Variation in Price of Preliminaries in Construction Projects During Tender Stage

UNIVERSITI TEKNOLOGI MARA
VARIATION IN PRICE OF PRELIMINARIES

IN CONSTRUCTION PROJECTS DURING
TENDER STAGE
ABDUL AZIZ ABAS
Dissertation submitted in partial fulfillment of the requirements for

the degree of
Master of Science in Integrated Construction Project
Management
Faculty of Architecture, Planning & Surveying
July 2016
AUTHOR’S DECLARATION
I declare that the work in this dissertation was carried out in accordance with the
regulations of Universiti Teknologi MARA. It is original and is the results of my own
work unless otherwise indicated or acknowledged as referenced work. This topic has
not been submitted to any other academic institution or non-academic institution for
any degree or qualification.
In the event that my dissertation be found to violate the conditions mentioned above, I
voluntarily waive the right of conferment of my degree and agree to be subjected to
the disciplinary rules and regulations of Universiti Teknologi MARA.
Name of Candidate : Abdul Aziz bin Abas

Candidate I.D. No. : 2014652822
Programme : Master of Science in Integrated Construction Project
Management
Faculty : Architecture, Planning & Surveying
Dissertation Title : Variation In Price Of Preliminaries In Construction
Projects During Tender Stage
Signature of Candidate : .....................................................

Date : July 2016
i
ABSTRACT
Preliminaries were unanimously accepted as an integral part of the Bills of Quantities

(BQ) and their accuracy had been the interest of many researchers in the past decades
and remained as a prime objective. The award of the tender was mainly depending on
the price of materials performances through a tedious tender evaluation process by the
Engineers or Quantity Surveyors. Generally, variation in the price of Preliminaries
was taken as the contractors’ risk. It was always a high expectation of the clients to
obtain a value for money and the worthiness of investment from a construction
project. The clients entrusted the contractors to perform the required tasks and
expected the projects to achieve the specified Quality, Time and Cost. The
understanding of the importance of Preliminaries determined the accuracy of price and
contributed value to the construction. This indirectly reduced the chance of
construction to fail and ensured a value for money for the project. The aim of the
research was to establish non-conclusive general guides to minimize variation in the
price of Preliminaries in construction projects during tender stage. The research
identified pertinent causes of price variation in Preliminaries, potential impacts, and
constructive solutions to benefit the present and future construction industry in
Malaysia. The in-depth focus into the root causes of price variation in Preliminaries
revealed the present trends, attitudes, and expectations of the contractors. The research
applied mixed method comprised of Content Analysis, Questionnaire Survey, and
Semi-structured Interview as the rigorous approach to achieving the objectives. The
method was logical as a mixture of qualitative and Quantitative Methods that provided
a wider perspective to the writer with comprehensive approaches to match the goal
needs. The research findings are triangulated; hence the more reliable results are
established based on unanimous decisions. In conclusion, the research key findings
are; (1) Establish the range of Preliminaries % for the Civil Engineering work between
3.26% and 6.38% of the tender sum and (2) Establish non-conclusive guides to
minimize price variation in Preliminaries of construction projects during tender stage.
Without the guides or other means of control procedures, price variation in
Preliminaries of construction projects during tender stage remains as a nightmare. The
findings are envisaged to provide some form of a checklist for the betterment of
Malaysian construction industry.
ii
ACKNOWLEDGEMENT
Praise is to Allah, Most Gracious Most Merciful. Best prayers and peace be upon his
best messenger Muhammad S.A.W, his pure descendant and his family and his noble
companions. In deep loving memory of my late father Hj. Abas Abdullah.
Firstly, I would like to dedicate this effort to my dearest mother Hjh. Aminah, parent-
in-law Hj. Hashim & Hjh. Azizah beloved wife Zainab and children. Without their
loves and support, none of this would have been possible. They have always been
there for me and I am thankful for everything they have helped me achieve.
Secondly, I would like to submit my heartiest thanks to Associate Professor Sr. Hj.
Ruslan Affendy Arshad for being my supervisor and your guidance is most precious
and immeasurable in any forms. Without it, I would not be where I am today. Assoc.
Prof. Sr. Ruslan what can I say, as a postgraduate student, I am truly fortunate to
have you as my supervisor and mentor. I thank you so much for the knowledge you
have passed on and I always am grateful for having the opportunity to study under
you. I also would like to extend my deepest gratitude and homage to honorable
lecturers; Assoc. Prof. Dr. Masran Surowono (Dean), Assoc. Prof. Sr. Dr. Faridah
Ismail (Head of Centre of Studies for Post Graduates), Assoc. Prof. Dr. Zulhabri
Ismail, Prof. Ismail Rahmat, Assoc. Prof. Sr. Dr. Mohd Hisham Ariffin, Assoc.
Prof. Dr. Roshana Takim, Prof. Sr. Dr. Abdul Hadi Nawawi, Assoc. Prof. Dr.
Fadzil @ Padzil Hassan, Assoc. Prof. Sr. Dr. Mohammad Fadhil Mohammad. Sr.
Dr. Norsiah Mohamad, Dr. Rumaizah Mohd Nordin, Dr. Norfashiha Hashim,
Dr. Intan Rohani Endut, Ir. Sulaiman Hasim, Ar Sokhri Mahmood, En. Hafadz
Kamizi Mat Hassan, Pn. Hjh. Wan Ainun Zarina Wan Ahmad Radzi, Sr Hj
Abdul Razak Isa, Assoc. Prof. Dr. Mohamad Nidzam Rahmat and Assoc. Prof.
Hj. Baharudin Mohd Hanipah. It would not be possible for me to be here without
your commendable commitments and dedications.
Finally, I would like to extend my personal gratitude to Assoc. Prof. Sr. Dr. Faridah
Ismail for her notable encouragement and support back in early 2014 that truly
inspired me to take on the postgraduate program. To Allah I supplicate and to Allah, I
shall return.
iii
TABLES OF CONTENTS
CHAPTER 1 : INTRODUCTION ...................................................................................................... 1

