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Abstract
Aim of Study
This study has focused on investigating procurement strategies
adopted in MARA large construction projects. It also identified
various factor affecting construction cost performance of MARA
large construction projects.
Need of Study
Very rarely MARA projects are finished within estimated project
cost. For improving cost performance, it is very important to identify
the reasons affecting cost performance of MARA projects. Hence,
there is a need of study in understanding the reasons and factors
affecting project cost performance of construction projects.
Research Approach
The project was carried out through interviews and survey using
the questionnaire among the personnel involved in handling MARA
large projects. Gathered data was analyzed statistically using SPSS
software package.
Research Findings
This study revealed that fluctuation in price of the material, cash
flow and financial difficulties faced by contractors, shortage of site
workers, lack of communication between parties, incorrect planning
and scheduling by contractors are most severe factors while frequent
design changes and owner interference are least affecting factors on
construction cost performance in MARA large projects.
Limitations
This study was limited to large construction projects
administrated by Majlis Amanah Rakyat (MARA) Malaysia.
TABLE I.
Methods/Techniques
Procurement
Strategy
I.
Management
INTRODUCTION
Integrated
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Procurement Strategy
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a Built Envirronment
adopted for
f large or com
mplex projects. A person or company
c
is
appointedd by client on a fee basis to organize and manage
m
the
whole construction proccess. A constru
uction managem
ment (CM)
is hired earlier or toggether with thhe designer before
b
any
substantiaal design worrk is done and
d before any substantial
work beggun. The CM
M (on clients behalf) works with the
designer during the ddesign phase and representting client
t
constructiion phase. The
T
typical contractual
c
during the
relationshhip and sequennce of operation is shown in Figure 3
and Figurre 4.
Self-Perfo
ormance
In-House Teams
Job-Orderr Contract
Separate Contracts
C
n Malaysian, traditional
t
lum
mp sum system
m, design andd
In
build//turnkey
syystem
and
Construction
Project
Manaagement/Contraact Managemeent are commoonly adopted inn
procu
urement strateg
gies [1, 9]. Thiss study has beeen conducted too
(1) ex
xamine variouss procurement strategies adoppted in MARA
A
Projeects, (ii) identtifying factors affecting connstruction cost
perfo
ormance in MA
ARA projects. However, thee limitations of
this study
s
include, firstly this paaper focus larg
ge constructionn
projects only. Altthough, it iss difficult to define largee
i a study of Vietnam
V
projeccts with a totaal
consttructions, but in
budgeet of $1 million were consideered as large projects
p
[10]. Inn
this study, project of budget RM
R 5 million and above iss
consiidered as largee construction project, seconndly, this studyy
focusses on projects with projectts managemennt procuremennt
strateegies only. Thiirdly, targeted respondent in
ncluded in dataa
collecction were perssonnel of contrractor firms andd client.
II.
Vol.
V 1 No. 1, 20014
Figure 1.
1 Typical Contraactual Relationship
ps under Traditionnal Method
RELATED WORKS
A. Budget Planning
g and Control
Prrocurement method
m
is a strrategy to mannage the entiree
consttruction processs. There are a number of proven strategiess
that are
a used to maanage the proccess where eacch has its ownn
distin
nct advantagees and disaadvantages. Initially,
I
fourr
procu
urement approoaches are widely discusseed; traditionall,
manaagement, integrrated services and
a in house teaams [9].
Figure 2. Typical
T
Sequencess of Operations
1) Traditional Procurement:
P
Basically,
B
this procurement iss
m
size annd complexityy.
applieed to ordinary projects of moderate
A client employs an
n architect (forr a building) or
o engineer (forr
s
and contractors forr
civil engineering works or other structures)
c
seeparately. A designer is hired earlier too
the construction
produuce drawings and
a specificatiion while conttractors will bee
selectted after a cllient is satisffied with the drawings andd
specification. Norm
mally, an arcchitect or enggineer will bee
appoiinted on fee baasis as a leadeer to coordinatte the activitiess
of oth
her members and
a have directt access to the client. In orderr
to geet the best posssible result, itt is normal fo
or the client too
choosse any suitab
ble variationss that suits to
t their plann.
