PROPOSED UPGRADING WORK

PROCEDURE ENHANCEMENT
Prepared by: DSS- HQ
Date: 3rd May 2018

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Background

In the current situation, upgrading work of

sewage treatment plant (STP) is

necessary for the asset which current
population equivalent (cPE) is more or
equal to design population equivalent
(dPE). Project Developer is required to
upgrade the STP if their development is

requested to connect to the STP prior to

approval of PDC1.

The connection to the existing STP is a

requirement by SPAN if the location of

development is near to the STP but

beyond STP catchment where is the initial

dPE does not consider the new proposed
development by developer.

In practice, developer will engage the

system supplier or contractor by

themselves and only surrender the STP

upon completion.

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Table of Contents

PROPOSED UPGRADING WORK PROCEDURE ENHANCEMENT ................................. 1

................................................................................................................................ 2

Background .............................................................................................................. 2

Problem Statement .................................................................................................... 4

Legislation governing upgrading STP .......................................................................... 5

Current procedure ..................................................................................................... 9

Proposed Enhancement/ implementation option ......................................................... 10

Scoping Proposed Work .......................................................................................... 11

1. Focus on JV development........................................................................................11
2. Consultant................................................................................................................11

3. Contractor ................................................................................................................11

Benefits from implementation ................................................................................... 12

1. Standardization ........................................................................................................12

2. Hassle Free .............................................................................................................12

3. Reduce handling cost ..............................................................................................12
4. Optimization .............................................................................................................12

5. Transparency ...........................................................................................................12

6. Avoid Offset of SCC Funds ......................................................................................12

Potential of implementation ...................................................................................... 13

Reference ............................................................................................................... 14

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Problem Statement

However, there are few problems has been encountered and can be further enhanced for the
benefits of industry.

1. Inconsistency of product: It has been found out that some upgraded plant has not fulfilling
the recommended minimum requirement. This has resulted in short lifespan on the STP

efficiency which later will increase the operational cost (OPEX) on the maintenance.

2. Sewerage Capital Contribution: With the variation of upgrading cost/ PE, developer has
taken opportunity in claiming more than actual construction cost. The purpose of doing this is
to avoid them for paying any amount on the difference between SCC to be paid vs cost of
upgrading.

3. Completion period: Any STP which has registered as asset number, will be monitored by
Department of Environment (DOE) on their performance. There are some cases which the
upgrading work has taken more time than their initial proposal. Even though the plant is under
upgrading, DOE will still issue a summons or letter to IWK if the plant is unable to well operated
during upgrading period., This has giving bad reputation to IWK.

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Legislation governing upgrading STP

Sewerage Capital Contribution (SCC) Fund established under section 172 of the Water
Services Industry Act 2006 [Act 655]. The upgrading work application is usually by developer
that their development buildings other than specific buildings.

A contribution to the Fund made by any developer or person referred to in subsection 172(2)

of the Act shall be at the rate as specified in the First Schedule.

Table 1: First Schedule: WATER SERVICES INDUSTRY ACT 2006; Water Services Industry (Sewerage Capital
Contribution Fund) Regulations 2011 (Industry, 2006)

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Developer is entitled to apply off-set from the of SCC by upgrading the sewerage facilities
(STP/ NWS). The provision of entitlement as stipulated in “Garis Panduan Permohonan Offset

Kumpulan Wang Sumbangan Modal Pembetungan (KWSMP) Pemaju (Pemohon)”.

Under Suruhanjaya Perkhidmatan Air Negara (SPAN), governance of the Sewage Treatment
Plant (STP) upgrading is subjected to application made by developer via appointed consultant.

The application has to be made in-line with PDC Rules.

Applicants is compulsory to visit the respective plant together with the presence of
representative from IWK-OPS, IWK-CA, developer, consultants and others related parties.

The purpose of the visitation is to determine the scope of work related with the upgrading work
proposal.

Upon completion of the detail design, it will then to be tabled in Jawatankuasa Penilaian Kecil
(JAKPEN) at SPAN regional office. The approved scope of work will then to be endorsed by
certifying agencies (CA-office) located at the state of upgrading work to be proposed.

Electronic access to respective legislation is available via the following sites:

Suruhanjaya Perkhidmatan Air Negara (SPAN)

http://www.span.gov.my/files/KWSMP/Guidelines%20for%20Upgrading%20of%20Public%2
0Sewerage%20System%20Procedure%20for%20Developer%20(Applicant).pdf (SPAN,

2016b)

http://www.span.gov.my/files/KWSMP/Guidelines%20for%20Application%20of%20Sewerag

e%20Capital%20Contribution%20(SCC)%20Offset%20%20for%20Developer%20(Applicant

).pdf (SPAN, 2016a)

The following diagrams extracted from respective guidelines shows the relationship of

legislation and administrative on the upgrading work application.