1.0 INTRODUCTION .............................................................................................................................. 1
1.1 BACKGROUND OF THE RESEARCH ................................................................................................ 1
1.1.1 Brief construction Industry in Malaysia ................................................................................ 4
1.1.2 Labour Cost in Selangor (2010-2014) .................................................................................. 5
1.1.3 Construction Material Prices ................................................................................................... 5
1.1.4 Hire Rates of Machineries in 200X for Kuala Lumpur & Selangor ........................... 7
1.2 RESEARCH STATEMENT ........................................................................................................... 8
1.2.1 Introduction ...................................................................................................................................... 8
1.2.2 Issue 1 : Lack of Accuracy And Consideration on Project Complexity ................... 8
1.2.3 Issue 2 : Lack of Anticipation of Indirect Cost ................................................................ 10
1.2.4 Research Questions .................................................................................................................... 12
1.3 AIM AND OBJECTIVES ..................................................................................................................... 12
1.3.1 Aim ..................................................................................................................................................... 12
1.3.2 Objectives ........................................................................................................................................ 12
1.4 SCOPE AND LIMITATION ................................................................................................................. 13
1.4.1 Scope of Work ............................................................................................................................... 13
1.4.2 Limitation ....................................................................................................................................... 14
1.5 FLOW CHART OF RESEARCH ......................................................................................................... 15
1.6 STRUCTURE OF DISSERTATION .................................................................................................... 15
CHAPTER 2 – IMPORTANCE OF ACCURATE PRICE IN PRELIMINARIES ........................ 17
2.0 INTRODUCTION ............................................................................................................................. 17
2.1 PRELIMINARIES ................................................................................................................................... 18
2.1.1 Preliminaries as an Integral Part of BQ ............................................................................ 19
2.1.2 Definition of Variation & Price ............................................................................................. 20
2.1.3 Significance of Variation in Price ........................................................................................ 20
2.2 ACCURACY OF ESTIMATES ............................................................................................................. 22
2.3 PRICE OF PRELIMINARIES IN TENDER ......................................................................................... 23
2.4 ACCURATE PRICE OBJECTIVE ........................................................................................................ 25
2.5 COMMON APPROACH OF CONTRACTOR PRICING ................................................................... 25
2.6 COMMON ITEMS IN PRELIMINARIES ............................................................................................ 26
2.7 PROBLEMS RELATED TO ACCURACY OF PRELIMINARIES ................................................... 31
2.8 PROCUREMENT PROCESS ................................................................................................................ 33
2.9 SUMMARY ........................................................................................................................................... 34
CHAPTER 3 – PRICE CONSIDERATION IN PRELIMINARIES .............................................. 36
3.0 INTRODUCTION ............................................................................................................................. 36
3.1 TENDER COMPETITION .................................................................................................................... 36
3.2 CHALLENGING TASKS TO ASCERTAIN VARIATION IN PRICE OF PRELIMINARIES ....... 37
3.2.1 Consideration on Project Complexity ................................................................................. 38
3.2.2 Quality & Direct Price .............................................................................................................. 39
3.2.3 Indirect Prices .............................................................................................................................. 41
3.2.4 Percentage of Preliminaries In Construction Project .................................................... 44
3.3 SUMMARY ............................................................................................................................................ 44
CHAPTER 4 : RESEARCH METHODOLOGY .............................................................................. 46
4.0 INTRODUCTION ............................................................................................................................. 46
4.1 RESEARCH DESIGN ........................................................................................................................... 46
iv
4.1.1 Content Analysis ........................................................................................................................... 46
4.1.2 Questionnaire Survey using Quantitative Method .......................................................... 47
4.1.3 Interview using Qualitative Method ..................................................................................... 47
4.1.4 The Research Process ................................................................................................................ 48
4.1.5 Research Approach .................................................................................................................... 49
4.2 RESEARCH METHODS ...................................................................................................................... 49
4.2.1 Content Analysis .......................................................................................................................... 49
4.2.2 Questionnaire Survey .................................................................................................................. 50
4.2.3 Semi-structured Interview ......................................................................................................... 50
4.3 RESEARCH INSTRUMENTS .............................................................................................................. 50
4.3.1 Content Analysis .......................................................................................................................... 50
4.3.2 Content Analysis Protocol ....................................................................................................... 51
4.3.3 Questionnaire Survey ................................................................................................................. 51
4.3.4 Semi-structured Interview ........................................................................................................ 52
4.3.5 Interview Protocol ........................................................................................................................ 53
4.3.6 Research Matrix ........................................................................................................................... 53
4.3.7 Significance of Research .......................................................................................................... 53
CHAPTER 5 : CONTENT ANALYSIS OF PRELIMINARIES ..................................................... 54
5.0 INTRODUCTION ............................................................................................................................. 54
5.1 METHODOLOGY ................................................................................................................................. 55
5.2 SUMMARY OF PRELIMINARIES ..................................................................................................... 56
5.3 RANGE OF PRELIMINARIES IN RELATION TO TENDERED SUM .......................................... 57
5.3.1 Average Range of Preliminaries ........................................................................................... 57
5.4 ANALYSIS OF PRELIMINARIES ...................................................................................................... 59
5.4.1 Analysis of Preliminaries Based on Actual Percentage (%) ...................................... 61
5.4.2 Tolerance ........................................................................................................................................ 62
5.4.3 Analysis of Preliminaries Based on Modified Percentage (%) ................................. 66
5.4.4 Comparison of Prices of Preliminaries, Actual %, and Modified % ...................... 68
5.5 ANALYSIS OF CRITICAL ITEMS OF PRELIMINARIES ................................................................ 69
5.5.1 Simplification of Items of Preliminaries ............................................................................. 70
5.5.2 Contractor’s Attitude during Tender Stage ....................................................................... 72
5.5.3 Ranking of Preliminaries Based on Contractor’s Frequency .................................... 78
5.6 ANALYSIS OF PRELIMINARIES IN TENDER ................................................................................ 81
5.6.1 Nature of Tender 2 ....................................................................................................................... 81
5.7 SUMMARY ........................................................................................................................................... 85
CHAPTER 6 : DATA COLLECTION AND ANALYSIS OF QUESTIONNAIRE SURVEY ...... 86
6.0 INTRODUCTION ............................................................................................................................. 86
6.1 SAMPLING POPULATION .................................................................................................................. 86
6.2 METHODOLOGY .................................................................................................................................. 88
6.2.1 Design of Instrument ................................................................................................................... 88
6.2.2 Validation of Instrument ............................................................................................................ 89
6.2.3 Data Collection ............................................................................................................................. 89
6.3 STATISTICAL ANALYSES ................................................................................................................. 92
6.4 DEMOGRAPHY ..................................................................................................................................... 92
6.4.1 Respondent’s Background ....................................................................................................... 93
6.4.2 Respondent’s Experience ......................................................................................................... 94
6.4.3 Respondent’s Competency Level ............................................................................................ 94
6.5 AWARENESS OF CRITICAL PRELIMINARIES .............................................................................. 95
6.5.1 Reliability Coefficient ................................................................................................................. 95
6.5.2 Degree of Awareness of the critical Preliminaries ......................................................... 96
6.6 CONTRIBUTING FACTORS OF VARIATION IN PRICE OF PRELIMINARIES .......................... 98
6.6.1 Objective .......................................................................................................................................... 98
v
6.6.2 Contributing Factors ................................................................................................................... 98
6.6.3 Reliability Coefficient .............................................................................................................. 100
6.6.4 Agreement of Contributing Factors in Price of Preliminaries ................................ 100
6.7 IMPACTS ON ACCURACY OF PRELIMINARIES ........................................................................ 103
6.7.1 Objective ....................................................................................................................................... 103
6.7.2 Impacts Factors .......................................................................................................................... 103
6.7.4 Ranking of Impacts on Accuracy in Preliminaries Based on Mean ...................... 105
6.7.5 Ranking of Impacts on Accuracy in Preliminaries Based on Range ..................... 107
6.7.6 Individual Analysis of Impacts on Accuracy in Preliminaries Based on
Frequency ..................................................................................................................................................... 109
6.8 CORRECTIVE ACTIONS TO IMPROVE ACCURACY OF PRELIMINARIES ........................... 119
6.8.1 Objective ....................................................................................................................................... 119
6.8.2 Corrective Factors .................................................................................................................... 119
6.8.4 Ranking of Corrective Actions To Improve Accuracy of Preliminaries ............... 122
6.8.5 Analysis of Corrective Actions to Improve Accuracy of Preliminaries Based on
Frequency ..................................................................................................................................................... 129
6.9 SUMMARY ........................................................................................................................................ 137
CHAPTER 7 : DATA COLLECTION AND ANALYSIS OF SEMI-STRUCTURED
INTERVIEWS ................................................................................................................................. 138
7.0 INTRODUCTION .......................................................................................................................... 138
7.1 METHODOLOGY ............................................................................................................................... 138
7.2 RATIONALE OF THE CRITICAL ISSUES ...................................................................................... 139
7.3 DATA COLLECTION ........................................................................................................................ 140
7.4 DEMOGRAPHY .................................................................................................................................. 140
7.5 ANALYSIS OF CRUCIAL ISSUES .................................................................................................. 141
7.5.1 Causes of price variation in Preliminaries during Tender Stage .......................... 141
7.5.2 Attitude during pricing of Preliminaries during Tender Stage .............................. 143
7.5.3 Approach to price Preliminaries during Tender Stage ............................................. 143
7.5.4 To ensure price accuracy in Preliminaries .................................................................... 144
7.5.5 Collusive tendering / protection money consideration in Preliminaries during
Tender Stage ............................................................................................................................................... 146
7.5.6 Mitigation of indirect cost in Preliminaries during Tender Stage ......................... 146
7.5.7 Opinion on lowest tender win approach in awarding the contract ........................ 148
7.5.8 Proposed improvement to Preliminaries during Tender Stage ............................... 149
7.5.9 Reasons for non-price items in Preliminaries ................................................................ 149
7.5 SUMMARY ......................................................................................................................................... 150
CHAPTER 8 : MAJOR FINDINGS AND ESTABLISHMENT OF GENERAL GUIDES ........ 152
8.0 INTRODUCTION .......................................................................................................................... 152
8.1 METHODOLOGY ............................................................................................................................... 152
8.2 MAJOR FINDINGS ............................................................................................................................ 153
8.3 GENERAL GUIDES ........................................................................................................................... 155
8.4 STRENGTH AND WEAKNESS OF RESEARCH ........................................................................... 158
8.4.1 The Strength ............................................................................................................................... 158
8.4.2 The Weakness ............................................................................................................................. 158
8.5 SUMMARY ......................................................................................................................................... 158
CHAPTER 9 : CONCLUSION AND RECOMMENDATIONS .................................................. 159
9.0 CONCLUSION ............................................................................................................................... 159
9.1 RECOMMENDATION ................................................................................................................ 162

vi
REFERENCES ................................................................................................................................. 163
APPENDICES ................................................................................................................................. 171
LIST OF TABLES
Table 1.1: Gross Domestic Product (GDP) – 2015 ...................................................................................................... 2

Table 1.2: Summary of Contractors Grades .................................................................................................................... 3
Table 1.3: Registered Contractors of Category CE, 2015 .......................................................................................... 3
Table 1.4: Average Daily Wages For State of Selangor ............................................................................................. 5
Table 1.5: Construction Material Prices ........................................................................................................................... 6
Table 1.6: Metal Prices ............................................................................................................................................................ 6
Table 1.7: Kuala Lumpur Construction Prices .............................................................................................................. 7
Table 1.8: Machineries Hire Rates 2008-2014 ............................................................................................................... 7
Table 1.9: Lack of Consideration on Project Complexity ......................................................................................... 9
Table 1.10: Lack of Anticipation of Indirect Price ..................................................................................................... 11
Table 2.1 : Common Preliminary Items .......................................................................................................................... 27
Table 2.2 : Mandatory Preliminary Items ....................................................................................................................... 28
Table 2.3 : JKR Preliminary & Items ............................................................................................................................... 28
Table 2.4 : Summary of Preliminary Items .................................................................................................................... 30
Table 2.5: Crucial Preliminary Items ............................................................................................................................... 35
Table 3.1: Cost of Tender Preparation .............................................................................................................................. 39
Table 3.2: Ethical Improprieties .......................................................................................................................................... 42
Table 4.1: Research Matrix ................................................................................................................................................. 53
Table 5.1 : Tender Documents ............................................................................................................................................. 54
Table 5.2 : Percentage (%) of Preliminaries Against Tendered Sum ................................................................... 56
Table 5.3 : Percentage of Preliminaries against Tendered Sum .............................................................................. 58
Table 5.4 : Ranking of Tenders ........................................................................................................................................... 59
Table 5.5 : Difference in Price of Preliminaries ............................................................................................................ 62
Table 5.6 : Derivation of Tolerance Based on Boussabaine's .................................................................................. 63
Table 5.7 : Tolerance Limits of Preliminaries at ± 1.11% ......................................................................................... 63
Table 5.8 : Establishment of Standard Deviation ......................................................................................................... 64
Table 5.9 : Tolerance Limits of Preliminaries using Standard Deviation = ± 1.56% ..................................... 64
Table 5.10 : Comparison Between Boussabaine And Standard Deviation ......................................................... 65
Table 5.11 : Review of Preliminaries (%) ....................................................................................................................... 65
Table 5.12 : Comparison of Actual % And Modified % of Preliminaries .......................................................... 66
Table 5.13 : Preliminaries With Difference of ±1.56% .............................................................................................. 68
Table 5.14 : Preliminaries’ Items Grouping ................................................................................................................... 70
Table 5.15 : Frequency of Contractors Pricing The Preliminaries ......................................................................... 73
Table 5.16 : Contractors’ Pricing Frequencies .............................................................................................................. 76
Table 5.17 : Percentile Rank ................................................................................................................................................. 78
Table 5.18 : Rank High for 12 Items of Preliminaries ................................................................................................ 79
Table 5.19 : Rank Average for 13 Items of Preliminaries ......................................................................................... 80
Table 5.20 : Rank Low for 5 Items of Preliminaries ................................................................................................... 81
Table 5.21 : Tender 2 – Road & Drain ............................................................................................................................. 81
Table 5.22 : Tender 2 – Preliminaries % Differences Comparison ....................................................................... 83
Table 5.23 : Tender 2 – Preliminaries % Comparison To Recommended Range ........................................... 84
Table 5.24 : Tender 2 – Overpriced Items For Contractor 1 .................................................................................... 84
Table 6.1 : Respond of Participants ................................................................................................................................... 91
Table 6.2 : Hierarchy of Respondent ................................................................................................................................. 93
Table 6.3 : Respondent Experience .................................................................................................................................... 94
Table 6.4 : Competency Level ............................................................................................................................................. 94
Table 6.5 : Reliability of Critical Preliminaries Items ................................................................................................ 95
Table 6.6 : Ranking of Awareness Level ......................................................................................................................... 96
vii
Table 6.7 : Derivation of Contributing Factors ............................................................................................................. 98
Table 6.8 : Reliability of Contributing Factors’ Items ........................................................................................... 100
Table 6.9 : Ranking of Contributing Factors Based on Mean .............................................................................. 100
Table 6.10 : Variation due to lack of experience of key person .......................................................................... 101
Table 6.11 : Variation due to lack of accuracy ........................................................................................................... 102
Table 6.12 : Huge financial commitment due to site accidents ............................................................................ 102
Table 6.13 : Occupational accident cost difficult to estimate ............................................................................... 102
Table 6.14 : Variation due lack of anticipation on compensation cost .............................................................. 103
Table 6.15 : Derivation of Impact Factors .................................................................................................................... 104
Table 6.16 : Reliability of Impact Factors .................................................................................................................... 105
Table 6.17 : Ranking of Impact Factors Based on Mean ........................................................................................ 106
Table 6.18 : Ranking of Impact Factors Based on Range ...................................................................................... 108
Table 6.19 : Abstract of Tender 4 – Main Infra ......................................................................................................... 116
Table 6.20 : Abstract of Tender 1 – Earthwork .......................................................................................................... 116
Table 6.21 : Derivation of Corrective Factors ............................................................................................................ 120
Table 6.22 : Reliability Test ............................................................................................................................................... 121
Table 6.23 : Ranking of Corrective Factors Based on Mean ................................................................................ 122
Table 6.24 : Price on General items ................................................................................................................................ 125
Table 6.25 : Frequency Analysis of Corrective Factors .......................................................................................... 129
Table 7.1 : Respondents ....................................................................................................................................................... 141
LIST OF FIGURES
Figure 4.1: Research Process Flow ................................................................................................................................. 48

