BQS559 ASSIGNMENT 1

FACULTY OF ARCHITECHTURE, PLANNING AND SURVEYING
UNIVERSITI TEKNOLOGI MARA
SHAH ALAM, SELANGOR

BQS559
PROFESIONAL PRACTICE I




ASSIGNMENT 1:

PROCUREMENT SYSTEM PRACTICE

IN MALAYSIAN CONSTRUCTION

INDUSTRY DURING THE PANDEMIC

PREPARED FOR: PN. NAQIYATUL AMIRAH BINTI MOHD SAID

Team Members

AMY SYAZWINA BINTI HUSAIN FATIN ADIBAH BINTI MOHD FAUZI
202060
1688 202185
3274

SITI NABILAH BINTI RIZAUDIN NUR INTAN FATIHAH BINTI

2021601394 SHAHROL IZA
2021615306

PUTRI SAGHIRAH NUR BINTI
ZAKIRAH HANNAN BINTI ZOHARI
MOHAMED NASRI 2020495664

2020816784 i

Table of

Contents 1-3
4-8
01 Introduction

02 Literature Review

03 Research Methodology 9-11

04 Data Analysis 12-20

05 Conclusion and Recommendation 21-22

06 References I-V

07 Appendices VI-XVI

ii

Chapter 1



Introduction


01

INTRODUCTION

Project procurement, as defined by PMBOK (2008); Ling (2014), is the process
by which customers order products or services from businesses other than
their own. The procurement process in construction management is a
technique whereby the client searches for, hires, and contracts a contractor or
someone with professional skill to complete the project. According to Clamp H.
(2012); Din (2022), construction procurement refers to a network of connections
between clients, consultants, and construction firms that are often formed to
make it possible to realize a building project. The procurement method, also
known as the project delivery method, is a thorough procedure whereby
designers, builders, and different consultants offer their services for design and
construction in order to deliver a finished project to the owner (Sobin, et al.,
2009; Suratkon, et al., 2020). The procurement method is how various
individuals or professionals organize their participation and responsibilities to
complete a building project from the perspective of project participants
(American Institute of Architects, 1996; Suratkon, et al., 2020).

Choosing the best project procurement method is critical to the project's
overall success. Clients can now select from a variety of project procurement
methods based on their specific requirements. According to Building C. I. (2011);
Ling (2014), there are four types of construction procurement methods:
traditional/conventional method, design and build method, management
contracting, and construction management. Each of these methods has its own
set of benefits and drawbacks in terms of cost, time, quality, and risk (Din,
2022). As a result, the procurement method chosen should take into account all
aspects required by the project and project team (Ling, 2014).

A project's success or failure is determined by the strategic approach to the
procurement route, that is, critically analyzing which procurement route is
best suited for the project (Bako, 2016). To do so effectively, clients and their
advisors must first understand the characteristics of the various procurement
systems and selection methods available before deciding on one (Davis, 2008). It
is necessary to understand the client's needs or desires, organize the functional
relationship among specialized organizations; that is, the project's stakeholders,
and their impact, whether positive or negative and allocate risk to the
organization that will handle it with utmost seriousness, that is, events that
will prevent the organization from achieving the project's objective, agree and
document the collaborating organizations' responsibilities, that is (Bako, 2016).

02

INTRODUCTION

However, a major virus outbreak known as Coronavirus Disease 2019
(COVID-19) is sweeping the globe. The World Health Organization declared the
COVID-19 outbreak a pandemic on March 11, 2020, stating that it is the first
pandemic from the coronavirus family (Aishah et al., 2020). The pandemic had
an impact not only on human health but also on the operational health of
businesses and organizations, including those in the construction industry. All
of the recent global events that have occurred as a result of the emergence of
this pandemic have had an impact on the construction environment, both
positively and negatively (Ogunnusi et al., 2020). According to the Prevention
and Control of Infectious Disease (Measures Within Infected Areas) Regulation
2020 (PCID Regulations 2020), all businesses must close during the MCO period,
with the exception of activities related to essential services (Federal
Government Gazette Malaysia, 2020). It should be noted that the construction
industry is considered a non-essential service and that any construction work
must be halted during the MCO period, as there will be a penalty for those
found guilty of an offense referring to Section 7 of the PCID Regulations 2020).
(Federal Government Gazette Malaysia, 2020; Nadkarni et al., 2020; Aishah et
al., 2020). The industry is concerned because the impact of the COVID-19
outbreak and the implementation of MCO has made it impossible for them to
fulfill their contractual obligations (Aishah et al., 2020).

