DEPARTMENT OF QUANTITY SURVEYING

KULIYYAH OF ARCHITECTURE AND ENVIRONMENTAL

DESIGN

COURSEWORK 2

NAME MATRIC NUMBER

NUR ALYA SYIFA BINTI ZULKEFLI 1911392
NUR FADHLIN SAKINA BINTI MAHATHIR 1917438
NURUL ADDINA BINTI AHMAD RIZAL 1910488

SEMESTER/SESSION : 2, 2019/2020

COURSE CODE NAME : INTRODUCTION TO THE PROCESSES OF CONSTRUCTION

PROCUREMENT

COURSE CODE : AQS 1250

COURSEWORK TITLE : REPORT FOR COURSEWORK 2

EVALUATOR’S : ASSIST. PROF. DR. SHARINA FARIHAH BINTI HASAN

NAME
 Declaration of Authorship

We hereby certify that the assignment we are submitting is entirely our own original work except
where otherwise indicated. We are aware of the University’s regulations concerning plagiarism,
including those regulations concerning disciplinary actions that may result from plagiarism. Any
use of the works of any other author, in any form, is properly acknowledged at their point of use.

Names Task
NUR ALYA SYIFA BINTI ZULKEFLI Literature review, Discussion and result
NUR FADHLIN SAKINA BINTI MAHATHIR Literature review, Discussion and result
NURUL ADDINA BINTI AHMAD RIZAL Literature review, Discussion and result

Date of submission: 20th July 2020

METHODOLOGY

This case study is conducted and carried out in one single method and technique, to obtain
information and all the necessary data in order to achieve the objectives of the study. In this
task, the method used by our group for the course AQS 1250 is RESEARCH METHOD.

The research on “Processes of Construction Procurement- Conventional Practice” are executed

with the help of academic articles and E-books available in the online platform.
Books and articles which are from trusted and well know author are used as reference to get
bigger ideas about the research topic. Aside from the internet, the group members went to
IIUM Library to carry out even deeper research for better comprehension on Processes of
Construction Procurement.
TABLE OF CONTENT

ITEM PAGE

1.0 INTRODUCTION 1

2.0 LITERATURE REVIEWS 2-5

3.0 DISCUSSION AND RESULT 6-9

4.0 CONCLUSION 10

5.0 REFERENCES 11-12

1.0 INTRODUCTION
The construction sector has incredibly huge socio-economic impacts that contribute to
global economic growth. It is a high-risk business, since a large amount of funds and
stakeholders are interested in carrying out a project. Therefore, in Islam, it is essential to deal
with building projects in a systemic, legal manner and sharia principle in order to avoid any
misconduct of work that transgresses the right of each of the parties concerned. Consequently,
in construction administration, the procurement process is used.
In 2007, Khairuddin initially proposed the concept of the sharia that meets the requirements
with construction procurement (Khairuddin, 2007; 2008; 2009, p.103). He related al-
Mu'amalat to the activities of the construction industry in business transactions and defined
sharia compliant construction procurement as a process wherein “… the subject matter, terms
and nature of the contract or covenant should not be contrary to the sharia.”
According to Mohd Ma’sum (2006) the foundation of the sharia on contracts comprises
belief in Allah (al-iman), god consciousness (al-tawwakal), knowledge (al-ilm) and sincerity
(al-ikhlas). The origins of the law are sacred from Quran and Sunnah as well as non-divine and
a contract must involve people as parties thereto. In addition, he suggested the need to
recognize and implement these elements into the subject-matter, arrangement, terms and
conditions as a basis for a Shariah-compliant contract.
The focal point of this study will be on the Sharia principal of traditional procurement
method, as it is one of the longest used procurement methods in the construction industry.
Using academical references, we will study on the process of the method and Islamic view on
this procurement method.

