RESEARCH REPORT CHALLENGES AND PRACTICES OF BUILT-UP RATE ESTIMATION IN THE MALAYSIAN CONSTRUCTION INDUSTRY HARYATI BINTI ISMAIL NOR ASMA BINTI MAMAT ZAHURIN BINTI HUSIN POLITEKNIK KOTA BHARU
Published and distributed by: Department of Civil Engineering Kota Bharu Polytechnic KM. 24, Kok Lanas, 16450 Ketereh, Kelantan. Research Report: Challenges and Practices of Built-Up Rate Estimation in The Malaysian Construction Industry First Print 2023 © 2023 Haryati Binti Ismail, Nor Asma Binti Mamat & Zahurin Binti Husin All rights reserved. No part of this publication can be reproduced, stored in any form or in any way, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the copyright holder. Haryati, Nor Asma & Zahurin Research Report: Challenges and Practices of Built-Up Rate Estimation in The Malaysian Construction Industry / Haryati, Nor Asma & Zahurin
iii AUTHOR’S BIO Haryati Binti Ismail completed her Doctor of Philosophy in Quantity Surveying from Universiti Teknologi Malaysia. Additionally, she obtained a Master of Civil Engineering from Universiti Tun Hussien Onn Malaysia, a Bachelor of Quantity Surveying (Hons), and a Diploma in Quantity Surveying from Universiti Teknologi Mara. Prior to joining Polytechnic Kota Bharu, Kelantan, she gained professional experience at Polytechnic Kota Kinabalu, Sabah, and Polytechnic Sultan Azlan Shah, Perak. Nor Asma Binti Mamat earned a Master of Science degree in Construction Contract Management from Universiti Teknologi Malaysia (UTM). Prior to becoming a lecturer at various polytechnics in 2009, she gained practical experience in the industry. Currently, she holds the position of Senior Lecturer in the Department of Civil Engineering at Polytechnic Kota Bharu. Zahurin Binti Husin achieved a Master of Facility Management (Hons) degree from Universiti Teknologi Mara (UiTM). Prior to becoming a lecturer in 1999, she gained 7 years of professional experience working with contractors and consultants. Presently, she holds the position of Head of Unit at the Centre of Excellence in Technology (Quantity Survey) at Polytechnic Kota Bharu.
iv ABSTRACT Accurate cost estimation is crucial for the success of construction projects in the Malaysian construction industry. Among the different methods of cost estimation, the built-up rate estimation plays a significant role in determining project costs. However, limited research has been conducted on the challenges and current practices related to the built-up rate in Malaysia. to provide insights into the challenges faced, current practices employed, and potential improvements for built-up rate in construction projects in Malaysia. The data was gathered through an online survey, involving participants from diverse sectors within the construction industry. Descriptive frequencies and content analysis were employed to analyze the collected data. The survey findings indicate that changes in market prices and difficulty in determining the labor constant are the main challenges faced in establishing the built-up rate. Other challenges include inconsistent formulas, complicated processes, and difficulty in obtaining quotations from suppliers. The study also identifies the current methods used by construction professionals, such as manual calculation, obtaining project and existing data, and using spreadsheet software like Microsoft Excel. The findings highlight the importance of adopting modern tools and techniques, staying updated with industry practices, and addressing challenges to enhance the accuracy and efficiency of cost estimation. By addressing these challenges and embracing technological advancements, the Malaysian construction industry can improve its cost estimation practices, leading to more successful and sustainable construction projects. These insights provide valuable information for industry professionals, project stakeholders, and decision-makers to make informed decisions and develop strategies for enhancing cost estimation accuracy in the Malaysian construction industry.
