2.

1 Traditional/Conventional
The traditional or conventional system has been
generally accepted as being the most familiar and
widely used by client to procure their project.
Although there are other alternative systems
available now, this system is still the most widely
used locally.
This system is a project delivery method in which
the agency or client contracts with separate
entities for each the design and construction of a
project.

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 It approaches to procuring the projects involve
discrete design development, tender, contract
award and construction delivery phases.
The process starts with the building owner
appointing a team of consultants to act on his
behalf to produce construction drawings,
specification and tender document and to
administer the tendering processes to select a
contractor.
The design is developed as close to completion
as possible before tenders are invited.

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 Tenders are invited in one of two bases. First,
open tendering which allows anyone to tender
for the project. Closed or prequalification
criteria such as financial soundness and
relevant project experience.
BQ tenders are widely used and they could be
either firm BQs or approximate BQs.
Contractor is selected on the basis of
competition, capacity, financial capabilities
and past performances, normally with Bill of
Quantities being produced to be priced and
compared among bidders.

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 Apart from the separation of design and
construction, the traditional procurement system
exhibits a number of other basic characteristics
which are:
i. Project delivery is a sequential process.
ii. The design of the project is largely completed
before work commences on site.
iii. The responsibility for managing the projects is
divided between the clients consultants and the
contractor and there is therefore little scope for
involvement of either of the parties in the
others activities.
iv. Reimbursement of the clients consultants is
normally on a fee and expenses basis whilst the
contractor is paid for the work completed on an
admeasure or lump-sum basis.

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 In terms of contractual arrangement, the first
contract formed between the client and the
design consultant for design and
administration process of the project.
The design consultant acts as an independent
role and offers impartial advice to the client
on technical and financial matters.
The client also has a contract with the
contractor for the construction of the project.
The contractor is only responsible to the
construction and not for design.

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Figure 1.1 illustrates the contractual relationship structure of
the traditional procurement system.

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Figure 1.2 shows the process or flow chart of activities of
this contracting system.
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 Contracting system offers the advantage of
being widely applicable, well understood, and
with well-established and clearly defined roles
for the parties involved.
Furthermore, it offers the owner a significant
amount of control over the end product,
particularly since the facilitys features are
fully determined and specified prior to
selection of the contractor.
However, many construction clients have
experienced a variety of frustrations using
this system, leading to the development of
other methods.

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 More importantly, in this method, the
contractor assumes responsibility and
financial risk for the building risk for the
building works whilst the client takes
responsibility and risk for design team
performance.
Hence, the contractor may seek compensation
from the client for additional cost and/or time
to complete the project.
In turn, the client could seek to recover these
costs from the design team members who is
responsible, if negligence can be proven.

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 It can be a fairly low-risk procurement option
for the client.
In this method, due to the separation of
responsibility between construction and
design, it will tend to submit to a number of
disadvantages.
The process in this system is time-consuming
since all design work must be completed prior
to solicitation of the construction contract.

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 The traditional approach tends to promote
more adversarial relationships rather than
cooperation or coordination between the
contractor, architect, engineer and the owner.
Moreover, this method does not provide
opportunities for contractor to contribute his
construction technology and management
expertise because they only come into the
scene after the design has been developed and
approved.
Disadvantage of traditional system is this
system will appear to encourage adversary
between the parties.

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 The final design in most traditional systems
or methods is often not fully developed before
construction start, and this can create
problem and price uncertainty.
This also would become unsuitable for the
client who has budgetary constraints.
Traditional method will lead to the lack of the
contractors technological and management
expertise and input into those aspects of the
design involving construction.
The absence of contractors input into the
project design may limit the effectiveness and
constructability of the design.

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 The absence of contractors input into the
project design may limit the effectiveness and
constructability of the design.
Important design decisions affecting both the
types of materials specified and the means of
construction may be made without full
consideration of a construction perspective.
The contractor has much to offer in term of
advice on how best to meet design
specification in a cost and time effective
manner because the contractor is closest to
the workforce with intimate knowledge of the
production process.

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2.2 Design and Build

The lengthy and adversarial nature of the

traditional lump sum system and increase in
project complexity has prompted the used of the
design and build or turnkey system.
Peck, P.E and CCM (2005), observe that this
project delivery system has grown in popularity,
and seen by some in the industry as the perfect
solution in addressing the limitations of other
methods.
Design and build procurement approach provides
for an organization to be contracted by a client to
manage the design and construction processes
with a single point of contract.

