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THE IMPORTANCE OF PRELIMINARIES ITEMS
NORHISHAM B. ABDUL GHANI
UNIVERSITI TEKNOLOGI MALAYSIA
" I hereby declare that I have read this project report and in
my opinion this report is adequate in term of scope and quality
In fulfillment of the requirement for the award of the degree of
Master of Science (Construction Management)'o
I Signature :
Name of Supervisor ;
Date :
Assoc. Prof. Aziruddin Ressang
12th .December 2006
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.
V
TABLE OF CONTENTS
CHAPTER TITLE PAGE
TITLE PAGE II
DECLARATION III
DEDICATION IV
ACKNOWLEDGEMENT V
ABSTRACT VI
ABSTRAK VII
TABLE OF CONTENTS VIII
LIST OF TABLES IX
LIST OF FIGURES X
LIST OF APPENDIXES XI
1 INTRODUCTION
1.1 Background 1
1.2 Problem Statement 2
1.3 Objectives 4
1.4 Scope of Study 4
1.5 Brief Research Methodology 5
2 THE PRELIMINARIES ITEMS
2.1 Introduction 7
2.2 Definition of Project Overhead as Preliminaries 8
2.3 The Category of Preliminaries item 9
VI
2.4 The preliminaries Section in standard Method of
Measurement (SMM) 11
2.5 The Preliminaries Section in P.W.D Format 16
2.6 Summary 19
3 MANDATORY ITEMS IN PRELIMINARIES
3.1 Introduction 21
3.2 Items Normally priced by Contractor 21
3.3 The Mandatory Items 24
3.3.1 Insurance 25
3.3.2 Workmens’ Compensation 25
3.3.3 Performance Bond 25
3.3.4 Setting Out 26
3.3.5 Construction Industry Development Board
(Payment for levy) 27
3.3.6 As-built Drawings 28
3.3.7 Work Programme 28
3.3.8 Hoarding and Fencing 29
3.3.9 Client/Employer’s Requirement 29
3.3.9.1 Vehicle for the S.O 30
3.3.9.2 Equipment and Facilities 31
3.4 Conclusion 32
4 METHODOLOGY
4.1 Introduction 33
4.2 Determination of the Research Objectives 33
4.3 Literature Review 34
4.4 Data Collections 34
4.4.1 Development of the questionnaire in the survey 35
4.5 Interview with the experts 35
4.5.1 Objective of the interview 36
VII
4.5.2 Methodology of interview 36
4.5.2.1 The structure Interview Questionnaire 37
4.5.2.2 Face to face interview 37
4.6 Industry Questionnaire of the industry Survey 38
4.6.1 Methodology of the industry Survey 38
4.6.2 Questionnaire for the industry Survey 38
4.7 Data Analysis 39
4.7.1 Content Analysis 40
4.7.2 Frequency Analysis 40
4.7.3 Average Index Analysis 40
4.7.4 Relative Index Analysis 42
5 FACTORS INFLUENCING PRICING DECISIONS
5.1 Introduction 44
5.2 Factor Influencing Pricing Decisions 44
5.2.1 Understanding Contract Particular 45
5.2.2 Site Condition 45
5.2.3 Location of the site 46
5.2.4 Difficult contract and restriction site 46
5.2.5 Magnitude of Contract 47
5.2.6 Plant and Equipment 47
5.2.7 Any Obligation or restriction imposed by Employer 48
5.2.8 Commitment number of project 48
5.2.9 Availability at Resources by the Contractor 48
5.3 Data analysis and Result 49
5.3.1 Background of the Respondents 49
5.3.2 The Industry Questionnaire Survey 51
5.3.3 Factor that influence the pricing of Preliminaries
By Contractor 52
5.3.4 Other Factor that influence the pricing of
Preliminaries by Contractor 53
VIII
5.3.5 General Comment from the respondents 53
6 DISCUSSION
6.1 Introduction 55
6.2 Factor influence The Pricing of Problem Items 56
6.3 Other Factor that Influence The Pricing of 59
Preliminaries items by the Contractors.
