THE IMPORTANCE OF PRELIMINARIES ITEMS

NORHISHAM B. ABDUL GHANI

UNIVERSITI TEKNOLOGI MALAYSIA

" I herebydeclare that I havereadthis projectreportandin my opinionthis reportis adequate in term of scope andquality In fulfillment of the requirement for the awardof the degree of Masterof Science (Construction Management)'o

Signature

: Assoc. Prof.AziruddinRessang .December 12th 2006

Nameof Supervisor ; Date :

THE IMPORTANCE OF PRELIMINARIES ITEM

NORHISHAM BIN ABDUL GHANI

A Project Report in partial fulfillment of the Requirements for the award of the degree of Master of Science (Construction Management)

Faculty of Civil Engineering University of Technology, Malaysia

DEC 2006

Specially dedicated to my beloved family my farther and mother Abdul Ghani Abdul Rajab and Komariah Hussain, my sisters Norhasmimi and Norhafikan for your support and everlasting love and care

II

ACKNOWLEDGEMENT

In preparing this master project report, it was never an individual effort. I was in contact with many people especially contractors and academicians. They have involved in contributing towards my understanding and thoughts directly or indirectly. In particular I wish to express my greatest sincere appreciation to my supervisor Asso. Prof Azirudin Ressang with all the guidance and advices given from the supervisor this master project was able to complete on time. His dedication and continuous assistance have led the author to strive for better achievement in this master project.

I am also wish to express my gratitude to my family and friends for their support and assistance at various occasion. Last but not least. I also wish to all those who have contribute in any way in making this master project a possible one.

III

ABSTRACT

The items found in the preliminaries section of a bill of quantities are usually the most difficult to price and would produce the greatest variation in prices with each contractor having his own idea of pricing preliminaries. Not all preliminary items need to be priced, some are remain unpriced. The aim of the study to understand the preliminaries item and identify mandatory items in selected project that should be priced by contractors. The findings will give benefits to contractor as strategies to price preliminaries accordingly and accurately. The study conducted with reference to the selected group of contractor who has vast experiences in tender pricing. The methodology adopted for the study includes interviews with contractor and industry wide questionnaire survey among the contractors that involved in JKR projects. The data collected were analysed using content analysis method and using appropriate statistical method such as frequency analysis and relative index method. The study has determined what the items are considered as mandatory items that should be price by contractor and the strategies in pricing preliminaries as a guide. Apart from that the study also established factors that influence in pricing preliminaries as well as can help contractor pricing preliminary accurately.

IV

ABSTRAK

Item kerja-kerja awalan yang dijumpai di dalam senarai kuantiti adalah selalunya yang paling sukar untuk dihargakan dan menghasilkan perbezaan yang ketara di dalam harga dengan setiap kontraktor mempunyai idie dan cara tersendiri dalam menghargakan kerja-kerja awalan. Tidak semua kerja-kerja awalan perlu dihargakan, sesetengah adalah kekal tidak berharga. Matlamat kajian adalah untuk memahami item bagi kerja-kerja awalan dan mengenal pasti item mandatori di dalam projek terpilih yang sepatutnya dihargakan oleh kontraktor. Hasil kajian akan memberi faedah kepada kontraktor sebagai strategi untuk menghargakan kerja-kerja awalan dengan sebetulnya dan tepat. Kajian telah dijalankan dengan rujukan kepada kumpulan kontraktor terpilih yang mempunyai pengalaman yang luas dalam menghargakan tender. Kaedah yang dipilih bagi kajian ini termasuklah temubual bersama kontraktor dan soal selidik industri di antara kontraktor yang terlibat dengan projek JKR. Data terkumpul di analisa dengan menggunakan kaedah kandungan analisis dan kaedah statistik yang sesuai seperti kaedah analisis frekuensi dan indeks relatif. Kajian telah menentukan apakah item-item yang dikira sebagai item mandatori yang sepatutnya dihargakan oleh kontraktor dan strategi untuk dijadikan sebagai panduan. Selain dari itu, kajian juga telah mengetahui faktor yang mempengaruhi dalam menghargakan kerja-kerja awalan dan seterusnya dapat membantu kontraktor untuk menghargakan kerja-kerja awalan dengan tepat.

TABLE OF CONTENTS

CHAPTER TITLE PAGE DECLARATION DEDICATION ACKNOWLEDGEMENT ABSTRACT ABSTRAK TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF APPENDIXES

TITLE

PAGE II III IV V VI VII VIII IX X XI

INTRODUCTION 1.1 1.2 1.3 1.4 1.5 Background Problem Statement Objectives Scope of Study Brief Research Methodology 1 2 4 4 5

THE PRELIMINARIES ITEMS 2.1 2.2 2.3 Introduction Definition of Project Overhead as Preliminaries The Category of Preliminaries item 7 8 9

VI 2.4 The preliminaries Section in standard Method of Measurement (SMM) 2.5 2.6 The Preliminaries Section in P.W.D Format Summary 11 16 19

MANDATORY ITEMS IN PRELIMINARIES 3.1 3.2 3.3 Introduction Items Normally priced by Contractor The Mandatory Items 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 Insurance Workmens Compensation Performance Bond Setting Out Construction Industry Development Board (Payment for levy) 3.3.6 3.3.7 3.3.8 3.3.9 As-built Drawings Work Programme Hoarding and Fencing Client/Employers Requirement 3.3.9.1 Vehicle for the S.O 3.3.9.2 Equipment and Facilities 3.4 Conclusion 27 28 28 29 29 30 31 32 21 21 24 25 25 25 26

METHODOLOGY 4.1 4.2 4.3 4.4 Introduction Determination of the Research Objectives Literature Review Data Collections 4.4.1 4.5 Development of the questionnaire in the survey 33 33 34 34 35 35 36

Interview with the experts 4.5.1 Objective of the interview

VII 4.5.2 Methodology of interview 4.5.2.1 The structure Interview Questionnaire 4.5.2.2 Face to face interview 4.6 Industry Questionnaire of the industry Survey 4.6.1 4.6.2 4.7 Methodology of the industry Survey Questionnaire for the industry Survey 36 37 37 38 38 38 39 40 40 40 42

Data Analysis 4.7.1 4.7.2 4.7.3 4.7.4 Content Analysis Frequency Analysis Average Index Analysis Relative Index Analysis

FACTORS INFLUENCING PRICING DECISIONS 5.1 5.2 Introduction Factor Influencing Pricing Decisions 5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 5.2.6 5.2.7 5.2.8 5.2.9 5.3 Understanding Contract Particular Site Condition Location of the site Difficult contract and restriction site Magnitude of Contract Plant and Equipment 44 44 45 45 46 46 47 47

Any Obligation or restriction imposed by Employer 48 Commitment number of project Availability at Resources by the Contractor 48 48 49 49 51

Data analysis and Result 5.3.1 5.3.2 5.3.3 Background of the Respondents The Industry Questionnaire Survey Factor that influence the pricing of Preliminaries By Contractor 5.3.4 Other Factor that influence the pricing of Preliminaries by Contractor

52

53

VIII 5.3.5 General Comment from the respondents 53

DISCUSSION 6.1 6.2 6.3 Introduction Factor influence The Pricing of Problem Items Other Factor that Influence The Pricing of Preliminaries items by the Contractors. 6.4 The Summary of Overall Findings of Study 60 55 56 59

STRATEGIES IN PRICING PRELIMINARIES 7.1 7.2 Introduction Strategy in Pricing Preliminaries 7.2.1 7.2.2 7.2.3 7.2.4 7.2.5 7.3 Establishing pricing objectives Examining each of prelim items Considering Factors Influencing pricing decisions Attention to methods of price determination Tactical consideration in setting prices 62 62 63 65 66 67 68 69

Conclusion

CONCLUSION AND RECOMMENDATION 8.1 8.2 8.3 Introduction Conclusion Recommendation for further study 70 70 72

IX

LIST OF TABLES

TABLE NO.

TITLE

PAGE

4.1

The level of agreement and evaluation for average Index analysis 41 50 51 52 53

5.1 5.2 5.3 5.4 6.1

Distribution of the respondents based on disciplines Distribution of panel respondent based on experience Number of respondent to the Questionnaire Frequency analysis or factors in pricing preliminaries Factor influencing price in preliminaries according to ranking of importance

56

LIST OF FIGURES

FIGURE NO.

TITLE

PAGE

1.1 4.1 5.1

Research methodology sequence. Five ordinal measures of agreement of Likerts scale. Distribution of expert respondent based on professional by percentage.

6 35

50

5.2

Distribution of panel respondent based on experience by percentage. 51

6.2

Percentage allow for lump sum(preliminaries item) By respondents. 58

6.3

Percentage of experience of respondents in construction Industry. 59

XI

LIST OF APPENDIXES

APPENDIX

TITLE

PAGE

Survey Questionnaire

76

CHAPTER 1

INTRODUCTION

1.1

Background

The preliminaries section in bill quantities is one of the most important sections that require being priced preliminaries, describing and consisting of informations of project, requirements related to project, services and facility that need to be prepared, contract conditions and so forth. Items in this section are divided into two parts, one is descriptive item where intended to give contractor overall picture of project that no need to priced. The other part is where contractor need to prepare and provide where it needs to be priced. Doing estimating for preliminary items is really complicated and always changed for every project.

2 There is no specific and standard way of doing the estimate for preliminaries. However previous project can be used as guidance for the estimating in the future. Although the approximate cost for each item can be obtained, by using previously priced similar jobs as yardstick still remains at best (John Milne, 1990). Nowadays, there are many contractors company in the country looking for projects. They are competing each other by putting in low price in order to get the projects. The best way is by cost cutting in the preliminary items. Yet, they have to follow all restrictions and requirements by the clients and priced what clients wanted for that particular project. Failure in fulfilling and pricing such items will raise problem later especially during construction. The contractor has to bare their own cost and definitely will incurred lose to contractor. This is because whatever items listed inside the preliminary is deemed to be priced by the contractor.

