FACULTY OF ARCHITECTURE PLANNING AND SURVEYING (FSPU)
AP773 MASTER OF ARCHITECTURE
MARCH 2019 – JULY 2019
ARK 876: CONSTRUCTION PROJECT MANAGEMENT
ASSIGNMENT 1: PROCUREMENT SYSTEM FOR THESIS PROJECT
Prepared for: AR. EMBONG MOHAMAD
Prepared by:
NAME: NUR ALYAA BINTI ADNAN (M.Arch 04)
STUDENT ID: 2017457596
TABLE OF CONTENT
1. PROJECT DETAILS
1.0 PROJECT BACKGROUND
1.1 EXECUTICE SUMMARY
2. FACTORS FOR PROCUREMENT METHOD
2.0 CLIENT’S REQUIREMENT
2.1 COST
2.2 QUALITY
2.3 TIME
2.4 EXTERNAL INFLUENCE
3. RECOMMENDED PROCURMENT METHOD
4. RISK MANAGEMENT
5. CONCLUSION
6. REFENRECES
Design Thesis Procurement Report
Biomechanics Sports Coaching & Training Camp
1. PROJECT DETAILS
1.0 PROJECT BACKGROUND
Project Title:
PROPOSED BIOMECHANIC SPORTS COACHING & TRAINING CAMP AT JALAN STADIUM BANDAR MALAWATI, KUALA SELANGOR, FOR AKADEMI KEJURULATIHAN KEBANGSAAN (AKK) IN COLLABORATION WITH THE MINISTRY OF YOUTH & SPORTS.
Client:
Akademi Kejurulatihan Kebangsaan (AKK)/ National Coaching Academy
Aras3,Gimnasium3,InstitutSukanNegara,SriPetaling,57000BukitJalil,Wilayah
Persekutuan Kuala Lumpur
Tel: 03-2072 6811
Fax: 03- 2072 6812
Location:
Jalan Stadium, Bandar Malawati, 45000, Kuala Selangor, Selangor.
Coordinate: 3°19'12.3"N 101°15'18.6"E
Site Area: 13,826 sqm
Built Area: 11,061 sqm
Building Type: Services (Academic Building)
Figure 1: Bird's Eye View of proposed project rendering. Source: Author1.1 EXECUTIVE SUMMARY
For this proposed design project, it is set that this paper is to propose a procurement strategy that is suitable for the construction of the Biomechanics Sports Coaching & Training Centre for the National Sports Coaching Academy (AKK) Malaysia.
Consequently, this report objectives are to suggest and advise on the proposed procurement method, financing, risk management and the matters on regarding consultants and contractors for the project during its whole project duration
The proposed procurement is the Private Finance Initiative (PFI) procurement method, in which was carefully chosen based on client’s requirement, time and cost constraint, construction buildability or output quality and includes management of possible risk.
2. FACTORS FOR PROCUREMENT METHOD
2.0 CLIENT’S REQUIREMENT
BRIEF AND REQUIREMENT
The proposed project is a new typology of sports training camp build specially to train different levels of professional Malaysian sports coaches that registered under the National Coaching Academy or known as Akademi Kejurulatihan Kebangsaan (AKK). The facility mainly focuses on the biomechanics branch of sports science.
It is an academic building equipped with biomechanics-related training programs, classes and sports facilities. The main facility is the biomechanics gymnasium that trains and helps correct to the occupants’ bodily movements during sporting activities. The building applies different degrees of ramp inclination as its’ main circulation and access that encourages corrections on movements, and improvement on general health by increasing the heart rate incrementally and promotes calorific burn
Hybrid construction of steel structure and concrete elements are proposed as the main construction materials and structural method for the building.
CONSIDERINGTHEBRIEF INRELATIONTO THEPFIPROCUREMENT METHOD:
The PFI procurement process in Malaysia context, involves the transfer of the responsibility of financing, managing capital investment and services in relation to public sector or government assets to the private sector. The appointed or involved concession in this procurement is responsible for the construction, management, maintenance, and operation of the facility within the contracted period. In exchange, the government will pay the company in the form of lease
rental charges which appropriate with the quality of the service provided, thus ensuring returns on investment
2.1 COST COST & PRICE CERTAINTY
The Malaysian approach for the financing of PFI projects were divided according to the scale of the project. Projects under the RM20 billion scope will be publicly funded and endorsed by the Ministry of Finance. MOF will take the role of the private sector in this PFI procurement. Therefore, the capital fund of this project construction will be loaned by the EmployeesProvidentFund (EPF). EPF or better known as KWSP is a government agency under the Malaysian Ministry of Finance (MMOF). The government allocates an allowance used to finance the project. Progress payment will be made to the contractor with the approval of Public Works Department (PWD).