v TABLE OF CONTENT AUTHOR’S BIO..........................................................................................................iii ABSTRACT................................................................................................................iv TABLE OF CONTENT................................................................................................ v LIST OF FIGURES....................................................................................................vii LIST OF TABLES ......................................................................................................vii 1.0 Introduction....................................................................................................... 2 1.1 Background of the Study....................................................................... 2 1.2 Problem Statement ............................................................................... 3 1.3 Research Question ............................................................................... 4 1.4 Objectives ............................................................................................. 4 1.5 Scope of the Study................................................................................ 5 1.6 Method .................................................................................................. 5 1.7 Expected Outcome................................................................................ 7 2.0 Literature Review ............................................................................................. 9 3.0 Research Methodology................................................................................... 12 3.1 Research Design................................................................................. 12 3.2 Data Collection.................................................................................... 12 3.3 Participant Selection ........................................................................... 13 3.4 Survey Instrument ............................................................................... 13 3.5 Data Analysis ...................................................................................... 14 4.0 Results ........................................................................................................... 17 4.1 Demographic of the Respondent......................................................... 17 4.2 Primary Challenges in Establishing Building Rates............................. 19 4.3 The Current Methods Used in Calculating The Built-Up Rate ............. 21
vi 5.0 Discussion...................................................................................................... 24 5.1 Objective 1: Identify the primary challenges in establishing the building rate in the Malaysian construction industry.......................................... 24 5.2 Objective 2: Investigate the current practices of construction professionals in Malaysia using the built-up rate estimation method... 25 5.3 Objective 3 : Propose strategies to enhance the utilization of the builtup rate method in the Malaysian construction industry........................ 26 6.0 Conclusion And Recommendations................................................................ 29 REFERENCES......................................................................................................... 31 APPENDIX A............................................................................................................ 34
vii LIST OF FIGURES Figure 1.1: Research flow .......................................................................................... 6 Figure 3.1 : The process of content analysis............................................................ 15 LIST OF TABLES Table 4.1: Type of Organisation................................................................................ 17 Table 4.2 : Position of the Respondents ................................................................... 18 Table 4.3 : Primary Challenges in Establishing Building Rates. ............................... 20 Table 4.4 : Current Method Used by the Respondents............................................. 22
2 1.0 INTRODUCTION 1.1 Background of the Study The Malaysian construction industry plays a vital role in the country's economic growth and development. As construction projects become increasingly complex and resource-intensive, accurate cost estimation has emerged as one of the most critical factors for ensuring project success. Cost estimation involves calculating the projected cost of a construction project, considering various components and factors. Among the different methods of cost estimation, the built-up rate estimation holds particular importance for professionals in the construction industry. The built-up rate serves as the foundation for cost projections used by clients, a guide during the design process for designers, a tool for estimating costs for estimators, and a basis for entering building contracts for contractors. This method considers every aspect of the project, including labor, materials, and other relevant factors, and computes a total cost for each item involved in the construction process. The built-up rate is typically expressed as the cost per unit of measurement, such as cost per cubic meter or kilogram. However, despite its importance, there has been limited discussion and research on the built-up rate estimation method. To address this gap, this study aims to identify the primary issues and current practices of the built-up rate from the perspective of construction professionals in the Malaysian construction industry. By examining the challenges and practices related to the built-up rate estimation method, this research aims to shed light on areas that require improvement and provide insights for enhancing cost estimation accuracy in construction projects. The findings of this study can help industry professionals, project stakeholders, and decision-makers in the Malaysian construction industry make informed decisions and develop strategies to overcome the challenges associated with built-up rate estimation.
3 1.2 Problem Statement Accurate cost estimation plays a critical role in the construction industry, as it directly affects project outcomes and overall success. Errors in estimation can lead to cost overruns, delays, and compromised quality, which can have significant consequences for all stakeholders involved. In the context of the Malaysian construction industry, there is a noticeable lack of research and discussion on the challenges and practices of the built-up rate estimation method. The built-up rate estimation method is a widely used approach in the construction industry. It involves the breakdown of project costs into various components or items, which are then assigned specific rates based on historical data, market prices, and other relevant factors. This method allows for a systematic and structured approach to estimating costs, providing a foundation for budgeting and financial planning. However, the absence of a comprehensive understanding of the issues and current practices related to the built-up rate estimation method poses significant challenges for professionals in the industry. To address this gap in knowledge, there is a pressing need for research and investigation into the challenges and practices specific to the built-up rate estimation method in the Malaysian construction industry. By gaining a better understanding of the challenges and practices surrounding cost estimation, professionals can enhance their ability to estimate project costs accurately and develop more effective strategies to manage budgets and resources. Improving cost estimation accuracy, particularly in terms of the built-up rate estimation method, is of utmost importance in the Malaysian construction industry. It can lead to better project planning, reduced financial risks, improved decision-making, and enhanced overall project success.