1.2

Problem Statement

The items found in the preliminaries section of a bill of quantities are usually the most difficult and arbitrary of all to price. If all the tenderers priced bills for any project could be examined, this preliminaries section would produce the greatest variation in prices with each estimator having his own idea as to the scale and extent of the costs involved. There is problem encountered by client during preparing tender evaluation especially on cost comparison for preliminaries each of tenderer. If there are 20 tenderers, there will be 20 different set of price. Some of them not even priced the preliminaries and just sufficiently allowing certain percentage out of construction cost to the preliminaries. Overhead cost can be divided into general overhead and job overhead costs. General overhead costs include all overhead costs that cannot be charged to any particular job. Job overhead costs include all overhead costs include all overhead and job but cannot be charged to labour, materials, or equipment(H.E. Pulver, 1989).

3 Preliminaries are all about cost overhead that has to be borne by the contractor to start the work and during the construction period. The first thing they have to do when deciding to go for tender is to understand what the items that need to be priced are. What are the extra restrictions, limitations and extra requirements that clients imposed for that particular project. Pricing of the preliminaries section will usually be one of the last operations before adjudication of the tender price, and will require that decisions relating to working methods, major plant, gang strengths, subcontractors, temporary work (Mudd D.R., 1993).When there is not enough time, the contractor tend to look back at a previously priced set of preliminaries similar project and then extract the price for use in the current project for tender(John Amile, 1986). If contractor overlooked such item, it could lose him a great deal of money and they have to bare all the cost. It is believed that an under-assessment of Preliminaries as far as cost is concerned is one of the reasons why many builders and contractors do not receive a proper return of profit that is to say, by under-pricing their Preliminaries the loss sustained thereby is deducted from profit (R.D Wood, 1990). This because all preliminaries items listed in the tender deemed to be priced by the contractor accordance with the Principle of the Standard Method of Measurement of Building Works.

Since each set of preliminaries is different in pricing, therefore is a necessary to understand each of preliminary items. A tremendous amount of thought and care is needed when pricing preliminaries. A constant check of the site costs and an appreciation of all problems which arise on the site need to be understood by an Estimator (R.D. Wood, 1990). To understand which items that mandatory to be priced by the contractor based on findings of research so as to avoid any discrepancies and problems arise during construction as well as reduced loses to the contractors due to overlooked the preliminaries items and reasons why many of them do not receive a proper return of profit.

4 1.3 Aims and Objectives

The aim of the study is to understand the preliminaries item and identify mandatory items in selected projects that should be priced by contractors. The findings will give benefits to contractor as strategies to price preliminaries accordingly and accurately. The aim of this research can be achieved with the following objectives.

1) 2) 3)

To identify the mandatory items in the preliminary To identify the factor that influence in pricing preliminaries To propose a strategies for contractor to price preliminaries.

1.4

Scope of the Study

The scope of study will focused on the government projects with the medium to bigger project capacity within range of RM 1 million and above carried out by JKR using PWD 203A form of contract. The study specifically carried limited in the area of Selangor and Kuala Lumpur. The data collection about preliminary estimate will be gathered from literature review a survey will be carried out among contractor specifically class A and B contractor just to know their understanding agreed on the results that have been produced.

1.5

Brief Research Methodology

The methodology used in conducting this research is through literature search, data collection, structured interviews with the professionals who are involved in their estimating and contract works and questionnaire survey among the contractors in the Selangor and Kuala Lumpur.

Data collection will be gathered from the project as stated in the scope of study. From the results, the questionnaire survey will be conducted among the contractors within the category of the study to asses their opinions of the findings towards the objectives of the study. Besides the questionnaire survey some interviews has also been conducted with the professionals as the expert panel, project manager, engineer and quantity surveyor to assess their opinions toward the findings each preliminaries items based on data that have gathered. The interviews are divided into face to face question and answer session and answering the structured questionnaire.

The qualitative data generated from the questionnaire has been analyzed using statistical method and finally inferences were made to support the study findings. The overall sequence of research process undertaken is shown in figure 1.1

Determining the Research Objective and Scope

Literature Review

Data Collection

Interview with the Experts panel (Face to Face & Structured Questionnaire)

Questionnaire Survey with the Contractors

Data Analysis

Discussion

Conclusion and Recommendation

Figure 1.1 Research Methodology Sequence

CHAPTER 2

THE PRELIMINARY ITEMS

2.1

Introduction

Preliminary is one of the important parts in the Bill of Quantities. The items generally set out to describe the requirements of the peculiar to the job in question, the nature of the site, description of the works and names of the parties involved conditions of the contract. According to John A Milne (1990) this part (preliminaries) of the bill is the most difficult to price. It is normal practice by some of the contractors in Malaysia, which they still resort to allowing a lump sum for all preliminaries items based on the a percentage of the tender value. The calculation of the preliminary cost is one of the hardest and complicated where there is no specific method to measure and always differ between one project to another. Many factors influencing preliminary costing such as main work value, the size of the project, location, complicated of the work and duration of the project. Normally estimate for preliminaries estimated between 5% to 10% from main work value. This is based on example of the percentage preliminaries work that had been taken from PWD projects within period of January to June 1990.

8 Basically the contractors will be using of their previous priced similar jobs as a yardstick and this remains the best method to obtain the approximate cost for preliminary. But still the preliminary section will give the greatest variation in prices especially during tender evaluation

According to John A. Milne (1990) although space is provided for extra items to be written in when required. It is also likely that all of the items would be needed for every contract, in which case those would obviously remain unpriced. The schedule would be priced in accordance with the requirements stated in the preliminaries and a total lump sum figure obtained which is then transferred to the tender summary.

2.2

Definition of Project Overheads as Preliminaries

According to J.I.W Bently, (1986), Project overhead is defined in the Code of Estimating (CEP) as the cost of administering a project and providing general plant, site staff, facilities and site based services. The project overheads are often called preliminaries. The preliminaries or project overhead cannot be priced in detail until the construction programme, method statements and layout diagram have been prepared; most of the items based and some, like temporary roads and hoardings, have to be measured.

As an aid to a methodical assessment and pricing for the preliminaries or overhead, and to act as check list, the estimator will usually use a Pro-forma(type form of checklist) which is filled in according to circumstances. In the example there are

9 nineteen sections, and no matter what size of job being tendered for, all of the items need to be checked to see if a cost will be incurred.

According to Ronald McCaffer (1986) the calculation of the sum of money required to cover site overheads or on-costs is based upon detailed checklists containing references to all items of materials, plant and services necessary of operate a construction project. Allowance has to be made for the following site on-costs;

a) b) c) d) e) f) g)

Supervision Clerical staffs Site offices and compound facilities Services Site transports Sundries General plant and major plant items.

2.3

The Category of Preliminaries item

The preliminary section of the tender documentation fulfils a number of functions from the estimators point of view. At an overall level the preliminaries section provides a high-level overview of the project, including a description of the project and the site and details of the conditions of the contract to be used, but the preliminaries will also include a considerable amount in the detailed information about specified issue (Mudd D.R, 1989). Therefore, information covered in the preliminaries section can be determined and categorized as following;

10 a) Descriptive items

Not all of items in the preliminaries bill will need pricing since many of them are purely descriptive and intended to give the contractor an overall picture of the work. The Example of each items under descriptive items are as follow:

1 2

The Preliminary particulars names of the parties, description of the site, description of the works, and submission of tenders. Definitions and qualifications definitions, quantities, cost analysis information, pricing of preliminaries, rates in bills of quantities.

b)

Condition of contract

The form of contract is always clearly stated together with a brief schedule of the clause headings which are to apply, including those clauses which are to be amended or deleted for this particular job and the details which are to be inserted in the appendix to the conditions. With regard to the conditions of the contract, most clauses will have no effect on cost at this stage and so will not be priced.

c)

Other obligations and restrictions imposed by the employer

In addition to the obligations imposed by the conditions of the contract, there may be further obligations or restrictions imposed by the employer and it is likely that such items will involve the contractor in further expenses such as the

11 provision of guarantee bond, provision of temporary accommodation and etc. Items which appear under this heading will normally need pricing by the estimator and for his convenience are usually grouped together.

2.4

The Preliminaries Section in Standard Method of Measurement(SMM)

Preliminaries are defined in the Standard Method of Measurement 2 (SMM2) clearly explained, are divided into several path of heading. There are consisting of preliminaries particular, contract, works, goods and materials by other and general facilities and obligation. The details each of the headings as the following:

a)

Preliminaries particular

Under preliminaries particular project, all parties and consultants which is description the name, nature and location of the project shall be stated in the preliminaries. A general description of the works shall be given. The names and addresses of the Employer and consultants to be named in the contract as well as other consultants shall be given. Description of site-information to indicate the boundaries of the site, the means of access and the position of the works shall be given. Attention shall be drawn to any drainage, water, gas and other mains or power services known to exist on or over the site. Attention shall be drawn to any adjacent or abutting buildings either. Information to facilitate visiting the site shall be given. The last one in particular is drawings and other document. All shall be given of the drawings from which the bills of quantities have been

12 prepared. Addresses where drawings and other documents may be inspected by appointment or otherwise shall be given too.

b)

Contract

Form, type and conditions of the contract Where the conditions of the contract are standard and published for general use, particulars of the edition to be used and a schedule of the clause headings shall be given. Where the standard conditions provide for alternative or optional clauses, the clauses which are to apply shall be stated. Amendments to standard conditions shall be given in full. When the conditions of the contract are not standard and published for general use, the conditions shall be set out in full in the bills of the quantities. In either case where the conditions provide for alternative or optional clauses, the clauses which are to apply shall be stated. Where there is an appendix to the conditions of the contract requiring inserting to be he damage to the work. For Employers liability should be given where the cost of insuring any liability of the Employer is required to be included in the contract sum, such cost shall be given as a provisional sum. Under the contract should be described about obligation and restrictions imposed by the Employer such as access to possession or use of the site, limitations of working space, limitation of working hours and the use or disposal of any material found on site.