In this procurement, the private company (contractor) is only responsible during the construction phase of the project and continues with the leasing contract with the government, hence, no obligation in maintaining the project except during the defects liability period (DLP). In result, the MMOF is required to allocate future operating expenditure for building maintenance.
CONSIDERING THE COST & PRICE CERTAINTY IN RELATION TO THE PFI PROCUREMENT METHOD:
One of two formats of the Malaysian version of PFI model is targeted at small to medium scale social infrastructure projects (e.g. schools, community halls, etc.) in which is very suitable for the nature of this proposed project. Social infrastructure scale projects gave the opportunity for small to medium sized private sector contractors to participate in the tendering process.
Regarding payments, the Department of General Director of Lands and Mines (DGDLM) will hold onto the grants once the training camp is completed and ready to operate In this project, DGDLM acts as the intermediary between the Ministry of Youth and Sports (KBS) and the Special Purpose Firm (SPF) for the construction of the assets, and in return, the Ministry of Youth and Sports will pay the lease charges to the SPF through DGDLM. It is noted that EPF will gain profits through interest payments from the long-term contract between the SPF and the DGDLM.
As a side note, after approval process the particular ministry involved, in this case the Ministry of Youth and Sports (KBS), runs a tendering process for the selection of contractor and is responsible in monitoring the project. Whilst SPF is obliged to pay the contractor with the EPF fund. After the contract between the SPF and DGDLM expires, the asset will be fully transferred to the government.
2.2 QUALITY
VALUE & BUILDIBITY
In Malaysia, PFI projects will be included with an output specifications and enforcementsofKPIs,hence,givingincentivestotheconcessionariestoperform well. Therefore, PFI projects has a certain level standard of quality that needed to be achieve in terms of the construction of the asset. PFI is driven by economist hence providing better value of money and promotes the maintenance culture in providing efficient public services.
As result, PFI procurement provides the solution into developing innovative and better public infrastructureprojects withoutsufferingdelays, cuttingcorners and bad workmanship in which
has been negatively affecting the government
Through this suggested procurement, it also introduces highly skilled professionals and private sectorsto beincludedinrevolutionizingideasinconstructingthe project, concurrently providing better project management, quick and innovative structural solutions and logical decision making.
CONSIDERING THE QUALITY IN RELATION TO THE PFI PROCUREMENT METHOD:
By implying the public funding, it allows for the selection of the idea of quality of work to be made through transparent competitive bidding among the medium sized contractorsinsteadofgivingtheprojecttoapre-selectedconcessionwithuncertainty of its price and performance
Through this method, the government could ensure the costing for the future maintenance and operating cost were also applied during tendering rather than plainly choosing a company with the lowest bidding.
2.3 TIME FUNDING
The early involvement of the financial institutions and endorsed funding in PFI projects manage to accelerate the negotiation process towards establishing the initial cost, concurrently lead to faster commencement of construction work. The certainty of funding provides confidence to all parties contracted in the project.
TENDERING AND CONSTRUCTION
Even if the tender evaluation, negotiation and the tendering process often creates delays in the early stages of the project. However, through careful and meticulous selection of concessions leads to the involvement of private sectors of highly skilled professionals, thus, helps generates quicker and better structural solution subsequently lead to time and cost-saving decision making during the construction period.
BUILDING OPERATION
Despite the long-term contract period between EPF and the DGDLM depending on duration of the service, upon completion, the SPF will lease the asset for operation commencement. Payments and profits will be obtained only when the building is completed and starts running. Therefore, operation date creates a powerful incentive for the appointed concession to deliver the project on time or before the contracted completion date.
2.4 EXTERNAL INFLUENCE
LOCAL AUTHORITY
The sports coach training camp is a government-based social infrastructure and will be governmentally funded. This result, the development approval process will only take 4 months, in which 2 months faster compare to a private sector project
The application and submission of development approval to the Local Planning Authority for Kuala Selangor District can be done prior or simultaneously to the tendering period Upon receiving the development approval, the construction period will begin accordingly to the timeline of the whole project following up until the post-construction stage.