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4.0 LITERATURE REVIEW
Gharar in Statutory Approval
The meaning of Gharar under Arabic linguistic means risk. While under jurisprudence
Gharar means instability, unpredictable outcome and probability of many events by few
scholars. Also, the meaning of Gharar comes from uncertainty, risk and misleading that could
lead to loss. In Gharar, Islam applies regardless of lack of consistency and certainty to any
contract that requires issues undoubtedly details about the object's existence. The subject
matter of Gharar is forbidden in Islam either it’s able or unable to be seen. There are few jurists
addressed about the Gharar concept.
In Darir’s view (1997), there are several meanings in Gharar and these are summarized in
three. Firstly, it applies in something happening or not to cases of doubt, uncertainty and
transparency. Furthermore, Gharar only refers to unknown individuals who do not knows the
actual transaction status. Finally, there is an unexplained and uncertain mixture of the two
terms in Gharar.
Another scholar says, Elgari (2006), there is an essential difference between the concept of
risk and that kind of “Gharar”. "Gharar" in exchange transactions is the contractual confusion.
Though from the Sharia point of view a deal hindered by "Gharar" cannot be said of risk. In
any case, risk is a natural occurrence which happens in every situation and it is possible to stop
it. While the structure of the contract agreement between the two parties creates a special risk
for "Gharar."
Meanwhile there are few scholars that are agree with “Gharar” such as, Al-Saati (2003), the
acceptable “Gharar” occurred when the uncertainties are endogenous or exogenous that can be
acceptable degree of “Gharar”, which is based on Islamic legal maxim “Damage and benefit
go together”. As in the saying of Prophet (PBUH) “Revenue goes with liability”.
Some reasons are responsible for the presence of Gharar in the deal. The key factor is the
absence or incomplete ownership of the product. Applying an unclear proviso is another aspect.
It happens when a party makes some limitless conditions which lead to an inconsistency in the
contract.

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 The rationality of Gharar is banned in Islamic sharia when the dispute arises between the
parties concerned can be seen in conventional construction contracts. In general, any
agreement or arrangement must be free of unnecessary expectation that the details and facts
are correct, straightforward for each party and satisfy any of the five parties concerned. When
considering the consequences and rationale of Gharar, one may infer that in any trade in Islam
Gharar is explicitly forbidden.
From the literature review, the prohibition explanations can be classified into four categories
which are speculation, outcome, unclear and unknown in term of future benefit. Consequently,
one of the elements mentioned above would render the contract null and void under the Sharia
principle during Statutory Approval stage. This will be discussed more on discussion and
result.

Inefficiency in Decision Making Process

It has been identified by various parties in construction industry, that the process of
obtaining approval for building plan approval is lengthy and complicated process that seems
to disrupt the timeline of a project. As, a proof, a case study was carried out by Mitropoulos
and Howell (2002), found out that the main reason for delay in development projects was due
to the process of obtaining approval from local authorities (Marzukhi, Jaafar, & Leh, 2019).
Thus, cause harm to the cost plan that have been agreed and might affect the overall of the
project.
Based on Jaapar,2019, stated that harm should not be inflicted to anyone. Anyone who
causes harm, Allah will do harm to him. Harm must be removed before it inflicted even greater
injuries. Therefore, according to the basic principle of Shariah law (legal maxim), it is
important for any services to be free from any form injuries which refers to Ad-dararu yuzal.
In the term of Statutory Approval, it could be seen that ineffectiveness in delivering approval
have inflicted harm to the developer.
As a proof, a survey by Marzukhi in 2019, conducted in Majlis Perbandaran Subang Jaya
(MPSJ), found out, that most of the Professional Submitting Person (PSP), are incapable of
reading the drawings. This may cause, something that are supposed to be guarding the safety
of the construction project, to be a harmful process (mafasid), that will not bring benefit to the
project. It can easily cause ghalat (mistake), to the decision-making process to deliver the
approval.
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 Adding up to this, from the survey, it also stated that the officers has inadequate way of
handling the development application, which cause ghubn (inequality) in terms of obtaining
approval early, despite submitting the building plan early. As a proof, Sanjugtha, V. (2019),
stated that local authorities are riddled with bureaucracy whereby, international project seems
to have a faster approval procedure compared to local project in Malaysia. It is prohibited for
an agreement to have ghalat and ghubn (Jaapar, 2019).
Currently the One Stop Centre in Malaysia are adopting the “one size fit all” procedures,
which may have cause major complication in approving the application for variety types of
building plan.(Marzukhi, Omar, et al., 2019).