4 1.3 Research Question Sub-section 1.2 highlighted shortcomings and gaps from previous studies which required further attention on the issue of the built-up rate in Malaysia construction industry. Therefore, this research attempted to find answers for the following questions: i. What are the primary challenges in establishing the building rate in the Malaysian construction industry? ii. What are the current practices of construction professionals in Malaysia using the built-up rate estimation method? iii. What strategies can enhance the enhance the utilization of the built-up rate method in the Malaysian construction industry.? 1.4 Objectives This research aim is to provide insights into the challenges faced, current practices employed, and potential improvements for built-up rate in construction projects in Malaysia. Thus, to achieve the research aim, the following objectives have been identified: i. Identify the primary challenges in establishing the building rate in the Malaysian construction industry. ii. Investigate the current practices of construction professionals in Malaysia using the built-up rate estimation method. iii. Propose strategies to enhance the utilization of the built-up rate method in the Malaysian construction industry.
5 1.5 Scope of the Study This study focuses specifically on the challenges and practices related to the built-up rate estimation method in the Malaysian construction industry. It aims to provide insights from construction professionals across various sectors, including clients, consultants, contractors, educators, municipalities and authorities, and quantity surveying freelancers. The study does not cover other aspects of cost estimation or delve into specific construction projects but instead provides a broad overview of the challenges and practices associated with the built-up rate estimation method. 1.6 Method This study employs a cross-sectional research design to collect data at a specific point in time and provide a snapshot of the current practices and challenges in cost estimation in the Malaysian construction industry. The data for this research is collected through an online survey using Google Forms, allowing for convenience and accessibility for participants. The target population includes construction practitioners from various sectors of the industry, ensuring a diverse representation of professionals with different roles and perspectives. The survey instrument consists of open-ended questions designed to gather in-depth qualitative insights into the issues and challenges related to cost estimation. The collected data is analysed using a combination of descriptive frequencies for demographic data and content analysis for the responses to open-ended questions. Descriptive frequencies provide a quantitative summary of the participants' characteristics, while content analysis allows for the identification of key themes, patterns, and insights from the qualitative data.
6 The research flow is depicted in Figure 1.1 Figure 1.1: Research flow Research problem Research question Research Objective First stage Research design Second stage Data collection Primary data Secondary data Third stage Fourth stage Data analysis stage Fifth stage Discussion Sixth stage Report writing
7 1.7 Expected Outcome The expected outcome of this study is to identify the primary challenges in establishing the building rate in the Malaysian construction industry and to understand the current methods used by respondents in calculating the built-up rate. Through data analysis and content analysis of the survey responses, the study aims to uncover common challenges, emerging themes, and trends in the current practices of the builtup rate estimation method. The findings will provide valuable insights for industry professionals, project stakeholders, and decision-makers in making informed decisions, improving cost estimation accuracy, and developing strategies to overcome the challenges associated with built-up rate estimation. The research outcomes are expected to contribute to the body of knowledge in the field of cost estimation in the Malaysian construction industry and serve as a basis for further research and practical applications.
9 2.0 LITERATURE REVIEW The Malaysian construction industry is a significant contributor to the country's economic growth and development. In this industry, cost estimation plays a vital role in ensuring the success of construction projects. Cost estimation is an essential process that determines the estimated cost of a project, providing decision-makers with valuable insights for budget allocation and management. However, producing accurate and reliable cost estimates in construction projects can be challenging due to the complexity of the construction process and the multitude of tasks involved. Several studies have highlighted the importance of cost estimation in the construction industry and the challenges associated with it. Webster and Dalcher (2019) emphasize that cost estimation is an integral part of cost planning and control in construction projects. It involves allocating and managing the agreed-upon budget for current and future expenses. This process helps in evaluating the required funding and comparing it with bids or tenders, enabling organizations to submit competitive proposals for contract awards and establish accurate budgets. However, producing accurate and reliable cost estimates is a time-consuming task that poses significant challenges for estimators. Samphaongoen (2010) notes that the primary difficulty faced by estimators is generating precise estimates that provide decision-makers with valuable insights and determine the necessary resources for project implementation. This complexity is further emphasized by Torp and Klakeg (2016), who state that realistic cost estimation is challenging due to the uncertainty and multitude of tasks involved in the construction process. Inadequate pricing systems can also hinder accurate cost estimation and affect the competitiveness of construction firms. Oparin, Chepachenko, and Yudenkо (2016) found that many construction organizations struggle with pricing systems that underestimate construction costs, preventing them from offering their services at competitive prices. It is crucial to address both underestimates and overestimates, as they can have costly consequences for construction projects (Leung, Skitmore, & Chan, 2007).
