management contracting procurement method along with a cost reimbursement contract form to allow flexibility given the uncertain scope of works and need for design changes.

1. INTRODUCTION
• Client’s information
oWW (M) Sdn. Bhd. is a private property
developer.
oHas 6 years’ experience in the construction
industry.
oInvolved in the construction of offices,
warehouse, apartments and residential houses.

2. INTRODUCTION
• Project’s detail
oType: 3-storey shopping mall
oTotal area: 100,000m²
oProposed construction period: 24 months
oSustainable features are to be added to the building
oClient lack knowledge in constructing sustainable
building

3. BASIC PROCUREMENT METHODS
Traditional method Management Contracting
Principles -Involves client, consultant team,
main contractor and sub-cons.
-Consultant team prepares design;
main contractor responsible for whole
execution of work.
-Involves client, consultant team,
management contractor (MC) and
work packages contractors.
-MC appointed at early stage to
advice, plan, manage and oversee
construction activities.
Advantages -Scope of work is well defined at
early stage.
-Client knows total contract sum
before the work starts.
-Faster completion time as design
and construction can overlap.
-Experienced MC can provide
useful advice.
-Flexible to design changes.
Disadvantag
es
-Requires longer time to prepare
detailed design before tendering
process.
-Completion time is longer as
contactor can only start constructing
after design is prepared.
-Contract sum is uncertain until
design is completed.
-More Variations lead to more
works to be done (eg.
remeasurement).

4. TYPE OF CONTRACT FORMS
• Lump Sum Contracts
• Measurement Contracts
• Cost Reimbursement
Contracts

5. Cost Reimbursement Contracts
• Contractor is being paid the actual cost they incur in carrying out the works plus additional
payment to allow profit.
• Nature and scope of the work cannot be well defined at the beginning.
• Include some provision to allow profit which are :
- Cost plus percentage contract : additional amount of money is expressed as percentages
which pay to the contractor.
- Cost plus fixed fee contract : a negotiated fee that is fixed at the outset of contract forming
will be provided to the contractor.
- Cost plus fluctuating fee contract : client has to pay contractor actual construction cost plus
an additional variable fee which agreed by both parties at the outset.
Choice of Contract Form

6. CHOICE OF CONTRACT FORM
Cost Reimbursement Contracts
• Best choice for project which cannot be well defined.
• Advisable to use when time if of essence.
• Flexible to change designs and materials during construction.
Cost Plus Fluctuating Fee Contract
• Provide incentives to contractor.
• Good relationship between both parties.
• Allows flexible and efficient building experience.

7. VIABILITY OF DESIGNAND BUILD AS COMPARING
TO BASICPROCUREMENT METHODS
D&B
• Design and build is a generic term describing a procurement route in
which the main contractor is appointed to design and construct the
works, as opposed to a traditional contract, where
the client appoints consultants to design the development and then
a contractor is appointed to construct the works.

8. Management contracting
• Management contracting is a procurement method in which the works
are constructed by a number of different sub/works contractors who are
contracted to a management contractor.

9. Design and build Management contracting
• D&B reduced project duration by the
overlapping of the design and
construction phases.
• Allow the early involvement of the
management contractor.
• Client’s financial commitment is
capped. D&B contractor is required to
submit a Guarantee maximum price
(GMP) based on the approximate bills
of quantity by means of a percentage
addition on the price arrived.
• Lower the risk and challenges (in the
aspect of building technology) that
might encounter during the
construction phase.
• Client has lesser ability to control the
design of project
• Accommodates later design decisions.
• D&B method increase the difficulty in
comparison of tenders.
• Suitable for fast track project.
Construction work can start as soon as
sufficient work has been designed and
approved by the local authorities.

10. CRITICAL ANALYSIS OF ALTERNATIVE BASIC
PROCUREMENT METHODS TO THE PROPOSED
PROJECT
Not single procurement strategy is suitable for all projects and
all employers

11. CRITICAL ANALYSIS OF ALTERNATIVE BASIC
PROCUREMENT METHODS TO THE PROPOSED SUBJECT
1. Shopping malls are different from all other retail store construction
projects, it is large and complex.
a. The Management Contracting is suitable for large-scale and complex
project
b. The traditional procurement method is suitable for project which relies on
full design.

12. CRITICAL ANALYSIS OF ALTERNATIVE BASIC
PROCUREMENT METHODS TO THE PROPOSED SUBJECT
2. The shopping complex construction projects are scheduled quicker than
ordinary construction projects
a. The Management Contracting is suitable for fast track project
b. The traditional procurement method relies on full design information, it
result in long time pre-contract preparation

13. 3. The building of a sustainable shopping mall requires knowledgeable
contractor or owner
> In construction management procurement, the client are require to have
experiences in the certain project
CRITICAL ANALYSIS OF ALTERNATIVE BASIC
PROCUREMENT METHODS TO THE PROPOSED SUBJECT

14. 4. A great deal of variation appear when site conditions are difficult
> The Management Contracting allows flexibility where
programme and design are not final and can change.
CRITICAL ANALYSIS OF ALTERNATIVE BASIC
PROCUREMENT METHODS TO THE PROPOSED SUBJECT

15. CONCLUSION
Procurement method to be used:
Management contracting procurement
-Allows early access of management contractor
-Speed up or reduce construction period
-Employer has more time for new business
Contract form to be used:
Cost reimbursement contract
-Efficient when scope of works are not certainty
-More flexible in amendment of designs
-Allows provision profit for contractor