Figure 4.2 : Strategies of Inquiry ...................................................................................................................................... 49
Figure 5.1 : Percentage of Preliminaries Against Tendered Sum For Civil Engineering Tenders .......... 58
Figure 5.2 : Preliminaries (%) Versus Tendered Sum ............................................................................................... 60
Figure 5.3 : Actual And Modified Preliminaries (%) Versus Tender Sum ......................................................... 67
Figure 5.4 : Frequency of Contractors Pricing The Preliminaries ...................................................................... 75
Figure 5.5 : Standard Score Diagram .............................................................................................................................. 79
Figure 5.6 : Tender 2 – Preliminaries Vs Tender Sum .............................................................................................. 83
Figure 6.1 : Value of Construction Work Done By Location of Project ............................................................. 87
Figure 6.2 : Profession of Respondents ........................................................................................................................... 93

viii
LIST OF ABBREVIATIONS
1Q 2015 1st Quarter of 2015
BNM Bank Negara Malaysia
BQ Bills of Quantities
CCA Canadian Construction Association
CE Civil Engineering
CIDB Construction Industry Development Board of Malaysia
COC Conditions of Contract
DBOT Design Build Operate Transfer
DRIFT Do it Right the First Time
EOT Extension Of Time
ESI Employment Studies Institute
G7, CE G7 Grade CE
GLC Government Link Company
GST Goods & Services Tax
GDP Gross Domestic Products
ICT Information & Communication Technology
IEM Institution of Engineers Malaysia
ITT Instructions To Tenderer
IWK Indah Water Konsortium
JKR Jabatan Kerja Raya (Public Works Department, Malaysia)
JPP Jabatan Perkhidmatan Pembetungan
JPS Jabatan Pengairan & Saliran
JUBM Juru Ukur Bahan Malaysia
ix
JV Joint Venture
LRT Light Rail Transit
Mil Million
MOF Ministry of Finance
MRT Mass Rapid Transit
n.d. Not Dated
N3C National Construction Costs Centre
NBS National Building Specifications
PAM Pertubuhan Arkitek Malaysia
PETRONAS Petroliam Nasional Berhad (Malaysian National Oil Company

Inc.)
PWD Public Works Department
RM Ringgit Malaysia
RMK11 Rancangan Malaysia Ke 11 (11th Malaysia Plan) 2016-2020
SMM Standard Method of Measurement
SO Superintending Officer
SOSHUM'2016 International Conference on Social Sciences and Humanities

2016
SPSS IBM SPSS Statistics Version 23 Release 23.0.0.0
SSP Sungai Buloh-Serdang-Putrajaya
SWOT Strength Weakness Opportunity and Threat
TNB Tenaga Nasional Berhad
i.e. id est (that is)
etc et cetera (and other things)
UCLA University of California Los Angeles
x
VARIATION IN PRICE OF PRELIMINARIES
IN CONSTRUCTION PROJECTS DURING TENDER STAGE
CHAPTER 1 : INTRODUCTION
1.0 INTRODUCTION
Variation of price in the Bills of Quantities (BQ) had been the interest of many
researchers in the past decades and accuracy of tender remains as a prime objective.
However, the specific discussion on variation in the price of preliminary items may be
scarce and brief. Truly that the award of tender depending on the qualitative and
quantitative (price of materials) performances through a tedious tender evaluation
process by the Engineers or Quantity Surveyors and generally the variation in the
price of Preliminaries was taken at the contractors’ risk.
This chapter briefly discusses the background of the research by overviewing the
present construction scenario in Malaysia and direction of the present construction
industry. The present labor costs according to trades (skilled Malaysian labors),
materials costs and average costs of construction buildings were discussed herein to
provide necessary baseline information about Malaysian construction market.
1.1 Background of the Research
Ministry of Finance [MOF] (2015) reported the Malaysian construction industry had
seen encouraging growth supported by strong public infrastructure development and
the Government recognized the sector as the catalyst to the overall Malaysian
economic development. MOF (2015) and Bank Negara Malaysia [BNM] (2014)
mention the government had continually improved the public infrastructure projects
and this had contributed to a strong percentage of Gross Domestic Product (GDP) as
discussed in the following section. Table 1.1 showed the influence of construction
industry against other key sectors in 2013 to 2014.
1
Table 1.1: Gross Domestic Product (GDP) – 2015
GDP Based on Economic Activity (2015)

Portion 2013 2014
2013 3Q 4Q 1Q 2Q 3Q
(%) Annual Variation %
Agriculture 7.1 2.0 0.2 2.3 7.1 4.0
Mining 8.1 1.4 -1.2 -0.8 2.1 1.4
Factory 24.5 4.3 5.2 6.8 7.3 5.3
Construction 3.8 10.2 9.8 18.9 9.9 9.6
Service 55.2 6.0 6.4 6.6 6.2 6.1
Actual GDP 100.0 5.0 5.1 6.2 6.5 5.6
Note: BNM (2014)
Mahmood & Kureshi (2014) specified the construction industry was a continuous
business and on-going, however, the construction project itself is a one-time activity
and bound to meet the challenges of the scope of work and to complete within the
allocated cost and specific time schedule. Ashworth (2010) defined the cost, as a
marked-up price of work done inclusive of built-up components of work done
inclusive of built-up components and insisted the price accuracy directly correlated to
the profit margin of the contractors. As such, the accuracy would certainly a serious
concern of the contractors.
Price in Preliminaries shall have significant bearings in the contract sum. Solomon
(1993) held by this belief and insisted variations provide a competitive edge to the
Contractors. Ferraby & Odgers (2007) realized the importance of the subject and
urged the price estimation at tender stage requires highly experienced personnel to
understand all requirements. The objective was clear to establish a competitive price.
This research investigated the approach of pricing Preliminaries by G7 of

Construction Industrial Development Board (CIDB)’s registered contractors in civil
infrastructure projects, identified the effects due to variation in price and proposed a
constructive action to ensure the best value for money to the clients and for the
betterment of the construction industry. The G7 Contractors were selected due to the
vast experience they have compared to other grades of contractors. CIDB (1995)
stipulated G7 Contractors had the unlimited tender capacity. Furthermore, the G7
2
Contractors most organized in terms of competency, skills, and organizational
structures. Refer to Table 1.2 for the summary of contractors’ grades and tender
capacity.
Table 1.2: Summary of Contractors Grades
Grade & Tender Capacity

G1 Not more than 200,000.00
G2 Not more than 500,000.00
G3 Not more than 1,000,000.00
G7 No limit
Note: CIDB (1995)
Based on the CIDB’s statistics in 2015, the highest registered G7 of Civil Engineering
(CE) population were concentrating in the states of Selangor and Federal Territories.
Any significant change of policy or procedure shall generally have a significant
impact on the construction industry. Table 1.3 showed registered contractors with the
appropriate grades in 2015.
Table 1.3: Registered Contractors of Category CE, 2015
Total Contractors Registered By Contractor Registered Grade

State registered
G1 G2 G3 G4 G5 G6 G7
Contractor
Johor 5853 2715 1082 882 307 337 117 412
Kedah 3183 2011 475 234 113 111 51 188
Kelantan 3150 2004 563 195 92 107 63 126
Melaka 1950 1009 302 246 113 106 40 134
Negeri
3025 1784 558 286 115 140 43 99
Sembilan
Pahang 3643 2153 615 342 183 157 61 132
Pulau Pinang 2600 1161 271 396 152 191 87 342
Perak 4080 2473 646 436 195 231 81 168
Perlis 1108 867 117 46 15 26 6 31
Selangor 9644 3553 1294 1538 643 1014 286 1316
Terengganu 3782 2263 626 265 155 195 88 190
Wilayah
5856 1331 463 955 458 973 263 1413
Persekutuan
Note: CIDB (2015a)
3
1.1.1 Brief construction Industry in Malaysia
BNM (2014) reported the construction sector in Malaysia contributed a significant

economic growth (GDP) in the third quarter (3Q) of 2014 at 9.6% compared to service
sector at 6.1%, Manufacturing at 5.3%, Agriculture at 4.0% and Mining at 1.4%.
MOF (2015) declared in the 2016 national budget that the industry was receiving a
hefty allocation for the improvement of main infrastructure and logistics such as
integrated transportation of MRT-LRT, highways network and the Bintulu Airport.
BNM (2015b) declared Malaysia inflation rate was 2.5% based on 2Q 2015 compared
to 3.2% in 2014. Malaysia Report (2014) however forecasted the inflation rate likely
to increase to 3% in 2016 which almost equals to 2014 in addition to the existing 6%
Goods and Service Tax (GST) that was introduced on 1 April 2015.
This situation would directly affect Malaysian construction industry where the
increase in the price of materials was expected. Prior to the imposition of GST, the
building demand had already been declining. Trading Economics (2015) reported
Malaysia Housing Index had decreased from 7% in 4Q 2014 to 4.10% in 1Q 2015.
BNM (2015a) declared the Malaysia GDP in 2Q 2015 for the construction sector had
moderately reduced to 5.6% from 1Q 2015 : 9.7% and growth of Malaysian economy
in 2Q 2015 showed a slight reduction to 4.9% compared to 1Q 2015 : 5.6%.
BNM (2015a) on the other hand revealed the GDP of Malaysian construction industry
experienced a steep reduction in 2Q 2015 : 4.9% compared to 3Q 2014 : 9.6% or
approximately by 49%. 11th Malaysian Plan 2016-2020 [RMK11] (2015) and MOF
(2015) suggested that with the Government determination to boost the industry in the
Malaysian Plan 2016-2020 and 2016 budget allocation, the construction industry was
envisaged to bounce back. RMK11 (2015) specified the transportation and logistics
sectors remain as crucial development drivers to the growth of Malaysian economy.
4
1.1.2 Labour Cost in Selangor (2010-2014)
CIDB (2015b) showed Gross basic daily wages statistic for the Malaysian skilled
local workers in the State of Selangor was in the increasing pattern since 2011. The
labor costs in 2010 were at peak and decreased towards 2012. The labor costs
increased in 2014 and generally higher compared to the 2010 rates. The basic wages
were necessary to provide baseline figures to establishing the built-up rates for the
construction industry. Table 1.4 depicted the movement of wages from 2010 – 2014.
Table 1.4: Average Daily Wages For State of Selangor
Category of Workers Average Daily Wages for Selangor (RM)