10 To overcome these challenges, researchers and industry practitioners have explored various approaches and factors influencing cost estimation accuracy in the Malaysian construction industry. The studies mentioned earlier shed light on factors such as project size, type, level of documentation, project team competency, information availability, and project complexity. Understanding and addressing these factors can help improve the accuracy and reliability of cost estimation in construction projects. Without a doubt, cost estimation plays a crucial role in the success of construction projects by providing valuable insights for budget allocation and management. However, it is a complex and time-consuming task that requires attention to detail and consideration of various factors. Enhancing cost estimation practices and addressing challenges can contribute to more accurate estimates, leading to better decisionmaking and cost control in the Malaysian construction industry.
12 3.0 RESEARCH METHODOLOGY This section presents the research methodology employed in this study to investigate the issues related to cost estimation in the Malaysian construction industry. The research design, data collection method, participant selection, and data analysis techniques are discussed in detail. 3.1 Research Design The research design for this study is a cross-sectional design that aims to collect data at a specific point in time. It provides a snapshot of the current practices and challenges in cost estimation in the Malaysian construction industry. This design allows for a comprehensive exploration of the research topic and facilitates the gathering of diverse perspectives from participants. 3.2 Data Collection 3.2.1 Primary Data Collection Method Data collection for the research can be categorized into primary and secondary data. Primary data refers to information that is collected directly by the researcher for the first time (Kothari, 2004; Kumar, 2011). The collection of primary data involves employing suitable procedures to address the research problem at hand (Hox & Boeije, 2005). Examples of primary data collection methods include the researcher's personal experience, personal documents, experiments, film/video, records, field observations, questionnaires, interviews, immersing oneself in a situation, manipulating models, schedules, and content analysis (Dawson, 2002; Kothari, 2004; Nicholas, 2010; Pandey & Pandey, 2015). The data for this research was collected through an online survey using Google Forms. Online surveys offer convenience and accessibility, allowing participants to respond to the survey at their convenience and from any location with internet access. Google Forms was chosen as the survey platform due to its user-friendly interface and ease of data collection and management.
13 3.2.2 Secondary Data Secondary data refers to information that has been gathered and analyzed by others in prior studies, including sources like journals, books, reports, magazines, manuscripts, and films. It is readily available data that needs to be extracted by the researcher (Kothari, 2004; Kumar, 2011). This data can be either published or unpublished and may exist in its raw form (Kothari, 2004; Saunders et al., 2009). According to Nicholas (2010), secondary data plays a significant role as it offers ideas, theories, and insights for a study, and can also be used to validate findings by comparing them with primary data. Moreover, it aids in developing a thorough understanding based on past research and the issues at hand (Saunders et al., 2009). Nevertheless, researchers must evaluate the relevance, accuracy, and quality of the data (Dawson, 2002; Nicholas, 2010). 3.3 Participant Selection The target population for this study consisted of construction practitioners in Malaysia. A total of 300 respondents from various sectors of the construction industry participated in the survey. The participants included clients, consultants, contractors, educators in the field of quantity surveying, municipalities and authorities, as well as quantity surveying freelancers. The selection of participants aimed to ensure a diverse representation of professionals with different roles and perspectives in the Malaysian construction industry. 3.4 Survey Instrument The researcher commonly utilizes questionnaires as a widely employed method for data collection (Saunders et al., 2009). Questionnaires employ variables that are selfexplanatory, self-administered, and pre-tested (Awang, 2012). Questionnaires can be collected through various means such as personal administration, mail, or technology like the internet (Sekaran, 2003). Kumar (2011) suggests considering several characteristics before conducting a questionnaire, including the willingness of participants to discuss the study with the researcher, the geographical location of respondents, and the type of population. Furthermore, researchers must consider the characteristics of respondents, sample size, response rate, number of questions (Saunders et al., 2009), questionnaire content, purpose of questions, language and
