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My company, i-PM Consult Sdn Bhd has been appointed as Development and Project Management Consultant by the client, Blue Diamond Realty Sdn Bhd for a new township project, in which will take 18 months to complete for the Phase1 with GDV of RM300 millions.
As the Managing Consultant, I will lead a team of professional members consists of architects, engineers (civil and structural and mechanical and electrical), quantity surveyors and others specialists consultants.
As a leader, I will suggest the non-traditional method which is design and build as a suitable procurement method for this fast track project in order to ensure that the whole project will be completed within the stipulated time, budgeted cost and desired quality.
Fast-tracking is particularly common and appropriate for industrial design-build construction contracts. This construction method reduces construction problems and poor workmanship significantly. To protect the owner, this method also provides quality services with checks and balances that are not found in the other methods. Remember, the negotiated general contractor's main incentive is to get the project completed within the defined budget and on time.
In this assignment, the duties of a development and project management consultant as project leader will be mentioned. I will also discuss the challenges faced in implementing fast track procurement project.
The construction industry is often known as a very highly fragmented industry with a large number of activities involving different parties and professionals such as architects, engineers, quantity surveyors, contractor teams, suppliers, financiers and others. By being a fragmented industry, management efficiency and competency in the industry is needed to gain a higher level of competitiveness. The needs for such an approach has become more important and more pronounced, not only due to the increased size and complexity of building projects but also as a result of growing participation by international contractors.
One of management solutions that has been widely used to improve efficiency of a project is through the use of Project Management Consultant (PMC) services. The use of its services has increased in every construction industry throughout the world.
In the Malaysian scenario, Project Management Consultant can be described as a group of professionals which has been formed to manage a project from the start to its completion stage.
The role of development and project management consultant is to re-integrate the very much disintegrated construction industry in order to avoid, as far as possible, conflict, lack of communication and waste of efforts through better co-ordination, closer cooperation and more effective control. Project management consultants are also required to have a body of knowledge in order to be consultant to others. Without those required knowledge, the chances of delivering the project as planned is minimal.
Development and Project Management Consultant (PMC) has become an important entity in the construction industry and the use of its services has increased significantly in recent years.
There are three major stages that requires the services of Project management Consultant:
project design and construction stages
project handover and commissioning stage
The list of services that should be provided by Project Management Consultant can be viewed in Figure 1.
Figure 1: Schedule of Services to be provided by Project Management Consultant
Figure 2 shows the five stages which require the services of Project Management Consultant (PMC):
initial stages with the client,
Figure 2: Services provided by Project Management Consultant (PMC)
Description of duties
Scope of Works
To analyse the project definition in functional terms to meet the
performance objectives and to advise the clients with respect to the
definition, consistency, practicability and controllability of all aspects of the project
To carry out feasibility studies, appraisal and to ensure that it is feasible functionally, technically and financially
To make site visits and to plan site layout and arrange of early site
arrangement and arrangements for geological investigations, site survey and to analyze the soil investigation reports and to prepare in brief project summary which include 'Schedule of Accommodation' for every building
Contract and Legal
To advise the clients on the terms and conditions of contracts, to prepare the contract document, To prepare Letter of Offer (LO) and Letter of Acceptance (LA) and assist the client on terms and condition inside both contracts
To prepare various levels of project schedules for planning and
implementation and to monitor all the activities, to provide input to the
project schedule regarding construction activities and to examine and
analyze the project planning
To convene meetings on a fortnightly basis or more frequently as the need arises, meet with consultant, client, and contractor at least once a month, and act as Chairman of such Project Management Meeting
To prepare meeting report and monthly progress report
Design and Other
To coordinate the services of the Design Consultants and other professional Consultant, examine and consider all plans produced by the Design Consultant, examine and control designs and plans, and liaise with the relevant authorities for approval
To prepare appropriate documents for calling for tenders or proposal, assist client in calling for prequalification of tenders, submit a report on tenders received and make recommendations, prepare and submit ATDA (As Tendered Detail Abstract), and analyze and examine all proposed tender rate
To prepare budget and business plan, and assist the client on the price
To control Variation of works, minimise wastage of materials and financial control over all payments, analyze and control costing and analyze any application made for changes of work, monitor changes in scope and the preparation of required budget variation
Table 1 below shows the framework of duties that should carried out by the Development and Project Management Consultant in Malaysia.