6.4 The Summary of Overall Findings of Study 60
7 STRATEGIES IN PRICING PRELIMINARIES
7.1 Introduction 62
7.2 Strategy in Pricing Preliminaries 62
7.2.1 Establishing pricing objectives 63
7.2.2 Examining each of prelim items 65
7.2.3 Considering Factors Influencing pricing decisions 66
7.2.4 Attention to methods of price determination 67
7.2.5 Tactical consideration in setting prices 68
7.3 Conclusion 69
8 CONCLUSION AND RECOMMENDATION
8.1 Introduction 70
8.2 Conclusion 70
8.3 Recommendation for further study 72
IX
LIST OF TABLES
TABLE NO. TITLE PAGE
4.1 The level of agreement and evaluation for average
Index analysis 41
5.1 Distribution of the respondents based on disciplines 50
5.2 Distribution of panel respondent based on experience 51
5.3 Number of respondent to the Questionnaire 52
5.4 Frequency analysis or factors in pricing preliminaries 53
6.1 Factor influencing price in preliminaries according to
ranking of importance 56
X
LIST OF FIGURES
FIGURE NO. TITLE PAGE
1.1 Research methodology sequence. 6
4.1 Five ordinal measures of agreement of Likert’s scale. 35
5.1 Distribution of expert respondent based on professional
by percentage. 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
A Survey Questionnaire 76
1
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
client’s and priced what client’s 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 client’s 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) To identify the mandatory items in the preliminary
2) To identify the factor that influence in pricing preliminaries
3) 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.
5
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
6
Figure 1.1 Research Methodology Sequence
Determining the Research Objective and Scope
Literature Review
Data Collection
Data Analysis
Discussion
Conclusion and Recommendation
Interview with the Experts panel (Face to Face & Structured
Questionnaire)
Questionnaire Survey with the Contractors
7
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) Supervision
b) Clerical staffs
c) Site offices and compound facilities
d) Services
e) Site transports
f) Sundries
g) 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 estimator’s 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 The Preliminary particulars – names of the parties, description of the
site, description of the works, and submission of tenders.
2 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 Employer’s
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 sub-
contractor 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 Contractor’s 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-contractor’s 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 Contractor’s
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) Plant, tools and vehicles;
b) Scaffolding;
c) Site administration and security;
d) Transport for workpeople;
e) Protecting the works from inclement weather.
f) Water for the works
g) Lighting and power for the works
h) Temporary roads, hard standings, crossings and similar items.
i) Temporary accommodation for the use of the Contractor.
j) 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) General Information
2) Condition of contract
3) Contract administration
4) General Facilities and Obligation
5) 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) Scope of works
ii) Contract drawing
iii) Setting out and survey
iv) Site cost management – Site agent etc
v) Variation work, Provisional and Prime Cost Sum
vi) Insurance-Public Liability, Fire, Contractors All Risk etc.
vii) Workmen’s Compensation
viii) Performance Bond – Bank Guarantee etc.
ix) Nominated Sub Contractors
x) Defect Liability Period
xi) Liquidated Ascertained Damages
xii) 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) Progress work and chart for every month
ii) Progress report
iii) Progress Photograph
iv) Site meeting
v) Licenses and permit
vi) Instruction of works
vii) Progress Payment
viii) Maintenance of the site
ix) Other expenses
d) 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) Plant and equipment
ii) Safety, health and welfare of the workmen
iii) Providing scaffolding
iv) Temporary water storage
v) Temporary electricity
vi) Providing temporary access road to the site
vii) Temporary building
a) Site office
b) Canteen
c) Store, etc
19
viii) Telephone
ix) Temporary hoarding
x) 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 that’s 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) Site Supervision – Site Agent etc
2) Temporary offices, storage sheds, man store
3) Small plant
4) Haulage and Unloading Plant
5) Cranes, Passenger lifts(tall building)
6) Concreting plant and hoist
7) Scaffolding
8) Safety Measures
9) Code of welfare conditions
10) Telephone
11) Temporary roads
12) Temporary compounds
13) Temporary fencing, hoardings, screens, gantries and walkaway
14) Setting out
15) Attendance on clerk of works
16) Watching and lighting
17) Temporary Power and Site Lighting
18) Pumping and baling
19) Traveling time fares
20) Additional overtime
21) Notices and fees to local Authorities and Public Undertakings
22) Transportation to site
22
23) Maintenance of the public and private roads
24) Weather protection and precautions
25) Protection and casing of finished work
26) Completion i) Defect liability
ii) Drying out
iii) Tidying site and clearing rubbish
iv) Cleaning out Buildings
v) Clearing windows and floors
27 Testing materials
28 Temporary water on site
29 Insurances
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) Site Condition and Ground Condition
b) Contract Document
c) Contractual Obligation Procedures
d) Plant, Site Facilities, Social And Site Safety
e) 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 Contractor’s 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 Workmen’s compensation
Clause 34 under JKR 203A (Rev 10/83), Workmen’s 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 Contractor’s legal
liability. The contractor has to insured certain amount of money not less than 20% of
contract sum for workmen’s 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 Banker’s
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 Banker’s 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 Contractor’s 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 Architecture’s
and Civil and Structure’s 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 data’s 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/Employer’s Requirement
The section will include specific Employer’s 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) one No. new four wheel drive engine vehicle of not less
than 2500c.c
2) New four wheel drive of 1300 c.c Kembara
3) 1 No. 2000 c.c of Honda CRV
4) 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 manufacturer’s
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) Notebook Computer with Intel Pentium 4
2) Computer with Intel Pentium 4 Processor
b) Printer
1) ‘Xerox’ or other equal and approved Phaser laser Printer
c) Software
d) Digital camera
e) Photostat machine
f) LCD projector
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.