14 wording, questionnaire type (open or closed), question format (positive or negative), question length, and question sequence (Sekaran, 2003). Additionally, questions should be unambiguous and not require excessive or unnecessary information from respondents (Fellows & Liu, 2003). For this study, the questionnaire consists of a few questions: a. To gather general information and background about the respondents, such as their organization and position. b. To address two out of the three objectives of this study, which are: • Identifying the primary challenges in establishing the building rate in the Malaysian construction industry. • Investigating the current practices of construction professionals in Malaysia using the built-up rate estimation method. To accomplish these two objectives, a set of open-ended questions was formulated to collect qualitative insights regarding the issues and challenges related to built-up rate estimation in the construction industry. Open-ended questions provide participants with the opportunity to express their opinions, experiences, and suggestions freely, allowing for a rich and nuanced understanding of the research topic. 3.5 Data Analysis The collected data was analyzed using a combination of descriptive frequencies for the demographic data and content analysis for the responses to the open-ended questions. Descriptive frequencies provided a quantitative summary of the participants' demographic characteristics, such as their professional roles and affiliations. Content analysis, a commonly used qualitative analysis technique, was employed to identify and categorize statements from the respondents' open-ended responses. This technique allowed for the systematic extraction of key themes, patterns, and insights from the qualitative data. In the context of this study, content analysis will be employed to examine the responses and identify key themes and patterns related to the primary challenges in establishing the build-up rate in the Malaysian construction industry and the current
15 practices of construction professionals in Malaysia using the built-up rate estimation method. The process of content analysis involves several steps as figure 3.1 below. Figure 3.1 : The process of content analysis By employing content analysis, this study will gain a deeper understanding of the primary challenges in establishing the building rate and the current practices of construction professionals using the built-up rate estimation method in the Malaysian construction industry. Based on the findings from objectives 1 and 2, strategies will be proposed to enhance the utilization of the built-up rate method in the Malaysian construction industry. First, the researcher will familiarize themselves with the data collected by carefully reading and reviewing all the responses. Next, the researcher will identify and code relevant units of meaning within the responses, such as specific challenges or practices mentioned by the participants. After coding, the researcher will categorize similar codes into broader themes or categories. These themes will reflect the primary challenges or current practices identified in the data. The researcher will then analyze the frequency and distribution of these themes to determine their prevalence among the responses.
17 4.0 RESULTS 4.1 Demographic of the Respondent The study collected a total of 293 valid responses out of the 300 participants who voluntarily provided their responses as shown in table 4.1 below. Table 4.1: Type of Organisation Type of organisation Frequency Percentage Client 34 12% Government Sector 28 10% Contractor 153 52% Consultant 45 14% Local Authority 3 1% Education Sector 16 5% Freelancer 6 2% Student 10 3% Supplier 3 0% Total 293 100% As shown on the table, the participants represented various organizations and were located in different states of Malaysia. Contractors represent the largest group among the respondents, with a frequency of 153, accounting for 52% of the total participants. The second most prevalent category is Consultants, with 45 respondents, constituting 14% of the total participants. Clients and Government Sector organizations each have a relatively significant representation, with frequencies of 34 and 28, respectively, making up 12% and 10% of the respondents. Other categories, including Education Sector, Freelancers, Students, Local Authorities, and Suppliers, have smaller representations, ranging from 0% to 5% of the total respondents.