13 c) Works, goods and materials by others

i)

Works by nominated sub-contractor

Works which are required to be carried out by a nominated subcontractor shall be given as a prime cost sum. The name of the firm to be nominated shall be given together with a description of the sub-contract work. An item shall be given in each case for general attendance which shall be deemed to include the use of the Contractors temporary roads, pavings and paths, standing scaffolding, standing power operated hoisting plant, the provision of temporary lighting and water supplies, clearing away rubbish, provision of space for the sub-contractors own offices and for the storage of his plant and materials and the use of messrooms, sanitary accommodation and welfare facilities, which shall all be without charge to the sub-contractor.

ii)

Goods and materials from nominated suppliers

Goods and materials which are required to be obtained from a nominated supplier shall be given as a prime cost sum. The name of the supplier shall be given if known. Fixing goods and materials shall be given in accordance with the appropriate clauses in this document. Unloading, storing, hoisting the goods and materials and returning packing materials to the nominated supplier carriage paid and obtaining credits therefore shall be deemed to be included with the items for fixing. Particulars shall be given where the Contractor is required to pay the

14 costs of conveying goods and materials to the site and/or of any special packing or similar requirements.

iii)

Works by government or statutory authorities

Works which are to be carried put by a government or statutory shall each be given separately as a provisional or prime cost sum. Works which are to be carried out by the government or statutory authority in accordance with statutory obligations shall be described, stipulating the scope and timing of the work and its effect on the Contractors operations.

iv)

Works or goods and materials by the Employer

A description shall be given of goods and materials provided by or on behalf of the Employer including fixing goods and materials.

d)

General Facilities and Obligation For convenience in pricing, items for the following if applicable shall be

given. Maintaining temporary works, adapting, clearing away and making good including any notices and fees to government or statutory authorities related to the following items shall be deemed to be included with the items. Thus, there may be items in the preliminaries section of the bill of quantities that might

15 influence the pricing generally, such as the names if the consultants, or the particular need to execute a section of the work by a specific time. In every case the preliminaries section of the bills of quantities should be closely scrutinized to ascertain which items need pricing and which items have a general facilities and obligations are:

a) b) c) d) e) f) g) h) i) j)

Plant, tools and vehicles; Scaffolding; Site administration and security; Transport for workpeople; Protecting the works from inclement weather. Water for the works Lighting and power for the works Temporary roads, hard standings, crossings and similar items. Temporary accommodation for the use of the Contractor. Etc.

However, according to J.I.W Bently (1990), from his opinion preliminaries are defined in the Standard Method of Measurement (SMM), is largely come under the heading of General facilities and obligation rather then other heading as describe above. Although this section producing the major part of the cost of preliminaries, it is still has to consider and other heading or items as mentioned earlier where we can get the overall project cost for preliminaries item accurately.

2.5

The Preliminaries Section in PWD format

16

Based on practice in PWD projects that using PWD form of contract (PWD 203A), there are standard format of listing the preliminaries item for certain project inside the Bill of Quantities. But there is still has a flexibility and space for the client to add any additional items inside the preliminary which consider and might be necessary to suit for that particular project. This is supported by John A. Milne (1990) although space is provided for extra items to be written in when required. It is also likely that all of the items would be needed for every contract, in which case those would obviously remain unpriced. The schedule would be priced in accordance with the requirements stated in the preliminaries and a total lump sum figure obtained which is then transferred to the tender summary.

Basically the preliminaries item under PWD projects are divided into several importance sections following by the sequence as below:1) 2) 3) 4) 5) General Information Condition of contract Contract administration General Facilities and Obligation Contingency Sum

After listing all the items according to main part of the preliminaries, then we will determine and identified which items should be priced and should not be priced.

a)

General Information

Items in this section give general information as an overall picture of the project to contractor such as the names of the client and his professional adviser,

17 a description works and the site and the condition of the contract applicable to the contract. These entire items are not to be priced.

b)

Condition of Contract Items in this section are describing about type of contract that to be used

and conditions of contract to be followed by contractor based on clauses that included in the form of contract. In this section there are items that give information which are not to be price and some other are required to price. Among the main items are as following:i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) xii) Scope of works Contract drawing Setting out and survey Site cost management Site agent etc Variation work, Provisional and Prime Cost Sum Insurance-Public Liability, Fire, Contractors All Risk etc. Workmens Compensation Performance Bond Bank Guarantee etc. Nominated Sub Contractors Defect Liability Period Liquidated Ascertained Damages Etc

c)

Contract Administration

18 Items in this section are additional to the condition of the contract for the purpose to smooth the contract matters that to be executed by the contractor. Among the items involved in this section as below: i) ii) iii) iv) v) vi) vii) viii) ix) d) Progress work and chart for every month Progress report Progress Photograph Site meeting Licenses and permit Instruction of works Progress Payment Maintenance of the site Other expenses

General Facilities and Obligations

Items under this section describing about general facilities that to be provided by contractor before and during the construction is on progress. All these items are mostly need to be priced. The items involved are as below: i) ii) iii) iv) v) vi) vii) Plant and equipment Safety, health and welfare of the workmen Providing scaffolding Temporary water storage Temporary electricity Providing temporary access road to the site Temporary building a) b) c) Site office Canteen Store, etc

19 viii) ix) x) Telephone Temporary hoarding Temporary drainage system

e)

Contingency Sum

This section is a sum allowed or allocated for total expenses from contingency works that might be done by contractor but does not state specifically in the contract.

2.6

Summary

This chapter has discussed the literature review regarding the preliminaries items and identifying what are exactly content of the items inside the preliminaries. At the same time to know what are the items generally used especially based on PWD form of contract compared to what is definitions of preliminaries inside the SMM2. All the fact is mostly reefing to PWD form of contract and Standard method of measurement in identifying the preliminaries item with thats will influence contractor how to price the preliminaries item.

The discussion in this chapter is to identify what are the main important items generally in the preliminary based on SMM and specifically what has been practicing using PWD form of contract.

20

CHAPTER 3

MANDATORY ITEMS IN PRELIMINARIES

3.1

Introduction

This chapter will discuss about findings on the literature review in the previous chapter. The discussions will summarize accordingly based on the objectives of the studies with regard to the literature review and the respondents in the industry. This chapter will highlight all the mandatory items in the preliminaries that should to be priced and considered by contractor when pricing preliminaries.

3.2

Items Normally Priced by Contractor

There are many items in each part of the preliminary works where some have to be priced and some are not. It can readily be seen that, although the preliminaries section

21 typically contains a very large amount of written information; only some of the items are actually priceable (Solomon, 1993). However, all the items under that are not price are still influencing indirectly to overall cost estimate of the preliminary that has to done. One of the major changes in new standard of measurement is the fact that certain facts will be taken for granted or deemed to be included in term and will not therefore appear in the Bills of quantities (R.D. Wood, 1990). This means all the preliminaries items are deemed to priced and prepared by the contractor. Following are the items that normally will be priced by the contractors for many projects: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) Site Supervision Site Agent etc Temporary offices, storage sheds, man store Small plant Haulage and Unloading Plant Cranes, Passenger lifts(tall building) Concreting plant and hoist Scaffolding Safety Measures Code of welfare conditions Telephone Temporary roads Temporary compounds Temporary fencing, hoardings, screens, gantries and walkaway Setting out Attendance on clerk of works Watching and lighting Temporary Power and Site Lighting Pumping and baling Traveling time fares Additional overtime Notices and fees to local Authorities and Public Undertakings Transportation to site

22 23) 24) 25) 26) Maintenance of the public and private roads Weather protection and precautions Protection and casing of finished work Completion i) ii) iii) iv) v) 27 28 29 Testing materials Temporary water on site Insurances Defect liability Drying out Tidying site and clearing rubbish Cleaning out Buildings Clearing windows and floors

All discussed and listed above, there are only a few items that categorized as mandatory items that should be priced by contractor. Mandatory items can be considered of any obligation or restriction that may be imposed on the contractor by the employer in respect of any matter not covered by any clause in the conditions of contract shall be given as an item stating the relevant particular (SMM, RCIS, 1968). Besides that a client requirement also is part of the mandatory items that contractor should fulfilled. All preliminary items however have an indirect bearing on the pricing even they are not specifically priced (R.D. Wood, 1989)

3.3

The mandatory items

Basically there are five sections according to the subsequence of preliminaries item in the tender documents based on JKR format. The discussion of the mandatory items will be in each of this part as the following:

23 a) b) c) d) e) Site Condition and Ground Condition Contract Document Contractual Obligation Procedures Plant, Site Facilities, Social And Site Safety P.C and Provisional Sum, Sub contractor and supplier.