COMMUNITY AND ENVIRONMENTAL SURROUNDING
The project site is located within the premise of Kuala Selangor Sports Complex, in which houses an outdoor and indoor stadium, a mini go-cart racing track, assorted sports courts and fields, plus an outdoor square which also serves as a vehicle parking space during certain events
Upon careful consideration, even though it is near to a school and residential area, the construction however, would not cause any major disturbance to its site context as it is sited inside a secured location and has about 100 metre radius of buffer zone
3. RECOMMENDED PROCUREMENT METHOD
3.0 PFI PROCUREMENT
Concerning to the client, the National Coaching Academy or publicly known as the Akademi Kejurulatihan Kebangsaan (AKK) is under the administration of the National Sports Institute (ISN), in which is a government-based subsidiary under the Ministry of Youth and Sports (KBS) Malaysia, it is appropriate for such project to undertake the PFI procurement method, not only because it is a public works infrastructure but also it is best suited for projects that requires a quite duration of maintenance and operation support to ensure stability and sustainability.
The PFI procurement method enables this government-based project to be funded in advance by a government-linked entity; EPF, thus the ministry that proposes the project; KBS is not obligated to bear the financial and political cost. Problems such as complex design or advance structural construction and operations could be minimize
Another factor to be considered, Malaysia ministries projects have always been plagued by issues like underfunded, time overruns, poor workmanship and lacking innovativeness in public services and infrastructure, nonetheless PFI procurement qualifies the government to achieve the quality and services they required through a stipulated output specifications and Key Performance Indicator (KPI) targets, thus ensuring value and success of the project.
4. RISK MANAGEMENT
Regarding the suggestion of Private Finance Initiative (PFI) procurement method, there are some potential risks that may arise during the project delivery;
NO POTENTIAL RISK RISK CONTROL
1 Project construction is given to a pre-agreed company (monopolistic advantage, cronyism, etc), limits
Suggest selection of concession through competitive bidding and transparency
choices, uncertainty in cost and quality.
2 Matter of disputes and obligations during concession period
3 Risk distribution/ allocation
A single consortium or central management who responsible for the concession will be responsible for any dispute arises, allowing quick resolution
Suggest that any identified risk involving the project should be borne by the party with best capability. Risk transfer depending on the characteristics of the project guarantees success and efficiency.
5. CONCLUSION
With the rights of choosing the suitable procurement method for this project, the Malaysian version of PFI procurement is appropriate and could give fairly distributed advantages on all contracted parties. With the upfront payment for the project construction, it is agreed that it helps encourage greater involvement from private sector in helping the government in providing public infrastructures and services, ensuring output success and early profits.
The different approach of Malaysia PFI compared to other countries gave the government the opportunity to closely monitor and measure the advantages of the privatised projects through giving the risk of financing the project to a governmentlinked company (GLC)
Therefore, the public are aware of such project due to the transparency of political investment through this procurement in which is conducted in such fair and transparent manner, thus benefitting all; the government, participating private sector and the public.
Concurrently, PFI procurement helps create a ripple effect in terms of new flow of factor income generated from new suppliers, professional skills, and advance technologies etc. that might be impossible to gain from a traditionally procured government project.
6. REFERENCES
Ahadzi, M., & Bowles, G. (2001). THE PRIVATE FINANCE INITIATIVE: THE PROCUREMENT PROCESS IN PERSPECTIVE, 1(September), 5–7.
Adoption of Private Finance Initiative (PFI) in Malaysian Public Works Projects: Are We Ready ? (n.d.), 105–120.
Zainon, N., Lou, E., Mohd-Danuri, M. S., & Rahim, F. A. (n.d.). Analysis of Practices for Private Finance Initiative (PFI) Procurement Process Malaysia vs. United Kingdom, 13–21.
Ismail, S., & Rashid, K. A. (2007). PRIVATE FINANCE INITIATIVE (PFI) IN MALAYSIA: THE NEED FOR AND ISSUES RELATED TO THE PUBLIC SECTOR COMPARATOR (PSC), (July 2018). https://doi.org/10.21002/jaki.2007.07