(Selective) Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014
General construction worker 52.50 54.00 57.00 63.00 70.00
- building (helper.Local)
Concretor (skilled, Local) 99.17 92.00 92.50 92.00 96.00
Bricklayer (skilled, Local) 101.67 93.00 92.20 98.50 103.50
Plasterer (skilled, Local) 106.67 104.00 105.00 109.50 109.50
Barbender (skilled, Local) 103.33 94.00 91.70 101.50 106.00
Carpenter-Formwork 118.33 107.00 103.75 100.00 109.00
(skilled, Local)
General Welder 115.00 117.00 121.00 122.50 127.50
Plumber-Reticulation 96.67 98.00 98.00 103.00 105.00
Scaffolder - Tubular 105.00 94.50 93.20 97.50 98.50
General Construction Worker 50.00 59.00 59.00 68.50 76.50
- Civil (Helper)
Note: (CIDB, 2015c)
1.1.3 Construction Material Prices
Materials cost was a phenomenon to be one of the contributors to the increase in

tender price. Malaysia Report (2014) statistic showed the labor daily wages and
materials price had been increasing yearly. The increase had a significant bearing on
the built-up rates of the tender estimates and the variation of work associated with it.
Escalation of price had a direct impact on the trade rates thus affect price in
Preliminaries.
JUBM et al. (2014) reported the Malaysian construction cost had been increasing
steadily since 2013. Hike in power tariff by 14.89% in January 2014 affected
5
production cost of construction materials such as steel and particularly cement that
increased about 15%, hence the market experienced a hike from 2 to 5% for a 50kg
bags, translated the hike of price (in the central region of peninsular Malaysia) from
RM17.87 to RM18.79. Tables 1.5 & 1.6 showed the movement of materials’ prices of
critical items for between 2013-2014 and table 1.7 showed the building construction
costs.
Table 1.5: Construction Material Prices
Note: Malaysia Report (2014)
Table 1.6: Metal Prices
6
Table 1.7: Kuala Lumpur Construction Prices
1.1.4 Hire Rates of Machineries in 200X for Kuala Lumpur & Selangor
CIDB (2015c) revealed basic machinery hire rates were not differed much since 2009
except a price jump exceeding 10% in 2009. Refer Table 1.8
Table 1.8: Machineries Hire Rates 2008-2014

Basic Machineries Jan’08 Jan’09 Jan’10 Jan’11 Jan’12 Jan’13 Jan’14
Wheeled Excavator
Hitachi - 13600kg - 14900kg 400 460 473.33 506.67 506.67 506.67 506.67
Hitachi 15800kg - 17300kg 400 460 473.33 500 500 500 500
Hitachi 17400kg - 18800kg 500 570 580 586.67 586.67 586.67 586.67
Hitachi 19200kg - 20600kg 500 570 580 586.67 586.67 586.67 586.67
Backhoe (all capacities) 333 400 416.67 400 433.33 450 450
Kobelco Mobile crane 20 MT 416.67 500 500 500 500 500 500
Kobelco Mobile crane 25 MT 500 600 600 600 600 600 600
Kobelco Mobile crane 45 MT 1000 1150 1150 1150 1150 1150 1150
Hino Dump truck 10 tonnes 650 693.33 693.33 693.33 693.33 693.33 693.33
Hino Lorry 10 tonnes 616.67 666.67 666.67 666.67 666.67 666.67 666.67
Note: CIDB (2015c)
7
1.2 RESEARCH STATEMENT
1.2.1 Introduction
Generally, in Malaysia, Preliminaries were priced entirely in lump sum whereas the
rest of the bills were itemized with the corresponding build-up rates. It was a
phenomenon that the variation of Preliminaries varied between contractors despite
tendering the same project that shared common nature and requirements. Tak et al.
(2002); Tah et al. (1994); Solomon (1994); Ghani (2006); Phillips (2009); Akbar et al.
(2015); Azman et al. (2013); Popecu et al. (2003); Masrom (2012) urged the accuracy
of preliminary absolutely crucial yet uncertain, thus provide the necessary research
gap to investigate the causes and challenges. Were there any means to reduce the
uncertainty? What were the considerations and influencing factors?
1.2.2 Issue 1 : Lack of Accuracy And Consideration on Project Complexity
Sailaja et. al. (2015) found that lack of accuracy to perform well within allocated time
leads to a loss to the party or organization. Internal efficiencies could be measured,
analyzed, structured for intensive improvement. Ferraby & Odgers (2007) insisted the
key persons have the required experience and well understand the project complexity.
His skills and experience such as selection of correct materials in construction are
crucial. Ferraby & Odgers (2007) further mentioned the required knowledge and
experience should also exist on the clients’ to avoid poor preparedness of the tender
documents and lack of brief to the contractors.
Lack of consideration and project complexity issues were also being faced globally.
Olawale & Sun (2010) found three causes that influenced the price performance in the
United Kingdom (UK) namely; (1) evaluation of time and price accuracy by key
persons, (2) design complexities and (3) sub-contractors defaults. Jaggar & Morton
(1995) agreed that the cost estimate was influenced by such variables. Atkinson et al.
(2006); Masrom (2012) opined that the project uncertainties related to estimates,
characteristics of team members and stages through the project cycle had fundamental
effects. Therefore, it was concluded that accuracy and complexity were pertinent
8
issues affecting variation in price estimates. The issues summarized in Table 1.9
Table 1.9: Lack of Consideration on Project Complexity
Issue Researcher Statement Gap RQ

Issue 1 : (Sailaja et al., Lack of accuracy to To verify How to ensure
Lack of 2015) perform well within awareness on accuracy and
accuracy & allocated time led to a the criticality of competency
consideration loss to the party or procurement levels at tender
on project organization. team & pricing stage
complexity competencies particularly on
Internal efficiencies and do they Preliminaries
could be measured, practice multi- price?
analyzed, structured tasking from
for intensive experience
improvement team. How
assessment on
time was made
and increase
members
proportionately
(Ferraby & Key persons to have To eliminate or Any practice to
Odgers, 2007) the required reduce ascertain project
experience and well uncertainties complexities at
understand the tender pricing
project’s complexities. stage? i.e. site
Skills and experience visits and
such as selection of consultation
correct materials in with Client
construction are
crucial
(Ferraby & Required knowledge To acquire What
Odgers, 2007) and experience multi-stage qualification
should also exist on checking and and years of
the Clients’ side to sign-off (staff experience
avoid poor empowerment) should be for
preparedness of the procurement
Tender Document and checkers?
lack of brief to bidders
(Jaggar & The cost estimate was To aware What were the
Morton, 1995 influenced by variables variables
;Atkinson et variables considered?
al. 2006;
Masrom,
2012)
9
1.2.3 Issue 2 : Lack of Anticipation of Indirect Cost
Vee & Skitmore (2003) opined Ethical improprieties such as treats, collusive
tendering occurred in the construction industry usually associated with hidden fees
and obligatory commissions. Though it could be an isolated case but this indirect cost
ought to be well anticipated by understanding the stakeholders’ culture and practices
likely to influence the tender.
Another aspect to consider was pertaining to the minor claims. Abdul Rahim et al.
(2008) found that huge financing on treatments or compensations due to site
accidents, these indirect costs constituted 8 to 33 times of the direct cost. Haefeli et al.
(2005) said limited knowledge in the accident costs. Yilmaz & Celebi (2015)
discovered that major occupational accidents were normally put into the legal action,
but the minor occupational accidents were difficult to estimate and constituted as
indirect costs. Normally, the expenses due to minor accidents were to cover mutual
settlements such as hospital bills and other out of pocket expenses by the contractors.
Hence, lack of anticipation to provide mitigation action such as safety procedure
contributed to the cost overrun.
Memon et. al. (2011) identified that amongst other factors that contributed to the cost
overrun as a result of the inaccurate price of Preliminaries were a lack of experience
of the contractors, improper or insufficient planning and scheduling and poor site
management to anticipate unproductive activities and lack of time controls.
Apart from that, the indirect costs could be due to the nature of the project itself.
Dell’Isola (2003) found that particular scope of works like demolition required higher
insurance premiums due to risks involved in the construction and relative safety
issues. He further suggested that the contingency might be considered as part of the
price of Preliminaries or markup depending on the level of risks involved in a project.
Ghazali et al. (2014) looked into the occupational safety angle that the fatality
accident in Malaysia was increasingly high alongside with the development despite
the implementation of Occupational Safety & Health procedures. The construction
industry in Malaysia like other places in the world exposed to the construction
10
accident risk.
The above issues were identified as the main factors to a variation of price in
Preliminaries between contractors, despite pricing on the same tender that shared
identical nature. This research investigated factors of variation, identified its impacts
to pre-tender estimates and proposed actions to enhance the accuracy. The issues were
summarized in Table 1.10
Table 1.10: Lack of Anticipation of Indirect Price
Issue Researcher Statement Gap RQ
Issue 2 : (Vee & Ethical Possibility What

Lack of Skitmore, improprieties such existent of uncertainties did
anticipation 2003) as treats, collusive loopholes in the you anticipate
of indirect tendering occurred system apart from
cost in the construction project
industry usually complexities
associated with would impact
hidden fees and the
obligatory Preliminaries
commissions price?
(Abdul Rahim Huge financing on Enforce Did you believe
et al., 2008) treatments or implementation in site safety
compensations due of site safety procedure?
to site accidents, procedure
these indirect costs How did you
constituted 8 to 33 Understand site anticipate
times of the direct constraints and unscheduled
cost possible cost compensation
implications claims?
(Haefeli et al., Limited knowledge Important of How did you
2005) in the costs of training needs ascertain costs
accidents and hindrances of site
accidents?
(Yilmaz & Major occupational Create safety Did you
Celebi, 2015) accident costs were awareness. To implement the
normally put into the adopt safety first safety
legal action but policy procedure?
Minor occupational
accident is difficult
to estimate and
constitute indirect
cost
11
1.2.4 Research Questions
Based on the initial literature reviews, three pertinent research questions were
established as a guide for sub-questions and also to determine solid aim of the
research.
RQ1: Why variation price of Preliminaries in construction projects exist and their
contributing factors?
RQ2: What were the possible impacts to pre-tender estimates related to the accuracy
of Preliminaries?
RQ3: How did the construction industry deal with ensuring correct estimate of
Preliminaries?
1.3 Aim and Objectives
1.3.1 Aim
To establish non-conclusive general guides to minimize variation in price of

Preliminaries in construction projects during tender stage
1.3.2 Objectives
Objective 1: To investigate the contributing factors of variation in price of