To ensure timely completion of the Project and instruct the Contractors on any incomplete works and defects, monitor project progress, take
reasonable measures to control progress, arrange for site inspection,
monitor any defect, and arrange for repair works
To coordinate the Contractor's work in accordance with his programme and Site planning and progress chasing in the event, to take immediate action on the construction issues, solve problem on site, deal with local authority on application for approval for 'Certificate of Fitness' and preparation of Certificate of Practical Completion
To arrange for Financial Statements showing expected final costs and
prepare and recommend the certification of all final accounts, and assist the client on payment to the contractor
To ensure that the building plant installations and all services operate in conformity with the requirements and design specifications, supervise and controlling of all test on site, As a witnesses of all test carried out by the contractor, to arrange for inspection, to ensure the quality of works when necessary and to prepare the report before handling over to the client
To assist client to obtain the issuance of the relevant Certificate of Fitness, to provide client a maintenance, operating and service manual, to assist and ensure that client receives a full set of as-built drawings and preparing a programme for maintenance
Table 1 : Framework of duties that should be carried out by the Development and
Project Management Consultant in Malaysia.
The organizational pattern which refers to the relationship between the Project Management Consultant and all parties involved in the project can be viewed in Figure 3 below.
Figure 3 Organizational Pattern
I will suggest the non-traditional method which is design and build as a suitable procurement method for this fast track project in order to ensure that the whole project will be completed within the stipulated time, budgeted cost and desired quality.
The design-build delivery system often cites the original "Master Builder" model used to build most pre-modern projects. Under the Master Builder approach, a central figure of the architect held total project accountability. From inception to completion, the master builder was the key organizational figure and strictly liable to the owner for defects, delays, and losses. The design-build system is a return to some of the fundamentals of the Master Builder approach. For nearly the entire twentieth century, the concept of Design-Build was classified as a non-traditional construction method.
Design-build (or design/build, and abbreviated D-B or D/B accordingly) is a construction project delivery system where, in contrast to "design-bid-build" (or "design-tender"), the design and construction aspects are contracted for with a single entity known as the design-builder or design-build contractor. The design-builder is usually the general contractor, but in many cases it is also the design professional (architect or engineer). Where the design-builder is the contractor, the design professionals are typically retained directly by the contractor. The most efficient design-builder has design and construction professionals working directly for the same at-risk entity. This is one of the oldest forms of construction since developing from the "master builder" approach.
Overview of process
Design-build focuses on combining the design, permit, and construction schedules in order to streamline the traditional design-bid-build environment. This does not shorten the time it takes to complete the individual tasks of creating construction documents (working drawings and specifications), acquiring building and other permits, or actually constructing the building.
Typically the hallmark of a Design-Build project is that one organization is responsible for both design and construction of the project. If this organization is a contractor, the process is known as "Contractor-led Design-Build". If the organization is a design firm, the process is known as "Design-led Design-Build". In either case, the organization employed by the owner rarely handles both aspects of design and construction in-house. In fact, the organization often subcontracts with on-site personnel (if design-led) as well as architects and engineers (if contractor-led).
Figure 4- Project delivery methods
Design-build is a project delivery method in which the owner retains both design and construction services in the same contract. Design-build delivery involves the contractor early in design and provides inherent constructability input to the design process. The design-builder is the legal entity that owns the details of design during construction and as a result, is accountable to the owner for the cost of any errors or omissions encountered in construction. As the owner no longer owns the details of design, its relationship with the design-builder must be based on a strong degree of mutual professional trust. The design-builder can literally control the project delivery process. As a result, the design-build delivery method has proven to be highly successful in compressing the project delivery period.
Due to the minimal amount of design at the time of contract award, the design-builder is generally selected through a best-value procurement that combines cost and price.
