Administer Contracts And Confirm Compliance With Requirements Construction Essay

A successful building house meets the clients demands while doing net income in the procedure. Owners frequently seeking for a qualify building houses that can present the undertaking with quality within the low cost and completed in a sensible clip. To get down a undertaking, the client must make up one’s mind a suited procurance method that can be choose from based on the undertaking ‘s demand such as traditional method, design and construct method, build-operate-transfer method ( BOT ) , direction catching method and professional building direction method and etc. After make up one’s minding a procurance method, the proprietor must continue to the following process that is tendering procedure. There are merely a few of tendering types that are being used in today ‘s building industry such as unfastened tendering, selective tendering – individual phase & A ; two-stage, negotiated tendering and joint ventures. Last of import process that needs to be considered based on the building ‘s principals design is the Standard Form of Contract. In Malaysia, there merely two types of Standard Form of Contract that being used such as Public Work Department ( PWD ) for authorities undertakings and PersatuanArkitek Malaysia ( PAM 2006 ) for private undertakings. While for the international undertakings there are FederationInternationale des Ingenieurs-Conseils ( FIDIC ) , Joint Contractors Tribunals ( JCT ) , Institution of Chemical Engineers ( IChemE ) and etc. The undermentioned instance analyze demo the scenario of a Singaporean company ( Client ) entered into a contract with Alpha Design Tech. Pvt. Ltd ( Architect ) , a Singaporean design adviser that would responsible to happen a Malayan builder company ( Contractor ) for joint venture to construct a hotel in City Square, Johor. The intent of the instance survey were conducted is to research the bing common pattern of procurance method, tendering procedure and Standard Form of Contract for international undertaking in Malaysia.


Procurement may be defined as the procedure which creates, manages and fulfils contracts associating to the proviso of supplies, services or technology and building plants, the hiring of anything, disposals and the acquisition or granting of any rights and grants. If procurance is so a procedure, it can be documented as a sequence of logically related actions happening or performed in a definite mode which culminates in the completion of a major deliverable or the attainment of a milepost. Processes in bend are underpinned by methods ( i.e. a documented, systematically-ordered aggregation of regulations or attacks ) and processs ( i.e. the formal stairss to be taken in the public presentation of a specific undertaking, which may be evoked in the class of a procedure ) , which are informed and shaped by the policy of an organisation. Methods and processs can similarly be documented and linked to procedures. ( CIDB )

Procurement activities commence one time the demand for procurance is identified and stop when the dealing is completed. There are six chief procurance activities and a figure of generic stairss that need to be taken to continue from one activity to another.

Establish what is to be procured

Decide on procurance schemes

Solicit stamp offers

Evaluate stamp offers

Award contract

Administer contracts and confirm conformity with demands

There is besides a demand to set up the relationship of the undermentioned three factors for the benefit of a undertaking.

clip ( velocity or certainty of completion day of the month )

cost ( monetary value degree or cost certainty )

quality ( functionality and public presentation )

Although there are assorted types of procurance systems in building industry but Lashkar-e-Taiba ‘s focal point on few of the technique that are being used in Malaysia.

Traditional method




Sub -contractor

Sub -contractor

Figure 1: Sequence of the Traditional Procurement Method

This likely the most normally used method of procurance and it is suited for:

All clients including inexperient clients

Complex undertakings and undertakings where functionality is a premier aim.

Time predictability.

Cost certainty.

However, it ‘s non suited for fast path undertakings.

The client provides a brief and budget and appoints a squad of advisers to fix a design, plus stamp paperss. The client appoints the edifice contractor to build the plants to the design, by the contract completion day of the month and for the in agreement monetary value. The advisers administer the contract on behalf of the client and advise on facets associated with design, advancement and phase payments which must be paid by the client. This scheme is a low-risk option for clients who wish to minimise their exposure to the hazards of overspend holds or design failure. However, the exposure to put on the line will increase where the design stage is rushed, where unreasonable clip marks are set or where the stamp paperss are non to the full completed.

Design and construct method




Sub -contractor

Sub -contractor

Figure 2: Sequence of the Design and Build Method

This method of procurance involves the contractor being responsible for design every bit good as building, it can be suited for:

All clients, including inexperient clients and those necessitating distance from the undertaking.

Cost certainty

Faster path

However, it is non suited for an unsure or developing client brief or a complex edifice.

The chief contractor takes duty for both design and building and will utilize either in-house interior decorators or employ advisers to transport out the design. The contractor stamps against a client brief and will frequently follow an initial construct design prepared by advisers appointed to rede the client. The design will be developed by the contractor and the plants will e completed, normally for a fixed monetary value.