18 Table 4.2 : Position of the Respondents Position Frequency Percentage Director 12 4% Quantity Surveyor 128 44% Contract Executive 19 6% Project Executive 11 4% Technical Manager 1 0% Project Coordinator 1 0% Site Supervisor 8 3% Civil Engineer 9 3% Contract Manager 2 1% Project Manager 6 2% Manager 14 5% Architect 1 0% Assistance Quantity Surveyor 34 12% Assistance Manager 3 1% Assistance Contract Manager 2 1% Technical Assistance 2 1% Assistance Engineer 4 1% Site Quantity Surveyor 2 1% Lecturer 14 5% Freelancer 5 2% Student 12 4% Others 3 0% Total 293 100%
19 The respondents exhibited a variety of positions within their respective organizations. As presented in Table 4.2. The most frequently represented position among the respondents was Quantity Surveyor, accounting for 44% (128) of the total participants. Following that, the next highest represented positions were Director (4%), Contract Executive (6%), and Project Executive (4%). Other positions such as Site Supervisor, Civil Engineer, and Manager each accounted for 3-5% of the respondents. There were smaller representations from positions such as Technical Manager, Project Coordinator, Contract Manager, Project Manager, Architect, and Lecturer, each comprising 0-2% of the total participants. Assistance Quantity Surveyors and Students both constituted 12% and 4% of the respondents respectively, while other positions combined made up the remaining 1%. The table reflects a diverse range of positions held by the respondents, demonstrating the varied roles and responsibilities within the study population. 4.2 Primary Challenges in Establishing Building Rates. The first objective of the study was to identify the primary challenges in establishing building rates. Table 1 presents the main problems faced by the respondents in determining the built-up rate in the construction industry. The most frequently mentioned problem was changes in market price, reported by 38.9% of the respondents. This indicates that the respondents found it challenging to keep up with the constantly changing market prices of materials and services required for the construction project. The second most common problem was difficult to determine labor constant, reported by 13.6% of the respondents. This suggests that the respondents found it challenging to estimate the labor required for the construction project accurately. Other significant problems mentioned by the respondents included inconsistence formula (10.6%), complicated process (9.6%), difficulty in getting quotations from suppliers (6.5%), inaccurate price calculation (4.4%), lack of skill (3.8%), lack of reference (3.1%), and lack of experience (2%).
20 It is interesting to note that the latest technology was reported as a problem by only one respondent, indicating that the use of technology in the built-up rate estimation process may not be a significant concern for most respondents. These findings provide valuable insights into the challenges faced by the construction industry in Malaysia in determining the built-up rate. Understanding these challenges can help in developing strategies and interventions to overcome them and improve the accuracy of cost estimation in construction projects. Table 4.3 : Primary Challenges in Establishing Building Rates. No Item Frequency Percentage 1 Difficult to determine labour constant 40 13.6% 2 Inconsistence formula 31 10.6% 3 Changes in market price 114 38.9% 4 Complicated process 28 9.6% 5 Latest technology 1 0.3% 6 Difficult to determine plant and machinery output 5 1.7% 7 Inaccurate price calculation 13 4.4% 8 Lack of skill 11 3.8% 9 Lack of experience 6 2% 10 Difficulty in getting quotations from suppliers 19 6.5% 11 Time consuming 8 2.7% 12 Lack of reference 9 3.1% 13 Changes in specification 3 1% 14 Not updated with current price index 3 1% 15 Difficult to determine wastage of materials 1 0.3% 16 Location factor 1 0.3% Total 293 100%
21 4.3 The Current Methods Used in Calculating The Built-Up Rate The second objective of the study was to identify the current methods used by respondents in calculating the built-up rate. Table 2 provides insights into the twelve methods employed by the respondents, shedding light on the prevailing practices within the Malaysian construction industry. The most commonly used method reported by the respondents was manual calculation, accounting for 28.3% of the participants. This method involves manually performing the calculations required to establish the built-up rate. Following closely was obtaining project and existing data, with 12.6% of the respondents relying on this method. This approach involves referring to data from previous projects or existing databases to determine the cost elements for the construction project. Another popular method among the respondents was obtaining quotations from subcontractors or suppliers, which constituted 11.6% of the responses. This method entails requesting price quotes from relevant parties involved in the construction process to gather accurate cost estimates. On the other hand, some respondents reported using less conventional methods. For instance, 2.4% of the participants stated that they add a percentage to the previous rate as a means of establishing the built-up rate. Additionally, a small percentage (0.7%) relied solely on their experience to calculate the built-up rate, while others referred to books and notes (3.4%) or sought guidance from colleagues and seniors (1.4%). Interestingly, approximately 19.8% of the respondents indicated that they utilize Microsoft Excel for their calculations, highlighting the prevalence of technology in the industry. This suggests that a significant portion of the respondents recognizes the benefits of using digital tools to streamline the estimation process. However, it is noteworthy that some respondents still rely on outdated methods, such as assuming figures or referring to outdated books and notes. This indicates a lack of up-to-date knowledge and skills within the industry, which can potentially affect the accuracy of cost estimation.
