PROCUREMENT

Procurement is an effort or process to get or to obtain any construction projects. There are 7
main elements of the processes of construction procurement:
Initiation / Promotion
Funding
Design
Statutory Approval
Tendering
Construction
Risk allocation

INITIATION / PROMOTION
Initiation is the process of identifying what peoples need for facility like
bridge, school building, airport and etc at any places to make their life better than before.
The process of identifying should be done by the developer before they construct any
project because they will get profit if the project success. They can make money by develop
the land if they have authority to do that based on peoples required facilities.
For any construction project, they must have their target person or
agencies to do the project. These target persons or agencies known as client. Anybody can
be the client. So, to invest a lot of money and save more time, we need to look up clients
background. Client may be the end user or may not be. If the client is the end user, then that
client is the owner-occupier but if the client is not the end user, so, he is an investor. There
are 2 common types of clients in construction project. First, the public sector client. The
public sector clients comprises of Federal government, State government, Local government
and the Non Financial Public Enterprisers (NFPE) like MARA, FELDA, PKNS AND PKNK. Second
type of client is private sector. For this sector, it can be individuals such as father, brother or
ourself as a client as well as firms and corporations. Besides, association likes MCA that have
their own building also private sector client and not forget other private bodies also.
Government is the largest owner of construction project especially infrastructure project.
During the process of project initiation, there 2 key elements that we need
to consider. Firstly, feasibility study, proposal to determine whether a project is viable or
feasible from both the business, technical and social points of view. The study may
encompass widespread issues including identifying and assessing the suitability of site, the
economic and market analysis, typical facility, possible demand and likely competition,
interest rates, assets, injection, user fees and selling price. Besides, feasibility study covers
estimating the time needed for the project, cost range and also the policies of the
authorities in relation to the proposed project. In the contact of EIA, project identification is
the stage when the client will consider whether the project is environmental friendly or not.
The second key element that we must consider during the process of
project initiation is preparation of project brief which is a tedious project. Project brief is
when the clients meet his/ her advisor and define the requirement of the proposed project
from the basis. This process very important to make sure the project success. It is essentially
state the need of the client and define the client requirement in term of concept, time, cost
and functionality of the project. The elements of project brief are the requirement of the
project, target completion of the project, overall budget for the project, and design features
either single storey, double storey, square shape or etc.
The client usually may enlist some parties to advise him during the
processes of initiating a project. The parties that usually involve are Architect or Engineer to
advise the client on design aspect, Quantity Surveyor in term of cost, Land Surveyor and also
a Lawyer.

FUNDING

Funding is Funding is a process of identifying the sources of funds and the
method of adequately funding a project. The available funding must be able to sustain
financing the project during the periods between the initiation of the project and the time
when the facility is able to yield its economic or other benefits.
There are 2 type of funding; Islamic funding and Conventional funding.
Islamic funding is based on shariah which prohibit interest (riba), oppression (zulm) and
prohibit getting economic benefits from unlawful goods or services. While for the
Conventional Funding, it based on man-made principles. It does not forbid interest (riba) or
predetermination (gahrar), rather interest is the way of earning extra benefits.
To construct any project, funding is the most important element that the
developer should have to concern. So, to get the fund, there are some sources. In the private
sector, the fund may be through internally generated funds from relatives or from own
saving and external borrowings that may be obtained from banks or other financial
institutions if do not have money or do not want to use own money. Examples of banks that
will provide the source of fund are The Development Bank of Malaysia, Merchant/
Investment Bank, Bank Negara Malaysia and etc. While in the public sector, government will
provides the necessary finance. For the internal source of finance, there are obtain from tax,
tariff, levy and etc than for the external source may be through the Treasury for short term
finance and Government Bond for long term finance or through borrowing from the local or
international bodies like World Bank and Asia Development Bank.
To obtain the funding for construction project, there are several processes.
First, identification of source. Before the client can apply for the fund, they need to provide
the proof that they would be able to achieve substantial sales and provide adequate
collateral, security deposit, repayment period and mode of payment. After that, the bank
will process the application and also they will charge the processing fee.