The effects of the Malaysian government's lockdown (i.e., the Movement
Control Order or MCO) on construction project success show that MCO has had
a negative impact on project success in terms of regulation compliance, safety,
additional time for project delivery, increase in development cost, limited
human resource supplies, and limited resource availability on-site (Radzi et al.,
2022). It also causes material and labor shortages and disrupts the global supply
chain (International Labour Organization, 2021; Radzi et al., 2022). Current,
planned, and new construction projects are being delayed, suspended, or
canceled (Agyekum et al., 2022; Ogunnusi et al., 2021; Radzi et al., 2022). Because
the lockdown was never considered during the tendering process for any
construction work, even well-planned projects were affected by this pandemic.
Some COVID-19 implications include changes to HSE rules, contingency plans,
and force majeure clauses in standard forms of construction contracts
(Ogunnusi et al., 2020). The COVID-19 pandemic has created a great deal of
uncertainty in terms of contractual consequences for those working in the
construction industry right now (Mohsen et al., 2021). As a result, the purpose of
this case study is to explore the current procurement system practice in the
Malaysian construction industry during the pandemic.

03

Chapter 2



Literature Review


04

i. Type of procurement

There are five types of procurement methods
that are commonly adopted in the construction
industry which are the traditional method,
design and build, joint venture or partnering,
management contracting, and Private Financing
Initiative (PFI). According to Suratkon et al.
(2020), the Traditional method or also can be
called the Design-Bid-Build (DBB) method is the
oldest and most frequent form of procurement
utilized in Malaysia's construction industry. The
traditional procurement method is the method
that which the design work and construction
are separated. This type of procurement is
suggested for difficult and large projects.
Raoneqs (2021) mentioned that the suitable
contractor chosen for the projects that utilized
the traditional procurement method usually
must enter a competitive tendering procedure.

The traditional procurement method is the
most fundamental form of procurement when a
contractor's duties are strictly limited to
construction only (ireditor, 2020). Based on
Hiew (2016), the consultant team is appointed to
handle the design and cost of the project. The
contractor is responsible for all workmanship
and materials as well as all work by the sub-
contractors (Hiew, 2016). In other words, the
contractor team will oversee the construction
works only. The contractor team is not
responsible and is not involved in design works.
By adopting the traditional procurement
method, the client has a contractual bond with
all parties as well as has closer control of the
works. However, this kind of method is a risk
for the client, since the client has a lot of
responsibility to deal with (Hiew, 2016).

05

ii. Selection of contractors in the projects iii. Tendering procedure

In the construction industry there are five Tendering processes in the construction sector
types of tenders that can be used to select a involve several parties such as contractors, clients,
contractor including. Open Tender, Selective architects and many more to ensure the success of the
Tender, Negotiated tendering, Serial tendering, project. According to Ng et al. (2007), tendering
and Term Contracting. Normally, for procedures start with an analysis to make sure that
government projects, the best type of tender the specifications meet the needs of the end-users,
that can be practiced is open tender as clients then contractor selection, an invitation to tender,
can get competitive tender prices. According to contract award, and contract monitoring. The
John Hudson (2021), implementing an open construction parties need to go through many
tender may encourage innovation and allow processes or procedures such as the development of
for a wider range of proposals. Everyone does tender lists, preparation of cost estimates as well as
their best to ensure that bids are accepted by evaluation of the tender. Meanwhile, Halaris et al.
providing a good timeframe and complying (2003) stated that tendering procedure is the list of
with the required quality, which creates a processes to develop and manage tender documents
thriving and competitive market (Xavier, made by a client or consultant.
2018).
Typical tender procedure practiced in the
An open tender is a type of tender that construction world starts with the client's desire to
allows anyone to take part in submitting the develop a project whether infrastructure, building or
tenders as long he meets the criteria requested service and maintenance works. Mohemad et al.
in supplying goods and services according to (2010) stated that most countries in different regions
the needs of the project. The client will such as the United States, Europe, the Middle East and
advertise his proposed project through Asia have the similar implementation of tenders.
newspaper, e-tendering website, or tender From this starting point, the consultant appointed by
notice allowing as many interested contractors the client will conduct a feasibility study to identify
as possible to apply for tender documents. the strengths and weaknesses of the proposed plan.
According to Basir (2019), open tenders provide Drury (2021) said a feasibility study was designed to
opportunities for Bumiputera contractors, determine whether a proposed project should proceed
especially G1 and G2 class contractors to get or not. Through this stage, the consultant will also
involved in government projects. Ahmad R. B. determine the estimated cost, time for project
et al. (2021) also indicate that open tenders can completion and procurement procedures which will
minimize the possibility of nepotism as only be used on the project. The consultant is also
the best bids are selected to carry out contracts responsible for preparing tender documents including
and provide new firms the chance to enter the qualification documents and bill of quantities where
market without being constrained by it needs to get approval from the client and only then
prejudice and corruption. can they advertise a notice to call an interested
contractor to take part.
Unfortunately, this form of contract has been
heavily criticized because consumes additional All tenders received will be evaluated for selection
time to select the most suitable contractor for of the most qualified contractor which it involves 2
the project. Stanley (2011), said the main issue stages of evaluation. After identifying the contractor
of lengthy-time frames of open tendering is who meets the project criteria and offers a reasonable
when a selected contractor is incapable of price, then the contractor will be appointed to carry
completing the contract's requirements. As a out the task in accordance with the agreement.
result, the client has to conduct again the
tendering process.