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 Definition of design and build is an
arrangement where one contracting
organization takes sole responsibility,
normally on a lump sum fixed price basis, for
the bespoke design and construction of a
clients project.
The essence of this system is that the
contractor is in control of both design and
construction aspect of the project. The
contractor will commission a firm of architects
for the design work.
Figure 1.3 shows process or flow of activities
of the design and build.

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 Design and build was first introduced in
Malaysia in 1983. In Malaysia, there are some
contractors now offering this method although
the number of design and build firms competent
to carry out all aspects of a particular project is
likely to very much smaller than the normal
method.
Procurement system tend to be used most
where a standard construction is required.
Standard processes and components will be
involved, with the client transferring most of
the risk to the contractor. The contractor will be
responsible for delivering the whole package.

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 Walker and Hampson (2003) noted that there
may have been preliminary sketch plans
developed to indicate a generalized design
solution or the design brief may be left fairly
open for the design and build contractor to offer
proposals.
Client initially appoint design consultants to
develop a brief, examine feasibility and prepare
tender documents that will include a set of
employers requirements.
Contractors are invited to tender on the basis
that they will be responsible for designing and
constructing the project and will submit a bid,
which will incorporate design and price
information.

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 Then the contractors proposals will be
examined by the client and the project
subsequently let. An issue to be considered in
the early stages of the project is the nature of
the employers requirements, which may vary
significantly in terms of detail.
In terms of contractual relationship, the clients
have one main contract with the design and
build company for the design and construction
of the project.
The client may have smaller contract getting
professionals for advice and looking at the scope
of work and design in the early stage of the
project.

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 Contractual links ______________
Functional links --------------------
Figure 1.4 Design and Build system
(Adopted from Ashworth and Hogg (2001))

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 The contractual relationship structure of
design and build is exhibited in figure 1.4.
The single point of contract between the client
and the contractor means the client has the
advantage of dealing with one single
organization, which would be responsible for
all aspects of the project.
One dissenting note has been struck in this
respect by the results of the 1986 CCMI study
(5), which found that this characteristic was
not of paramount importance to client
respondents, although architects and
contractors identified single-point
responsibility as the runner up to cost as a
prime advantage

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 The event of dispute, the responsibility can be
unambiguously attributed to a single source.
Walker and Hampson (2003) opine that
inherent buildability can be achieved as
design-and-build contractors are primarily
builders who have constructability input that
can be of significant value.
Design-and-build system improves project
team integration.
Since the construction team is working
together from the outset, Design-and-build
procurement system offers the opportunity to
save time and money.

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 Design-and-build procurement system is a fast-
track strategy where the construction can start
before all the detailed design is completed, but
surely at the contractors risk.
Additionally, price certainty can be obtained
before construction starts, provided that the
clients requirements are adequately specified and
accordingly changed.
Generally, detailed design will establish a high
level of price certainty and there is almost a
guaranteed cost and completion date.
By using this system, since contractor act as
single point responsibility, of course the client has
no control over how they collaborate with one
another.

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 The designers are employed directly by the
design-and-build contractor, the clients interest
may not always be given first priority.
Consequently, any client requirement, which is
not directly specified in the tender document, will
constitute a change or variation to the contract.
Changes are usually more expensive to introduce
after the contract has been let, compared with
other type of procurement system.
Many clients are used to short tender period
under traditional procurement system, fail to give
design and build tenderers adequate time to
prepare their design in addition to the other
activities of estimating, subcontract enquiries etc.

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 This can led to tenders being inflated to cover
unforeseen cost. Since each tenderers bid is
based on a different design, programme and
cost, tender can be difficult to compare.
There are several numbers of variants in
design and build which are:
i. Novation
ii. Turnkey or Package Deals
iii. Develop and Construct
iv. Design and Manage

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2.3 Management oriented

Management procurement system will generally

be chosen where the client requires a hands-on
involvement.
This allows for a high degree of innovation
throughout the project. This procurement system
is also known as the fast-track methods, due to
their overlapping of design and construction,
leading to shorter overall project duration.
When used, this system will allocate most of risk
to the client.