Based on the findings, the followings are the basic mandatory items that therefore have to be considered by contractor for pricing on every contract:-

3.3.1

Insurance

The various kinds of insurance in which a contractor is interested are many. Some of the kinds of insurance are required by law, other kinds are required by the owner, and some other kinds are desirable for the protection of the contractor. Some of the general kinds are described briefly in the article on Insurance.(H.E. Pulver, 1990). The Contractor shall effect and maintain an insurance of Works for the whole of the Contract Sum plus professional fees. Notwithstanding the conditions of Contract Clauses 33 and 36 of the JKR 203A (Rev 10/83) clearly stated that the Contractor shall effect and maintain a Contractors All Risk (CAR) insurance policy to cover for public Liability and Fire Insurance of the Works under the name of government and contractor. Even in JCT Form of Contract (1998) in clause 22(A), when used for new buildings, states that the builder shall insure the building against fire risk, etc(W.Howard, 1994). All the above statement has defined that insurance is essentially important as a one of the mandatory items that contractor should not miss to price.

24 3.3.2 Workmens compensation

Clause 34 under JKR 203A (Rev 10/83), Workmens compensation insurance shall not be less than 20% of Contract Sum less Preliminaries, PC and Provisional Sum which must be approved by the S.O. but without prejudice to the Contractors legal liability. The contractor has to insured certain amount of money not less than 20% of contract sum for workmens compensation without prejudice and clearly that this items can be included in a mandatory items.

3.3.3

Performance bond

It is usual on many contracts for client to require a guarantee bond or other surety. A contractor normally pays a single insurance premium for this and it can be a very expensive item depending on the financial status and experience of the contractor (W. Howard, 1994). The purpose of such a bond is to guarantee the faithful fulfillment of the contract by the contractor. Contract bonds are of two kinds, construction and material supply. These bonds are two kinds, construction and material supply. These bonds are sometimes called surety or guarantee bonds(H.E. Pulver, 1990). The Contractor shall, as a condition precedent to the commencement of nay work under this Contract, deposit with Government a Security Deposit in the form of approved Bankers Guarantee only to five(5) per cent of the contract Sum, for the due observance and performance of this contract. The performance bond shall be held or shall remain valid and effective for such period as provided in the approved Bankers Guarantee. If the contractor fails to execute the Contract, the government or the S.O. on its behalf may utilize and make payment out of or deduction from the said performance Bond or any part thereof in accordance with the terms of this Contract. Performance bond the contractor has to pay 5% of original contract sum. The payment in term of bank guarantee or deducted (10%) of each interim payment until the total amount deducted is

25 equivalent to 5%of original contract sum. This performance bond is actually part of a condition precedent to the commencement of the work. For employees social act the contractor has to submit the code number of the worker to the Superintending officer and pay contribution for the worker. This ensures that should the contractor be unable to fulfill his contractual obligations, the guarantor will either pay damage to the employer up to full value of the bond or arrange or another contractor to finish off the outstanding work, again, up to the value of the bond.(J.IW Bently, 1990). If contractor is failed to pay, it will breach of the contract based on clause 35.

3.3.4 Setting out

The Contractors shall employ a Licensed Surveyor for the setting out of base lines for the works. The setting out shall be carried out before the works commences. The Surveyor to carry out before the works commences. The surveyor to carry out on the setting out of the piling points before piling works commence. The setting out of the points is to be established according to the proposed grid lines as indicated on the Architectural and Structural drawings. Submit five (5) copies of such setting out survey drawings duly endorsed by the Registered Land Surveyor for the S.O. approval. Upon completion of the piling works, a survey exercise have to be carry out for the driven/installed pile points and is to be verified and endorsed by the Registered Land Surveyor. Submit five (5) copies of the said as-built survey drawings of the piles driven/installed for the S.O. approval. No claims for extra payment as a result of any discrepancy will be entertained later. Setting out works is considered compulsory work that contract need to do and prepare such as undertake boundary and engineering survey of the site and install bench marks and marking. Contractor also has to allow certain amount of money to engage licensed land surveyor to carry out the work. This made this item is the most important item and part of mandatory items.

26 3.3.5 Construction Industry Development Board (Payment for levy)

The contractor shall comply to part VIII of the Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994 and the Construction Industry (Levy Collection) Regulations 1996, and shall submit a notification on Form CIDB L1/96 to Lembaga not late than 14 days after the issuance of the Letter of Acceptance/ Letter of Award/ or any document that constitutes acceptance of a contract of works, or not less than 14 days before commencement of the Works, whichever date is earlier. The contractor shall display a copy of his registration with CIDB together with a copy of the work site and shall make it available arising out of his neglect of this Clause. The Contractor shall indemnify the Employer against all loses that may arise due to the failure on the part of the Contractor shall indemnify the Employer against all loses that may arise due to the failure on the part of the Contractor to comply with this requirement.

3.3.6

As-built Drawings

From the findings, as built Drawing is among the most important items in this part and considered as mandatory items that contractor has to provide during construction. The contractor shall prepare and submit as built drawings of Architectures and Civil and Structures Works. The Contractor shall supply the original together with five (5) sets of all record drawings, two sets of diskettes and one set of reduced size drawings. All as-built drawing must be endorsed by P.E and to be submitted to the S.O within two (2) months from the date of handing Over. If the contractor fails to supply all as built drawing requested by the S.O, the S.O will employ others to do the drawings and charged the expenses incurred to the contractor. This make contractor felt need to price for this items

27 3.3.7 Work Programme

According to JKR 203A (Rev 10/83), Within 14 days after the receipt of the Letter of Acceptance of the Tender, the Contractor shall submit to the S.O ten (10) copies for his approval a programme showing the order or procedure and method in which the Contractor propose to carry out the Works and shall whenever required by the S.O or the S.O.s representative furnish for his information particulars in writing the Contractor arrangements for carrying out of the Works and the Constructional plants and temporary works, if any, which the Contractor intends to supply use or construct as the case may be. The programme shall be on a Critical Path Method (CPM) by using latest version software of Microsoft Project 2000 or Primavera Project Planning (P3e) or equivalent and shall show the programme datas for the Commencement and completion of the various elements in the works. Like as built drawing, work programme falls under compulsory items that contractor has to provide and shall submit proposal programme within 10 days of acception of the contract to the S.O. after approval of the programme then eventually become approval proggramme.

3.3.8

Hording and fencing

The contractor shall supply, erect and maintain hoarding or banner to isolate the works in the works in the site from other areas. All works shall be carried out in accordance to the Architectual Drawings and to the Satisfaction of the S.O and local Authorities. It if often necessary to erect wire compounds around sites in isolated locations or just around the area where materials are stored (W.Howard, 1994).

28 3.3.9 Client/Employers Requirement

The section will include specific Employers requirement relating to any provision stated on the invitation to tender or form of tender, provision by the architect and consultant, supervision and administration of the work, requirements for safeguarding the site (Mudd. D.R, 1980). The requirement also may include requirements for health, safety, prevention of nuisance, security, control of pollution, and protection of existing trees, services etc. For the certain projects, the employer will ask for the specific item with specific brand for the used of the project. The items normally required by the clients are below:-

3.3.9.1 Vehicle for the S.O.

Some of the provision imposed by the employer asked the contractor to provide within two(2) weeks of the date of possession of the site until the expiry of the Defects Liability period or the issue of the certificate of the completion of the making good defects, whichever is the later the following item :1) 2) 3) 4) one No. new four wheel drive engine vehicle of not less than 2500c.c New four wheel drive of 1300 c.c Kembara 1 No. 2000 c.c of Honda CRV 4 Nos. new motorcycle of 110 c.c capacity to the brand approved by the S.O

29 As soon as practicable after purchasing the vehicle, the Contractor shall produce the registration card and insurance policy together with receipts for premium paid for the same to the S.O. The vehicles shall be reverted to the Contractor after the certification of completion of making good defects is issued by the S.O.

3.3.9.2 Equipment and Facilities.

The Contractor has to provide the following equipment and facilities for the use of the Superintending Officer (S.O) and/or his staff. All equipment provided shall benew delivered, tested and installed within a month of the issuance of the Letter of Acceptance. The place of delivery and installation shall be as directed by the S.O. The equipment provided shall be maintained by the Contractor or his appointed agent throughout the contract period. Maintenance shall be including all necessary monthly servicing to according to manufacturers specification and supply of accessories and consumables. The contractor fails to provide or maintain any equipment specified below the Government shall have right to procure the equipments from other sources or maintain it and all expense arising shall be borne by the Contractor and appropriate adjustment shall be made to the Contract Sum. On completion of the contract after the Certification of Practical Completion has been issued, the computers including the software applications, printers digital camera, Photostat machine shall become the property of the employer.

30 a) Computers 1) 2) b) c) d) e) f) Printer 1) Xerox or other equal and approved Phaser laser Printer Software Digital camera Photostat machine LCD projector Notebook Computer with Intel Pentium 4 Computer with Intel Pentium 4 Processor

3.4

Conclusion

As discussed above are the mandatory items that should be priced by contractor when pricing preliminaries. The intention is plainly to provide contractors with the opportunity to show more accurately in their priced preliminaries. Other purpose of identifying mandatory is to provide a space for contractor to price not just allow a lump sum percentage for preliminaries. This is obviously for the use the quantity surveyor and the contractor to ease the preparing of interim valuation payment.

31

CHAPTER 4

METHODOLOGY

4.1

Introduction

This chapter describes the methods used in carrying out the study. A thorough planning and scheduling had been organized on the study in proper sequence to ensure a smooth running of the study program from literature review, interview, questionnaire survey data collection, data analysis, the discussion of the results and finally the suggestion and conclusion.

4.2

Determination of the research Objectives.

Preliminaries study has been carried out to determine the research objectives and scope of the dissertation. In the process some information about preliminaries has been

32 gathered. Some interviews have been carried out to the respondent from expert of the contract, senior QS in Quantity Surveyor Consultant and Contractor Company. After the preliminary review, some specific facts about preliminary have been identified and gathered as discussed in previous chapter.