Specifically, design-build focuses on combining the design, permit, and construction phases in order to streamline the traditional design/bid/build process. A design-build firm strives to bring together design and construction professionals in a collaborative environment to produce the most cost-effective design and to simultaneously complete their tasks.
The diagram below illustrates some of the major benefits of the Design-Build method vs. the traditional Design-Bid-Build method.
Using the traditional method of Design-Bid-Build, a complete or nearly complete set of documents must be fully drafted, then issued for pricing from all of the various trades. Only at this time can the true cost of the project be determined. Quite often, the drawings result in cost overruns and need to be rethought, redrafted, and once again resubmitted for pricing. This method often leads to frustration, lost time, and additional design fees.
Using the Design-Build approach, the preliminary design is agreed upon by the designer or architect and customer first. Then the project cost is determined. This method involves the various trades to establish costs up front, identify cost saving or value engineering methods, and ensures that the drawings accurately reflect the requirements, budget and schedule of the customer.
Here is a sequence of events for a design-build contract.
The owner or agent first writes a request for proposals.
Then selects and contracts with a firm that performs both design and construction.
If, for example, a contractor is chosen, they must have a licensed engineer on staff or one subcontracted for the design.
If an engineering firm is chosen, they need a contractor for the construction.
After the contract is issued to the selected company, a notice to proceed is given and the project design is started. Some activity may begin, such as purchasing supplies and materials, as long as it does not require permits.
The design-build firm works with the owner and other interested agencies to prepare a preliminary design to firm up requirements then continues preparing design for the facility.
The builder may start construction before the design is 100% complete.
The design-build firm may prepare the site design, such as rough grading, site utilities.
When the site work design is at a level of completion to allow start of construction, the builder might begin that portion of construction.
The designer continues design while construction is already under way.
The owner takes possession of the facility upon substantial completion.
Benefits of Design & Build method
The singular responsibility inherent in design-build serves as a motivation for quality and proper project performance.
With the "stipulated price" method of implementing design-build, an agency has the best certainty of the cost of the building at the outset of the project. This is because the agency specifies what it is willing to pay for a building before it solicits proposals from design-build contractors for the configuration, features, and materials they are willing to provide for the specified price. The risk with this approach is that the agency may not get the best quality building for the price it pays. In addition, the construction contractor is involved in the design process from the beginning and can provide helpful insights on construction materials and methods that can make the design more efficient and less costly to construct.
Since the design and construction are overlapped, and bidding periods and redesign are eliminated, therefore the total design and construction time can be significantly reduced.
Because the design parameters of a project are being developed along with the budgetary goals - construction methodologies and budget conditions being weighed simultaneously - a project is more likely to be realized than with a pure design approach. The owner has greater access to the project "team" as the project is being developed. This efficiency is not a negative "short cut" as a rule, but rather the keystone to the success of the Design-Build model.
Agency May Avoid Conflicts and Disputes
Since the designer and builder are part of the same design-build entity, and the public agency is not the guarantor of the completeness and accuracy of the work of the architect/engineer, the agency may avoid conflicts and disputes that can arise between the architect/engineer and construction contractor.
Rather than a parcelized level of responsibility of the classic design-bid-build, design-build provides an integrated entity to the owner or client. This moves projects away from the "finger-pointing" that is often commonplace in contemporary construction projects, and allows the owner to look to one entity with any questions or concerns.
One source of responsibility
With both design and construction in the hands of a single entity, there is a single point of responsibility for quality, cost and schedule adherence. Instead of having several contractors and consultants, an owner has just one entity to deal with. Design revisions, project feedback, budgeting, permitting, construction issues, change orders, and billing can all be routed through the design-build firm. This single point of contact allows a certain degree of flexibility for the owner.With design-build, the client is able to focus on scope/needs definition and timely decision-making, rather than coordination between designer and builder.
Value-based project feedback
Typically, in order for a contractor to bid on a project, very specific details relating to the methods and materials must be given to avoid any ambiguity and to make an "apples to apples" comparison of bids. In a design-build context, the owner, the owner's other consultants, and the design-builder can work together to determine what methods and materials will maximize the owner's value. In instances where marginally more expensive materials, designs, or construction methods might yield a higher return on investment for the owner than those of lower cost, the owner is free to adjust the project's program without having to re-bid the entire project.