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 Nor Ainah (1994) quote a report by the
University of Reading describe the
circumstances under which this system should
be considered such as:
i. Separate contractual professional
responsibility for the management of the
construction of the project
ii. Separate contractual professional
responsibility for the design of the project
iii. A choice competitive tendering or
negotiation for construction elements
iv. An early starts on site
v. Fast track procurement

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 There are two main types of management
systems which are Management Contracting
and Construction Management.
In this both cases fees are negotiated and paid
by the client to a manager for managing the
construction process.
In one cases the fee is paid to contractor
taking on the management role and the other
cases the fee is paid to an independent
consultant appoint to manage the project.

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a. Management Contracting
Management contracting system has not been
widely used to deliver buildings in the Hong
Kong industry. This is similar in Malaysia
where pre and post construction times
appeared less for management.
Management contracting can be defined as a
general term used in the construction industry
for any contractual arrangement that seeks to
place a special emphasis on the management
of the construction process and the progress of
design information.

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 Management contractor is responsible for all the
construction works and has direct contractual links with
the all works contractors. The works are subdivided into
trades and let as a series of work packages. The client
employs the design team and therefore, bears the risk of
the design team delaying construction for reasons other
than negligence
This system is a fast-track strategy where all design work
will not be complete before the first works contractors start
work, although the design necessary for those packages
must be complete. Management contracting the roles of the
management contractor include managing and co-
ordinating the project for the client, to appoint design
consultants and to administer the design and other
consultants. The management contractor has a direct
contractual relationship with the client and receives
management fees for his services.
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 Advantages of this system are:
i. Time-saving potential for overall project
time
ii. Buildability potential
iii. Breaks down traditional adversarial
barriers
iv. Parallel working is inherent
v. Changes can be accommodated provided
packages affected have not been let and
there is little or no impact on those
already let
vi. Works packages are let competitively

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 Detraction in terms of quality (of
workmanship): quality of workmanship may
suffer because the actual construction works are
carried out by works or package contractors who
are employed, coordinated and administered by
the management contractor. Criterion of high
quality in workmanship is not a priority by
management contracting client
Disadvantages of this procurement system
include:
i. Price is known in advance of construction
ii. The system is not suitable for those clients
who lack experience

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Figure 1.5 Management contracting system (Adopted from Wilkinson and Scofield, 2003)

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b. Construction Management
This system as a method where the
management service is provided by a fee-
based professional and all construction
contracts are directly between the client and
the trade (package) contractors. The difference
between this procurement system and
management contracting is that with this
approach client enters into a direct contract
with the individual works contractors. This
system is slightly different from management
contracting system where there will be a
construction manager intermediary between
the client and works contractors.

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 Characteristics of this system are:
i. Construction manager appointed as a
consultant during the initial stages of
project
ii. Reimbursement is made by means of a
lump sum or percentage fee for
management services
iii. Physical construction of the project is
carried out by works, or package,
contractors who are employed by the client
and coordinated, supervised and
administered by the construction manager.

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 With this procurement system, the client does not
allocate risk and responsibility to a single main
contractor. Instead, the client employs the design
team and a construction manager is engaged as a
fee-earning professional to programme and
coordinate the design and construction activities
and to improve the buildability of the design.
Construction work is carried out by trade
contractors through direct contracts with the
client for distinct trade or work packages.
Construction management system, the contractor
acts as consultant builder providing significant
advice on the practically of the design and
expected construction method to be employed.

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 Using this procurement system, the client will
be closely involved in each stage of design and
construction and needs to maintain a strong
presence through a project management team
that is technically and commercially astute.
Consequently, this system is not suitable for
inexperience client in the construction industry.
In Malaysia, there is very little experience of
management based systems. However, there is
some indication that once a contract is won, the
job is actually executed by a main subcontractor
who usually is involved in the actual
management of the job but not actually and
contractually having the responsibilities and
rights of a management contractor.

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__________ Contract
------------------ Communication/ supervision

Figure 1.6 Construction management system

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 Inthis type of procurement, client has
multiple contracts with designers,
construction manager and contractors. The
contractual relationship structure of
construction management system is exhibit in
figure 1.6.