22 To enhance the accuracy and efficiency of the built-up rate calculation, it is crucial for respondents to consider adopting more modern methods, such as specialized software specifically designed for construction cost estimation. Embracing technologydriven solutions can help streamline the estimation process, improve accuracy, and save time and resources. Furthermore, it is imperative for construction professionals to stay updated on the latest advancements and best practices in the industry to ensure the effectiveness of their cost estimation processes. Table 4.4 : Current Method Used by the Respondents No Item Frequency Percentage 1 Previous project and data 37 12.6% 2 Calculate manually 83 28.3% 3 Using schedule of rate published by PWD 26 8.9% 4 Refer books and notes 10 3.4% 5 Get quotation from subcontractor / supplier 34 11.6% 6 Adding percentage to the previous rate 7 2.4% 7 Based on current market price 15 5.1% 8 By experience 2 0.7% 9 Refer colleague and senior 4 1.4% 10 Calculate by using excel 58 19.8% 11 Assuming 14 4.8% 12 Appoint others 3 1% Total 293 100%
24 5.0 DISCUSSION 5.1 Objective 1: Identify the primary challenges in establishing the building rate in the Malaysian construction industry. The first objective of this study was to identify the primary challenges faced by construction professionals in determining the built-up rate in the Malaysian construction industry. The findings provide valuable insights into the difficulties encountered during the cost estimation process, shedding light on areas that require attention and improvement. According to the survey results, the most frequently mentioned challenge in establishing the building rate was changes in market prices, reported by 38.9% of the respondents. This indicates that construction professionals find it challenging to keep up with the constantly fluctuating market prices of materials and services required for construction projects. The dynamic nature of the market introduces uncertainties and complexities into the cost estimation process, making it difficult to accurately predict and allocate costs. The second most common challenge reported by the respondents was the difficulty in determining the labor constant, mentioned by 13.6% of the participants. Estimating the labor required for a construction project accurately is crucial for developing an accurate built-up rate. However, factors such as workforce availability, skill levels, productivity, and labor market conditions contribute to the complexity of determining the labor constant, leading to challenges in estimating labor costs. Other significant challenges mentioned by the respondents included inconsistent formulas (10.6%), complicated processes (9.6%), difficulty in obtaining quotations from suppliers (6.5%), inaccurate price calculations (4.4%), lack of skills (3.8%), lack of reference (3.1%), and lack of experience (2%). These challenges reflect the multifaceted nature of cost estimation in the construction industry, where various factors and variables need to be considered and managed effectively. It is interesting to note that the use of the latest technology was reported as a challenge by only one respondent, indicating that the adoption of technology in the built-up rate estimation process may not be a significant concern for most respondents. This
25 suggests that construction professionals in Malaysia are relatively open to embracing technological advancements to enhance their cost estimation practices. 5.2 Objective 2: Investigate the current practices of construction professionals in Malaysia using the built-up rate estimation method. The second objective of this study was to identify the current methods employed by construction professionals in calculating the built-up rate. Understanding the existing practices provides insights into the prevailing approaches and highlights potential areas for improvement and innovation. The survey results revealed that manual calculation was the most commonly used method among the respondents, with 28.3% of participants relying on this approach. Manual calculation involves performing the necessary calculations manually to establish the built-up rate. While manual calculation offers flexibility and control, it is time-consuming and prone to human errors. Obtaining project and existing data was the second most prevalent method, reported by 12.6% of the respondents. This method involves referring to data from previous projects or existing databases to determine cost elements for the construction project. This approach can provide valuable insights and benchmarks, facilitating more accurate cost estimation. Additionally, obtaining quotations from subcontractors or suppliers was another commonly employed method, with 11.6% of the respondents relying on this approach. This method involves requesting price quotes from relevant parties involved in the construction process to gather accurate cost estimates. By engaging with subcontractors and suppliers, construction professionals can obtain real-time pricing information for various project components. Notably, approximately 19.8% of the respondents indicated using Microsoft Excel for their calculations, indicating the widespread use of technology in the industry. Leveraging spreadsheet software like Excel can streamline the calculation process, improve accuracy, and enhance efficiency.