06

iv. Types of contract b) PWD 203A

a) PAM (with quantities) PWD form of contract 203 or 203A is the standard
contract type used for building and civil engineering
The Malaysian Institute of Architects (PAM) has projects in the sector or government. These standard
launched the new PAM Contract 2018. PAM Contract contract types are developed based on drawings and
2018 is the fourth version of the PAM standard form specifications (203) or bills of quantities (203A). In
of building contract since 1969 when it is first general, WordPress (2011) claimed that these common
introduced (Edgeprop, 2018). PAM form of contract for contract types have passed most of the risks to the
building works which was developed by the contractor. It is apparent that the Government has lost a
Malaysian Institute of Architects has been the most lot of contractual and legal conflicts, even though the
frequently applied standard form of contract for forms are deemed to be slanted in the Government's
building works in the Malaysian private sector favor. The standard form is typically utilized in
(Wordpress, 2012). PAM Contract 2018 was developed accordance with the standard administrative forms that
in two versions which are with quantities and go along with it. These forms were designed especially
without quantities. According to Edgeprop (2018), the for use with contract forms and in many cases, they
most recent version of the contract addresses issues strengthen the terms of the contract's clauses' duties
that significantly impact the usual development of the (WordPress, 2011). In general, the Contractor is
work, certificates of extension of time, and retention permitted to request contract period prolongation for a
periods. It also addresses the privileges and variety of situations considered to be the risks of the
responsibilities of employers and contracts. PAM Government, but normally not for damage and cost
president Ezumi Harzani hoped that the new contract incurred. (WordPress, 2011). Another peculiarity is that
will solve issues that businesspeople are having and there is no retention money deducted from payments.
encourage equality and justice. Moreover, the forms There is no opportunity for the contractor to choose his
have been updated most notably to guarantee that is own profession with the Government, and if his
acceptable and appropriate in the current economic contract is revoked then he will be prevented from
situation which takes commercial, professional and participating in any other government projects.
political factors into account.
These basic forms are frequently used and utilized in
PAM Contract 2018 comes has 40 clauses compared projects in the private sector with modifications done to
to the previous one, PAM Contract 2006 which only account for changes in Employer. Here are some of the
has 38 clauses. Here are some of the clauses of the clauses in the PWD forms of contract 203A (Rev.
PAM Contract (with quantities) that may undergo a 1/2010). In clause 10.0 (a), the contractor is obligated to
major change. In PAM Contract 2018, clause 15.2 is construct, complete, test, and commission the works in
about the certificate of practical completion. Based on accordance with specifications, contract drawings, and
the Malaysian Institute of Architects (PAM) (2018), other documents given in contract documents (P.W.D.
clause 15.2 mentioned that the Architect is required to FORM 203A, 2010). Other than that, the contractor
state the incomplete works or the conditions which should submit the receipt of the Letter of Acceptance by
have not been met if the notice of the works is not the Government to the S.O for approval within 14 days
practically completed are given. Moreover, the as mentioned in clause 12.1 (P.W.D. FORM 203A, 2010).
Certificate of Extension of Time is mentioned in Accordance to clause 13.1(a), the contractor should
accordance with clause 23.4 in the PAM Contract provide the performance bond in favor of the
2018. In clause 23.4, the Malaysian Institute of Government for a sum equivalent to 5% of the total
Architects (PAM) (2018) stated that revision requires contract sum. Moreover, the performance bond may
the Architects to give reasons for rejecting the remain valid and effective until 12 months after the
contractor’s application for an extension of time or expiry of the defect liability period (P.W.D. FORM 203A,
give details to accompany the Certificate of Extension 2010).
of Time.