The Design-Build attack gives the client a individual point of contact. However, the client commits to the cost of building, every bit good as the cost of design, much earlier than with the traditional attack. Whilst hazard is shifted to the contractor, it is of import that design liability insurance is maintained to cover that hazard. Changes made by the client during design can be expensive, because they affect the whole of the Design-Build contract, instead than merely the design squad costs.

Build-operate-transfer ( BOT )





Concession Agreement


Figure 3: Sequence of the Build-Operate-Transfer Method

BOT is a comparatively recent procurance method. Developers/ concessioner use their ain support beginnings to construct a public installation in return for the right to run it and bear down a fee for its usage. At the terminal of an in agreement period the installation may return to the landowner, which would frequently be the Crown. This type of contract focal points on concluding service bringing and relies upon the needed public presentation criterions being decently documented. Building contractor involved in this type of development is normally portion of a pool. The pool has duty for the design, building and bringing of the undertaking. Government and its bureaus, as either direct or indirect buyers of services from BOT undertakings bear some degree of fiscal and viability hazard. The BOT procedure can be modified to accommodate peculiar demands. A few fluctuations already in usage are BOOT ( Build, Own, Operates, Transfer ) and BOO ( Build, Own, Operate ) .

Comparison of informations for instance survey

Based on the instance survey that is given, I think the most suited procurance system is the novated design and construct method. This technique can be define as one time the client ‘s adviser has developed the undertaking to tender phase and a contractor has been awarded the contract, the contractor so employ the same design adviser to finish the post- contract design phase. The ground is clear as it was stated a Singaporean company proposes to construct a 40- storey hotel with 2 degrees of cellars at City Square, Johor. The Singaporean company entered into a contract with Alpha Design Tech. Pvt. Ltd, a Singaporean design adviser as their adviser and the adviser must happen a Malayan contractor to put to death the building work with a status that the contractor must come in into a contract with Alpha Design Tech Pvt. Ltd that will be treated as the contractor ‘s adviser squad. Below is shown how the novated design and construct method ‘s sequence work.

Sub -contractor

Sub -contractor




Appointed by proprietor

Contract and functional relationship

Figure 4: Sequence of the Novated Design and Build Method.


Purpose of the tendering procedure

To choose a suited contractor at a clip appropriate to the state of affairs of the undertaking.

To obtain from the contractor selected at the proper clip, and acceptable stamp or offer upon which a contract can be let.

There are three chief factors that can impact in choosing a contractor for tendering procedure.

The contractor prequalification standards in edifice building undertakings.

Fiscal Consideration

Fiscal stableness, fiscal position, Bank agreement and bonding capacity.

Past Performance

Failure to hold completed undertakings, agenda overproductions, cost overproductions, past failures, owner/contractor relationship.

Technical Ability

Technical expertness, possessed works and equipment, experience.

Management Capability

Past public presentation and quality, undertaking direction organisation, experience of proficient forces.

The contractor tendering standards in edifice building undertakings.

Monetary value

Fixed capital cost, variable stamp costs during the contract period, care costs.

Technical Skills

Design quality, proficient expertness.


Plan of plants, division of plants into sub-contracts, cardinal public presentation indexs, coverage and recoding systems.

Relevant Experience

Undertaking cost

Past Performance:

Quality criterions, mark public presentation degree ; stamp monetary value, fluctuations and concluding cost.

The contractor tendering process in constructing building undertakings.

Tender Evaluation

Tender quality ( proficient rating ) ; stamp monetary value ( fiscal rating ) ; determine lowest command ; reactivity, and duty.

Tender Submission

Sealing and marker of the tenderers, stamp signifiers and stamp specification papers ; stamp footings and status for command readying ; station offer dialogue.

Prequalification and Registration

Prequalification demand.

A tendering procedure can be divided into three classs as below:

Open stamp

This stamp is wholly free and just manner of offering work to the local or other contractor. The local governments are accountable for public outgo – want that they obtained the best deal as possible for public money. It besides will guarantee a good competition since there is no duty to accept and offer. This procedure can forestall the contractor from organizing a ring or agreed on the monetary value to be submitted.

Advantages of unfastened tendering

A familiar method to all sectors of the technology and building industry.

Endure the trial of clip and its restrictions are appreciated.

The Employer holding a larger pick of possible tenderer – taking to a better competition and ‘value for money ‘ .

No restrictive list of tenderers.

Does non let favouritism.

No duty to tender – stamp receive will be echt.

Disadvantages of unfastened tendering

High cost – client must bear the cost reproducing multiple transcripts of drawings, BQ.

Drawn-out operation – requiring skilled estimating.

The lowest stamp may non be needfully be a ‘bargain ‘ as it may ensue a hapless work quality.

Less net income for the contractor.