DESIGN
Design is the process of translating the initiators requirements into forms,
shape, size and functions into 2D (drawing), 3D (CAD) and virtual reality (construct model).
There are 3 stages of design start with schematic design which means the process of
translating the requirements of the initiator/ promoter into a basic design form, indicating
the general design in terms of shape, size and function of building in brief, what to built,
followed by detailed design the production of detailed drawings and specifications, from
the concept / schematic design, detailing and describing each element of the building so that
it may be constructed like doors, windows and the last one is Specialist design
development of detailed drawings and specifications for a specific component or element
within the structure, which requires specialist technical knowledge to design and construct
such as mechanical and electrical installation.
For the design process, 3 main parties will involve. First, the architect that
has to provide services in architectural design and in general pre-contract and post-contract
administration. Then, several type of engineer will take place. Firstly, civil and structural
engineer take charge in designing the structural aspect of the facility and also responsible for
the design, supervision and construction of roads, sewerage and other civil works.
Mechanical and electrical engineer responsible in all of electric and external infrastructure
works. The last party that involve in designing process is quantity surveyor that work on all
works that relate to financial. There also other party works together in designing process
which are the landscape architecture, land surveyor, planner and etc.
There is also having the stages in design management. First of all,
identifying stages in design; schematic, detailed and specialized. Second, identifying key
design team members followed by set up the management policies. They also need to
provide clear communication channel after they plan, coordinate and monitor activities
within agreed time and budgets constraints. The last stage in design managements is listen
to the feedbacks.

STATUTORY APPROVAL

Statutory approval can refer to obtaining permissions from the relevant
authorities to initiate and construct a facility and upon its completion to occupy and use the
completed facility. The government is make obtaining statutory approval for construction as
compulsory because to achieve proper use of land and to plan the town and city. Other than
that, the approval is compulsory because it is regulating the standard of the town building
and to ensure systematic and orderly development. Statutory control on construction and
the processes of obtaining statutory approval involves public and private authorities. There
are three stages that the developer must face before they can proceed to their construction
project. They need to get approval from the local authorities, state authorities also from
federal authorities.
In construction, they need statutory control and standard because it will
bring the huge effect to the users. If they do not follow the law that has been made, it will
bring the problem if something bad happen. The statutory control and standard may be
divided into two broad categories : statutes that directly effect construction because laws
and regulations impose strict control on construction activities and the processing and
approving of plan from change of land use, sub-division and amalgamation and the second
category that have indirect effect on construction because they govern and control the
administration of the authorities and the practicing professionals in architecture,
engineering, surveying and the activities of property developer.
There are some processes that the developer must follow before they
obtain the approval from the authorities. They need to face four stages before their project
will be approved. Firstly, the need to pass in development order stage where they need to
get approval pertaining land matters, approval for Environment Impact Assessment (EIA),
planning permission and application for Development Order Approval. The second stage,
Building and services plan stage because to ensure that buildings are designed, constructed
and maintained free from failure, defects or nuisance which may bring the danger during
and after construction. At this stage, application for approval the building and services plan
must be made to the Building Control Division after the planning permission is obtained.
After that construction stage will take place. During this stage, the contractor is responsible
to observe the various laws to ensure that the construction work are monitored and
disciplined. Come to last stage, certificate of fitness stage. It is compulsory to obtained CF
before a completed facility can be used. They must submit complete as-built drawing for the
building works and services and giving notice for final inspection on the completed project.


TENDERING

Tendering is the process that is used to obtain offers leading to a contract
between a client and contractor, between a client and consultant or a contractor and sub-
contractor. It is also a process of obtaining permissions from the relevant authorities to
initiate and construct a facility and upon its completion occupy and / or use the completed
facility. Other than that, tendering also can define as a process of bidding a contract. The
clients professional advisor should aim to find a contracting company that is financially
stable and has a good business record. Besides that, he must consider the size of the project
and ha s a reputation for good quality workmanship and efficient organization also has a
good record of industrial relations.
There are three principal method of choosing a contractor; open tendering,
selective tendering and negotiated tendering. Open tendering is process to invite offers from
registered contracting firs, through tender advertisement, usually in general press. Selective
tendering where the client inviting offers from a limited number of registered contracting
firms, usually through some way such as clients personal contact, recommendation from
consultant or third party known to clients. Negotiated tendering is used when the client has
a preference for a particular firm, often because it has done satisfactory work for him
before.
The number and nature of the tender documents will vary with the type of
contract. They will include some or all the following items in tender document. The tenderer
must provide tender document that have the condition of the contract, bill of quantities,
specifications, schedule of work, drawing, form of tender and also return envelope. For
tendering process, first need to find and review the tender advertisement, than obtain a
copy of the tender, decide and understand the project. There are some procedures in
tendering, preliminary enquiry, period for preparation of tenders, parity of tendering,
opening tenders and notifying tenderers.
There are some parties usually involve in tendering process. There quantity
surveyor in client and contractor side to prepare the BQ and estimate all the cost of
construction. Other than that, it also involves consultants and JKR officers such as
committees of open tender, technical officer and financial officer.




