Faculty of Engineering Technology and Built Environment

School of Architecture and Built Environment

Bachelor of Quantity Surveying (Hons)

Course Name:
BEQ2103 Professional Practice for Quantity Surveyor

Assignment Title:
Assignment 1

Student Name & Matric Number:

Jordan Soo Mao Soon (1002058266)

Lecturer:
Ts. Sr. Dr. Nadzirah Binti Zainordin
Table of Contents
1.0 Introduction ....................................................................................................................................... 3
2.0 Procurement Route............................................................................................................................ 3
2.0.1 Traditional Contract ................................................................................................................... 3
2.0.2 Design and Build........................................................................................................................ 3
2.0.3 Management Contracting ........................................................................................................... 4
2.0.4 Construction Management ......................................................................................................... 4
2.1 Chosen Procurement Route............................................................................................................... 4
3.0 Contractual Arrangement .................................................................................................................. 5
3.0.1 Lump Sum.................................................................................................................................. 5
3.0.2 Measurement .............................................................................................................................. 5
3.0.3 Cost Reimbursement .................................................................................................................. 5
3.0.4 Target Cost Plus ......................................................................................................................... 6
3.1 Chosen Contractual Arrangement ..................................................................................................... 6
4.0 Tendering Strategies ......................................................................................................................... 6
4.0.1 Open Tender............................................................................................................................... 7
4.0.2 Selective tender .......................................................................................................................... 7
4.0.3 Negotiated Tender ...................................................................................................................... 7
4.1 Chosen Tendering Strategies ............................................................................................................ 7
5.0 Conclusion ........................................................................................................................................ 7
References ............................................................................................................................................... 9
Appendix ............................................................................................................................................... 11

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1.0 Introduction
Mr Lim is an entrepreneur, and he is currently 60 years old. Mr Lim plan to build 20-
unit bungalow but he does not have any experience in housing development. Therefore, Mr
Lim ask me as a Professional Quantity Surveyor (QS), to propose a suitable procurement route,
contractual arrangement, and tendering strategies for a 20-unit bungalow housing development.
With that, Mr Lim required us to form a proposal report to present to Mr Lim. Without further
ado, for this report there will be three main topics which in this report include the procurement
route, contractual arrangement, and tendering strategies.

2.0 Procurement Route

Method for purchasing the products and services we require is the procurement process.
“Procurement routes in construction are the methods of running a project” (“3 Main
Procurement Routes Explained | Vita Architecture,” 2020). We want to get a big construction
project started ; therefore, we are trying to gather all the supplies and services we need.
Acquisition or gaining strategy is a time- and resource-intensive procedure in the construction
business. As a result, the construction sector employs a variety of contractual strategies. In
other words, any of these contract types are available as procurement method in the
construction industry. Besides that, there are four types of procurement route:-

2.0.1 Traditional Contract

It's also known as design-bid-build when using the traditional procurement process. In
this one-stage project, the customer, and a consultant work together to develop the design.
Following that, a contractor will be chosen and given a lump sum building contract. It's likely
that the contractor in this scenario won't be in control of any design, except from any ad hoc
projects.

2.0.2 Design and Build

When entire design and construction are handled by a single contractor for a
predetermined price, it is possible for the two phases to overlap. This strategy is known as
design and build. The procurement method is referred to as "Develop and Construct" when a
concept design is created by the Employer prior to the Contractor being chosen to complete
and build that design. “Cost will agree on the construction and execution of the project”
(Raoneqs, 2021). The main advantage of the design and build procurement technique is that
the client shouldn't want to pay for a design consultant for the project.

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2.0.3 Management Contracting
In this instance, the Employer hired experts to prepare the design, and construction has
already begun. In order to split responsibilities across several trade or package contracts, a
"Management Contractor" is appointed in advance (referred to as "works packages"). The
agreements are between the management contractor and the work contractors. “Client will only
communicate with the management contractors, and the client’s risk will be transferred to
management contractors” (Raoneqs, 2021). The exact cost cannot be ascertained until the last
package has been granted, much as in construction management.

2.0.4 Construction Management

The Employer in this case hires consultants to produce the design, and project work
starts before the design is finished. For the Employer, a fee-earning consulting "Construction
Manager" selects and oversees a range of Works Packages, each of which is connected to a
distinct or advantageous aspect of the project. “Construction management is a procurement
route in which the works are constructed by a number of different trade contractors, these trade
contractors are contracted to the client but managed by a construction manager” (“Procurement
Route,” 2022). All agreements are made between the trade contractors and the employer. Only
when all of the packages have been awarded can the project's true total cost be determined.