Objective 2: To identify the impacts of variation in price of Preliminaries in

construction projects during tender stage
Objective 3: To propose corrective actions to minimize variation in price of

12
1.4 Scope and Limitation
The writer acknowledged the diversity of the research topic. Due to limitations of the
research, the following declaration entailed a clear direction and expectation of the
results.
1.4.1 Scope of Work
The scope of work was for the following tasks and as a guide for the writer throughout
the research process;
• Focus of this research was to the aspect of price variation in Preliminaries during the
tender stage that directly affects the tender sum and future performance of the
construction project.
• The writer confined to selective civil construction projects between the period and
inclusive of 2005 to 2015 (10 years). 10-year period gave a fair observation of the
issues and improvement. Any older data may be incompatible to compare with due to
limited exposures to technology and virtual information (ICT) at that time.
• The writer focused on the civil construction projects in Selangor, Malaysia. The
reason was that most large scale of civil construction projects in Malaysia
concentrated in the Klang Valley and Selangor was the second largest population of
G7 Contractors after the Federal Territory in 2015. The nature of construction projects
in Selangor was typical to other states in Malaysia. The size of contracts for G7
Contractors entailed comprehensive Preliminaries in term of prices and scopes.
• The sample population was CIDB contractors grade G7 of category CE (Civil

Engineering) registered or operating in the Districts of Klang and Petaling, Selangor.
The construction projects duration normally ranged between 1 to 3 years.
• The writer conducted Content Analysis on Preliminaries of the shortlisted tenders i.e.
obtained from the Civil Engineering Consultant’s office to understand the general
13
attitudes of the contractors during the tender process and assessed the average
percentage range of Preliminaries against the tendered sum.
• The writer proceeded with the Likert survey on the sample population and Semi-
structured Interviews on selective contractors. The purpose was to verify the
understanding and observed attitudes of the contractors based on their knowledge and
experiences in the pricing of Preliminaries during tender stage.
1.4.2 Limitation
Due to the confidentiality and sensitivity of data, restricted source of information and
constraint of time, the limits of research were established and declared herein;
• Data for construction projects was for a period of 2005 until 2015. A period of 10-
year seemed to be suitable to generate near past and present cases.
• For the Content Analysis, the reviews of the tender documents were only allowed in
the consultant’s premise and the abstracts of Preliminaries information were strictly
limited. The matter was discussed in Chapter 5.
• The weakness of the research was anticipated as follow; Variation in the price of
Preliminaries associated to ethical improprieties limitedly discussed to appreciate the
causes. References were made to foreign experiences that related to the local context
to indicate should the case exist.
• Some citations adopted only foreign researchers if the local literature related to the
subject were not found due to weaknesses in research skills of the writer. However,
references were discussed in relation to the Malaysian context.
• The return of completed Questionnaire Survey was poor due to either the refusal of
contractors to participate or business inactivity. The writer implemented several
rigorous approaches, but the collected responses were unable to reach the calculated
sample size based on population. However, the collected samples exceeded the
14
minimum required numbers as recommended by the researchers. The matter was
discussed in Chapter 6.
1.5 Flow Chart of Research
The research process flows chart depicted in Chapter 4 Figure 4.1
1.6 Structure of Dissertation
Chapter 1: This chapter of introduction discussed the background of the research and
present construction industry in Malaysia. The Gross Domestic Product (GDP) of the
construction sector, labor cost, materials’ costs and average costs of machinery rentals
were discussed to provide a scenario of the present Malaysian construction market.
Pertinent issues related to research matter are studied to provide understanding and
necessary research gap. This chapter provides an outline for the literature review. The
aim, objectives, and scope of works & limitations are established.
Chapter 2: This chapter of literature review discussed previous researchers’ findings

and general understanding of Preliminaries, variation & price and significance of
variation in price and its impacts. The importance of accurate estimates, price
objectives and potential issues leading to the variation are scrutinized to recognize
pertinent variables.
Chapter 3: This chapter of literature review discussed in-depth previous researchers’

findings on pertinent issues of price such as competition, indirect cost, project
complexity and required quality of the Contract Managers. The contractors’ awareness
on the variables that influence the pricing of Preliminaries was absolute important
particularly on the nature of project and influence of quality, direct and indirect prices.
Chapter 4: This chapter or research methodology outlined research design process

from initiation to completion of the research topic encompassing conceptualization
approaches namely; identifying problems, objectives, and scopes, literature reviews
on previous research, conduct research questionnaires’ interviews, establish research
15
methodology i.e. either Qualitative or Quantitative or Mixed method, discussion, and
conclusion.
Chapter 5: This chapter discusses Content Analysis of Preliminaries obtained from

an established consulting engineering firm (Qualitative Method). 6 Tender Documents
involving 25 shortlisted G7 Contractors provide a significant overview of the pricing
pattern of the Preliminaries and their strategies. The average percentage of
Preliminaries against the Tendered Sum is established.
Chapter 6: This chapter discusses the Questionnaire Survey data carried out on the
sample population of G7 Contractors (Quantitative Method). The instrument was
designed to encourage respondents to provide critical feedback related to pricing of
Preliminaries focussing on (1) Demography, (2) Awareness of critical items, (3)
Contributing factors, (4) Identification of impacts and (5) Suitability of corrective
actions. The structured questionnaires using Likert Scale (5 points) were designed to
meet the research objectives.
Chapter 7: This chapter discusses and analyses the verbal information based on
Semi-structured Interviews on selected contractors (Qualitative Method). The
contractors’ experiences and strategies in dealing with pricing of Preliminaries are
observed and provide an understanding of contractors’ critical thinking that serve as a
guide.
Chapter 8: This chapter discusses major findings of the research. The non-conclusive
guides are proposed to minimize the price variation in Preliminaries during tender
stage. The strength and weakness of the research are discussed.
Chapter 9: This chapter concludes the research findings by definitive conclusion and
recommendation. Recommendation for future research is proposed.
16
CHAPTER 2 – IMPORTANCE OF ACCURATE PRICE IN
PRELIMINARIES
2.0 INTRODUCTION
This chapter of the literature review was presented in the conference proceeding of the
International Conference on Social Sciences and Humanities (SOSHUM’2016) on
19th April 2016 at Kota Kinabalu, Sabah, Malaysia entitled “Challenges of Accurate
Estimation in Preliminaries of Construction Project”. Refer to Appendix A.
Generally, it was always a high expectation of the clients to obtain worth of

investment and value for money from the construction projects. The clients entrusted
the construction company to perform the required tasks and expected the construction
performances within the acceptable Quality, Time and Cost. This research focused on
a micro aspect of cost and discussed variation in the price of Preliminaries. However,
the bottom line was to mind the clients’ satisfaction for the project. Kärnä et al. (2004)
urged that the clients’ satisfaction as crucial in the construction industry. With the
satisfaction of the clients, the construction companies would be able to differentiate
themselves from other competitors and indirectly create business sustainability in the
long run. The clients, in fact, buyers of the services provided by the contractors.
This chapter covered previous researchers’ findings and general understanding of

Preliminaries, variation & price and significance of variation in price at tender stage
and its impacts. The potential issues leading to the variations were identified to
provide the necessary research gap. It discussed the contractors’ common approach in
the tender pricing with a preference towards Preliminaries. Contractors’ understanding
of the purpose of Preliminaries became a crucial element to ensure the accuracy of
prices and competitiveness of tenders.
17
2.1 Preliminaries
Ghani (2006) described Preliminaries & General Condition the integral components in
the BQ and being the most crucial as it entails general instructions about the project
and mandatory tasks to be carried out or adhered to by the contractors. Failure to
comply with the Preliminaries & General items would jeopardize the performance of
the project and would potentially lead to construction failure.
Ghani (2006) specified that Preliminaries contain all information about the project
comprises of descriptive, itemized items, and the statutory contribution items based on
legislative requirement. Abd Rashid et al. (2006) meanwhile specified the uniformity
of tender as crucial, and BQ was a tool to obtain fairness on the basis that the
contractors priced the works based on the same requirement. Ghani (2006)
specifically urged the fairness must exist in the Preliminaries as it forms part of the
BQ based on the same principal. As such, prices between the contractors were
expected to be competitive.
Variation in Preliminaries indicates how sparse the contractors consider fairness when
dealing with the price estimates and anticipation of scopes of work with a myriad of
uncertainties in their own methods. Shakantu et al. (2003) and Popecu et al. (2003)
agreed that in the tender process, the contractors priced the items using compound
rates derived based on their respective anticipations or guesses, methodologies,
strategies and background information or knowledge, thus provide variation.
Dell’Isola (2003) said the Preliminaries could be priced as a percentage of the

construction cost or line items [Lump Sum] based on specifications or conditions of
the contract; however, it was not a correct representation of scheduling and therefore
prone to be a source of error on the estimates. A detailed assessment would be more
appropriate compared to the percentage in case of the scheduling issues. Akbar et al.
(2015) found the lump sum system was common and getting stronger by years in
Malaysian construction industry but agreed it must have proper documentation to
facilitate bidding, cost control & monitoring. Based on the researchers’ opinions, the
18
writer understood the work components in Preliminaries should be broken down into
smaller parcels for a proper consideration to avoid misrepresentation of the price.
2.1.1 Preliminaries as an Integral Part of BQ
National Building Specification [NBS] (2015) specified Preliminaries & General

information contained the items stipulated in the scope of works that include
provisional sum and all other items [related to the conditions of contract]. In general,
the Preliminaries outlined the contractors’ general execution to complete the project
including provision for testing and commissioning and sub-contracting works. The
Entrustry Group (2009) considered Preliminaries an integral part of the BQ. The
Preliminaries stipulated about general scopes of works, obligations, responsibilities
and liabilities of the contractors related to the tender and to be priced accordingly and
separated from the trade bills.
Malaysian construction contract procedure specified the BQ as the standard form of

the tender document. Abd Rashid et al. (2006) concurred BQ was part of the tender
document and being largely used for estimation of price and soliciting the contractors’
competitiveness of tenders. El-Mashaleh (2010) also agreed with this opinion and
acknowledged BQ was used in the decision making of the Tender Bid.
IEM.CE (2011); PWD203A (2010); PAM2006 (2006) Conditions of Contract (COC)

stipulate that Bills of Quantities are mandatory documents of a tender document. The
COC stipulates that the Bills of Quantities shall be the basis of the contract sum.
PAM2006 (2006) specifies the Bills of Quantities as the contract bills and stipulates
similar mandatory requirement in Clause 12.1.
Ghani (2006) specified Preliminaries as an important document to be priced except for

the descriptive items. Preliminaries described overall project information, services to
be provided and the applicable conditions of the contract. She insisted the price
estimation for Preliminaries was somehow complicated [due to complexity] and
different between projects. Olawale & Sun (2010); Wood & Gidado (2008) defined
complexity as a combination of several factors that distort the normal method or
19
performance of the activity to achieve the required outcomes and may have caused
challenges for effective control of price and time.
In summary, the Preliminaries contained important [crucial] items encompassing

general information within the scope of services that outline the contractors’ general
execution plan, obligations, responsibilities, and liabilities. Preliminaries, in fact, an
integral part of the Bills of Quantities that to be diligently priced and complicated in
nature, and the complexity varied between projects.
2.1.2 Definition of Variation & Price
Iversen (2004) defined ‘variation’ as differences in results of the same variables.