Corruption (Fasad) in Construction Procurement

The Arabic word Fasad translates into rottenness, spoiledness, corruption, decay,
decomposition, putrefaction, depravity, wickedness, viciousness, iniquity, and
pervertedness In the English translations by Abdullah Yusuf Ali of the Qur’an, he
frequently uses mischief to translate the word Fasad. (Iqbal & Lewis, 2006).
According to Iqbal and Lewis (2006), corruption (Fasad) is a broad concept that can be
interpreted as unfaithfulness, dishonesty, betrayal of trust, misuse, iniquity, and cheating
in private and public dealings. ‘Arafa (2018) in his article also defines Fasad in similar
light which is dishonesty, betrayal of trust, abuse of power, and deceit in both private and
public dealings. He also said that the scope of rashwa (bribery) is possible to exist in
financial transactions among the public and governmental officials. Iqbal and Lewis
(2006) stated in their article that many hadith portray corruption through criticism of the
abuse of trust placed in officials by the state who perform acts such as stealing public
funds, breaking the rules or law in exchange for bribes and also accepting gifts for hidden
interest.
However the practice of gift-giving is encouraged in Islam but with only it is mean to
spread love and to strengthen social relationships among Muslims. Unfortunately, the
practice of gift-giving among some has been strayed from its original purpose as they are
giving gifts with the hidden intention to influence the other party which the gift comes
with condition to get something in return for personal gain. In this context, it is no longer
considered as gift but a bribe (Fethi, 2018).

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 This practice can be seen during procurement process in construction industry
especially during statutory approval process where some party will try to improve informal
relationship or paying off public officials, politicians or related authorities to speed up the
process or gain planning approval to start a project. According to Malaysian Anti-
Corruption Commission (MACC), the construction industry has been identified as a high-risk
industry subjected to high levels of corruption amongst any other industries. Sedlenieks
(2003) also stated that it is easy to get an idea of the level of corruption from data collected
on bribery cases in agencies that issue permits and licenses in general (not just building
permits). This is might be because time is extremely crucial in the industry. Therefore, a
lengthy and time-consuming statutory approval process is disadvantages and a delay can
result in losses of money to the builder or client. Therefore, many players in the
construction industry often choose to corrupt as methods of resolving this issue
(Sedlenieks, 2003).

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3.0 DISCUSSION AND RESULT
Gharar in Statutory Approval
Gharar is available at all phases of the construction production, but industry experts have
overcome and raise any uncertainty as a solution. The regular provision of the contract model
puts together the ambiguity gap that can arise between the parties involved, such as stakeholder
responsibility, payout, and more. The price, date, quantity and quality of the works can be
related to Gharar under a construction contract. There are numerous of authentic Hadith that
can be related on prohibition of Gharar. These hadith above was narrated by Ibn Abbas and
Jabir bin Abdullah.

Sahih Muslim, book 10, Number 3640:

Ibn Abbas (Allah be pleased with them) reported that Allah's Messenger (May peace be
upon him) as saying: He who buys food grain should not sell it until he has taken possession
of it.

Sahih Muslim, book 10, Number 3654:

Jabir b. Abdullah (Allah be pleased with them) is reported to have said that Allah's
Messenger (may peace be upon him) forbade the sale of a heap of dates the weight of which is
unknown in accordance with the known weight of dates.
For instance, another important part of the procurement process is the statutory approval.
The lengthy time over which regulatory permission was sought has contributed to confusion.
The local authority is extremely difficult to correct the safety and qualification of buildings
based solely on the documented paper. This procedure may occasionally lead to bribery so that
approval can be given more quickly. Therefore, the State Approval must be confident and
assertive about a project that he/she needs to approve if the project itself follow the regulations
and conditions.

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 Next, it is very essential for every architect or designer to have a precised design including
the specifications and regulations that already set up by every country such as in Malaysia, we
use JKR and CIDB as our guidance to construct a building and to provide information on the
building planned. After all, the building shall follow the design approved by the local authority
and any changes made during construction shall be re-informed.

Inefficiency In Decision Making Process

To ensure, statutory approval is a shariah compliance procedure, it is important to ensure
that all the harm element to be removed from the procedure. As stated in Quran (2:188):

‫اْل إث ِم َوأَنتُ إم‬

ِ ‫اس بِ إ‬ ِ ‫اط ِل َوتُ إدلُوا بِهَا إِلَى إال ُح َّك ِام لِتَأإ ُكلُوا فَ ِريقًا ِّم إن أَ إم َو‬
ِ َّ‫ال الن‬ ِ َ‫َو ََل تَأإ ُكلُوا أَ إم َوالَ ُكم بَ إينَ ُكم بِ إالب‬
َ‫تَ إعلَ ُمون‬
“ And do not consume one another’s wealth unjustly or spend it (in bribery) to the rulers in
order that (they might aid) you (to) consume a portion of wealth of the people in sin, while you
know (it is unlawful).”