Variaations such as design-bid-buiild, negotiated contracts, best
valuee procurement, incentives contracts are widely
w
used inn
USA, while variattions such as open tender contracts andd
o
tender andd
negottiated contractss in UK. In Maalaysia, both open
negottiated contractss are extensiveely adopted andd this is similarr
to UK
K. Sometimes,, a client incorrporates Projecct Management
Consultant (PMC) into this procuurement to assiist the client inn
nistering the project [9]. The typicaal contractuaal
admin
relationship and seequence of opeeration is show
wn in Figure 1
F
2.
and Figure
2) Managementt Procuremen
nt: Basically Compared too
ment which iss focusing on moderate sizee
tradittional procurem
and complexity,
c
management proocurement is preferred
p
to bee
3) Inttegrated
Prrocurement:
Basically
Integrated
procurem
ment is where design and construction,
c
a well as
as
several other
o
subtasks on the projeect, are perforrmed by a
single org
ganization, ofteen a large conttracting firm. Sometimes,
S
professionals such aas constructioon managers, architect,
s
and engineers com
mbined togetheer to form a
quantity surveyors
consortiuum to provide iintegrated servvices. This proccurement is
mainly addopted on techhnically sophissticated projectts of which
prospectiive contractorss have special experience, orr time is of
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International
Joournal of Civill Engineering and
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Vol.
V 1 No. 1, 20014
the essence.
e
It provides
p
a sin
ngle point off contact andd
respo
onsibility throuughout the prroject. Design and build orr
desig
gn-build variatiion is popularlly used in USA
A. Similarly inn
UK, design and build variation is also widely usedd.
Appaarently, designn and build or turnkey system wass
introd
duced to Malaaysia 1983 [9] and still widdely adopted inn
Malaaysia construcction project.. The typicaal contractuaal
relationship and seequence of opeeration is show
wn in Figure 5
F
6.
and Figure
III. DATA
A
COLLECT
TION AND ANA
ALYSIS
Data collection wass carried out inn two phases where first
s
and interrviews. It aimeed to assess
phase foccused on field study
various procurement
p
strrategies adopteed in MARA projects
p
and
identify common
c
causees of cost overrrun. In the seccond phase,
survey was
w
conductedd for identify
fying significaant factors
affecting construction cost performaance among contractors,
c
nts and contracctors for assesssing significaance of the
consultan
factors. A five point likeert-scale of 1 to
o 5 was adopteed to assess
the degreee of agreemeent of each cau
use where 1 represented
r
strongly disagree, 2 disagree, 3 moderately agree, 4
a
5 stronglly agree. A total of 36 respondents
r
agree and
participatted in intervieews and questtionnaire surveey process.
Statistical Package for Social Sciencee (SPSS) versiion 17 was
used to an
nalyze the dataa. Data was chhecked for reliaability prior
to ranking the factors. R
Reliability describes the stabbility of the
data colleected measuredd using Cronbaach coefficieent value. It
is consideered low and unacceptable
u
iff Cronbach value
v
is less
than 0.3. Reliability is considered
c
satiisfactory if Croonbach is
n 0.7 [18].
more than
Fig
gure 6. Typical Sequences
S
of Operations of Integrateed Procurement
Figure 7. R
Respondents workiing experience
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IV.
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International
Joournal of Civill Engineering and
a Built Envirronment
Vol.
V 1 No. 1, 20014
RESULTS AND
N DISCUSSION
N
Figure 11.
1 Sequence of Operation of MARA
A Management Proocurement
C. Facto
ors Affecting Co
Construction Coost Performancce
Durinng interview pprocess, a totall of 15 comm
mon factors
affecting project cost performance in MRA large prroject were
d. Literature sshowed that th
he identified factors are
identified
common factors affeccting cost perrformance worrldwide as
f ranking
shown inn figure II. These factors weree investigated for
purpose. Data collecteed through qu
uestionnaire waas test for
Alpha of the gaathered data waas found as
reliabilityy. Cronbach's A
0.776 whhich means dataa collected in acceptable
a
for analysis.
a
In
order to identify
i
the rannks of factors affecting
a
constrruction cost
performannce, data wass analyzed witth SPSS 17. R
Results are
presented
d in table III. Based
B
on table III, Fluctuatioon in prices
of materials is the most significant facctor affecting coonstruction
cost perrformance folllowed by Caash flow andd financial
difficultiees faced by contractors
c
as second rankeed factors.