MBASkool (2015) however defined ‘variation’ as differences between predicted
outcomes of variables. Phillips (2009) defined ‘price’ as expenses resulted from
‘direct’ cost such as materials and overhead or ‘indirect’ cost such as disbursement,
losses of production or time or ‘intangible’ cost related to pain and suffering.
2.1.3 Significance of Variation in Price
Ji et. al. (2014) opined that crucial during the tender stage, the contractors to conduct
risk analysis such as to identify and prioritize all variables and attend to the accuracy
of estimates. The end result had a crucial bearing on the tender price and the expected
profit margin. Relying on the variation orders (V.O) for the works always ended up
with a tedious process and difficult to recover if disputed by the clients particularly on
the lump sum contracts.
Tower & Baccarini (2012) said the critical factors to be scrutinized by the contractors
during the tender stage include Liquidated Damages, the sufficiency of the document,
procurement type, and complexity of projects such as difficulties or constraints and
existing works in hands. The contractors practically have no jurisdiction or less over
these factors and therefore required thorough price consideration to avoid mistakes.
The writer agreed that any misjudgment of the said factors would definitely affect the
price of Preliminaries.
20
Tak et al. (2002) foresaw underestimation of overhead for site management and
general operation of the construction project would create significant inaccurate price
estimation to the overall tender. This activity seldom received appropriate attention, as
they did not belong to any specific productive site work. Similarly, it happened to the
non-productive activities such as attending major repair for completed works due to
defects. Tah et al. (1994) envisaged the existence of risks implication if the non-
productive activities or activities incurred but not priced in the tender. This would
create significant price variation.
Indirect costs such as to incur higher insurance premium and expensive rental of
machinery for high-risk work may be observed. Tah et al. (1994) found differences of
markups by the contractors and indirect cost would be the contributing factors to the
variation. Solomon (1993) however envisaged price adjustment in Preliminaries
would somehow provide a competitive edge to the contractors in the tender. The
contractors have a fair opportunity to demonstrate their respective competency,
experience, and capability. The writer realized the best price should stand a better
chance to be awarded the contract.
Significantly, a variation of price in Preliminaries would provide competitiveness to

contractors during the tender stage. Accurate price and close consideration on non-
productive activities and indirect prices would ensure full control of the project and
meet the expectation of the contractors financially. From the researchers’ findings, the
variation of price in Preliminaries signified the following;
1) Tak et al. (2002) said underestimation of overhead created a significant

inaccurate estimation. As such competency of the cost manager and awareness
about the market condition not only encompassing labors costs but also the
machinery, materials and time.
2) Tah et al. (1994) said the markup price and indirect costs contributed to
variation, therefore, crucial to be scrutinized and visualized prior to the
implementation of such items. The price of cleaners, general administrators,
21
general attendance of labors on unscheduled works, etc. commonly neglected
indirect costs. Mark-up factors equally crucial to reflect the actual Builder’s
prices, sufficient floats and required profit.
3) Solomon (1993) said adjustment to price in Preliminaries would provide a

competitive edge. The contractors must have competent knowledge in
assessing the complexity of scopes and adjust the price accordingly and not
simply discriminating the important items to gain competitiveness or else the
project may be abandoned due to incompletion of preliminary items.
4) Ellsworth (2011) said non-productive activities provided variation. The costs

incurred but not priced in any billable item such as repair works or excess in
manpower for a simple assignment would theoretically using up the operation
budget of other activities. “Do it Right the First Time (DRIFT)” theory may
provide a significant solution.
2.2 Accuracy of Estimates
Smith (1990) found in the past decade’s many researchers had concentrated on the
issues of construction failures and highlighted the pertinent root causes. Lesson
learned and dozens of proposals were publicized for the stakeholders’ action. The
writer investigated the similarity of the problems and lessons learned based on past
experiences. The accuracy of estimates particularly the costs in Preliminaries was seen
as crucial and could be a main determining factor towards the success or failure of a
construction project.
Abd Rashid et al. (2006) mentioned that price estimation mainly dealt with the
establishment of price components, acquiring and evaluating using available price
information. On the other hand, they said the price information normally depending
on the type and nature of the application and its extent, thus the availability of such
information deemed crucial.
22
It was a common practice to the construction industry in decades where the
contractors were required to commit the price before the construction had taken place,
thus constituted high-risk business on the contractors. Smith (1990) opined the
contractors were obliged to estimate the price as accurately as possible to avoid
uncalled for errors. In Malaysia, the situation was no exception and therefore the
contractors must properly address the risks of inaccurate estimation.
Akintoye (1991) found that pricing a tender was not an easy task due to fragmentation
of the industry itself and high competition and to deal with risks and complexity of the
work. The accuracy of price was truly a prime necessity to the contractors due to
fierce bid competition. Akintoye (1991) further recommended that the present
information must be utilized in order to anticipate or forecast the future demands;
price and competition thus would meet the desired profit margin. Cheung (2008)
however said most of the clients did not consider accurate price estimation as
important to gauge the performance of work. Azman et al. (2013) found that in JKR
the criticality of price (cost) planning was not considered as a critical procedure.
Saunders et al. (2013) discovered the contractors faced huge challenges to determine
the uncertainties and risk myriad that existed in the construction projects and to
analyze the impacts and anticipate the outcomes. The difference in thoughts between
“critical” and “non-critical” terminologies for accurate price estimation would be
challenging. The terms normally determined which procedure best fit to describe the
performance of construction Preliminaries.
2.3 Price of Preliminaries in Tender
The Preliminaries were normally priced using BQ in the tender document. Shakantu et
al. (2003) said the prices were mainly to cover all common or general items to be
carried out by the contractors as compliance to the tender requirements. The Entrusty
Group (2009) and Ghani (2006) elaborated by saying the Preliminaries of a
construction contract stipulated the project description, general obligation of the
contractors, provisions of all general or mandatory facilities, pre-requisite of
23
compliance to the law and the setting up price for the construction.
In Malaysia, the Preliminaries were generally clustered and summarized from initial
costs (pre-construction stage expenses), recurring costs during the construction stage
and final costs (post-construction stage expenses). Initial and final prices were a one-
off price to be disbursed while the recurring costs were expended through the project
life. Turner & Townsend (2013) in the International Construction Cost Survey 2013
found the Preliminaries were normally ranged between 8% and 15% of the tender sum
and varied between countries and Malaysia was in the region of 10%. Keng & Ching
(2012) however found average percentages in Malaysia varied between 3.60% and
7.94% of the tender sum.
Despite the above provision, arbitrarily, other researchers anticipated the existence of
indirect costs to be considered in the Preliminaries of construction projects. Pearson et
al. (2015) defined indirect costs comprised of several significant prices or costs of the
total construction costs that could not be identified during the tender stage. They
claimed no significant research had been conducted to ascertain how best indirect
costs to be estimated, managed and controlled. Becker et al. (2014) defined indirect
costs were the price that not considered in the tenders due to additional expenses on
activities during construction and supportive in nature. It was apparent that the
indirect costs constituted 10% to 40% of the construction costs depending on the
nature of work. Considering the costs’ impacts, tight control of the indirect costs
deemed crucial.
The higher the underestimated price, the lower the profit margin would be. If it was
not prudently anticipated then the projects would eventually suffer the loss of profits
and could lead to failures. Turner & Townsend (2013) reported the average margin
made by the Malaysian contractors was in the region of 9%. As such, it was safely
assumed that underestimation of the price of Preliminaries may lead to cash flow
difficulties of the construction companies if not properly managed.
24
2.4 Accurate Price Objective
Smith (1990); Tah et al. (1994) and Solomon (1993) mutually agreed the main
objective of accurate price in Preliminaries was to obtain the as-accurate-as-possible
price of tender and to be competitive and to reflect the actual costs. It minimized the
unnecessary variations between tenders.
Smith (1990) opined that accurate tender required detailed pricing. However, errors in
price estimation due to limited time at tender stage unavoidable, therefore, required a
complete formulation how to overcome such situation. Smith (1990) suggested a large
lump sum item be broken down into smaller lump sum items and to incorporate all
overheads and profits and appropriate Preliminaries. Theoretically, a smaller lump
sum item naturally easier to manage and prices were based on identified variables.
Jaggar & Morton (1995) and Masrom (2012) described price estimates very much
influenced by variables.
Abd Rashid et al. (2006) learned that the clients normally expected the consultants (in
this respect Engineers) to ensure value for money for the implemented projects
encompassed Quality, Time and Costs. As such, the contractors’ proposed qualitative
& quantitative prices were to be duly competitive (based on most accurate prices
consideration) for the successful completion of the projects based on the win-win
concept.
2.5 Common Approach of Contractor Pricing
Shakantu et al. (2003) found that in general, the contractors priced the items based on
quantities established from direct taking offs or Bills of Quantities provided in the
tender documents. All profits, running costs and wastages were taken as consolidated
costs against the quantities. Popecu et al. (2003) said these consolidated costs were
normally based on intelligent guesses, past statistics references alongside with present
data. The writer added the present and historical economic or administrative trends
should also be included into consideration as they affected the construction markets,
such as the movement of materials’ prices due to the changed of Goods & Service Tax
policy and/or the changed of electricity tariffs.
25
Impliedly, this uncertainty contributed to the accuracy of estimates lead to price
variation that may carry significant impacts to the tenders. Azman et al. (2013)
defined accuracy as lack of errors. Saunders et al. (2013) opined uncertainty became
sub-domain in the project management. Li, Han, & Zhang (2013) in the “…19th
International Conference on Industrial Engineering and Engineering Management…”
mentioned variation was the main reason for price adjustment in a construction
contract due to several factors such as a change in materials constituted a change of
price. However, they did not discuss specifically variation in Preliminaries at the
tender stage.
Li et al. (2013) generally described variation of similar unit price should meet
minimum one of the followings; (1) constituted new work and repriced in tender, (2)
Nature of construction environment was changed due to variation, (3) changed
materials & price beyond the agreed contract bills, (4) grossly unbalanced contract
price from contractors and (5) timeline of critical path was changed due to variation.
The writer appreciated the five criteria of the variation established and related to item
4 that directly impacted the Preliminaries, where a large variation caused unbalance in
the tenders.
2.6 Common Items In Preliminaries
The Entrusty Group (2009) mentioned in the Master Builders Journal that in Malaysia,
irrespective of any Bills of Quantities, the common Preliminaries typically included
items in Table 2.1. The typical requirement somehow showed the urgency of the items
in the construction sites and therefore to be considered for appropriate pricing in the
tenders.
26
Table 2.1 : Common Preliminary Items
% of Direct Indirect
Tender Cost Cost
Cost
(1) General Particulars & Contractual obligation P P
(2) Machineries & vehicles P P
(3) scaffolding works P P
(4) site security & administration P P
(5) workers transportation P P
(6) protection of works P P
(7) temporary supply i.e. water, electricity P P
(8) Communication facility P P
(9) temporary access P P
(10) temporary accommodation for workers P P
(11) compliance with traffic regulations P P
(12) Safety & Health P P
(13) maintenance of public access P P
(14) site waste disposal P P
(15) Noise & pollution control P P
(16) Compliance with law P P
(17) bond & warranties P P
(18) Insurances P P
(19) Shop drawings / As-built drawings P P
(20) Site photographs / record P P
(21) Work scheduling P P
22) Site preparation for handing over P P
Note: The Entrustry Group (2009)
Ghani (2006) opined mandatory critical items in Preliminaries comprised of (1)