It is important for the local authorities to only employ, employee with qualifications needed
for the position. The employee should have the capabilities to understand the drawings of a
project to prevent from any mistakes that cause for development to be deemed unsafe since it
does not fulfil the proper standard. As, mistakes in giving out approval to unsuitable
development is a major failure in moral responsibility, since it could harm the safety of society
at large. Muslim have an obligation to be ethical and moral. A set of specific guidelines should
be formed, to allow for a smooth application process. This also will prevent from applicants to
submit documents with insufficient information, to allow ethical and detailed asses to be made.
At the same time, this allows for the public’s right to be protect. As mentioned in Quran (49:6):

َ‫صيبُوا قَوإ ًما بِ َجهَالَ ٍة فَتُصإ بِحُوا َعلَ ٰى َما فَ َع إلتُ إم نَا ِد ِمين‬
ِ ُ‫ق بِنَبَإ ٍ فَتَبَيَّنُوا أَن ت‬ ِ َ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا إِن َجا َء ُك إم ف‬
ٌ ‫اس‬

“O you who have believed, if there comes to you a disobedient one with information,
investigate, lest you harm a people out of ignorance and become, over what have you done,
regretful.”

For Malaysia to cope with rapid town planning development, the delivery of permit, for the
developers to build their project, need to be extremely effective, thus there should be no room
for mistakes to happen.

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Corruption (Fasad) in Construction Procurement
Fethi (2018) said that the Qur’ān and Sunnah strongly condemn corruption in the
judiciary system and call for justice to reign supreme in all circumstances. It is clearly
stated in the Qur’ān that everybody is required to do justice and act righteously in all
conditions and towards whomsoever including relatives regardless of gender, religious,
socio-cultural background and even against one’s own self or interest (An-nisa, 4:135).

‫إط ُشهَدَا َء ِ َّّلِلِ َولَوإ َعلَ ٰى أَنفُ ِس ُك إم أَ ِو إال َوالِ َدي ِإن َو إاْلَ إق َربِينَ ۚ إِن يَ ُك إن َغنِيًا‬
ِ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا ُكونُوا قَ َّوا ِمينَ بِ إالقِس‬
َّ ‫إرضُوا فَإ ِ َّن‬
‫َّللاَ َكانَ بِ َما تَ إع َملُونَ خَ بِيرًا‬ ِ ‫اّلِلُ أَوإ لَ ٰى بِ ِه َما ۖ فَ ََل تَتَّبِعُوا إالهَ َو ٰى أَن تَ إع ِدلُوا ۚ َوإِن ت إَل ُووا أَوإ تُع‬
َّ َ‫أَوإ فَقِيرًا ف‬

“O you who have believed, be persistently standing firm in justice, witnesses for Allah,
even if it be against yourselves or parents and relatives. Whether one is rich or poor, Allah is
more worthy of both. So follow not [personal] inclination, lest you not be just. And if you
distort [your testimony] or refuse [to give it], then indeed Allah is ever, with what you do,
Acquainted.”

Corruption in statutory approval can be tackled by promoting positive culture in the

construction industry which helps to develop positive values, high level of moral and ethical
standard among the construction practitioners. However, every party or group needs to play
their role to make this happen. Not only the construction companies need to promote honest
and ethical culture among their workers, but the government also need to increase awareness
or strictly established and enforce an adequate code of conduct to the construction practitioner.
Construction Industry Development Board (CIDB) has prepared a code of conduct which to
be implemented to all parties engages in construction procurement. According to CIDB, the
code represents an important step in the management of integrity and will create an
environment which will help to get rid of the root of corruption.
Apart from that, selection of employee in construction industry either private organization
or for the selection of government officer should be toughened and controlled to filter out the
potential immoral officer to reduce corrupt acts in the construction projects.
For instance, the employer should do a proper and deep background checking such as
whether there is past involvement of the corrupt practices of the applicants (Gunduz & Önder
(2013).

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 For statutory approval in construction procurement, the proper selection of worker or
officer is very important especially if it involves a position of a government officers who
will be determined the process of statutory approval. A corrupt officer who vi olate his
duties and has given unfair treatment once he accepts a bribe is considered a clear form of
betrayal of trust which is strictly prohibited in Islam as their job has becomes amānah
(trust). This is exactly what the Qur’ān teaches:

َ‫ُول َوتَ ُخونُوا أَ َمانَاتِ ُك إم َوأَنتُ إم تَ إعلَ ُمون‬ َّ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُوا ََل تَ ُخونُوا‬
َ ‫َّللاَ َوال َّرس‬

“O you who believe! Do not betray God and the Messenger, nor betray our trusts,
while you know”. (Al-Anfal, 8:27)

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4.0 CONCLUSION
As the growth for the construction industry rise, it has given for more demands on granting
permits to the developer. Thus, it is important, that the procedure on obtaining approval, are
able to cater for the rapid demand for permits, as it will determine the exact date that the
developer can start off their construction process (Marzukhi, Jaafar, & Leh, 2019). Therefore,
there is always a need for a constant reform on the procedures to allow for more efficient and
rapid on obtaining the approval from the local authorities. This is especially applied in term of
application of shariah principles into the procedures.