Early Knowledge of Firm Costs
Guaranteed construction costs are known far earlier than in other delivery systems. The entity responsible for design is simultaneously estimating construction costs and can accurately conceptualize the complete project. Staged contracting for design/build services affords the client on or more "go, no-go" decision points during design. The decision to proceed with the project is made before substantial design expenditure and with firm knowledge of final costs.
Improved Risk Management
Performance aspects of cost, schedule and quality are clearly defined and responsibilities/risks are appropriately balanced. Change orders due to "errors and omissions' are virtually eliminated, because the design/builder has responsibility for developing drawings and specifications as well as constructing a fully-functioning project.
The diagram below shows the relationships between all the parties involved in this project.
Due to the competitive nature of the construction industry, it's no surprise that design-build continues to be the fastest growing method of project delivery in the country. However, this fast-track approach is not only gaining popularity among owners, it's also becoming the method of choice for more and more developers/contractors and design professionals. It is not only more cost effective, it also creates a teamwork environment in which all parties work together to ensure success. This results in a higher level of quality and workmanship, quicker turnaround time, more attention to detail, and less chance for error.
This method involves the owner securing a single contract with a general contractor, who, in turn, contracts for architectural, engineering and construction services. The selected general contractor may have in-house architectural and engineering services, or the contractor may have to subcontract these services with individual architectural and engineering firms. Either way, the general contractor is responsible for those contracts under their contract and provides the single point contract to the owner.
The design and construction method is the way to enjoy both, with this approach the owner selects and contracts with an architect, preferably one with extensive design experience, for design and engineering services. Immediately following the architectural selection, the owner begins to interview quality general contractors. That way the owner and general contractor will not have any contractual agreement for the design phase. However, some general contractors may have a contract with a small-stipulated sum amount for pre-bid services. This amount is usually credited towards the final construction contract once final bidding is complete.
With these steps completed, the construction team is in place: the owner, the architect and the contractor. The strength of this relationship is already founded on trust, experience and quality. A design team with the owner's best interests in mind is assembled, and a quality general contractor is now available to provide early preliminary cost estimates during schematic design and design development phases of drawings. The general contractor and owner will draw up an agreement.
Under this agreement, the basis of payment is the cost of the construction plus a negotiated fee. The contract should include a guaranteed maximum cost with any savings at the end of the project retained by the owner. This is an open book approach where all cost and fees are open to the owner and architect for review. Competitive bids for all work scope categories are provided. Generally, owners experience far less problems during the construction phase under the negotiated contract arrangement, mainly because usually few change orders occur due to the greater involvement and improved communication of the architect, general contractor and owner, especially during the bid period.
The challenges faced in implementing
fast track procurement project
To meet the increasing demands to deliver projects within a short period of time, many projects are being executed on a fast-track basis. On fast-track projects, the construction begins when the design is between 35% and 65% complete. This poses numerous challenges.
One of the key challenges is to ensure that the flow of information and deliverables between the engineering, procurement, and construction is synchronized. This work initially studied the information flow on process plant projects, the disruptions to information flow, and the problems faced due to the disruptions.
The complexities that arise in managing projects are tackled through restructuring project organization, improving management commitment, strengthening project-planning activities, ensuring project quality, managing project risk objectively and integrating project activities through management information systems. These would not only ensure completion of projects in fast track, but also improve project effectiveness in terms of quality, cost effectiveness, team building and in turn overall productivity of the project organization would improve.
Client's Needs : Time, Cost and Quality
The procurement triangle
The procurement triangle above illustrates the relationship between three primary forces in a project. Time constraint refers to the amount of time available to complete a project. Cost constraint refers to the budgeted amount or resources available for the project. Quality constraint refers to the fit-to-purpose that the project must achieve to be a success.
These three constraints are often competing constraints: increased scope typically means increased time and increased cost, a tight time constraint could mean increased costs and reduced scope, and a tight budget could mean increased time and reduced scope.