Insurances, (2) Workmen’s compensation, (3) Performance bond, (4) Setting out, (5)
CIDB levy, (6) As-built drawings, (7) Work program, (8) Hoarding & Fencing and (9)
Client / Employer requirement namely Vehicle for sole use of Superintending Officer
and Equipment & Facilities. Refer to Table 2.2
27
Table 2.2 : Mandatory Preliminary Items
Tender Cost Cost
Cost
(1) Insurances P P
(2) Workmen’s compensation P P
(3) Performance bond P P
(4) Setting out P P
(5) CIDB levy P P
(6) As-built drawings P P
(7) Work programme P P
(8) Hoarding & Fencing P P
(9) Client / Employer requirement P P
Note: Ghani (2006)
JKR20800-0183-14 (2014) however stipulated 32 preliminary items related to the

Civil Engineering construction. Refer to Table 2.3.
Table 2.3 : JKR Preliminary & Items

Tender Cost Cost
Cost
(1) Shop Drawings, Samples, And Mock-Ups P P
(2) Contractor’s Plant (Scaffolding, tools, hoist, etc) P P
(3) Construction Plan (Work Programme) P P
(4) Project Signboard P P
(5) Progress Photographs P P
(6) Sufficient Notice To Local Authorities P P
(7) Access And Temporary Roads P P
(8) Temporary Diversion And Relocation Of Existing P P
Overhead And Underground Services
(9) Temporary Water And Power Supplies For The Works P P
(10) Site Security P P
(11) Care And Protection (from any damage by weather, P P
careless etc)
(12) Legislation And Regulations P P
(13) Drainage, Erosion And Sediment Control P P
(14) Access Roads And Maintenance Of Existing Roads P P
(15) Control Of Workmen, Plant And Machinery At Site P P
28
Table 2.3 : Continued
Tender Cost Cost
Cost
(16) Contractor’s Temporary Accommodation And Facilities P P
For Workmen
(17) Contractor’s Office And Storage P P
(18) Office Accommodation For S.O. P P
(19) Telephone For S.O. P P
(20) Site Items For S.O./ Office Equipment And Facilities P P
(21) Material Testing Laboratory And Staff P P
(22) Survey Instruments And Personnel P P
(23) Safe Working Area P P
(24) Safety, Health, And Welfare P P
(25) Sanitation P P
(26) Waste Management P P
(27) Environmental Protection Works P P
(28) Water And Air Quality, Noise And Vibration Control P P
(29) Nominated Sub-Contractors (Profit & Attendance)
(30) Keeping The Site Tidy P P
(31) As-built Drawings P P
(32) Clearing, Cleaning And Making Good On Completion P P
Note:JKR20800-0183-14 (2014)
Based on researchers’ identification, the writer summarized 30 common preliminary

items showed in Table 2.4. It indicated possible influence of indirect costs on certain
variables due to the uncertainties of work. The writer also proposed several items that
could have higher possibilities to be quantified and priced as provisional items due to
their nature of work that more predictable and controllable. As such, increased the
accuracy of the Preliminaries.
29
Table 2.4 : Summary of Preliminary Items
(JKR2080 % of Possible Possible
(The Entrustry (Ghani, Direct
0-0183-14, Tender Indirect Provisional
Group, 2009) 2006) Cost
2014) Cost Cost Quantity
(1) General Particulars & Contractual obligation P P P P General
(2) Insurances P P P P %
(3) Workmen’s compensation P P P %
(4) Performance bond P P P P %
(5) Setting out P P P P
(6) CIDB levy P P P %
(7) Superintending Officer Office P P P P
(8) Contractor’s Office And Storage P P P P
(9) Shop Drawings / As-built drawings P P P P P P
(10) Work programme P P P P P P
(11) Hoarding & Fencing P P P P
(12) Client / Employer requirement P P P P
(13) Contractor’s Plant (Scaffolding, tools, temporary sheds, vehicles, etc) P P P P P
(14) Site security & administration P P P P P
(15) Material Testing P P P
(16) protection of works P P P P
(17) temporary supply i.e. water, electricity P P P P
(18) Communication facility P P P P P
(19) temporary access P P P P P
(20) temporary accommodation for workers P P P P P
(21) Legislation & regulations P P P
(22) Safety & Health P P P P
(23) maintenance of public access P P P P
(24) Sanitation P P P P
(25) site waste disposal P P P P
(26) Noise & pollution control P P P P
(27) Drainage, Erosion And Sediment Control P P P
(28) Site photographs / record / Progress Report P P P P P
(29) Nominated Sub-Contractors (Profit & Attendance) P %
(30) Site Cleanliness And Preparation P P P P
30
2.7 Problems Related To Accuracy of Preliminaries
Accuracy minimized variation of price in Preliminaries. Tah et al. (1994) believed the
pricing very much depended on the assessment of the contractors on the tender
document and anticipated or judged the best approach to recouping the costs.
Contractors’ approaches and understandings remain speculative and doubtful until a
proper verification was carried out. Tah et al. (1994) identified the following were
crucial factors to be verified from the contractors on how they anticipated or expected
from the project prior to award of tender; (1) site overheads, (2) general overheads, (3)
profits and (4) risks.
Learned from previous researchers’ findings, the writer understood that variation in
the price of Preliminaries (despite similar nature of work) should spur concern to the
Engineers & Quantity Surveyors, and to be detailed out during the tender evaluation
process. Josephson & Saukkoriipi, (2003) found that contractors’ tendency to lower
the price to win the tenders should be of a major concern to the Project Managers, as it
would somehow lead to project failures if not properly analyzed. Azman et al. (2013)
also found that the lowest tender price was always the main focus of the contract,
however, they believed that it was not the best means to achieve value for money due
to tendency to offer a “…suicidal low bid price…” by the contractors i.e. out of
desperation to win the contract. Preliminaries were prone to such price reduction. This
research investigated the impacts of such move.
Project failure was an inherited issue and its causes had been actively discussed in the
90’s to-date. Issues such as understanding project requirement, high clients’
expectations and incompetency of the Project Managers had been identified. Leicht et
al. (1999) and Frese & Sauter (2006) had a common agreement that success factors
evolved in proper planning and realistic anticipations. Challenging and fail factors
were the opposite of success factors and in particular due to technical incompetence
and lack of resources. These causes existed (to-date) in Malaysia.
31
Smith (1990); Ji et al. (2014) insisted the accuracy of Preliminaries very much
depended on the skills of Estimators and the collaborative support from the
management and team members involved in the tender process. Lack of consideration
caused the estimation to be either under or over priced and implicated the
competitiveness of tender and success completion of work. Smith (1990) for the same
reason suggested the Estimators be highly qualified with thorough working
experiences on construction particularly related to the effects of cost and price. Ji et al.
(2014) emphasized that experience of similar nature of work was definitely crucial to
the contractors. The writer concurred with their opinions that sufficient experience
had significant impacts to establish the reliable price of Preliminaries.
The tender exercise was practically a competition in the sense that the lowest price
may have a higher probability to win the contract. Josephson & Saukkoriipi (2003)
found a decade ago in Sweden the contractors lowered the price for the sake of
competition. The contractors tend to forgo items that they considered as less
important. This situation was still valid today in the context of Malaysian
construction. Hesami & Lavasani (2014) found that at present, due to competition and
to remain competitive for a project, the contractors considered the option of
decreasing the price while maintaining the required qualities. The action deemed
necessary to stay ahead of the competition. This action required accuracy in price
estimate to avoid underpricing that jeopardized the performance of contractors during
construction (if neglected).
Josephson & Saukkoriipi (2003) found that it was always the intention of the clients to
transfer the site quality costs to the contractors (such as routine improvement works of
the construction site) but often overlooked. The contractors’ main focus was on own
quality needs. In such instances, the contractors generally absorbed it as part of the
overall price. This certainly affected the performance of the contractors in the long
run. Considered this consequence and to achieve the world-class practice, the
contractors need to change their perceptions. Josephson & Saukkoriipi (2003)
recommended the move by contractors to broaden the focus of this ‘direct cost
transfer’ as necessary. This research investigated the contractors’ strategies and how
such costs being addressed in the Preliminaries.
32
Carlos (2015) stated through the 80/20 rule among other failure reasons for the
construction site (that relates to the Preliminaries) were cost overrun, unrealistic
schedules, error in price estimates, giving priority towards tender price competition
and lack of project planning. Lim (2012) declared inaccuracy of cost estimation due to
gross underestimation of price would result in restriction of resources. Budget
overrun would lead to project failure. Holm et al. (2005) ; Elfaki et al. (2014) agreed
on the accuracy of price estimation by thorough inspection of the required scopes and
the sound prediction was no doubt critical to avoid project failure.
Ghani (2006) found the pricing of Preliminaries was most difficult and exposed to a
large variation between contractors as they have different approaches and
understandings. However, she opined only selective items in the Preliminaries to be
priced [as it depended on nature of the project]. The writer agreed that the pricing of
Preliminaries very much depended on the intention of the scope and its nature of
work, hence gave near accurate estimation and value for money.
2.8 Procurement Process
Davis et al. (2008) described construction industry was the most cost orientated and
integrated processes encompassing all inter-related supply chains and stakeholders.
The construction projects were normally carried out through various procurement
methods. The categories were Conventional, Design & Build and Joint Venture that
involve joint management and collaboration between two or more parties. Shu Hui et
al. (2011) discovered Malaysian procurement methods were normally by means of
Direct Procurement, Tender, and Negotiation.
Irrespective of any mode of procurement methods adopted for a construction project,