07

v. Contract Price Strategy

Before any construction could begin the best way to
determine the price of the work or services is by contract
pricing. According to Decker (2022), contract pricing is a
method used to determine the best price for goods or
services. It is essential to have a good understanding of
contract pricing as it enables accurate risk and effort
assessment, which is fundamental to ensure the
construction parties maintain profitability in the work
performed. According to Staff E. (2020), there are four
common contract pricing such Cost-reimbursement
pricing, Turnkey contracts, Lump sum, and Unit Price.

Unit Price or unit rate is a method to price the work
according to unit rate to obtain an estimate of the total
project cost without having detailed information such as
the quantity of the work. Anjas H. et al. (2020) said that a
unit price is a contract of goods or services with a fixed
unit price per unit of work with an incomplete scope of
work such as specifications and the quantity of the
works will be estimated at the time the contract is signed.
The contractor agrees to carry out the work as per the
drawing and bills of quantities while payment will be
made based on the measurements taken during the work
progress and at the unit price offered by the contractor in
the quantity bill (Omkar Shirke et al., 2014).

Generally, unit price contracts are suitable for work
that involves repetitive tasks and can easily be divided
into bundles of work. However, in most cases, the actual
quantities and estimated quantities never correspond
with one another because construction parties face
uncertainty when it comes to estimating. Alexi Naous
(2021) claimed that a change in quantity is common in
unit pricing contracts where there will be lack of
estimated quantity and exposes the risk to the client of
not achieving the profit margin. Some studies tried to
find solutions that can be used to minimize this risk
which Aubry (2019) has suggested the client to choose an
experienced contractor to achieve a proper quantity
take-off. This is also supported by Laryea and Hughes
(2011) who said that improving management and cost-
estimating abilities, as well as changing the unit pricing
contract can minimize this issue.

08

Chapter 3



Research Methodology


09

Research As for sampling design, we select a
purposive sampling method to collect the
Methodology data from the trustworthy person. This
method is fairly straightforward which
As it is indicated in the title, this chapter make it easier for our team to directly ask
will explain various research any information related to the Malaysian
methodologies that were used by our Construction Procurement System. By
group in gathering both primary and considering all the factor such as the
secondary data and analyze which are person experience and knowledge, we had
relevant to our research about the selected Mrs Fatin from JUBM Sdn Bhd as
procurement system in the construction she is the best fit for our studies.
industry. It will include location of the
study, sampling, data collection method as Then, for the purpose of data gathering,
well as type of data used. Thus, this there are three types that may be used:
chapter begins by giving a thorough qualitative, quantitative, and a mix of both
overview to the research. where it is the application of both method
on the same studies. Qualitative is defining
The methodology of research is a as collecting and analysing words based on
methodical method of finding a solution the situations, events, people, interactions,
to a problem. According to Jansen and observed behaviours, and direct
Warren (2020), it is a method of questionnaire form people that had
investigation that has been used by the knowledge, experience, and beliefs. It can
researcher systematically designs a study be either written or spoken by the
to ensure a valid and trustworthy resource person meanwhile the focus of
outcome that address the research aims as quantitative method is a statistical
well as its objectives. To put it another analysis and systematic measurement to
way, it is a process of defining specific generate findings about the topic. (Jansen
strategies for locating, gathering, and and Warren, 2020).
analysing relevant information to a
certain study topic.

10

Research
Methodology

The objective of this data collection is to seek and identify the current practice of the procurement
system that had been applied in the Malaysian Construction Industry. Since the Covid-19 epidemic
has disrupted normal process in many industries throughout the world, including the construction
industry, all construction players must modify the standard procedure and adopt a new measure to
accommodate the present limitations in order to ensure the construction industry can still working
and contribute to the country’s economy.

This paper is an in-depth literature review of various construction procurement systems used
in the past and present of Covid-19 outbreak, both in general and within the context of Malaysian
construction industry. It also involves the data from the selected individual that have a depth
knowledge and experience in the industry as our primary data sources.