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2.4 Build-Operate-Transfer/ Build-Own-
Operate-Transfer (BOT/BOOT)

In recent years, there has been a growing trend for

governments in the Southeast Asian region to allow
participation in some major public investments,
especially for infrastructure projects. Many large
infrastructure projects, such as expressways and
power plants, are being constructed by private
firms under a procurement system called build-
operate-transfer (BOT).
The main idea behind using BOT is to alleviate the
spending on governments budgets buy seeking
capital from external financiers especially on large-
scale projects.

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 In BOT project, the arrangement is that the
contractor or a consortium of the contractor and
another party commonly known as promoter will
contract to (design and) construct works such as a
toll road or a water treatment plant, operate the
works either as owner or under lease, for a
prescribe period and at the end of the period,
transfer the works to the principal.
BOOT projects, the operator has ownership of the
facility (for construction period of operation) and
may use the facility to conduct a related business
such as the operation of service stations and foods
outlets on a toll road.

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 During the time that the project proponent
operates the facility, it is allowed to charge
facility users appropriate tolls, fees, rentals,
and charges stated in their contract to enable
the project proponent to recover its
investment, and operating and maintenance
expenses in the project.
However, this systems is more common for
infrastructure projects than building because
the concession allows for tolls or other
payments to be made by end-users to cover
the cost of both procuring the facility and its
operation.

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 The advantage of this arrangement is that it
extends the ideas of constructability further to
embrace lifecycle cost effectiveness. If the
entity proposing the design solution is
responsible for maintaining and operating the
facility then they will have the incentive to
reduce long-term cost and thus develop a
highly cost effective product over the product
lifecycle . Major motivator for the BOT system
is that the host government need not spend
any public funding but still can provide a
public facility to the people.

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 However, this system can be very risky
potentially. Generally these have been based
on failures of trust and/or communication.
One of the most prominent failures has been
in Bangkok Second Stage Expressway. Three
transportation projects in Thailand, including
the Second Expressway System, Don Muang
Tollway and the Bangkok Elevated Transport
system, have given investors a painful
experience.

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2.5 Partnering System

o Partnering is a concept based on co-operative

efforts for mutual benefits. Its use is widespread
in other countries and other economic sectors. The
application of partnering in construction
procurement may lead to improved performance
in the construction industry.
o The authors further notes that partnering can be
defined as a strategic alliance between two or
more organizations, the key objective is for
mutual benefit. Partnering in context of
construction industry is an alliance project based
or strategic long-term relationship between two or
more organizations.

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o Definition Partnering is a management
approach used by two or more organization to
achieve specific business objectives, an agreed
method of problem resolution and active
search for continuous measurable
improvements.
o Since the late 1980s partnering in
construction has drawn a lot of attention from
academics and practitioners. This
procurement system is one of the more recent
initiatives to improve communication between
difference parties in the construction process.

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o Partnering places special emphasis on front-end
decision-making, planning and execution phases of
projects, as well as the rapid integration of organizations
with different knowledge bases. Essentially, the most
concern by client in partnering system is to reduce the
cost of construction and improve its efficiency. However,
the author further note that there are several other
reasons underlying this decision:
i. The need to carryout projects with specific
requirements which could not be fulfilled using
traditional procurement methods.
ii. A desire to rationalize their supplier base.
iii. The need to ensure that contractors and suppliers
adequately represented the client to their public
customers or other international clients.

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o Partnering offers a numerous benefit if the it
applied throughout the supply chain, rather
than between clients and main contractors.
o Benefits of partnering which may include:
i. Greater certainty of the outcome in cost
and time
ii. Reduce wastage
iii. Improving communications
iv. Improving safety
v. Reduce costs associated with disputes
vi. Potential for continuous improvement

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o Advantages derived from the partnering
system, this system requires risks and
problems in its implementation. Commitment
by all parties dominants the problems of
partnering such as commitment in finding
works, uneven level of commitment,
continuity of commitment, lack of commitment
and upfront commitment. Furthermore,
cultural issues of changing the ways run deep
and hard to change, the partnering philosophy
is very hard to introduce otherwise might
change to the traditionally philosophy.

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o One example of popular variant of partnering
is Public-Private Partnership. In Malaysia,
the application of the Kuala Lumpur
International Airport (KLIA) is said to be
among the key factors that enable the mega
airport project to be completed in record time.
The authors further note, support from across
the board is vital in order to make the concept
of partnering a success in the construction
industry of Malaysia.

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 THANK YOU
for any further discussion, please
contact me at:
fadhilnavy@yahoo.com.............

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