Implementing Shariah Principles into the procedures, will greatly affect the workability of
the procedures, as it will eliminated any harmful element and disadvantages that may affect all
the parties involved in the procedures. This because, Shariah Principles are generally derived
from Quran and Sunnah which are the ultimate guideline on governing and conducting Muslim
day to day life. As stated by Allah S.W.T in the Quran (20:123):

‫ضلُّ َو ََل يَ إشقَ ٰى‬ َ ‫إض َع ُد ٌّو ۖ فَإ ِ َّما يَأإتِيَنَّ ُكم ِّمنِّي هُدًى فَ َم ِن اتَّبَ َع هُد‬
ِ َ‫َاي فَ ََل ي‬ ُ ‫ال ا إهبِطَا ِم إنهَا َج ِميعًا ۖ بَ إع‬
ٍ ‫ض ُك إم لِبَع‬ َ َ‫ق‬

“(Allah) said, Descend from Paradise-all, (your descendants) being enemies to one another.
And if there should come to you guidance from Me-then whoever follows My guidance will
neither go astray (in the world) nor suffer (in the Hereafter).”

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5.0 REFERENCES

‘Arafa, M. A. (2018). White-collar crimes, corruption and bribery in Islamic. Revista de Estudos
e Pesquisas Avançadas do Terceiro Setor(5), 711-743.
CONSTRUCTION INDUSTRY AND BACKGROUND. (n.d.). Retrieved from Official Portal
Malaysian Anti-Corruption Commission (MACC):
https://www.sprm.gov.my/index.php/en/enforcement/corruption-offenders-database/199-
pembinaan/1042-construction
El-Gamal, M. (2001). An economic explication of the prohibition of gharar in classical Islamic
jurisprudence. Islamic Economic Studies, 8(2).

Fethi, A. (2018). Corruption according to the main sources of islam. Intellectual Discourse, 91-
110.
Gunduz, M. and Önder, O., 2013. Corruption and internal fraud in the Turkish construction
industry. Science and Engineering Ethics, 19(2), pp.505–528.
Iqbal, Z., & Lewis, M. K. (2006). Governance and Corruption: CanIslamic Societies and the
WestLearn from Each Other?
Jaapar, A. P. D. G. (2019). Qawaid Al Fiqhiyyah-Legal Maxims i.e. General Legal Principles
of Fiqh. 6. Retrieved from https://islamicbankers.files.wordpress.com/2015/09/legal-
maxims.pdf

Johari, N. S., Shaini, N. A. S., Bakar, N. A. A. A., Fahmi, N. A. S., Sharom, N. A., & Malek, N.
A. A. CONCEPT OF GHARAR IN CONSTRUCTION PROCUREMENT PROCESS.

Marzukhi, M. A., Jaafar, A., & Leh, O. L. H. (2019). The Effectiveness Of Building Plan
Approval. Case Study: Subang Jaya Municipal Council, Selangor. MATEC Web of
Conferences, 266, 06005. https://doi.org/10.1051/matecconf/201926606005

Marzukhi, M. A., Omar, D., Arshad, A. F., Leh, O. L. H., Yusup, M., & Jaafar, A. (2019). One
stop centre (OSC): Lessons on best practices in planning system delivery. Planning
Malaysia, 17(1), 104–115. https://doi.org/10.21837/pmjournal.v17.i9.590

Sanjugtha, V. (2019). Retrieved July 16, 2020, from

http://read.focusmalaysia.my/ePaper/xml_epaper/Focus/03_08_2019/pla_1_Standard/xml
_arts/art_47471.html

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Sedlenieks, K. (2003). Corruption in The Process of Issuing Building Permits. Centre for public
policy, 34(69), 1689-1699.
Waemustafa, W., & Sukri, S. (2016). Theory of Gharar and its interpretation of risk and uncertainty
from the perspectives of authentic hadith and the Holy Quran: Review of
literatures. Journal of Islamic Economics, Banking and Finance, 113(5741), 1-17.

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