In order to satisfy our objectives, we provide two options to the respondents for providing the
data either they would be interviewed or self-administering the questionnaires. Thus, after all
consideration is taken, we had decided and selected a qualitative method as one of the ways to
identify, collect, and analyse information to fulfil all the report requirement by conducting a
structured interview via google form questionnaire among the industry players. This is because, it
is one of the methods that offering fast transmission, cost effectiveness, response turnaround and a
complete description and analysis of a topic. (Langkos, 2014). In addition, the respondents also have
more time flexibility as they can fill up and complete the inquiry during their free time.

Then, to gain an accurate and precise data, we had selected one staff from the consultant firm
who are the quantity surveyor from JUBM Sdn Bhd known as Mrs Fatin. The firm is located at
Petaling Jaya, Selangor and had been establish in the construction industry for 46 years. She had
more than five years of expertise in the construction industry and throughout her career as a
quantity surveyor, she managed, involved, and participated in a wide variety of construction
project.

As a result, our group had obtained one case study for both situation which are before the
Covid-19 outbreak period which occurred before 2020 and during the Covid-19 outbreak that
where around 2020 to 2022, namely the construction of KL Eco City and the construction of Tun
Razak Exchange (Package D).

11

Chapter 4



Data Analysis


(Case Study)

12

COMPARISON DURING PANDEMIC COVID-19

BEFORE PANDEMIC COVID-19

Company JUBM Sdn Bhd

Project

Types of
KL ECO CITY TRX (PACKAGE D)
procurement

system adopted Traditional Contract Traditional Contract

It is because this method had It is still used because of the
been commonly used for a long familiarity with the process on
time, so, both contractor and Variation Order, Variation Of
consultant team are familiar to Price, instructions, post tender
solve or face the risks during
the procurement state of a
construction progress.

Selection of
Open Tendering Open Tendering
contractor
The tendering procedure is by
The tendering procedure is

Tendering
open tender through promoting
the same as before pandemic.
procedure
publicly with crucial details.

Contract used PAM 2018 (with quantities) PAM 2006 (with quantities)

Contract price
Unit Price Contract Unit Price Contract
strategy adopted
The work might increase Because of the familiarity
during the project based on the
needs hence, producing a from the previous project but
accurate estimate of the whole
project cost is difficult. the contract price has slightly

changed and demand of

material also has changed.
13

A. TYPES OF PROCUREMENT SYSTEM ADOPTED FOR THE
CASE STUDY

The data collected from the questionnare contributes to the findings on the impact of COVID-19 pandemic to
the Malaysian Construction Industry procurement system practice. The separation of design and production —
for example construction or installation, is a key characteristic of traditional contracts.

Before the pandemic COVID-19

In the questionnaire from the Consultant’s SP Setia is the Client and also the developer for the
Company, the Types of procurement system project of KL Eco City Development at Kuala
adopted for the project of KL Eco City, a project Lumpur. The Client appoints the Professional team
that has an involvement of the JUBM Sdn Bhd, consists of architects from GDP Architects and BEP
is Traditional Contract. The reason for this Architects. Moroever, M&E Consultant was also
procurement system to be chosen is because hired which the design of the mechanical and
this method had been commonly used for a long electrical work is under the responsibility of J.
time, so, both contractor and consultant team roger Preston (M) Sdn. Bhd. and KTA Tenaga Sdn.
are familiar to solve or face the risks during the Bhd. Then the Quantity Surveyor's company
procurement state of a construction progress. appointed is JUBM Sdn Bhd which work together
According to the Consultant’s company JUBM along with other professional team for the
Sdn Bhd, the advantage of the procurement preparation of tender and design.
chosen is the flexibility of the post tendering
through instructions of Variation Order. While After the tender process, the awarded main
there are advantages to the system chosen, contractor for the project is Ireka Corp Bhd, which
there are also limitations such that the does not have any contractual link to the
procurement consume time, cost, and has high professional team but only responsibility to
workability. Below are the organizational complete the work according to the specifications.
structure for the project of KL Eco City using The main contractor then hire sub-contractors and
traditional contract. they would work with suppliers and other sub-sub
contractors to work together for the project's
completion.