2.1 Chosen Procurement Route

In Mr Lim case, the best procurement route option for Mr Lim is Traditional contract.
This is because, traditional contract is suitable for all client especially inexperienced clients.
When utilising the traditional contract tasks that are difficult and where functionality and
quality are the main goals. One thing to keep in mind is that traditional contract is not suitable
for fast-track projects. “One of the main benefits of the traditional procurement route is that
it’s been established for the longest length of time out of the three routes” (“3 Main
Procurement Routes Explained | Vita Architecture,” 2020). As a result, this technique and the
associated procedure are familiar to most contractors. The architect frequently serves as the
project's primary consultant, evaluating the contractor's work and ensuring that the project's
emphasis on the calibre of the end product is maintained. The fundamental issue with
conventional contracts is the separation of the design and construction teams.

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3.0 Contractual Arrangement
An agreement between two or more parties that imposes legal obligations on them and
authorises or forbids them from taking certain acts is known as a contractual arrangement, or
simply a contract. Laws may impose financial fines, community service requirements, or even
jail time as penalties for violating these responsibilities. We sign contracts every day, whether
it's authorising cookies on a website or accepting a bank loan. “Any company or brand needs
these legally enforceable contracts since they clearly describe the fundamental activities”
(Juang, 2021). Due to the multiple processes and intricacies involved, maintaining contractual
agreements can occasionally be difficult.

3.0.1 Lump Sum

The most typical type of contract, particular for building project, is a lump-sum
arrangement. In this instance, the contractor offers a single, flat rate for all services associated
with the project. The objective is to outline and characterise the entire project within a
predetermined range of activities. Prior to determining the project's worth by factoring in
overhead and his fee, the contractor is in charge of project cost estimating based on drawings.
While the owner is informed of the upfront cost the contractor may moderate expectations. The
benefits of using a lump-sum contract are that it presents a simple, manageable sum for the
owner. According to Ellis (2022), “They give the contractor the flexibility to focus on quality,
materials, and output”.

3.0.2 Measurement
Measurement contract also referred to as re-measurement contract. On projects when
the vital work's nature may be accurately described in pertinent detail when they are offered,
but the quantity cannot, a measurement contract may be necessary. “Rates are offered in the
contractor's tender rather than a set price, either in accordance with the price estimate or the
price schedule” (“Why Remeasurement Contracts Are Risky - 5 Pros &Amp; Cons Re Mea,”
2021). The tender prices are then applied to the data after determining the actual amount of
work accomplished. The contractor receives payment in accordance with the volume of work
completed. The benefit of employing a measurement contract is that time is saved by not having
to prepare a whole bill because quantity is only an estimate at the tender stage.

3.0.3 Cost Reimbursement

A cost-plus or cost-reimbursable contract pays the contractor for both the additional
sum and the actual costs incurred in delivering the service. “A cost-reimbursable contract may

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be used when the nature or scope of the work to be done cannot be precisely stated at the outset
and the risks associated with the assignment are considerable, such as emergency work” (“Cost
Reimbursable Contract,” n.d.). Based on a general specification, any pertinent drawings, and
an estimated cost, the tendering process may go on. One advantage of this structure is the
flexibility it provides.

3.0.4 Target Cost Plus

There are certain similarities between target cost contracts, lump sum payments, and
cost-plus agreements. The contractor will be paid on the basis of real costs plus a fee that is
either fixed or a percentage of the overall cost if the project's cost stays within a predefined
target cost set by the owner. According to Jain (2020), “If building project costs rise, the
contractor will be at danger”. A portion of any savings realized between both the goal cost and
actual expenditures will also go to the contractor. Utilising the target cost contract not only
does it has high level of flexibility for design change but also client participation is present.
The agreement grants the customer or his agent a proactive management position.

3.1 Chosen Contractual Arrangement

Lump-sum contract is the most suitable for Mr Lim. This is due to the budget for the
project being known and publicised in advance before any work has even begun. Additionally,
the owner controls expectations. Furthermore, managing contracts is easier when there are no
or little modifications. “The contractor is liable for all risks; the owner is not accountable for
any of them” (Jain, 2020). The contractor is motivated by this contract since there are rewards
for an early completion and penalties for a late completion.

