This document provides information about a group assignment for a professional practice course. The group members are listed. The project involves developing a 20-storey condominium in Kuala Lumpur to address the effects of the Malaysian economic downturn on property developers. Various construction procurement methods are discussed, including traditional procurement, management contracting, design-build, and cost reimbursement contracts. The advantages and disadvantages of each method are analyzed. Management contracting using a cost plus fixed fee contract is recommended to control costs while maintaining quality for the condominium project.

1. PROFESSIONAL PRACTICE 1
(QSB 60604)
GROUP ASSIGNMENT

2. GROUP MEMBER
• Ng Wai Khong (0317980)
• Leong Karr Khei (0324362)
• Loh Pey Mun (0318572)
• Sherlyn Ang (0317977)
• Michael Chang (0319198)

3. The Malaysian economic downturn has affected
developers in delivering and meeting key
property development and sales targets
Due to inventory fluctuation, unstable market
condition and tighter lending requirements

4. Proposed project : 20 storey condominium
Type of project : Residential
Location of the project : Kuala Lumpur
Intensify affordability by
fractionalizing the cost of
land and building among
consumers

5. What is construction procurement?
• A process whereby client chooses a specialized method
to implement a project
• Involves setting up a contractual network of designers,
contractors, financiers and other agents to design,
construct and manage a project
• Identify the best way of achieving the objectives of client

6. Factors to consider when selecting procurement
methods
• Time
• Capital cost
• Operating cost
• Environment
• Market value of the project
• Flexibility and
• Prestige

7. • Traditional procurement method
• Management contracting
• Construction management
• Design and Build
Common procurement methods

8. Traditional Procurement
Method

9. • The ‘least risk’ approach
• The client will selects and appoints the consultant team comprising
of architect, engineer, quantity surveyor, etc to design the building
and prepare tender documents
• Design will normally be completed before the main construction
contract is let
• Contractors are then selected through open tender, selective tender
or negotiation
Traditional Procurement Method

10. Sequence
ConstructionCompetition
(Tendering)
DesignBrief
Relatively slow prior to the commencement of construction

11. • Competitive fairness
• Relatively low tender preparation costs
• Satisfactory public accountability
• Procedures well known
• Design changes reasonably easily arranged
Advantages

12. • Slow to start on site (no concurrent working)
• Open to abuse when design incomplete (resulting in less
certainty)
• Contractor not involved in design or planning (poor
buildability)
• Potential for adversarial relationships
• Design risk rests with the client
Disadvantages

13. MANAGEMENT
CONTRACTOR

15. • Procurement route which is fairly similar to
Construction Manager.
• MC will be appointed in the early stage (design is not
completed et)
• The construction duration will be shorten.
• Enhance buildability development in terms of cost.
Management Contractor (MC)

16. • MC are responsible and works direct with different
work contractors.
• MC act as a dominant.
• Client only have direct contract with the MC
Differences between MC and CM

17. • An agreement and contractual relationship
between parties that would exist.
• Insurance to designers or sub-contractors where
the client may provide coverage to them when
dispute arises.
Collateral Warranty

18. • MC provides services:
• -advising and planning on the development schedule.
• -cost planning.
• -cost control.
• -monitoring the site and key performance.
Why client prefer MC?

19. • MC can participate in the early stage where the design
process and construction process can overlapped where it
generally helps to reduce the development time.
• The contract sum will be the total of each separate work
trades that are tendered differently because all the works
trade will be break down into various work packages.
Pro’s of MC

20. • Management contracting will not be able to be precise and
certain of the final cost unless the final works and contract
have been sign with confirmation.
• Variation may occur during the construction period where
the cost of variations and re-measurement can lead to a
higher cost than the original traditional method.
Con’s of MC

21. COMPARISON

22. Traditional Management
Contracting
Requires longer period of
time for completion as the
overall complete design prior
to contract award
Time for design &
construction phases
Allow the shortest total
project time since design
and construction phase are
overlapping
Less flexible for the
employer to declare any
design variations since the
contract sum is fixed before
commencing the project.
Flexibility to change
specification
Greater control over the
change of design of the
project without sacrificing
cost control.
Contractor may lack of
incentives to point out any
potential mistakes and
missing parts in the design
due to the fixed contract
sum.
Control of quality standards Contractor has the freedom
to choose and evaluate
specialist subcontractors and
suppliers to collaborate with
them.

23. Traditional Management
Contracting
• No cost certainty
during design phases.
• Cost certainty after
commitment to
construct.
• Cost monitoring at
each stages.
Cost certainty • No firm price at
commitment to
construct.
• Contractor not
responsible for
managing cost of
works.
Better for cost and quality. Summary Better for time and
quality.