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Figure 1: Upgrading work application flowchart

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Upon completion of upgrading work, applicant has to submit the off-set application for the work
that they had carried out. The diagrams as follows:

Figure 2: Off-Set application flowchart

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Current procedure

PDC1

PDC2

PDC3/4/5

PDC6

• Application of off set – No BG

required

PDC7

• If Submission of PDC8 without

off set granted, BG required
PDC8

Validation of upgrading work

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Proposed Enhancement/ implementation option

PDC1

• Developer paid SCC

PDC2

PDC3/4/5

PDC6

PDC7

• LoC granted by completion of

PDC8
sewer work

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Developer need to pay the SCC amount upon PDC2 approval
1. If loading reached dPE: IWK will study the needs of upgrading work either major upgrading

or improvisation on certain process element.

2. If loading still low: SCC funds will park in “pool”. Withdrawal when it is necessary.

The LoC will be issued based on completion of sewer work connected to the STP. This will
ensure there is no pending work prior to completion of STP.

Scoping Proposed Work

IWK is the service solution in sewerage infrastructure in Malaysia. IWK has capacity on

providing consultancy, constructing and providing overall services in sewerage. There are
some options that can be considered in implementing the mechanism:

1. Focus on JV development
As current practice, for development area which involving few developer company, there is
third parties which has been appointed by developer to coordinate the construction of STP. It

is an opportunity that the role is taken by IWK in providing overall solution for the sewerage
facility to the development. IWK in this position can either be as Project Management
Consultant (PMC), consultant or contractor for the project. This can ensure the overall process
and requirement as required by SL.

2. Consultant
IWK can consider on providing consultancy services for the developer. As the main duty of

the consultant is to ensure the proposal of upgrading will be commenced and completed within
stipulated of time. They has also to ensure all the procedure has been taken into consideration
seriously.

3. Contractor
IWK can also becoming the design and build contractor to the developer. All necessary

incorporated work element will be refined by IWK for better product output.

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Benefits from implementation

1. Standardization: Based on (Department and Business, 2012), “Standardization is the

process of creating, issuing and implementing standards. A standard is a document,

established by consensus and approved by a recognized body. It provides rules, guidelines

or characteristics for activities or their results so that they can be repeated.” IWK can promote
the standardization to the STP in fulfilling national initiative.

2. Hassle Free: Developer has no need to face any difficulty in aspect of STP upgrading. The
Letter of clearance (LoC) can be obtained within time upon completion of sewer work.

3. Reduce handling cost: Considering that all associates work related with STP upgrading has
been fully transferred to IWK, handling cost shall be reduced. Based on (Winch, 1989), the
key factors in generating transaction costs are hounded rationality, in the face of uncertainty
and complexity; and opportunism in the context of small numbers relationships.

4. Optimization: Some STP does not need to upgrade but the optimization may imply.
Optimization in design is the ability to include parameters characterizing the design of the plant

as decision variables. In this way, it is possible to determine design parameter values leading
to optimal switching (Perkins and Walsh, 1996).

5. Transparency: IWK is the appointed company in providing services for sewerage facilities.
The SCC funds is mainly to be used in uplifting image of STP. As reputable sewerage service
provider, it’s the company aim to ensure the facilities maintained by IWK is beneficial to

industry.

6. Avoid Offset of SCC Funds: Developer has no control on the SCC funds amount. This is
because they have paid the SCC at any situation. The existing off-set procedure may obsolete.

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Potential of implementation

From the overall assessment and discussion, the upgrading initiative is reliable and may be

proceeded for implementation. However, there are certain limitation that need to further

discussed and establish.

1. Refine BG Upgrading Procedure & Scope: There some needs to establish proper procedure

in handling BG involving upgrading by IWK.

2. Resources: Involvement from others department CWD/ BDID for implementation

3. Costing: To establish cost element per items. Furthermore, the proposed cost shall be lower
from existing price by others contractor/ system supplier. Costing breakdown may be prepared

by certified quantity surveyor. By doing this, it will embark the stern of IWK in implementation.

4. Refine catchment strategy: PSS unit may need to re-look on the existing catchment

strategy. The connection to existing STP requirement may need to robust for adopting the way
forward of strategy.

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Reference

1. Department and Business, S. & I. E. (2012) GOV.UK, Guidance Standardisation.

Available at:

https://www.gov.uk/government/publications/standardisation/standardisation.

2. Industry, W. S. (2006) ‘Act 655’.

3. Perkins, J. D. and Walsh, S. P. K. (1996) ‘Optimization as a tool for design/control

integration’, Computers and Chemical Engineering, 20(4), pp. 315–323. doi:

10.1016/0098-1354(95)00022-4.
4. SPAN (2016a) ‘Garis Panduan Permohonan Offset Kumpulan Wang Sumbangan

Modal Pembetungan (KWSMP)’.

5. SPAN (2016b) ‘Garis panduan prosedur kerja penaiktarafan sistem pembetungan
awam’.
6. Winch, G. (1989) ‘The construction firm and the construction project: A transaction cost
approach’, Construction Management and Economics, 7(4), pp. 331–345. doi:

10.1080/01446198900000032.

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