4.3

Literature Review

Literature review has been carried out to establish some knowledge and to collect information pertaining to the study area. The literature review has been obtained from several sources such as published books, textbooks, information from internet, articles in journals and papers of some published guidance from practice in the industry and previous construction records. The purpose of literature review is to gather important information related to the topic of preliminary.

4.4

Data Collections

Data collections have been done in two stages i.e. through interviews with the experts panel and questionnaire survey with the contractors in the industry. The interviews are divided into sessions which include face to face interview for session one requesting the respondents to answer the structured questionnaires in the later.

33 4.4.1 Development of the questionnaire in the survey

The structured questionnaire in the interview with the experts panel and the questionnaires used in the questionnaire survey in the industry are developed mainly based on the Likerts scale on five ordinal measures of agreement from 1 to 5 toward each statement as in figure 1

Ordinal scale of 1 to 5 in ascending order Least Agree 1 2 3 4 Increasing order of agreement Figure 4.1 : Five ordinal measures of agreement of Likerts scale Very Strongly Agree 5

4.5

Interview with the experts

The interview of the experts comprises of the professionals who have been involved in the costing in tendering and contracting in the industry will be carried out to review their opinions about method of pricing the preliminaries. The interview also requested to identify the factors and the importance of the preliminaries to the contractors. These interviews are conducted at random selection face to face questions and answers session and respondents were also requested to answer the structured questionnaire.

34 4.5.1 Objective of the interview

The objectives if the interviews are to strengthen the research findings based on the main objectives as specified earlier. These objectives are:

ii) iii) iv)

To identify mandatory item that should be priced by contractor. To identify the factors that influence in pricing the preliminaries items To propose strategies to price preliminaries

4.5.2

Methodology of the interview

The interviews were conducted in two stages with professionals in the government agencies and the Senior Quantity Surveyor from private firm who has contract background in their works and practices. The first stage is face to face questionnaires and answers sessions and the second stage is requesting the expert to answer the structured questionnaires.

35 4.5.2.1 Face to Face interview

A total number of 15 professionals of various engineering disciplines including quantity surveyors and 2 lecturers have been approached for face to face interviews. Their views were obtained to evaluate the understanding and the current scenario over method been used by the contractor nowadays. The experts also been asked about the opinion in establishing a standard guideline in pricing the preliminaries.

4.5.2.2 The Structure Interview Questionnaire

In addition to face to face interviews the same panels has been given a set of structured questionnaire requesting them to respond based on their experts opinion and experience in how to price preliminaries and their understanding of preliminaries costing in the industry. Their actual practice and views has been then translated in the results for further discussion and studies.

The structured questionnaire comprises of 3 sections as below: Section A : Section B: Section C: To obtain information about respondents background; To obtain general information about the organization; To identify their understanding of how preliminaries are estimated and their opinion on what is the current practice of estimating the

36 preliminaries in our local construction industry and what are the factor that influence pricing preliminaries.

4.6

Industry Questionnaires Survey

The questionnaire survey in the industry was carried out to pool the opinion of the contractors towards the understanding of the contract document. The result of the survey then compared with numbers contract document in similar projects to match the similarity of thought for the discussion and conclusion in this study.

4.6.1

Methodology of the Industry Survey

The questionnaire survey has been carried out among the group of contractors chose at random to gather the information based on their practice and experience in the industry. A total of 100 sets of questionnaire have been distributed through mail and some other means to contracting companies in Selangor and Kuala Lumpur. Most of the company had the experience in implementing the government projects in their respective states. Respond to the questionnaire were then analyzed based on the category of questionnaire to obtain the results for further discussion and conclusion.

37 4.6.2 Questionnaire for the industry Survey

The questionnaires are structures into four sections: Section A : To identify the general information about the respondent; Section B : To identify the background of the Organization/Company Section C : To identify factor influence the pricing of the preliminaries Items The sample of questionnaire used for the survey in this project is shown in Appendix II.

4.7

Data Analysis

Data analysis is carried out for the qualitative data obtained from the questionnaire survey. Qualitative data collected through the questionnaire were first segregated and separated to answer different study objectives. The data will be categorized under different variables to represent the result of the research objectives. Different statistical methods such as content analysis. Frequency analysis, average index analysis. The discussions are mainly to evaluate the results obtained from the survey to compare any similarity with the experts opinions in conjunctions with the objectives of the study. The summary of the study are then presented with the recommendation along with the conclusion for further studies in this area.

38 4.7.1 Content Analysis

Content analysis is used to analyze the number of response that the respondents gives in proposing to different variables based on the same questionnaires. The proposed variables are tabulated and analyzed based on the opinions given by the respondents.

4.7.2

Frequency Analysis

The frequency analysis is used to represent result of data analysis of the number of response that the respondent gives to different variables in the questionnaire. The result has been tabulated in the form of frequency number and percentage according to total respondents. For graphic result presentation, pie chart has been used as the summary.

4.7.3

Average Index Analysis

In Average index analysis, the results are further summarized to obtain the level of importance in evaluating the factors which involve in the understanding of contract document. The respondents have been requested to gauge and evaluate the proposed factors element in every section of the questionnaire in structured interview questionnaire and the industry survey questionnaire and the industry survey questionnaire based on five-point scale starting with 1 for least agreed to 5 for very

39 strongly agreed. The average index analysis for each variable is calculated by using the formula below: Average index (A.I) = 1X1 + 2X2 + 3X3 + 4X4 + 5X5 X1 + X2 + X3 + X4 + X5 Where, X1 = Number of respondents for least Important X2 = Number of respondent for fairly important X3 = Number of respondent for important X4 = Number of respondent for strongly important X5 = Number of respondent for Very Strongly important The overall level of agreement by the respondents to the factors which influence the understanding of contract document by the contractors are summarized based on the categories as specified earlier and show in the table 3.1.

Table 4.1 : The level of agreement and evaluation for average index analysis Average Index 0.0 < Average Index < 1.50 1.50 < Average Index < 2.50 2.50 < Average Index < 3.50 3.50 < Average Index < 4.50 4.50 < Average Index < 5.0 Level of Agreement of Evaluation Least Important Fairly Important Important Strongly Important Very Strongly Important

40 4.7.4 Relative Index Analysis

Relative indices are a technique used to compute the strength of indices of agreement for each question to enable subsequent comparison between each factor to support the level of important of the subject.

The result will be summarized to obtain ranking according to the level of importance in evaluating the understanding toward contract documents. The respondents has been requested to evaluate the factors that contribute to improving the level of understanding toward contract document and they has been also requested to give their views based on their experience toward factors that inhibit the understanding of contract document based on their experience toward factors that inhibit the understanding of contract document based on five point scale starting with 1 for least important, 2 for fairly important, 3 important, 4 strongly important and 5 for very strongly important.

The relative index analysis for each variable is calculated by using the formula as follows: Relative Index (R.I) = 1x1 + 2x2 +3x3 + 4x4 + 5x5 5x1 + x2 + x3 + x4 + x5 Where, x1 = Number of respondents for least important; x2 = Number of respondents for fairly important; x3 = Number of respondents for least important; x4 = Number of respondents for strongly important; x5 = Number of respondents for very strongly important;

41 The computation of RI using formula yield the value of RI ranging from 0.2 to 1, where 0.2 represent the minimum strength and 1 the maximum strength. The RI computed is referred to make comparison between each factor generated from the survey.

42

CHAPTER 5

FACTORS INFLUENCING PRICING DECISIONS

5.1

Introduction

In this chapter, the analysis of data has been on two categorized of respondents. The first category is the views of the expert panels which comprises of the professional of different disciplines and the second category is the contractors who are involved in the construction industry.

The questionnaire has been first analyzed and summarized based on their good knowledge and experience to answer questions in respective industry questionnaire survey. The results were then tabulated and analyzed for further discussion and conclusion. Analysis on the contractors views in the industry has also been conducted based on the questionnaire and open ended questions. The results were then analyzed for further discussion.

43 5.2 Factors Influencing Pricing Decisions

The factors have been suggested based on the expert experience in their undertaking pertaining to the subject matter. These entail gathering information about the various factors that should be taken into consideration when pricing preliminaries. Prelims can be higher in certain circumstances for instance if sites require special measures. The followings are the factors that have to be considered when pricing preliminaries by contractor:-

5.2.1

Understanding contract particular

The estimator should be conversant with the standard forms of contract and should note cover any amendments. Items which should be particularly noted by the estimator are Cost Variation Clause, Limit and period of retention, discounts on nominated suppliers and sub-contractors, insurances and special additional clauses.

5.2.2 Site condition

The estimator should visit the site and determine if an existing supply is available and if it is sufficient and can be used for building operations (W.Atton, 1978). Before commencing the pricing the estimator must visit the Architects office and study the Drawings, specification and contract documents. Also the site must be inspected and any

44 special problems must be considered and appraised. Access, storage if materials, positioning of mechanical plant and multiple loading on the site would all be important matters to review. In good tendering practice drawings are always sent to the tenderer.(R.D Wood, 1990)

5.2.3

Location of the site

If the contract being tendered for is in an existing factory which is enclosed by a boundary fence or in an area where damage or stealing is unlikely the estimator will usually include a nominal amount to cover losses or damage. If, however, damage or stealing on a larger scale is expected a watchman would be employed for the whole of the time when the contract was not working.

5.2.4

Difficult contract and restricted site

Many small contracts by the nature of the work involved, such as dangerous underpinning, deep foundations in bad ground and similar items, or contracts where working conditions and access are particularly bad, require foreman of great experience and of above average organizing ability(W.Atton, 1978). All the above items must be taken into account as they will influence the pricing of preliminaries and also the number of general foremen and assistant general foremen required for the particular contract.