26 However, the study also revealed the use of outdated methods, such as assuming figures or referring to books and notes. This highlights a need for continuous professional development and staying updated with current industry practices, as relying solely on outdated methods can compromise the accuracy and reliability of cost estimation. The findings highlight the significance of addressing issues related to market price fluctuations, labor estimation, inconsistent formulas, complicated processes, and other factors that contribute to the complexity of cost estimation. Furthermore, the study sheds light on the current methods used by respondents, emphasizing the importance of adopting modern tools and techniques to enhance accuracy, efficiency, and decision-making in cost estimation. By addressing these challenges and embracing technological advancements, the Malaysian construction industry can improve its cost estimation practices, leading to more successful and sustainable construction projects. 5.3 Objective 3 : Propose strategies to enhance the utilization of the built-up rate method in the Malaysian construction industry. Based on the discussion of Objective 1, addressing the primary challenges in establishing the building rate in the Malaysian construction industry, and Objective 2, investigating the current practices of construction professionals, the following strategies can be proposed: i. Research and develop a suitable built-up rate system for the organisation: Based on the challenges identified in establishing the building rate and the current practices in cost estimation, there is a need for research and development to design and implement a suitable built-up rate system. This system should provide a structured and standardized approach to cost estimation. ii. Address market price fluctuations: Develop strategies to mitigate the impact of market price fluctuations by regularly monitoring and analyzing market trends. Establish strong relationships with suppliers, explore long-term contracts or strategic partnerships, and consider alternative sourcing
27 options to ensure more stable and predictable pricing for construction materials and services. iii. Enhance skill in estimation techniques: Invest in workforce planning and development to improve the accuracy of labor estimation. This can include conducting detailed skill assessments, collaborating with human resource departments, and implementing training programs to enhance workforce productivity and efficiency. iv. Standardize and update formulas: Establish industry-wide standards and guidelines for formulas used in cost estimation. This can promote consistency and accuracy in calculating the built-up rate, making it easier to compare and validate cost estimates across different projects. v. Adopt advanced technologies: Embrace technology solutions specifically designed for cost estimation, such as specialized software or cloud-based platforms. vi. Encourage professional development and knowledge sharing: Promote continuous learning and professional development among construction professionals involved in cost estimation. This can be achieved through workshops, seminars, industry conferences, and networking events where professionals can share best practices, exchange knowledge, and stay updated with emerging trends and technologies. vii. Foster collaboration between stakeholders: Encourage collaboration and communication among all stakeholders involved in the cost estimation process, including clients, contractors, consultants, and suppliers. Facilitate open dialogue, information sharing, and joint problem-solving to address challenges and improve cost estimation accuracy collectively. Implementing these strategies can help overcome the challenges identified and improve the utilization of the built-up rate method in the Malaysian construction industry. By enhancing cost estimation practices, stakeholders can make informed decisions, minimize project risks, optimize resource allocation, and ultimately achieve successful project outcomes.
29 6.0 CONCLUSION AND RECOMMENDATIONS In conclusion, this study focused on identifying the primary challenges in establishing the building rate in the Malaysian construction industry and investigating the current practices of construction professionals using the built-up rate estimation method. The findings highlighted key challenges such as market price fluctuations, labor estimation difficulties, inconsistent formulas, and complicated processes. The study also revealed that manual calculation, obtaining project and existing data, and requesting quotations from subcontractors or suppliers were the commonly employed methods for cost estimation. To enhance the utilization of the built-up rate method in the Malaysian construction industry., several strategies are recommended. Firstly, there is a need for research and development of a suitable built-up rate system that addresses the specific challenges faced in the industry. This system should provide a standardized and structured approach to cost estimation. Secondly, strategies should be implemented to address market price fluctuations, such as regular monitoring of market trends and establishing strong relationships with suppliers. Enhancing estimation techniques and skills through workforce planning, training, and development is crucial. Standardizing and updating formulas used in cost estimation can promote consistency and accuracy. Embracing advanced technologies, encouraging professional development and knowledge sharing, and fostering collaboration between stakeholders are also essential strategies.
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APPENDIX
34 APPENDIX A QUESTIONAIRE FORM
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