14

A. TYPES OF PROCUREMENT SYSTEM ADOPTED FOR
THE CASE STUDY (CONT'D)

During the pandemic The Project's Client is TRX City Sdn Bhd, which is
a company that is wholly owned by the Malaysian
COVID-19 Ministry of Finance. The Client appoints
architects from NRY Architects Sdn. Bhd. and Just
During the pandemic, the consultant’s Right Design Sdn. Bhd. Other professional and
company JUBM Sdn Bhd still uses consultants teams are also appointed for the
Traditional Contract for the project of Tun purpose of design and tender preparation.
Razak Exchange (TRX) Package D, due to Once open tendering procedure has completed,
the familiarity of the process on Variation China Communications Construction Company
Order, Variation of Price, Instructions and (M) won the tender and became the main
Post tender. They further state that the contractor for the Tun Razak Exchange
flexibility of the post tendering is the construction works which then its task are
advantages of traditional tendering while divided to sub-contractors.
the disadvantages are time, cost and energy
consuming. The process are the same before
and during the pandemic. The Client
appoints Professional team like Architect,
M&E consultants and quantity surveyors
and then initiate the tender process until
the tender is awarded to the contractor. the
construction can commence after that until
completion and the completed work is
handed over to the Client. The diagram
shows the parties involved in the TRX
Package D using the traditional contract.

Analysis

According to the the answer from the questionnare and based on the analysis, there are no modification in
the type of procurement adopted for both project of KL Eco City, before the pandemic COVID-19, as well
as during the pandemic COVID-19 for the project of Tun Razak Exchange (TRX) Package D. the Traditional
contract method is being chosen due to the familiarity to the construction parties and the company since
they have been the primary method of contract procurement for a very long time. Through this method,
Contractor can only focus on its workmanship quality on site for construction and the Consultants team can
focus on the design quality or cost consultancy services.

15

B. SELECTION OF CONTRACTOR IN THE PROJECTS

Before the pandemic

The selection of contractor in the projects are the same before and during the pandemic.
According to the data analysed in the survey carried out, before the pandemic started, the
selection of contractors in the project for KL Eco City by JUBM Sdn. Bhd. was done through
open tendering. Although other tendering methods such as negotiation and selective
tendering methods were available, the open tendering method was chosen. This is because it is
believed that the open tendering method is the primary tendering technique used by both the
private and public sectors.

As mentioned earlier in the literature review, everyone will try their best to make sure that
bids are approved by giving a respectable timeline and adhering to the necessary standards,
which promotes a thriving and competitive market (Xavier, 2018). Implementing an open
tender may enhance exploration and experimentation and allow for a larger choice of
solutions, claims John Hudson (2021).

The open tendering method is implemented through opening the tender through JUBM's
online official website. The tenderers that purchase and submit their tenders will be evaluated
in order to select the most qualified and suitable tenderer for the project. They will be
evaluated based on the company profile, experiences in construction works and have a stable
financial history.

During the pandemic

During the pandemic, the selection of contractor method maintained the same according to
the survey carried out for the TRX Package D project by JUBM Sdn. Bhd.

An open tender is a form of tender that enables anybody to make bids as long as they meet the
requirements for supplying products and services in accordance with the project's needs
(Basir, 2019). During the pandemic, construction projects were limited, hence open tenders
offered Bumiputera contractors, particularly G1 and G2 class contractors, the chance to
participate in the projects. According to the survey carried out, the open tendering method
had been used during the pandemic as it has been commonly used for a long time, so, both
contractor and consultant teams are familiar and find it better to use this method to select
contractors for the projects during the pandemic.

Analysis

According to both before and during pandemic case studies, the client JUBM Sdn. Bhd. chose the selection

of contractors for the projects using the open tendering method. Supported by literature review, not only

that it is a traditional way of tendering that is well-known throughout the engineering and construction

industries, it also increases the number of opportunities for contractors so that the client can get a better

deal.

16

C. TENDERING PROCEDURE

Before the pandemic & During the pandemic

The procurement and tendering process has a substantial impact on a building project's
performance. Understanding the procurement and tendering process for the construction
sector is essential to guaranteeing that projects are finished on time, within budget, and to a
high standard. To successfully manage a construction project, it is essential to choose the right
contractor, who is chosen during the tendering process.
According to the case studies, the client which is JUBM Sdn. Bhd. has chosen open tendering
method for both before and during the pandemic. Referring to the data collected, the
procedure for calling the tenderers are similar, however, some tender documents are done
through e-tendering and the method of bid submission also differ during the pandemic.

RFQ= Request for Qualification;

SoQ=Submission of Qualification.

Analysis

The development of tender lists, the creation of cost estimates, and the evaluation of the tender are only a
few of the many processes or procedures that the construction parties must go through. This may be
supported from the literature review by Ng et al. (2007) that claims that the first step in the tendering
process is an evaluation to see if the requirements satisfy the demands of the end users, followed by
contractor selection, an invitation to tender, contract award, and contract monitoring. Hence, it is
confirmed that both the tendering process of before and during the pandemic are similar processes.