45 5.2.5 Magnitude of contract

When pricing preliminaries the estimator must bear in mind the magnitude and type of contract. A simple, small and straightforward contract can be, perhaps, supervised by a modestly paid general foreman. On another contract of the same price bracket the complications and problems of the work may involve a highly paid site agent. The financial scope of contracts must also be considered and a range of examples will be given later to cover these points.

5.2.6

Plant and equipment

The estimator has to decide the type of plant to be used on the contract being tendered for and the length of the time the plant will be required on the site. Sometimes using very rare plant equipment also will influence contractor in pricing preliminaries. it is a practice for the majority of plant costs to be shown in the preliminaries section. This is because most of the plant and equipment probably be shared by at least several trades and it is difficult to apportion the cost between different items and section(W.Atton, 1978).

46 5.2.7 Any Obligation or restriction imposed by Employer

In respect of any matter not covered by any clause in the conditions of contract, any obligation or restriction imposed by employer normally be given as an item stating the relevant particulars in preliminaries item. The requirements basically about details relating to tendering in addition to those on the invitation to tender, e.g. subletting, provision and content of documents, management of the works, quality control, security, safety, working restrictions, facilities to be provided for the clients benefit and building maintenance.

5.2.8

Commitment number of project

Commitment number of project is when contractor did not have enough time to price thoroughly and some are tent to price it lump sum according to their past experience and same project.

5.2.9

Availability at Resources by the Contractor

Availability of resources much influence to contractor when pricing the preliminaries. It is noted that some of the factor are repeatedly mention by the contractor in the survey for instant the availability of the plant and equipment by the contractor. This will be advantage to the contractor that have their own plant and equipment and

47 giving very great different of prices when pricing plant and equipment items. The contractor will price low on this item compared to the contractors that have hire plant and machineries and it showed that plant and equipment give a major factor to the pricing of the preliminaries.

5.3

Data Analysis and Result

In this chapter, a detail analysis of the qualitative data has been analyzed by using appropriate statistical approach as mentioned in the previous chapter. The analysis of data has been on two categorized of respondents. The first category is the views of the expert panels which comprises of the professional of different disciplines and the second category is the contractors who are involved in the construction industry.

The questionnaire has been first analyzed and summarized based on their good knowledge and experience to answer questions in respective industry questionnaire survey. The results were then tabulated and analyzed for further discussion and conclusion. Analysis on the contractors views in the industry has also been conducted based on the questionnaire and open ended questions. The results were then tabulated and analyzed for further discussion.

48 5.3.1 Background of the Respondents

Respondents of the interview comprises of 6 Professional of different discipline background. i.e. 1 project directors, 9 quantity surveyor involved in contractors company, 2 project managers and 3 engineers who were involved in tendering stage and construction industry as shown in Table 5.1 and pie graph figure 4.1

Table 5.1 : Distribution of the respondents based on displines

Respondents Project Directors project Planner Quntity Surveyor Project Managers Engineer Supervisor Distribution 20 20 20 20 20 20 Response 1 1 10 3 5 0 Response % 5% 5% 50% 15% 25% 0%

Engineer 25%

Supervisor 0%

Project Directors 5% project Planner 5% Project Directors project Planner Quntity Surveyor Project Managers Engineer Quntity Surveyor 50% Supervisor

Project Managers 15%

Figure 5.1 Distribution of expert respondent based on profession by percentage

49

The working experiences of the respondents are between 2 up to more than 20 years. In the Table 4.2 shows that most of the respondents have experienced in construction industry within 6 to 10 years carried of 67% of the total percentage of respondents. Table 5.2 : Distribution of panel Respondent based on experience

Experience of Respondent 2 - 5 Years 6 - 10 Years 11 - 15 Years 16 - 20 Years > 20 Years Total

No. of Respondents 2 10 6 2 0 20

Total % 10% 50% 30% 10% 0% 100%

No. of Respondents 10% 0% 10% 2 - 5 Years 6 - 10 Years 30% 50% 11 - 15 Years 16 - 20 Years > 20 Years

Figure 5.2 Distribution of panel respondent based on experience by percentage

50 5.3.2 The Industry Questionnaire survey

The Respondent has been randomly selected among the contractors from the State of Kuala Lumpur. 50 sets of questionnaire wee distributed and 61 were returned with complete answer. Thus 30% responded and 70% sets were not returned which comprises of 6% as shown in the table 4.3.

Table 5.3 : Number of respondent responded to the Questionnaire No. Respondents 1 2 3 Replied No reply Replied with incomplete questionnaire 60 100% with complete questionnaires 40 0 60% 0% Frequency 20 Percentage (%) 40%

5.3.3

Factor Influence the pricing of the preliminaries items

Table 4.10 shows the analysis computed by average indices and relative indices. From the analysis, all factors suggested scores are between 4.60 and 3.45. All respondents strongly agree and very strongly agree to the proposed questionnaires. From relative indices computation, the ranking of the factors are between 0.92 and 0.69. All the nine factors can be summarized in order of importance based on the relative index scores as shown in the table.

51 1. 2. 3. 4. 5. 6. 7. 8. 9. Availability of resources by the contractor Plant and equipment to be used Any obligation or restriction imposed by employer Site Condition Commitment number of projects Location of the Site Magnitude of contract. Eg. Small, simple contract Lacking of understanding contract particular and Preliminary items by Contractor Contract difficulties and site restriction

Frequency analysis No. 1 Questions Lack of understanding of each preliminary by Contractor Site Condition Freq 0 1 % 0% Freq 3 2 % 15% Freq 8 3 % 40% Freq 4 4 % 20% Freq 5 5 % 25% Avg Index 3.55 Rel. Index 0.71

Rank 8 4 6 9 7 2 3 5 1

0%

0%

30%

30%

40%

4.10

0.82

Location of site

0%

5%

15%

10

50%

30%

4.05

0.81

Contract difficulties and site restriction, Magnitude of Contract.

0%

15%

40%

30%

15%

3.45

0.69

0%

10%

25%

30%

35%

3.90

0.78

Plant and equipment to be used Any obligation or restriction imposed by employer Commitment number of projects Availability of resources by the Contractor.

0%

5%

10%

10%

15

75%

4.55

0.91

0%

5%

10%

25%

12

60%

4.40

0.88

0%

10%

15%

35%

40%

4.05

0.81

0%

0%

10%

25%

13

65%

4.60

0.92

Table 5.4 : Frequency analysis on factors influence in pricing Preliminaries

52 5.3.4 Other factor that influence the pricing of preliminaries by contractor.

The respondents are given open ended question to seek their additional opinion of the other factor that contributes to the pricing of the preliminaries item. The factors are as follows; i. ii. iii. iv. v. vi. vii. viii. ix. Depends on site condition and type of a project- infra or building works Uncertainty of material price Availability of resources by the contractor Using Plant and equipment (rare contribute to higher price) Client Financial Background Site Condition and Resource as plant for equipment Extra requirement by clients that need to be priced Location, Local Authority requirement. Availability of equipment by the contractor

5.3.5

General comment from the respondents

The Analysis has shown that respondents have commented that still need to be done about pricing preliminaries so that contractor do not miss anything while pricing the preliminaries and chances winning the tender bidding is larger. The comments and thoughts are as below: i. ii. Contractor to have their own standardize checklist in order to avoid missing items during tender stage. Provide the clause in the condition of contract

53 iii. Must be justified the items included in the preliminaries item more details and accurate cover the whole duration of the project plus tentative extension of the completion of the project Simplified the preliminaries description, use the simple word & put the required item only.

iv.

54

CHAPTER 6

DISCUSSION

6.1

Introduction

This chapter will discuss about findings obtained based on the data analysis in the previous chapter. The discussions will summarize accordingly based on the objectives of the studies with regard to the literature review and the respondents in the industry. The chapter will highlight all the important factors contributed by this study and comparison will be made for their congruent opinions to be drawn in the conclusions. This chapter will end with the factor that contributes when pricing the preliminaries items.

55 6.2 Factor Influence The Pricing Of The Preliminaries Items

Frequency analysis No. 1 Questions Availability of resources by the Contractor. Plant and equipment to be used Any obligation or restriction imposed by employer Site Condition Freq 0 1 % 0% Freq 0 2 % 0% Freq 2 3 % 10% Freq 5 4 % 25% Freq 13 5 % 65% Avege Index 4.60 Rel Index 0.92 Rank 1

0%

5%

10%

10%

15

75%

4.55

0.91

0%

5%

10%

25%

12

60%

4.40

0.88

0%

0%

30%

30%

40%

4.10

0.82

Commitment number of projects Location of site

0%

10%

15%

35%

40%

4.05

0.81

0%

5%

15%

10

50%

30%

4.05

0.81

Magnitude of Contract.

0%

10%

25%

30%

35%

3.90

0.78

Lack of understanding of each preliminary by Contractor Contract difficulties and site restriction,

0%

15%

40%

20%

25%

3.55

0.71

0%

15%

40%

30%

15%

3.45

0.69

Table 6.1

Factor influencing price in preliminaries according to ranking of importance

Based on the analysis on the questionnaire in the industrial survey, the factors that influence the preliminaries items are summarized and captured under the items of factors that influence in pricing preliminaries as in table 6.1.

1. 2. 3. 4.

Availability of resources by the contractor Plant and equipment to be used Any obligation or restriction imposed by employer Site Condition

56 5. 6. 7. 8. 9. Commitment number of projects Location of the Site Magnitude of contract. Eg. Small, simple contract Lacking of understanding contract particular and Preliminary items by Contractor Contract difficulties and site restriction

The analysis is aim to pool the respondents view with regard to personal factor that influence the pricing of the preliminaries items. Based on the result, the respondent strongly agreed that availability at resources by the contractor with (R.I) 0.92 is much influence to contractor when pricing the preliminaries. This is followed by commitment number of project 0.91 (R.I). These two factors are very strongly agreed by respondent by scoring above 0.88 (R.I). The rest of factors are score under 0.7 (R.I) most of them are interrelated to each other. This show that all the factors are reliable and relevant to be considered in contributing influencing the pricing of preliminaries.