Shortage of site workerss, lack of comm
munication am
mong parties
p
& schheduling by
were 3rd major factor aand incorrect planning
contracto
ors were found as 4th ranked faactor.
B. M
MARA Construcction Procurem
ment
Sttudies revealeed that MAR
RA is adoptin
ng 2 types off
procu
urement; traditional and management.
m
For
F traditionall,
MAR
RA is organizinng its own techhnical teams to administer thee
wholee the project.. However, iff MARA deccides to adopt
manaagement procuurement,approvval from LPM
M A must bee
granted first before a PMC is appointed. Figure 8 and Figure 9
w the contractu
ual relationshipp of MARA traditional andd
show
manaagement procuurement whilee Figure 10 and
a
Figure 111
show
ws their sequencce of operation.
Fig
gure 8. Contractu
ual Relationship off MARA Traditionnal Procurement
w
Thiss factor is siggnificant as
Shorttage of site workers:
perceivedd by Client. It is 3rd rannked factor by
b overall
responden
nts. However, client rankeed this factorr as most
dominantt while contraactors ranked it as 12th raank. Client
responden
nts claim thatt the problem between conttractor and
subcontraactor seems larrgely contributte to this causee. As most
of the works
w
are conttracted to subcontractors, most
m
of the
workers are
a hired by thhese sub-contraactor. If there are
a disputes
between contractor andd subcontractorr, automaticallyy this issue
prevails.
nication betw
ween parties: Lack of
Lack of commun
communiication betweenn parties is alsso ranked as thhird highest
affecting factor. Cliennts ranked thhis factor as 3rd while
or ranked as 4tth. Lack of co
oordination maay result in
contracto
poor mannagement, seleection of propeer material andd problems
between the
t contractor aand other partiees.
Figu
ure 10. Contractuaal Relationship of MARA
M
Management Procurement
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7
8
10
11
12
13
15
[30]
[28]
[27]
[26]
[29]
S.No.
TABLE III.
14
[25]
[24]
[23]
[22]
[21]
[20]
[19]
Causes
[17]
S.No
[`11]
TABLE II.
[10]
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Client Respondents
Contractor Respondents
Factors
Mean
S.D
Rank
Mean
S.D
Rank
Mean
S.D
Rank
3.97
0.97
3.62
0.87
4.47
0.92
3.89
1.21
3.90
1.18
3.87
1.30
3.78
1.12
3.95
1.02
3.53
1.25
3.78
1.07
4.0
0.78
3.78
1.07
3.67
1.12
4.29
0.78
2.8
0.94
12
3.67
1.06
4.24
0.70
2.87
0.99
11
5
6
3.53
0.94
3.33
0.91
3.8
0.94
3.47
0.91
3.47
0.75
3.47
1.13
3.39
0.96
3.14
0.96
10
3.73
0.88
10
3.36
0.90
3.38
0.80
3.33
1.04
11
3.36
1.10
3.95
0.80
2.53
0.92
13
12
3.33
0.76
3.14
0.65
10
3.60
0.83
13
3.28
1.28
10
3.09
1.19
11
3.53
1.34
14
3.19
0.95
11
2.90
0.94
12
3.6
0.83
15
Owner interference
2.89
0.95
12
2.8
0.81
13
3.0
1.13
10
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V. CONCLUSION
Study was carried out to investigate various procurement
strategies adopted in MARA large construction projects.
Results showed that MARA projects are classified as small and
large project based on cost of project cost. Project worth
contract amount above 5 Million Ringgit were regarded as
large construction projects. In order to manage projects,
traditional and management procurement strategies are
adopted. Also, comprehensive study was conducted to identify
the factors affecting construction cost performance. Through a
questionnaire survey amongst contractor and client personnel,
it was perceived that fluctuation of material prices was the
most dominant factor affecting construction cost performance
followed by cash flow and financial difficulties faced by
contractors. Shortage of site workers and lack of
communication between parties were found as third major
factors affecting construction cost performance.
REFERENCES
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
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