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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 Likert’s 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 Very Strongly Agree
1 2 3 4 5
Increasing order of agreement
Figure 4.1 : Five ordinal measures of agreement of Likert’s scale
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) To identify mandatory item that should be priced by contractor.
iii) To identify the factors that influence in pricing the preliminaries
items
iv) 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 : To obtain information about respondents’ background;
Section B: To obtain general information about the organization;
Section C: 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 expert’s 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 respondent’s
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 Level of Agreement of Evaluation
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
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
5∑x1 + 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 Architect’s 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 client’s 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 contractor’s
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 Distribution Response Response %
Project Directors 20 1 5%
project Planner 20 1 5%
Quntity Surveyor 20 10 50%
Project Managers 20 3 15%
Engineer 20 5 25%
Supervisor 20 0 0%
Project Managers
15% Quntity Surveyor50%
project Planner5%
Project Directors
5%Supervisor
0%Engineer25%
Project Directors
project Planner
Quntity Surveyor
Project Managers
Engineer
Supervisor
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 No. of Respondents Total %
2 - 5 Years 2 10%
6 - 10 Years 10 50%
11 - 15 Years 6 30%
16 - 20 Years 2 10%
> 20 Years 0 0%
Total 20 100%
No. of Respondents
10%
50%30%
10% 0% 2 - 5 Years6 - 10 Years11 - 15 Years16 - 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 Frequency Percentage (%)
1 Replied with complete
questionnaires
20 40%
2 No reply 40 60%
3 Replied with incomplete
questionnaire
0 0%
60 100%
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.
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1. Availability of resources by the contractor
2. Plant and equipment to be used
3. Any obligation or restriction imposed by employer
4. Site Condition
5. Commitment number of projects
6. Location of the Site
7. Magnitude of contract. Eg. Small, simple contract
8. Lacking of understanding contract particular and Preliminary items by Contractor
9. Contract difficulties and site restriction
Frequency analysis
1 2 3 4 5 No. Questions
Freq % Freq % Freq % Freq % Freq %
Avg Index
Rel. Index Rank
1 Lack of understanding of each preliminary by Contractor
0 0% 3 15% 8 40% 4 20% 5 25% 3.55 0.71 8
2 Site Condition 0 0% 0 0% 6 30% 6 30% 8 40% 4.10 0.82 4
3 Location of site 0 0% 1 5% 3 15% 10 50% 6 30% 4.05 0.81 6
4 Contract difficulties and site restriction,
0 0% 3 15% 8 40% 6 30% 3 15% 3.45 0.69 9
5 Magnitude of Contract. 0 0% 2 10% 5 25% 6 30% 7 35% 3.90 0.78 7
6 Plant and equipment to be used
0 0% 1 5% 2 10% 2 10% 15 75% 4.55 0.91 2
7 Any obligation or restriction imposed by employer
0 0% 1 5% 2 10% 5 25% 12 60% 4.40 0.88 3
8 Commitment number of projects
0 0% 2 10% 3 15% 7 35% 8 40% 4.05 0.81 5
9 Availability of resources by the Contractor.
0 0% 0 0% 2 10% 5 25% 13 65% 4.60 0.92 1
Table 5.4 : Frequency analysis on factors influence in pricing Preliminaries
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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. Depends on site condition and type of a project- infra or building works
ii. Uncertainty of material price
iii. Availability of resources by the contractor
iv. Using Plant and equipment (rare contribute to higher price)
v. Client Financial Background
vi. Site Condition and Resource as plant for equipment
vii. Extra requirement by clients that need to be priced
viii. Location, Local Authority requirement.
ix. 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. Contractor to have their own standardize checklist in order to avoid missing items during tender stage.
ii. Provide the clause in the condition of contract
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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
iv. Simplified the preliminaries description, use the simple word & put the
required item only.
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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.
