Chapter 4
Data Analysis
4.1 Introduction
For this chapter, the feedbacks of the interview collected from the participants are analysed in order to determine the effects of using procurement system in construction project in Malaysia. The interview is divided intro three parts, each of which determine the outcome based on the interview questions. The first part is to identify what type of procurement system that the company usually used the most in handling the client’s requirement in the project. The second part focuses on the effect using the procurement system based on the first part based on cost, time and quality. Lastly, the third part will emphasize on the challenges encountered when employing various types of procurement system, which related on the first and second part. The three parts will be later compiled and analysed to construct a summary.
4.2 Procurement System
There are various types of procurement system that been widely used by construction company in handling a project. For my finding, basically involved three types of procurement systems, which are traditional system, design and build system and management contracting system in Klang Valley area.
The first question of the interview determines the first objective, which is to identify what types of procurement system commonly used by Quantity Surveyor in Malaysia. In this first question there are sub question, which related to the first question. There are two-sub questions, which firstly what is the advantage and disadvantage using these type of procurement system. Secondly, the question involved of the contractual relationship of these types of procurement system, which related to the first question. The interview is carried out across six companies.
The first question in the interview is a general question to identify what type of procurement system mostly used for their client in handling a project. The response from this question shows that all the participating firms had mostly used traditional system, secondly design and build and the most least used is management contracting. Based on the result, a table is form for comparison as shown in figure 4.1.
Traditional System Design & Build System Management Contracting System
A1 ✓ ✓✓ ✓✓✓
A2 ✓ ✓✓ ✓✓✓
A3 ✓ ✓✓ ✓✓✓
A4 ✓ ✓✓ ✓✓✓
A5 ✓ ✓✓ ✓✓✓
A6 ✓ ✓✓ ✓✓✓
✓ Seldom used
✓✓ Used
✓✓✓ Mostly used
As shown in figure 4.1, it is obvious that mostly firm used traditional system in handling a project and the least used is management contracting.
The next question is the sub question, which related to the first question, which is what are the reasons of using those procurement systems for the client in a project. Based on the response, which mostly they preferred traditional systems, it can be seen that the firms basically mentioned about the cost, which is much more cheaper compare to the other system. All interviewers agree that project budgets can be planned and monitored more effectively compared to other procurement systems. Plus, the interviewers also said that by the firms is too familiar in the industry of using it that is easier for them in handling a project.
The drawings, specification, and bill of quantities breakdown are provided by the client to the contractor during tender stage for ease of pricing. It also gives the client firmer and more competitive price because the design plus the complete working drawings have been fully developed and detailed out prior to tendering. It eliminates any design or construction ambiguity or uncertainty which often causes the contractors to unnecessarily inflate the price. In the case where bill of quantities is used, the bidding tend to be more fair as such the project cost is lower.
The second sub question is the contractual relationship between these types of procurement system that they are using in their firm. This question is to identify the contractual relationships between the client, contractor and design team.
All the 6 firms explain the same contractual relationship which can be shown under figure 4.2.
For traditional system basically the client would appoint an Architect and the consultants at the first phase. Later on, a main contractor is engaged later carry out the construction work. From there, the main contractor would hire a nominated sub-contractor, domestic sub-contractor and supplier for the project.
As for design and build system, all the interviewers mentioned that client would hire a contractor which provide the design, organizing and controlling work and construction planning. Basically, contractor is responsible in the event of any failure of the project. For this contractual relationship, all interviewers agree that contractor are the one who hire the design team, sub-contractor and supplier. In any decision, the design team have to comply with the contractor not to the client.
For management contracting, basically client will appoint a design team and management contractor. At pre-construction stages, the design team and management contractor will be as adviser and they will be responsible for executing works using direct contract. From the interview, A1 and A3 they mentioned that it is possible to make an early start on-site and can achieved early completion. A4 also mentioned that this types of procurement system is very flexible and it allow the contractor to change the design during construction because the drawings and detail can be adjusted and finalised as the work proceeds.
For a management contract to be successful there must be trust and good teamwork on the part of the client, the design consultants and contractor. The contractor should preferably be appointed no later than the outline design stage. The contractor can advise on the design programme, tender action, delivery of materials and goods, and construction programmes.
A6 also mentioned that the management contractor will usually make a written submission which includes a proposed management fee and will be appointed after interviews with the client and design team. The fee will include for the total management service, expressed as a percentage of the total project cost, and for a service to cover pre-construction stages should the project not proceed to site.
4.3 Effects of Procurement System
For the second question is basically about the effect of using these three types of procurement system in the construction industry. As highlighted earlier, the focus of the paper is on the three procurement systems. From this highlighted subjects, the interview is limited to the main project performance parameters which are time, cost and quality.
4.3.1 Based on the interview for traditional system, in terms of time all the interviewers mentioned that this types of system has longer project duration due to the design and constrution process which is being separated and sequential approach. In other word it is very slow in terms of project delivery approach. A2 and A3 mentioned that however, this kinds of system provides clear accountability and better design and construction control by the client.
As for cost for tradional system, A3, A4, and A6 agree that there is a high degree of price certainty as during the time of award, the cost of the project is known, provided that the design os not subjected to major changes due to errors and changes in client’s requirements. A1, A2 and A5 mentioned also that the bidding tend t be more fair as such the project cost is lower if the bill of quantites are provided. All the interviewer agree that the system has better cost control as such cost increase due to variations is minimized, but the disadvantage is theat if there are too many variations, works can be often disrupted and this can cause the cost to be inflate.
As for quality, A1, A2, A4, and A5 mentioned that traditional procurement system provide a high degree of quality certainty. It gives an opportunity for the client to combine the best design, and construction expertise between the design team and the contrcator. This give an opportunity for the client and consultants to have more time to review the design and specification which allow better documentation preparation. However, A5 and A6 mentioned that the contractor only appear into the scene after the design has been fully completed and approved which doesn’t give the opportunity to the contractor to contrubute their work.
The table below show the which the firm thinks that the most important
Time Cost Quality
A1
A2
A3
A4
A5
A6
Based on the data above, it is clear that the interviewers A1, A3, A5 and A6 thinks that cost is more important among all. As for A2 mentioned quality and A4 is time.
4.3.2
As for design and build procurement system in terms of time, A2 and A5 mentioned that the design is a free pre-tender process which allow for earlier construction date. All the interveiwers said that it can reduce the overall project development period consideably as the process of detail design and construction run almost concurrently to each other. A4 and A6 mentioned also that the contractor actually can control not only construction time but the time reserved for the design project, thus reducing the overall contract duration in design and construction. A1 mention that it is important to select the contractor because usually the contractor is the one who held the responsibility and usually been selected based on its experience, knowledge and compentency in construction.
As for costs, all interviewers agree that the cost is fixed at the tender stage and can be subject to design changes which can lead higher cost that the traditional system.