CONSTRUCTION

Construction is the processes of physically fitting the various component of
a facility together, to form a final structure. Process of construction fall under two main
categories, management construction and construction production. Management of
construction is the management of the construction processes for the initiator / promoter
while construction production is the physical construction off all part of the structure for the
initiator / promoter, in accordance with the detailed designs.
In management construction, the clients appoint contract admin and
management team to oversee the project and there are some parties involve. There are
architect or civil engineer usually perform the function of supervising building or civil
engineering works, respectively. Client may appoint a PMC to supervise the works while in
public sector the architect or civil engineer will do the work that known as Superintending
Officers (S.0). For the contractor, they need to prepare a programme of works showing the
activities to be performed and their duration that will use by the Architect or Civil Engineer
or S.O and not forget the Quantity Surveyor also involve in management construction.
In construction production, clients appoint contractor to do all works and
the contractor needs to convert the inputs: human, physical and financial into the process.
Main contractor usually specialist either in building works or civil engineering works. They
must be responsible to convert requirement, drawing and BQ as followed. The main
contractor may enter into further contracts with sub contractor and / or suppliers. There are
some types of sub-contractor that specialist in some kind of work. The nominated sub-
contractor normally nominated by the client but enter into a contract with the main
contractor. Their specialist works usually in electrical, mechanical, lift and etc. The second
type of sub-contractor is domestic. They normally will employ by the main contractor and
nothing with the client or management. For example, for tiling work, they will buy the
material, plant by their own and ask the main contractor for the cost of it. The last sub-
contractor is labour only sub- contractor that their main role just only to provide the workers
to do the works. Main contractor supply cement and anything else but this sub-contractor
provide the workers to do the project.





RISK ALLOCATION

The risk allocation is the susceptibility of each of the above generic
functions to varying the degrees of risk. The degree of risk is dependent upon the type of
procurement system used and the individual functional roles. Risk are divided into two,
certainly risk that the data is available and we have full information about that, what will
happen and when it will happen. Another type of risk is uncertainly risk, caused by the lack
of information.
There are two type of risk in construction. First, project based risk, directly
related to the project. For example, the project itself in term of size, complexity, speed of
design and construction and etc. the problem that usually occur in this stage, consuming in
time, they not sure the project will finished on time or not or because of the inexperience
architect or contractor. Another type of risk in construction is non-project based. This risk is
an external factor that we will not expect to be occurring. There are some examples of non-
project based risk: inflation, bad whether like flood, price increase, political problem and etc.
The sources of risk that commonly found in construction procurement are
product price- the risk in when the contractor price the project with uncertainly price and it
can lead to loss, quality of product the risk is when the quality of the product is unsuitable
with the clients requirement, design apportionment liability to finish the project unable to
follow the design as stated in the drawing and specifications, construction time- the
completion time of the project is not accordance to the target of completion date and
project finance- the risk in providing funding for the project will lead to loss.
The best party to handle all the risk in construction project is the client
could transfer risks in whole to another party or parties in the procurement process and the
client retain the rest. The client will accept some risk but if anything goes wrong with the
design, the architect will responsible because the client is already appoint architect to
design. Risk could be reduce by adopting several measures such as preparing a through and
adequate project feasibility study, project brief, site and soil investigation and etc. Other
than that, transfers the rest some contained risk like buy the performance bond because it is
a guarantee that contractor will honour his obligation on the construction and completion of
the project, all accordance to the contract and also buy the insurance so that the risks will
transfer to the insurance. Get the warranty from the manufacturers of equipment and
materials also can be a way to transfer the risk. For example, if we buy a car and what if the
car broke down in certain time, so, there is warranty even though the warranty cannot cover
all the things.


REFERENCES
Khairuddin (2002) Construction Procurement in Malaysia, Processes and Systems,
Constraints and strategies