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6.2 Factor Influence The Pricing Of The Preliminaries Items
Frequency analysis
1 2 3 4 5 No. Questions
Freq % Freq % Freq % Freq % Freq %
Avege Index
Rel Index Rank
1 Availability of resources by the Contractor.
0 0% 0 0% 2 10% 5 25% 13 65% 4.60 0.92 1
2 Plant and equipment to be used
0 0% 1 5% 2 10% 2 10% 15 75% 4.55 0.91 2
3 Any obligation or restriction imposed by employer
0 0% 1 5% 2 10% 5 25% 12 60% 4.40 0.88 3
4 Site Condition 0 0% 0 0% 6 30% 6 30% 8 40% 4.10 0.82 4
5 Commitment number of projects
0 0% 2 10% 3 15% 7 35% 8 40% 4.05 0.81 5
6 Location of site 0 0% 1 5% 3 15% 10 50% 6 30% 4.05 0.81 6
7 Magnitude of Contract. 0 0% 2 10% 5 25% 6 30% 7 35% 3.90 0.78 7
8 Lack of understanding of each preliminary by Contractor
0 0% 3 15% 8 40% 4 20% 5 25% 3.55 0.71 8
9 Contract difficulties and site restriction,
0 0% 3 15% 8 40% 6 30% 3 15% 3.45 0.69 9
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. Availability of resources by the contractor
2. Plant and equipment to be used
3. Any obligation or restriction imposed by employer
4. Site Condition
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5. Commitment number of projects
6. Location of the Site
7. Magnitude of contract. Eg. Small, simple contract
8. Lacking of understanding contract particular and Preliminary items by Contractor
9. Contract difficulties and site restriction
The analysis is aim to pool the respondent’s 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
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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
55%25%
15% 5% 5 - 6 %6 - 7 %8 - 9 %More Than 10 %
Figure 6.2: Percentage allow for lump sum (Preliminaries Item) by respondents
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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%
50%30%
10% 0% 2 - 5 Years6 - 10 Years11 - 15 Years16 - 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
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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
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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.
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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
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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) Establishing pricing objectives
ii) Examining each of preliminaries items
iii) Considering factors influencing pricing decisions
iv) Attention to methods of price determination
v) 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.
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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) Insurance,
ii) Workmen’s compensation,
iii) Performance Bond,
iv) Setting out,
v) CIDB, payment for levy
vi) As Built Drawing,
vii) Work Programme,
viii) Hoarding and Fencing, and
ix) Client/Employer’s 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.
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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 under-
pricing 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 long-
term 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.
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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.
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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 contractor’s 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 contractor’s understanding
of the pricing decision process.
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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) Insurance
2) Workmen’s compensation
3) Performance Bond
4) Setting out
5) Construction Industry Development Board
(Payment for levy)
6) As-built Drawing
7) Work Programmes
8) Hoarding and fencing
9) Client/Employer’s Requirement
i) Vehicles for the S.O
ii) Equipment and facilities
II. The Influencing Factor in pricing preliminaries
1) Availability of resources by the Contractor
2) Plant and equipment to be used
3) Any Obligation or restriction imposed by employer
4) Site condition
5) Commitment number of project
6) Location of site
7) Magnitude of contract
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8) Lack of understanding of each preliminaries by contractor
9) 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.
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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.
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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. Macgraw-
Hill 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.
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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
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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 2. Supplier 3. Contractor 4. Government Agency 5. Consultant 6. Others (please indicate) _________________________ Q2. What is your position in your company?
1. Project Director 2. Project Managers
3. Project Planner 4. Engineer 5. Quantity Surveyor 6. Supervisor 7. Others (please indicate) ________________________
Q3. How long has you involved in Construction Industry 1. < 2 years 4. 11-20 years 2 2 – 5 years 5. > 20 years 3. 6 – 10 years
SECTION A
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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. Lacking of understanding contract particular and preliminary items by Contractor 1 2 3 4 5
2. Site Condition 1 2 3 4 5 3. Location of the Site 1 2 3 4 5 4. Contract Difficulties and site restriction 1 2 3 4 5 Eg. Dangerous underpinning, deep foundation 5. Magnitude of contract. Eg. Small, simple contract 1 2 3 4 5 6. Plant and equipment to be used 1 2 3 4 5 7. Any obligation or restriction imposed by employer 1 2 3 4 5 8. Commitment number of projects 1 2 3 4 5 9. Availability of resources by the contractor 1 2 3 4 5
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10. What are other factor(s) that you think influence the Pricing of preliminary
by the contractors. (Please specify your good thoughts) __________________________________________________________________________________________________________________________________________________________________________________________
11. Based on your good experience, normally how much is the percentage approximately allowed in tender irrespective of type of project (please tick)
5 – 6 % 6 – 7 %
8 – 9 % More than 10%
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