Selective stamp

Selective stamp is different from unfastened stamp as it limits the Numberss of contractors to tender. Selection standards are both general and undertaking particular, and seek to cut down the possibility of presenting a contract to a contractor who can non execute harmonizing to the client ‘s demands.

Advantages of selective tendering

Reduced certification, shorter stamp period, and better direction of the stamp procedure.

The unfavourable contractors have already pull out at the pre-selection phase.

Disadvantages of selective tendering

The clip and resources required to carry on the rating procedure and maintain up to day of the month blessing lists.

The fight is decreased in proportion to the size of the stamp list.

That the standards used in choice may non sufficiently good developed.

3.3 Negotiation stamp

In dialogue stamp procedure, the contractor is selected and contract monetary value agreed upon non through competition but on the footing of dialogues between parties.

Advantages of dialogue tendering

Options for exigencies or high security undertakings.

Disadvantages of dialogue tendering

The monetary value can be comparatively higher.

3.4 Comparison of informations for instance survey

In a tendering procedure, the pick of stamp technique may be determined by external factors, such as demands of the client. As in this instance survey, it shown that the client is concerned about a few of the facets such as facade, illuming, acoustic system, mechanical technology, marine technology and fire technology. After sing all the standards in the tendering procedure and reappraisal on the instance survey scenario, I choose selective stamp as the most suited tendering procedure as it can assist the client to salvage clip in choosing a qualify contractor to finish the proposed hotel.


There were assorted types of Standard Form of Contract that for international undertakings such as FIDIC, JCT, NEC and IChemE. While in Malaysia, it has merely two types Standard Form of Contract that were used like PWD for public or authorities undertaking and PAM 2006 for the private sector. A comparing tabular array of the Standard Form of Contract for international undertaking and domestic undertaking will be utilize to further explicate their intent and types of contract.

Types Form Of Contract





Largely for Public and Government sector

Private sector

Private sector


Building and Engineering plants

Building works merely

Civil technology, Mechanical and Electrical plants

Standard Form Of Contract

1. 203 ( Rev 10/83 )

-without measures

2. 203A ( Rev 10/83 )

-with measures

3. 203N ( Rev 10/83 )


4. 203P ( Rev 10/83 )

– nominated provider

5.PWD Form DB/T

( 2000 Edition )

– Design and Construct

Turnkey contract

1. PAM 2006

( antecedently 1998 )

-with measures

2. PAM 2006

-without measures

3. PAM NSC 2006


1. IEM Condition

IEM CE. 1/89

( 2nd reissue 1994 )

– Civil technology


2. IEM Condition

IEM CES 1/90

( 1st reissue 1994 )


3. IEM Condition


( 1st edition 1994 )

– Mechanical and

Electrical work

Published Year




Table 1: Comparison Standard Form of Contract in Malaysia.

Types Form Of Contract





International undertaking

International undertaking

International undertaking

Standard Form Of Contract

1. Red Book

– Construction for Building and Engineering Works Designed by the Employer.

2. Yellow Book

– Plant and Design- Build.

3. Silver Book

– EPC / Turnkey Projects.

4. Green Book

– Conditionss of Short Form of Contract.

5. Blue Book: Contract for Dredging and Reclamation Works.

6. MDB/FIDIC Contract:

– FIDIC conditions incorporated in the standard command paperss of many-sided development Bankss

7. White Book

– Client/Consultant Model Services Agreement

8. Gold Book

– FIDIC Design, Build and Operate Projects.

1. Standard Building

Contract ( SBC )

2. Design & A ; Build ( DB )

1. Red Book

– ball amount or fixed monetary value contract

2. Green Book

– reimbursement contract

3. Burgundy Book

– mark cost contract

Published Year

Table 2: Comparison Standard Form of Contract for FIDIC, JCT and IChemE.

4.1 Comparison of informations for instance survey

In this instance survey, I think the most suited Standard Form of Contract will be FIDIC ‘s Yellow Book for works and Design – Physique to be used as a guideline as it was widely used for international undertakings and best describes the contract between the Singapore and Malaysia company in the scenario. The Yellow Book of FIDIC is recommended for the proviso of electrical and / or mechanical works, and for the design and executing of edifice or technology plants. Under the usual agreements for this type of contract, the Contractor designs and provides, in conformity with the Employer ‘s demands, works and / or other plants ; which may include any combination of civil, mechanical, electrical and/or building works.

4.4 Employer ‘s Rights

Under clause

4.3 Contractor ‘s Duty

Under clause

5.0 Decision

An international contract may be defined as a contract in which one of the parties is from a different state to the state of the undertaking. In many instances the demands outlined in the Conditions of Contract for international contracts are similar to those for domestic contracts, but there are extra affairs such as different legal systems, or local imposts and processs, currency which must be considered.