17

D. CONTRACT USED

Before the pandemic

According to the data collected from the During the pandemic
case study of JUBM Sdn. Bhd. project of KL
Eco City which was carried out before The PAM 2006 (with quantities) contract
pandemic started, they have been using has been adopted for the TRX Package D
the PAM 2018 (with quantities) contract. project by JUBM Sdn. Bhd. during the
pandemic. Referring to studies gathered
Since the PAM standard form of building from literature review, PAM Contract
contract was published in 1969, there have 2006 only has 38 clauses compared to PAM
been four editions, the most recent being 2018 (with quantities).
the PAM 2018 Contract. Since that time,
Malaysia's Standard Type of Building In the standard PAM Contract 2006 (with
Contract has been based on the PAM form quantities), there is a requirement to obey
of contract. laws. Therefore, the enforcement of MCO,
which obviously has the force of law
There is an agreement and condition of which the contractor has to comply with,
PAM contract 2018 that states the "force may fall within the 'Relevant Events" that
majeure" is defined as "any conditions may entitle the contractor to apply for an
beyond the control of the Contractor extension of time, provided that all other
caused by terrorist actions, governmental requirements for extension of time are
or regulatory action, diseases, and natural fulfilled (R.D.L, 2020).
catastrophes" in Article 7(ad) of PAM 2006.
(Chen, 2020). The PAM 2006 (with quantities) contract
has been adopted during the pandemic as
it provides force majeure clauses.
According to Chen (2020), these clauses are
often used to describe provisions that
address unique and exceptional
circumstances (such as war, an epidemic,
etc.).

Analysis

The construction contracts may also have clauses dealing with changes in the law or compliance with
governmental orders or directions which affect obligations of a party or its ability to perform the obligations
under the contract. According to the case study, JUBM Sdn. Bhd. has chosen PAM 2018 (with quantities)
contract before the pandemic existed as it has been the standard contract used, meanwhile during the
pandemic, PAM 2006 (with quantities) contract has been adopted to comply with the force majeure
clauses and only entitles the contractor to claim for extension of time, but not to suspend its performance
and/or terminate the contract.

18

E. CONTRACT PRICE STRATEGY ADOPTED

There are several types of contracting approaches between Client and Contractor and each
supports different project environment and project approaches. Through this type of contract, the
final cost of the project depends upon the quantities of work and cannot be determined at the
early stage.

Before the pandemic C0VID-19

Before the pandemic, the company JUBM Sdn Bhd uses Unit price contract. The work in unit
price contract can be divided into units. Therefore, the adoption of unit price contract for the
case study project of KL Eco City is suitable because this project has more than one tower
building to be constructed hence the projects are repeated, the cost would just be highly
dependent on materials, and the final quantity of work may not be immediately obvious.

Since it is a mega project, the work might be increased at any moment during the project based
on the needs. As a result, producing an accurate estimate and determining the whole project
cost is difficult. Furthermore, the increase of the scope of work typically involving repeating
the activities that are already completed throughout the course of the project or something
close to it. This simplifies the cost of the additional work. The contractor can simply charge for
them based on the previous estimates that were passed for the job.

During the pandemic COVID-19

During the pandemic of COVID-19 from the year 2020 to 2022, the company JUBM Sdn
Bhd still uses Unit price contract as the contract price strategy because of the
familiarity from the previous project. Even so, the company claims that the cost of the
work increases at the early stage of the pandemic somewhat due to strong demand for
materials during COVID-19, but less availability because the factories that produce
material was ordered to shut down its operations. During this period, pricing of the
work has its challenge because the rate of material fluctuates and are not standadized.

Nonetheless, Unit pricing still provide benefits as it is very flexible. Because these
projects may span several years, the need for extra work may arise at a later time after
the initial planning. It enables for project additions or expansions in the middle of the
project, which may be extremely beneficial to the project planning and implementation
teams. During scope adjustments, the unit price may simply be modified up or down,
making it easier for the Client and Contractor to reach an agreement during change
orders.

