2. Question‽
You are working for a house builder at Kuala Lumpur. Your company has recently received
an invitation to tender a low cost apartment in Kajang, Selangor. You are required to
make a recommendation whether to accept or decline the tender invitation. What are the
5 main factors you will consider before making the recommendation? Explain how these
factors influence your decision.
3. COMPANY’S BACKGROUND
■ Date of Establishment: June 2008
■ Completed Projects : Low to medium cost residential buildings/shoplots
■ In-house Employees : Quantity Surveyors, Engineers, Project Manager etc.
■ Capital / Assets : RM250,000 in bank
■ No. of SiteWorkers : 20
■ MachineriesOwned : 2 excavators
5. TYPE OF PROJECT
Site location and accessibility :-
■ Low cost apartment is suitable to be constructed around Kajang
■ Existing road to provide safe access and egress
■ 35km away from our office
Past experience with similar projects ;-
■ Projects undertaken include low to medium range residential buildings
6. TYPE OF PROJECT
Is the project within the company boundaries?
■ Yes, capable of delivering the project due to past experiences.
Method of construction?
■ Adopt traditional construction method. (eg.Timber formwork)
7. TYPE OF PROJECT
Is the project complexity beyond the capability of the company?
■ No, it involves simple and typical designs only
The risk involved considering the nature of the work?
■ Accidents and injuries might occur at site due to traditional method of construction
■ Exterior work such as concreting and painting depends on weather condition
9. PROJECT SIZEANDVALUE
Project Size :-
■ 4 units x 5 storeys x 4 blocks
ProjectValue :-
■ RM 100,000 per unit x 4 units x 5 storeys x 4 blocks = RM8 million
10. PROJECT SIZEANDVALUE
Projected cash flow required during execution :-
■ Standard S Curve onGraph – past cost information and details of completed.
■ Critical Path Method (CPM) – technique for project planning made up of a
number of individual activities.
11. PROJECT SIZEANDVALUE
Is the project size beyond the capability of the firm?
■ Yes. It is within our boundaries as it is a medium scaled project.
Equipment, Labour and Plants :-
■ Equipment(s)– owns 2 excavators.
■ Labour(s) – 20-30 workers available.
12. PROJECT SIZEANDVALUE
Risks of project :-
■ Force majeure (construction risk)
■ Late changes / additional work
■ Site access
■ Labour productivity (performance risk)
■ Defective work – latent defects
■ Vandalism (security)
■ Intrusion
■ Delays
■ Liquidated ascertained damages (LAD)
13. PROJECT SIZEANDVALUE
Conditions of contract :-
■ Date of possession, deferment of possession, progress, delays, completion date
■ Liquidated ascertained damages
■ Partial possession
■ Quality of works
■ Testing and defects (Defects Liability Period)
15. TYPE OF CLIENT
Public Sector or Private Sector
■ Private Sector – Kelly Jeners
Financial capability of the client :-
■ Financially strong, reliable and has good financial records.
16. TYPE OF CLIENT
Reputation of the client :-
■ Well known among the peers in the industry.
■ Kelly Jeners delivers on its promises to the customers and is worthy of respect and
trust.
Relationship with the client :-
■ Has an existing and positive relationship with the client.
17. TYPE OF CLIENT
Expectations of the client :-
■ Client expects contractor to focus on their requirements, all of their needs and how to
solve their problems.
Form of contract :-
■ PAM Contract 2006 (With Quantities)
19. CURRENTAND PROJECTED
WORKLOAD OFTHE COMPANY
The need for work :-
■ The need for work is present since the company is only dealing with a medium range
cost residential project at the moment.
Other projects currently out for tender :-
■ Currently bidding for 2 projects and one of them is the Kajang low-cost apartment
project.
20. CURRENTAND PROJECTED
WORKLOAD OFTHE COMPANY
Forecast for upcoming projects :-
■ To be able to secure at least 5 projects in the next 2 years.
Availability of in-house staff :-
■ Yes. Quantity Surveyors, Engineers, Project Managers, etc.
21. CURRENTAND PROJECTED
WORKLOAD OFTHE COMPANY
Labour force availability :-
■ 20 workers.
Availability of equipment owned by the contractor :-
■ 2 excavators.
23. REGIONAL MARKET CONDITIONS
Economical situation overall and the construction industry :-
■ Have to look into the economic factors of the country, such as GDP growth rate, or
GDP for construction (July 2016 – RM11899 million)
• How many projects are currently available in the market?
• How many competitors are expected to tender?
• How competitive are they and what is the experience of estimators?
• What are the status of the competitors?
24. REGIONAL MARKET CONDITIONS
Amount of work currently available in the industry :-
■ The lesser the work, the more likely contractors are forced to bid for works which may
be partly out of their competence and therefore more risky in terms of successful
implementation.
Availability of skilled workers and equipment needed :-
■ Not always available due to high demand at peak periods (January – April)
25. REGIONAL MARKET CONDITIONS
Rate of price escalation in labour/materials price :-
■ Different price between tender period and obtaining actual material period.
Unforeseeable circumstances which affects the final costs.
Codes and standards applicable in the region :-
■ Different area, different standards and procedures. Eg: Noise level cannot exceed
certain decibels in residential areas.
Reliability of subcontractors :-
■ Finding a good subcontractor would be a tough job without connection.
26. CONCLUSION
5 factors to consider:
■ Type Of Project
■ Project Size AndValue
■ Type of Client
■ Current and ProjectWorkload
■ Regional Market Conditions
FinalVerdict : OUR COMPANY IS RECOMMENDEDTO
ACCEPTTHETENDER FORTHE
PROJECT.