4.0 Tendering Strategies

A potential supplier's answer to a request for bids is a tender (“What Are the Most
Common Types of Tender and Tendering. . .,” 2020). It provides a forward-looking strategy
for delivering goods or services. Due to the complex nature of the procurement procedures,
bids may be sought for a variety of goods and services (on a construction management contract,
for instance, the works are constructed by a number of distinct trade contractors, each of which
is hired by the client), and contractors may also carry out supplementary duties like design and
management.

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4.0.1 Open Tender
Open tendering is the main procurement method utilised by both the governmental and
commercial sectors. Under an open bidding procedure, anybody may make a proposal to
provide the required products or services, giving every organisation an equal opportunity to do
so. The industries that use this sort of tender the most commonly are engineering and
construction.

4.0.2 Selective tender

In the case of selective tendering, suppliers may only reply to invitations by submitting
offers. Previous work by these vendors has shown that they are capable of managing projects
of the current size, scope, and complexity. The amount of client certainty that their demands
will be addressed rises with selective tendering. If there are just a few appropriate firms, it
could be especially advantageous for difficult or specialised tasks. Smaller vendors or those
looking to enter a new market, nevertheless, can be excluded.

4.0.3 Negotiated Tender

In the engineering and construction sectors, negotiated bids are widely utilised for
everything from bidding to dispute settlement. It could be reasonable to haggle with a single
supplier or extend the terms of an existing contract for highly specialised contracts. Early
contractor involvement is made feasible while costs are reduced. The contractor joining the
project team early on results in improved communication and information flow.

4.1 Chosen Tendering Strategies

The chosen tendering strategies for this project is selective tendering. “This is because
there is no pre-qualification process as part of the tender procedure itself and only vendors who
are known to be appropriate for the proposed contract are encouraged to submit proposals,
selective tendering will typically be quicker than open tendering and can be perceived as less
wasteful” (“Selective Tendering,” n.d.). Additionally, it gives customers more assurance that
their needs will be met.

5.0 Conclusion
In a nutshell, the traditional contract is Mr. Lim's best option for a procurement channel
in this circumstance. This is so because traditional contracts are appropriate for all clients,
including novice clients. For the most part, contractors are familiar with this approach and the
related process. The architect frequently serves as the project's primary consultant, evaluating

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the contractor's work and ensuring that the project's emphasis on the calibre of the end product
is maintained. Furthermore, the lump-sum contract is best for Mr. Lim. This is because the
project's budget was known and made public before any actual work had started. Additionally,
maintaining contracts is simpler when there are few or no changes. Last of all, the selection
process used for this project was selective tendering. Selective tendering is frequently quicker
than open tendering and can be perceived as less wasteful because there is no pre-qualification
procedure as part of the tender system itself and only suppliers who are known to be appropriate
for the proposed contract are invited to submit offers.

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References
3 Main Procurement Routes Explained | Vita Architecture. (2020, April 19). Retrieved

February 4, 2023, from https://vitaarchitecture.com/journal/the-3-main-procurement-

routes-explained/

Cost reimbursable contract. (n.d.). Retrieved from

https://www.designingbuildings.co.uk/wiki/Cost_reimbursable_contract

Ellis, G. (2022, September 16). 8 Main Types of Construction Contracts. Retrieved February

7, 2023, from https://constructionblog.autodesk.com/construction-contracts-types/

Jain, V. (2020, May 8). Types of Construction Contracts and their Comparison [PDF].

Retrieved February 8, 2023, from https://theconstructor.org/construction/types-of-

construction-contracts-comparison/14268/

Juang, R. (2021, September 27). What Is a Contractual Agreement? Retrieved from

https://ironcladapp.com/journal/contracts/contractual-agreement/

Procurement route. (2022, December 1). Retrieved February 5, 2023, from

https://www.designingbuildings.co.uk/wiki/Procurement_route

Raoneqs, R. (2021, December 29). 5 best procurement methods in construction:Types of

contracts. Retrieved February 5, 2023, from

https://quantitysurveyor.blog/2019/08/05/procurement-methods-in-construction/

Selective tendering. (n.d.). Retrieved from

https://www.designingbuildings.co.uk/wiki/Selective_tendering

What are the Most Common Types of Tender and Tendering. . . (2020, March 11). Retrieved

February 9, 2023, from https://www.opuskinetic.com/2020/03/what-are-the-most-

common-types-of-tender-and-tendering-process/

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Why remeasurement contracts are risky - 5 Pros & cons Re mea. (2021, January 9). Retrieved

February 8, 2023, from https://quantitysurveyor.blog/2019/09/04/remeasurement-

contract-unit-price/

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Appendix

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