19

E. CONTRACT PRICE STRATEGY ADOPTED (CONT'D)

Analysis

From the analysis of the data collected, it can be concluded that there are also no change in the
contract price strategy that is being adopted by the company JUBM Sdn Bhd. Both projects from
before pandemic COVID-19 (KL Eco City) and during pandemic COVID-19 (TRX Package D) uses Unit
Price Contract to price the items. However, the company states that there a slight change in the price
of the work due to high demand of materials during COVID-19 but less supply because of the
inoperability of the factories that produces material.

The list of costs that are commonly factored into unit prices are labor costs, material costs,
overhead costs, profit or mark-up, taxes, as well as permit and inspection costs. These costs increases
during the early stages of COVID-19 pandemic due to lockdowns and lack of supply.

This type of contract gives benefit both to the Client and Contractor. The Client can be confident
in quantity take-offs and accurate schedule estimations since they have selected and hired an
experienced consultant and the company that utilized unit price contract in this case study is JUBM
Sdn Bhd, one of the oldest and largest established Quantity Surveying firm in the country.

Unit price contract pre-determine rates, works can begin before the whole design is completed. For
both of the mega projects, the scope of work cannot be precisely defined until construction activities
begin. Unit pricing contracts are the most precise and transparent when it comes to monthly progress
invoicing since it quantifies the work accomplished.

In short, this contract need significant amount of upfront effort from consultants and contractors,
but they can provide several benefits throughout the tendering and construction phases of the
project. This will result in high performance, competitive and compliance tendering, and shared risks
among the stakeholders.

20

Chapter 5



Conclusion and


Recommendation

21

CONCLUSION

To summarise, what changed in the current procurement system practice during the pandemic was not
significant. Changes in the procurement system before and after the pandemic Covid-19, are their additional
contract clauses for health and safety following the standard operating procedure, claims and interim
certification, valuation, and variation order. Following the pandemic, there are no changes in the 'contract
price.' The type of tendering method used by the company to submit the tender, as well as the contract price
strategy, remain unchanged. A site visit, tender validity, method of bid submission for the project, and
demand for the material all changed during the pandemic.

The procurement system used for the construction project before and during the pandemic remains
unchanged. The traditional method was used in both cases. Despite the current pandemic situation,
Malaysian construction continues to use traditional methods. This could be due to consultants' familiarity
with traditional methods, which was discovered due to the long existence of traditional procurement
systems in the Malaysian construction industry (Yap, 2019). However, the traditional method has
limitations in terms of time, cost, and energy consumption.

RECOMMENDATION

Procurement is one of the most important areas of a company's cost structure (Amemba et al. 2013). As a
result, it is recommended that manual procurement procedures be replaced with an Internet-based
electronic system, which allows government contracting authorities to electronically purchase goods and
services from their suppliers (Sila 2013; Mahat et al., 2022). This procurement process's digital transformation
is perfectly aligned with the growing demand for social distancing and remote working requirements
imposed by the current COVID-19 pandemic (PMWeb, 2020). E-procurement is more than just an online
purchasing system. The system was put in place to achieve significant advantages such as cost savings and
increased efficiency. Other benefits of using an e-procurement system include a faster government
procurement process and increased transparency when compared to traditional procurement and tendering
methods (Nawi et al., 2016).

E-procurement includes e-bidding and e-ordering, which can aid in the management and exchange of
information. To reduce the spread of the COVID-19 virus (Gregoire, 2020), e-procurement promotes
paperless management, which eliminates the need for service providers to deliver hardcopy submissions to
project owners, and for owners to distribute those physical submissions to all required evaluators. Tender
advertisements, as well as tender submissions, will be digitized (Mahat et al., 2022). In this regard, electronic
procurement aids owners' ongoing efforts to protect the health and safety of their employees and business
partners while moving critical capital projects forward (Gregoire, 2020). The awarding process will be very
organized and precise because the decision committees will have a better understanding of these bids and
may be able to obtain better pricing, saving a lot of money (Nawi et al., 2016).

22

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v

APPENDICES

QUESTIONNAIRE ON
GOOGLE FORM

vi

Appendix A: Questionnaire Response on Google Form

vii

Appendix B: Questionnaire Response on Google Form

viii

Appendix C: Questionnaire Response on Google Form

ix

Appendix D: Questionnaire Response on Google Form

x

Appendix E: Questionnaire Response on Google Form

xi

Appendix F: Questionnaire Response on Google Form

xii

Appendix G: Questionnaire Response on Google Form

xiii

Appendix H: Questionnaire Response on Google Form

xiv

Appendix I: Questionnaire Response on Google Form

xv

Appendix J: Questionnaire Response on Google Form

xvi