24. DESIGN & BUILD

25. • Popular & modern procurement route
• Main Contractor is responsible to design and
construct
• Single point of responsibility - Contractor
Design & Build

26. • Client appoints Design Consultants to draft a layout of design (50%). Tender document
will be prepared according to Approximate BOQ.
• Approximated BOQ is given to few selected D&B contractor including the design layout.
Everything need to be done according to Employer’s Requirements.
• After the selection has done, and the D&B contractor has done all the design and
details drawing. The employer’s QS will then produce a Final BQ based on Approximate
BOQ.
• Once Final BQ is agreed by both parties, it will be converted into Lump Sum Contract
Design & Build Steps

27. • Submitted to Client by D&B Contractor.
• Provide client an amount of project cost.
• If the final cost exceeds GMP, sum payable by
client remains as GMP
• If lower than GMP, saving will be shared among
Client and Contractor in 70:30 basis.
Design & Build
Guarantee Maximum Price (GMP)

28. Design & Build
Advantages & Disadvantages
Advantages Disadvantages
Project delivered time can be reduced
Contractor might produce low quality work,
if Client doesn’t have a full concept of the
project (Employer Requirement)
Maximum amount payable can be obtained
before design is completed (GMP)
Employer right need to pay more, if
unreasonable request is given to contractor
Contractor will have all responsibility
(Single point responsibility)
Compare between bidders will be difficult
as different bidder have different design,
which means price may vary
Client can select the most ideal design of the
selected Contractor’s proposal.

29. • The management contractor(MC) is reimbursed
for completed work and plus a management
fees as his profit.
• To avoid any argument, the 2 parties should
specify how much is the reimbursable fees to
the MC before the project start
Type of Contract
[ Cost Reimbursement Contract ]

30. • Cost Plus Fixed Fee Contract (CPFF)
• Cost Plus Incentive Fee Contract (CPIF)
• Cost Plus Award Fee (CPAF)
• Cost Plus Percentage of Cost (CPPC)
Cost Reimbursable Contracts can be
allocated into 4 categories :

31. • MC is paid for all incurred costs and then plus a
fixed amount, which is agree in both parties
before enter into the project, and it will not be
change.
• MC can’t to overprice a job to cover profit for any
unknown work. So, client has the benefit in
financial. Client only pay for works that carry out
by the MC.
Cost Plus Fixed Fee Contract (CPFF)

32. • This agreement allow the client to have more
flexibility to change designs and material during
the projects procees.
• Client have the control in the decision of
making process and with the controlling of
money spent.

33. • Client has the right to know all the details about
the project, for example the cost of materials and
labour at every stage of the construction process.
• Final cost may be less compare with the fixed
price contract because MC can’t to increase the
price to cover their risk.
• This is so called “open book process.
• And also is a monitoring system .

34. • Client can’t know exactly how much is the cost
for the project, and making it difficult to budget.
• Client take an indeterminism risk that the
construction works will not spiral out of control,
even legally and there is very little incentive for
the MC to have the job done with quickly and
inexpensively.

35. • Client requires a high level of trust, good
relationship, and good communication between
the parties.
• To overcome the problem and to limit the risk of
the client, client can hire a specialist construction
lawyer to draft a special conditions and request
to be included in the CPFF contract and client
should be cautious after obtaining the required
legal advice before enter into the contract.

36. • To overcome the problem and to limit the risk
of the client, client can hire a specialist
construction lawyer to draft a special
conditions and request to be included in the
CPFF contract and client should be cautious
after obtaining the required legal advice
before enter into the contract.

37. CONCLUSION

38. QUALITY COST
RESOURCES WORKMANSHIP
Management Contractor (MC)

39. • Homebuyers are more attracted to quality
rather than on price.
• Quality can be control through MC.
• Through discussion between MC and client
during construction process can improve the
quality.
Quality

40. • More transparent cost data.
• Through CPFF, the contractor will limit it cost
so that it won’t exceed the fixed fee cost.
Cost

41. • Contractually in relationship with different
work packages.
• Different work packages provide different
resources from different sources.
Resources

42. • Contractually in relationship with different
work packages.
• Different work packages provide well-trained
skilled workers.
• Save time hence maintain the quality of
works.
Workmanship

43. • Variation is less due to typical floors in
condominium.
• For specialized project and not suitable for
typical condominium.
• Fast track project.
In Compare to D&B

44. THE END
~ THANK YOU ~