Availability of resources by the contractor and the type plant and equipment used can consider in contributing influencing in pricing preliminaries. From the data obtained all respondents have been strongly agreed that these factors are very relevant in order to consider in pricing tender. The study has also found that inadequate resources by contractor that caused contractor to put higher rates and price in preliminaries. This will make the chances of winning bidding tender are bigger.

Factor such as other special obligations and restriction imposed by employer or client and the condition of the site also the contributing factors that influence the way contractor pricing preliminaries. Therefore a contractor has to understand and read carefully all client requirements and obligations for that particular project in order to have a chance in getting a competitive and acceptable price by client

57 From the study even though much have been said about factors that influencing preliminaries, the respondents also agreed that the contractor difficulties and site restriction also closely related to lack of understanding of preliminaries items. Contractors felt that need to understand each of preliminaries items and get to know the nature of the site whether involved dangerous underpinning or any deep foundation with bad ground condition. This factor can be much affected to the overall cost of preliminaries.

Commitment number of project is when contractor did not have enough time to price thoroughly and some are tent to price it lump sum according to their past experience and same project. To this reinforced this statement, one questioned being asked to respondent how much approximate estimate percentage allowed by them for one preliminaries items regardless type of the project. the range has been provided as pie chart below shows that 55% agreed to choose 5% - 6% approximate percentage for preliminaries and followed by 25% choosing 6% 7% and 15% is choosing above 8% . The majority of the respondent will go for range 5% to 6% if the want to price lump sum for preliminaries items.

No. of Respondents

15%

5%

5-6% 6-7% 8-9% More Than 10 %

25%

55%

Figure 6.2: Percentage allow for lump sum (Preliminaries Item) by respondents

58 Other factor such as lack of understanding of each preliminaries items, lack of experience is agreed by all respondent and not really contribute or matter to factor of pricing preliminaries. This is proved by percentage of respondent about 92% of them have experience in construction industry more than 6 years. They absolutely understand and familiar with preliminaries items.

No. of Respondents 10% 0% 10% 2 - 5 Years 6 - 10 Years 30% 50% 11 - 15 Years 16 - 20 Years > 20 Years

Figure 6.3: Percentage of experiences of respondents in construction industry

6.3

Other Factor That Influence The Pricing Of Preliminaries Items By The Contractors.

Based on the content analysis on the open questions to respondent there are 5 factors as thought by the correspondent to influence the pricing of preliminaries. The factors have been suggested based on the expert experience in their undertaking pertaining to the subject matter. It is noted that some of the factor are repeatedly mention by the respondent although there are been asked earlier in the survey for instant the availability of the plant and equipment by the contractor. This shows that plant and equipment give a major factor to the pricing of the preliminaries. Other factor that

59 contractor has to take into consideration and been proposed by correspondent is factor the time during construction tender stage when time is short. This factor will contribute to the higher price of the preliminaries. Some of the respondent has said by using very rare plant and equipment in the market will contribute to the factor to get competitive price for preliminaries. The personal factor discussed above is also closely related to factor in the survey.

The respondent also have been giving their comments about how to ensure that preliminaries item is fully priced by the contractor for better competitive cost. They been suggesting that the preliminaries is need to simplified the preliminaries description which long and hard to understand by the contractor and also using simple word and just to put the required items to be priced in. the other suggesting that the contractor should have their own standard guidelines in pricing the preliminaries when pricing the preliminaries items. One respondent also suggest that the price must be justified and detail and cover the whole duration of project and plus the tentative extension of time of the completion of the project in order to get a better competitive cost for preliminaries.

6.4

The Summary of overall Findings of study

Based on the discussion in the previous sections by observing the results obtained from the interviews and questionnaire survey in the industry the overall findings of the study can be summarized as in the following paragraphs.

After scrutinizing the facts from the literature review and the opinions from the selected expert and survey, it is found that Contractors in the construction industry have to understand and identify which factor that can be used and considered in giving the

60 best price to offer in pricing preliminaries. This can be shown in the results of the survey as previously discussed where all the respondents agreed that availability of resources and types of plants and equipments to be used were much influenced in pricing preliminaries. Respondents had suggested that preliminaries items in bills of quantities need to simplified the description and should have their own standard guidelines in pricing the preliminaries when they were asked to comment on how to ensure the preliminaries item is fully prices by contractors.

61

CHAPTER 7

STRATEGIES IN PRICING PRELIMINARIES

7.1

Introduction

This chapter will discuss about findings obtained based on the data analysis in the previous chapter. The discussions will discuss accordingly based on the objectives of the studies with regard to the literature review and the respondents in the industry. The chapter will highlight strategies of pricing preliminaries item based on the factors identified from the previous chapter

7.2

Strategy in pricing preliminaries

Contract pricing is not a simple matter. The construction industry is extremely fragmented and highly competitive. Contractors have to bid competitively for most of

62 their work and at the same time deal with risks and uncertainties connected with tender submission. The high level of price competition and low capital intensity which characterizes the industry, often combine to cause depressed profit margins. A great deal of current information is needed together with forecasts of demand, cost, competition, etc., to enable prices to be set and adjusted to desired profit levels. Tellis (1986), for instance, defines a pricing strategy as a reasoned choice from a set of alternatives prices (or price schedule) that could aim at profit maximization within a planning period in response to a given scenario. In relation to maximizing profit and winning the tender bidding and need to consider the pricing decision approach that involves as the following:

i) ii) iii) iv) v)

Establishing pricing objectives Examining each of preliminaries items Considering factors influencing pricing decisions Attention to methods of price determination Tactical considerations in setting prices

7.2.1

Establishing pricing objectives

It is notes how a contractor's overall objectives determine its pricing objectives which, in turn, establish the parameters of pricing policies. Davis (1978) reported that price should be chosen in order to achieve a company's objective. Within this field numerous pricing objectives have been identified. Three major types of setting pricing objectives to be:

63 i) Cost-oriented objectives - to pursue a target return on investment - to recoup costs over a particular time period ii) Competition-oriented objectives - to discourage competition iii) Demand-oriented objectives - to meet the expectations of clients and the industry.

Govindarajan (1983), on the other hand, claimed that Contractors' pricing objectives are related to expected profit levels, and usually concerned with either profit maximization or profit satisfying. Abratt and Leyland's (1985) empirical study found a correlation between the pricing objectives of contractor and their pricing strategies and they also realised that most of the contractors with a target return on investment operated a cost based pricing strategy. It may be expected that a contractor's pricing objectives will have different weighted effects on its bid price decisions. Therefore contractors need to establish objectives and their aim for every particular project before decide to enter tender bidding and relate to the factors as discussed previously when considering the pricing.

64 7.2.2 Examining each of preliminaries items

Examination each of preliminaries items is one of the strategies that contractor has to take into consideration. Identification of the mandatory items is needed in order to know what the priorities in pricing preliminaries are. In previous chapter has discussed on findings what are the mandatory items that should be priced by contractors. The items listed are as follows:

i) ii) iii) iv) v) vi) vii) viii) ix)

Insurance, Workmens compensation, Performance Bond, Setting out, CIDB, payment for levy As Built Drawing, Work Programme, Hoarding and Fencing, and Client/Employers Requirement.

These are the items that imposed in any obligation or restriction by client. If contractor fail to fulfill or price, it will cause them lose of profit and problem may occur during construction due to under pricing. The contractor must completely understand and identify what other items that should be priced because not all the items are priceable.

65 It is important to for contractor to break down the price because some of them are most reluctant to do so. It is absolutely necessary. The percentage of the total tender price allocated to preliminaries in tender bills will vary widely from job to job depending upon tendering and pricing strategies adopted, Mudd. D.R(1980). By knowing which items that should be priced according to fixed and time-related charges, it will provide contractors with the opportunity to show more accurately in their priced bills. This is also used for the preparation of interim valuation payment. It may also aid contractor substantiating claims for additional payments as a result of variations and for reimbursement of loss and expense following the granting of extension of time.

7.2.3

Considering factors influencing pricing decisions

These entail gathering information about the various factors that should be taken into consideration when making a bid price decision. Nine factors have being identified in previous chapter such as availability of resources by the contractor, plant and equipment to be used, any obligation or restriction imposed by employer, site condition, commitment number of projects, location of site, magnitude of contract, lack of understanding of each preliminaries items and lastly contract difficulties and site restriction. All these factors are following the sequence of the importance. Contractors have to consider each factors as mentioned above before pricing prelim because it is help and much influence in the cost of preliminaries and overall total cost.

All respondents have agreed that availability of resource by the contractor is the most influenced in pricing preliminaries. Contractor should identify what are the sources that they have and go to the site to see the actual condition of the site. This can provide

66 ideas to contractors in pricing accurately and avoiding from missed item and underpricing in preliminaries.

7.2.4

Attention to methods of price determination

In a competitive tender, pricing strategies are often used by contractors to facilitate their cash flows. Usually, the decisions are based on contractors' experience, intuition, and personal bias. The existing mark-up or cash-flow forecasting models simulate the pricing strategies in a simplified manner which may depart from real situation and therefore could lead to inaccurate cash-flow forecasting.