A project's activities can either take shorter or longer amount of time to complete. Completion of tasks depends on a number of factors such as the number of people working on the project, experience and skills.
Time is a crucial factor which is uncontrollable. On the other hand, failure to meet the deadlines in a project can create adverse effects. Most often, the main reason for organizations to fail in terms of time is due to lack of resources.
Clients have been increasingly concerned with the overall profitability of projects and the accountability of projects generally. Cost overruns, in association with project delays, are frequently identified as one of the principal factors leading to the high cost of construction.
It's imperative for both the project manager and the organization to have an estimated cost when undertaking a project. Budgets will ensure that project is developed or implemented below a certain cost.
Sometimes, project managers have to allocate additional resources in order to meet the deadlines with a penalty of additional project costs.
To the client, quality may be defined as one of the components that contributes to "value for money".
Many project managers are under the notion that 'high quality comes with high cost', which to some extent is true. By using low quality resources to accomplish project deadlines does not ensure success of the overall project.
Clients', contractors' and consultants' opinions with respect to client expectations of time, cost and quality at the outset of the project are not uniform.
Clients believe their time, cost and quality expectations to be realistic, whereas contractors and consultants do not believe that this is generally so. Clients rate project quality as more important than project time performance, whereas contractors and consultants believe that clients actually hold a converse view.
Contractors and clients place great confidence in the time performance of design and build procurement systems but have slightly less confidence in the conventional and management-oriented procurement systems. Lower levels of confidence were evidenced with respect to the cost performance of projects under all the various procurement systems.
Clients believe that variations only sometimes occur after the start of the project. There is a large discrepancy between the perceptions of clients and other members of the project procurement team about what constitutes a variation to the original brief. All members of the project procurement team showed little faith in the clients' ability to know exactly what they wanted at the outset of the project.
Clients, contractors and building professionals believe that the choice of building procurement system has little influence on the level of subsequent cost variations to the contract. Clients believe that they have the resources to monitor and control project cost. Contractors and building professionals did not believe that this is so. Client induced changes are seen by contractors and building professionals to contribute the most to project time over-runs. Quantity surveyors see the potential for effective time management increasing in the construction phase of the project delivery process, whereas project managers believe that the briefing stage offers the highest potential for the effective management of time.
Overcoming Challenges to
It is always a requirement to overcome the challenges related to the project triangle during the project execution period. Project managers need to understand that the three constraints outlined in the project management triangle can be adjusted.
The important aspect is to deal with it. The project manager needs to strike a balance between the three constraints so that quality of the project will not be compromised.
To overcome the constraints, the project managers have a several methods to keep the project going. Some of these will be based on preventing stakeholders from changing the scope and maintaining limits on both financial and human resources.
A project manager's role is evolved around responsibility. A project manager needs to supervise and control the project from the beginning to the closure.
The following factors will outline a project manager's role.
The project manager needs to define the project and split the tasks amongst team members. The project manager also needs to obtain key resources and build teamwork.
The project manager needs to set the objectives required for the project and work towards meeting these objectives.
The most important activity of a project manager is to keep stakeholders informed on the progress of the project.
The project manager needs to asses and carefully monitor risks of the project.
Malaysia's rapid economic development and the transformation process from an upper middle income developing country to an industrialized and developed nation status as envisaged in Vision 2020 has created the environment for the development of the construction industry. From its progressive growth, there is a need for the Malaysian construction industry to change in the way projects are managed especially after the recession period in 1997.
Certainly, design and build is a popular and valuable form of procurement, particularly with clients seeking transfer of the design risk and responsibilities to the Contractor. Therefore, as a managing consultant, I strongly believe that design and build system is the best procurement method for this fast track project in terms of its shorter period of development, its simple contractual relationship and its build ability.
It is very important that all the parties that involved in this project (which include a team of professional members consists of architects, civil and structural engineers, mechanical and electrical engineers, quantity surveyors and others specialists consultants) to carry out their duties respectively in order to ensure that the whole project will be completed within the stipulated time, budgeted cost and desired quality.