Under-pricing in construction tenders is a common phenomenon and is commonly explained by the need of cash flows and penetration strategy. However, these explanations involve profit cutting and therefore are not plausible in explaining a longterm persistent phenomenon of under-pricing. When uncertainties of cost items in a tender exist and choices are available to defer and switch modes of construction, then a valuable option is available to the bidders. It amounts to about 4% of the lump sum tendered in our case. The under-priced portion is the options value which the bidder is willing to pay for the flexibility and the uncertainty. These findings enable contractors to be more competitive and to estimate construction costs more accurately in devising their bid strategies.

67

The evidence base on prelims is not extensive and though data is collected, it appears to relate more to experience in the field and the discretion of the contractor than does the calculation of fees. Wide variations in prelims appear to occur between projects in different sub-sectors of the construction industry and variations occur over time.

In overall terms, we believe prelims should reasonably be no higher than 10% of the contract sum for the type and scale of work involved in building programmes. The Pricing Model therefore fixes prelims at 10%. These will vary, i.e. some items of may attract higher prelims and others will attract none or virtually no prelims. However, we believe that 10% is a reasonable average on which to base a price calculation, as it should be a reasonably attainable figure for an efficient RSL with several thousand houses in need of refurbishment. Although exact figures for the social building and housing sector do not appear to be widely documented, the direct experience of construction industry is that 10% is a reasonable (and attainable) figure for prelims in relation to building and housing in Malaysia. This was proof by previous survey in previous chapter that most of respondents agreed that 5% to 6% was allowed for preliminaries items out of overall cost.

68 7.2.5 Tactical considerations in setting prices

It has, however become practice for some contractors to move money around in tender bills, and it is not usual for the prices inserted in the preliminaries bill to bear little or no relationship to the contractors actual costs. Site overheads may be included either as a percentage of measured work, in the preliminaries section, or as a combination of both. According to Solomon (1993), this (preliminaries section) is the main area within a tender where a contractor can seek to gain a competitive advantage by adjustment of the tender price. The preliminaries bill the contractor with an opportunity to make a provision for overheads and profit within his tender. While profit should not be forbidden fruit, it is a luxury which the contractor can adjust, to provide the opportunity of winning a contract.

7.3

Conclusion

Based on the discussion contract pricing strategies are very important in determining the best and competitive price that contractor can offer when pricing preliminaries. Five elements of strategies were addressed in earlier discussion that needs to be taken into consideration by contractor before pricing preliminaries. However, the study found that there were strength relationships between the strategies. Although based mainly on literature review and in previous discussion, it is expected that the conceptual model could be very helpful in the development of computer aids for contractors pricing strategies, while at the same time, enrich contractors understanding of the pricing decision process.

69

CHAPTER 8

CONCLUSION AND RECOMMENDATION

8.1

Introduction

This chapter presents the major findings and conclusion for the research project. Recommendation is also presented for further research in this area so as to enhance the level of understanding of contract documentation and ensure the better implementation of project in the construction industry.

8.2

Major findings

Although the small sample did not provide representative findings, the questionnaire survey was able to provide important information on the importance of the preliminaries by knowing the mandatory items and factors that influence in pricing

70 preliminaries. Based on literature search and empirical works the followings are the findings of this study.

The major findings of the study are: I. The mandatory item that should be priced by contractors 1) 2) 3) 4) 5) 6) 7) 8) 9) Insurance Workmens compensation Performance Bond Setting out Construction Industry Development Board (Payment for levy) As-built Drawing Work Programmes Hoarding and fencing Client/Employers Requirement i) ii) Vehicles for the S.O Equipment and facilities

II.

The Influencing Factor in pricing preliminaries 1) 2) 3) 4) 5) 6) 7) Availability of resources by the Contractor Plant and equipment to be used Any Obligation or restriction imposed by employer Site condition Commitment number of project Location of site Magnitude of contract

71 8) 9) Lack of understanding of each preliminaries by contractor Contract difficulties and site restriction.

8.3 Conclusion

The study has identified the mandatory items in preliminaries that should be priced by contractors when pricing preliminaries. It is found that the items listed must be priced in other greater chances of winning the tender bidding this Is because preliminaries is important part of overall cost. The study also has identified factors that influencing pricing preliminaries items. Based on the factor found will help contractor to be taken into consideration when pricing the preliminaries. Based on the first and second objective, the strategy in pricing preliminaries has derived. Hopefully the strategies will give fully benefited to the contractor when pricing and will fully price the items and cover the whole important without miss it.

Based on the findings of the study it is therefore concluded that the objective of the study has been achieved. It is also suggested that the findings in this study to be further digest for considering the present norm of approving the registration of contractors in our industry so as to achieve the qualified, skill and committed participants in the industry.

72 8.2 Recommendation for further study

The study has somehow yielded limited achievement. Hence to improve further the study in this area, it is suggested that further study can be extended to as follows; a) To expand the whole study to the Malaysia irrespective of the status of the contractor. b) To establish guideline by segregate them for infra and building works. c) To study the impact and important each of preliminaries items. d) To proposed a conceptual model by development of computer aids for contractors pricing strategies.

73

BIBLIOGRAFI

Mudd. D.R(1980). Pricing Prelimnaries; Construction Cost Estimate. Second Edition. Canada. John Miley & Son. Inc H.E.Pulver, B.S. CE (1985). Construction Estimate and Cost. Forth Edition. MacgrawHill Book Company, New York Toronto London Sydney. Frank, R. Dagostino (1990). Estimating in Building Construction. Third Edition. Prentice Hall, Eaglewood Clifft, New Jersey. George E. Deatherage, P.E (1965). Construction Estimating and Job Planning. Magraw Hill Book Company New York San Fransisco Toronto London Sydney. The Royal Institution of Chartered Surveyor (1978). Standard Method of Measurement of Building Works. Fifth Edition. The Royal Institution of Chartered Surveyors. 12 Great George Street Parliament Square London. R.D Wood (1985). Principles of Estimating. The Estate Gazatte Limited 18 Denmark Street. London. WC2. W. Howard Wainwright (1990). Practical Builders Estimating. Hutchinson Educational. W. Atton (1968). Introduction to Estimating for Builders. GeorgeGodwin Ltd. for The Builders Ltd 4, London. J.I.W Bentley (1992). Construction Tendering on Estimating. E & F.N Spon. John A. Milne (1985). Construction and Estimating Procedure. GeorgeGodwin Ltd. for The Builders Ltd 4, London. Akintola Akintoye (2000). Analysis of Factors Influencing Project Cost Estimating Practice. Routledge, Part of The Taylor & Francis Group. Volume 18, Number1/Jan 1. Akintola, Akintoye and Skitmore, Martine R. (1990). A Conceptual Model of Contruction Contractors Pricing Strategies. In Baxeudule; A Proceedings 6th Annual Conference Association of Researchers in Construction Management. Page pp 31-47.

74 P.D. Steane, D.H.T. Walker (2000). Competitive tendering and contracting public sector services in Australia a facilities management issue. MCB UP Ltd. Volume: 18 Issue: 5/6 Page: 245 255

75

APPENDIX 1 (QUESTIONNAIRES FOR THE INDUSTRY SURVEY)

76 To Whom it May Concern

The understanding Contract Documentation in Project Implementation You have been chosen to participate in this survey because we know with the vast experience that you have, you are able to provide valuable knowledge into the factors that influence in pricing preliminaries. The intention of our study is to seek opinion and good thoughts pertaining to the level of understanding of preliminaries items referring to the interpretation of contractor according to the importance of each item. The study will focus to the indigenous group of contractors involved directly in building project above 1 mil of project cost. Your opinion and good thoughts through responding to this questionnaire survey are very much appreciated. Your identity remains unknown and your response will be kept confidential and only accessible to our research team. Please return the completed questionnaire using the self addressed envelope for normal mail delivery or you may fax directly to me at the number given below. NORHISHAM BIN ABDUL GHANI Jbb Consultants Sdn Bhd No.43 1st Floor USJ 10/1A, 47301 Subang Jaya, Selangor Your sincere and honest response is highly appreciated. Thank You. Norhisham Bin Abdul Ghani

A:Background

77

Please Circle the Appropriate choice Q1. Which of the following Background most accurately describes your organization? 1. Developer 3. Contractor 5. Consultant 2. Supplier 4. Government Agency 6. Others (please indicate) _________________________

Q2.

What is your position in your company? 1. Project Director 3. Project Planner 5. Quantity Surveyor 7. Others (please indicate) ________________________ 2. Project Managers 4. Engineer 6. Supervisor

Q3.

How long has you involved in Construction Industry 1. 2 3. < 2 years 2 5 years 6 10 years 4. 11-20 years 5. > 20 years

SECTION A

78

Factors Influence the pricing of the preliminary items Please circle your choice where : 1 Least Agreed 2 Fairly Agreed 3 Agreed 4 Strongly Agree 5 Very Strongly Agree Least Agreed Very Strongly Agreed

1. 2. 3. 4. 5. 6. 7. 8. 9.

Lacking of understanding contract particular and preliminary items by Contractor Site Condition Location of the Site Contract Difficulties and site restriction Eg. Dangerous underpinning, deep foundation Magnitude of contract. Eg. Small, simple contract Plant and equipment to be used Any obligation or restriction imposed by employer Commitment number of projects Availability of resources by the contractor

1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5

79

10.

What are other factor(s) that you think influence the Pricing of preliminary by the contractors. (Please specify your good thoughts) ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ Based on your good experience, normally how much is the percentage approximately allowed in tender irrespective of type of project (please tick) 56% 67% 89% More than 10%

11.

12.

Based on your good experience, please provide opinions and Comments on How to ensure that the preliminaries item is fully priced by the Contractor for better competitive cost. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________

We thank you your corporation in completing this questionnaire. We are confident that the information you provided will greatly us in our research. Please return he completed questionnaire in the self-addressed and postage-paid envelope not later than 15 October 2006. Once again thank you for your support