most researchers agreed that Preliminaries were the most crucial component to be
thoroughly considered and administered. Apart from the availability of measurable
items such as insurances, erection of temporary works, etc., there were also elements
of uncertainties such as health and safety provision & compliance, workers
recruitment, Authorities requirements, materials testing etc.
33
The uncertain components required a more detailed consideration, most recent &
correct assumptions, valid anticipations and accurate pricing. Dell’Isola (2003)
confirmed uncertainties were the risks to the contractors, therefore must be considered
thoroughly in firming up the construction cost. Dell’Isola (2003) had identified that
transfer of risks to the contractors [by clients] was one of the uncertainties and
consequences unpredictable and would incur higher cost consideration.
Saunders, F.C., Gale, A.W. and Sherry (2013) supported this issue and agreed that
uncertainties were the prime risk, thus the contractors to analyze and anticipate the
[correct] price for the projects. Generally, the preliminary costs of a construction
project in Malaysia included the provisions of mobilization costs, supervision,
securing insurances and permits, erection of temporary facilities such as workers
accommodation, temporary drains, wash through, hoarding etc.
2.9 Summary
Based on the researchers’ findings, Preliminaries crucial for the construction projects.
It stipulated about general scopes of works, obligations, responsibilities and liabilities
of the contractors related to the tender. Failure to comply jeopardized the performance
of the project. Preliminaries as an integral part of the BQ and the items were normally
priced in a lump sum; however, it dealt with recurrence activities and uncertainties,
therefore, prone to be a source of error in the price estimates.
The majority of the researchers agreed that accuracy in price estimates was the most
crucial factor in establishing the accurate tender; hence value for money to the clients.
Lump sums required higher skills and sufficient experience of the contractors. Apart
from direct prices, the existent of indirect prices in the construction was to be
critically considered. It was also learned that the clients likely to transfer the quality
costs to the contractors and tendency to bias towards the lowest tender to be awarded.
On the other hand, the contractors were obliged to perform ethically and
professionally to carry out the intended works with acceptable quality, within budget
and completed within stipulated time limit. The competition was practically
34
unavoidable amongst the contractors to win a project. Accurate price in Preliminaries
should be one of the prominent success factors.
Considered the preliminary items summarized from the researchers’ findings minus
items determined by mere standard percentages of the tendered sum such as CIDB’s
mandatory contribution of 0.125% of tendered sum, Performance Bond, Insurances
and Stamp Duty, the following 25 variables showed in Table 2.5 provided significant
variation in the price of Preliminaries. Significant variation constituted gaps for
finding the root cause.
Table 2.5: Crucial Preliminary Items

(The
(JKR2080 Possible
Entrustry (Ghani,
0-0183-14, Provisional
Group, 2006)
2014) Quantity
2009)
(1) General Particulars & Contractual obligation P P General
(2) Setting out P P
(3) Superintending Officer Office P P
(4) Contractor’s Office And Storage P P
(5) Shop Drawings / As-built drawings P P P P
(6) Work programme P P P P
(7) Hoarding & Fencing P P
(8) Client / Employer requirement P P
(9) Contractor’s Plant (Scaffolding, tools, hoist, P P P
temporary sheds, vehicles, etc)
(10) Site security & administration P P P
(11) Material Testing P
(12) protection of works P P
(13) temporary supply i.e. water, electricity P P
(14) Communication facility P P P
(15) temporary access P P P
(16) temporary accommodation for workers P P P
(17) Legislation & regulations P
(18) Safety & Health P P
(19) maintenance of public access P P
(20) Sanitation P P
(21) site waste disposal P P
(22) Noise & pollution control P P
(23) Drainage, Erosion And Sediment Control P
(24) Site photographs / record / Progress Report P P P
(25) Site Cleanliness And Preparation P P
Upon understanding the critical variables in Preliminaries as discussed in Chapter 2,

price consideration was further deliberated in Chapter 3 to understand the
consequences and challenges faced by the contractors in achieving accuracy in price
estimates. Appendix B showed typical Preliminaries for a Civil Engineering project.
35
CHAPTER 3 – PRICE CONSIDERATION IN PRELIMINARIES
3.0 INTRODUCTION
This chapter of literature review discusses the consideration of project complexity and
the necessity of the Contract Managers (contractors) to familiarize with the
construction unique environment. It was important that the contractors aware about
critical variables that influenced the pricing of Preliminaries, particularly the nature of
projects, quality, direct, and indirect prices.
Canadian Construction Association [CCA] (2012) conducted a survey on the

Canadian market and found the tender [particularly the Preliminaries] items were
priced based on assumptions. Smith (1990) found that such approach was very much
influenced by constraints and limited tender period. Despite that the contractors were
obliged to provide competitive prices without risking the performance of the tender,
therefore the need for accurate prices was the priority. The contractors had no choice
but to have constantly observed the construction market trend, to be alert about the
influence factors, acquired substantial knowledge about the movement of construction
materials’ prices, and developed their reliable databank for later retrieval.
3.1 Tender Competition
Due to competitiveness and to strive for a job, the contractors may have a tendency to
under quote the overall price particularly the Preliminaries simply to keep the tender
price low. This practice had a potential to inflict the good quality of services. The
concern was not only limited to Malaysia but also elsewhere.
Azman et al. (2013) mentioned that underestimation of price would lead to the
abandonment of a project, possible lawsuit, and contract difficulty, whereas
overestimation of the same would overshoot the allocation and deferment of the
project itself. Wong et al. (2000) found that in the case of any tender, the clients had a
tendency to favor the lowest tender. This attitude may be driven by the assumption
36
that it would save the development cost. The contractors were poised about this
attitude and in most cases reacted accordingly. Was it a wise move and good to the
construction industry?
Ashworth (2010) said the contractors’ profits had considerably reduced for the past
decades; therefore, competitive prices consideration with low-cost risks impact was
crucial. He insisted the price apparently related to selling, and the costs were the
contractors’ prices spent on work done and received as incomes. The differences
between costs and prices were the profits.
Wong et al. (2000) found in the United Kingdom, there was an upward urge from the
industry to shift from practices of “…lowest-price wins…” to “…multi-criteria
selection….” They believed the shift from this ‘capital cost’ oriented to ‘value’ for
money [best practices] oriented would ensure the best value to the clients. This
definitely required determination and correct procurement approach for the benefits
and purposes of the projects. The same phenomena applied to Malaysia.
Abd Rashid et al. (2006) found that the procurement practices in the commonwealth
countries including Malaysia adopted the British construction & procurement
approach where the Bills of Quantities prepared by the Engineers or Quantity
Surveyors and the contractors did the pricing, whereas the neighbouring countries i.e.
Thailand and Taiwan required contractors to provide and priced their own BQs. As
such, the writer anticipated the Preliminaries and variation in price issues in Malaysia
may be somehow typical to other commonwealth countries.
3.2 Challenging Tasks to Ascertain Variation In Price of Preliminaries
NBS (2015) mentioned the pertinent requirement of the Standard Method of

Measurement (SMM) that the price in Preliminaries to be identified by the contractors
although the scope of work was not specific. How the contractors to be guided in the
process to identify the missing information? Smith (1990) trusted this would be a
challenging task to the Contract Managers due to the risks associated with it.
37
3.2.1 Consideration on Project Complexity
Lack of consideration of project complexity was being the most critical part when
considering the Preliminaries. Lack of knowledge and experiences of the contractors
led to the insufficient costs’ consideration such as overhead costs, materials, required
technologies or any legislative requirements based on the nature of the projects such
as refurbishment compared to the new projects. This matter was addressed by Ali &
Zakaria (2012); Rahmat & Ali (2010) that the complexity of a refurbishment project
was most critical compared to the new construction as many variables such as
technology as well as social and legal aspects needed to be considered, thus crucial
proper planning to meet the clients’ expectation and timely completion.
Wood & Gidado (2008) envisaged ability to identify the complexity at the early stage
of the project provided better understanding thus reduced the risks [particularly
variation in price] and ensured successful project management due to better
anticipation. The degree of complexity depended on nature of the projects and ranged
from moderate to most challenging. Rahmat & Ali (2010) said managing the
refurbishment project was challenging due to its complexity and uncertainty.
Tender preparation costs were also related to the complexity of the projects and spent
upfront during the tender stage. The contractors normally absorbed such indirect costs.
Mega projects such as PETRONAS Twin Towers or Coastal Highways were more
complex compared to the ordinary pipework or a bridge. Popecu et al. (2003)
mentioned in the United States of America, the contractors generally incurred tenders’
preparation costs showed in Table 3.1. Based on the similar scenario, the costs were
also incurred by the Malaysian contractors and they would decide whether to consider
this factor in the price of Preliminaries at tender stage unless they decided to absorb it.
This research investigated the contractors’ approaches pertaining to the direct and
indirect cost issues during the tender stage.
38
Table 3.1: Cost of Tender Preparation
Type of Work % of bid value
New buildings 5%
Sewerage and water treatment 7.5%
Roadwork/Bridges 1.25%
Note: Popecu et al. (2003)
Azman et al. (2013) mentioned the accuracy of estimates largely improved if proper
price planning was available in terms of analyzing and improving the historical price
data and acquired sufficient design information. Smith (1990) however commented, to
have the required accuracy in the estimates, the Estimators not necessarily expert in
all aspects but must be supported by diligent advice from higher management such as
the Contract Managers and other leading tradesmen in the teamwork to plan and
determine the necessity and sound work plan. The writer agreed with both opinions.
The concerted efforts of team members based on their experiences and ability to
anticipate the consequences enhanced the accuracy of rates particularly the
Preliminaries that normally priced in a lump sum and exposed to the uncertainties and
variation.
3.2.2 Quality & Direct Price
The contractors’ implementation strategies depended on the complexity of the project

such as quality & direct price that must be well planned or anticipated to avoid
possible large variation of price due to uncertainties. Sailaja et al. (2015) opined
components such as underutilization of plants or machinery, long overdue or delay in
honoring the payments, serving undue financial charges by financial institutions, non-
performing loan by debtors, loss of profit due to bad sales etc. were among the
contributing factors.
This opinion had supported the previous researchers’ findings. Cleden (2009) and
Winch (2010) said that the complexity was part of the uncertainties exists in the
project. Danilovic & Sandkull (2005) proposed that the complexity emerged from the
39
project requirements and the selection of technology or materials or / and diversity of
the stakeholders of the projects. Smith (1990) found unit rates established by the
contractors were normally pure estimates and arbitrary, exaggeration of risks and
unseen problems matching the clients’ optimism for the completion of projects.
Consideration of the running costs such as for the electricity, water supply, labors,
rentals, etc., were equally crucial. For instance, different electricity tariffs between the
daytime and the night. Berger (2015) brought an example that in the developed
country like the United State, electricity tariff for the daytime more than doubled the
night tariff. Though Malaysia being a developing country but the electricity charges
adopted similar tariffs’ pattern. TNB (2014) charged more than 65% increase in
daytime tariff compared to the night tariff.
The repair of defective works costs due to shrinkages and imperfections during
Defects Liability Period must not be taken lightly. The price was seldom considered
as a priority due to uncertainties. Glover (2008) identified among major cause of
construction disputes was due to defects. Malaysian Conditions of Contract emphasize
the contractors’ responsibility to bear all costs due to defects during the Defects
Liability Period. Clause 48.1 of PAM2006 ; Clause 15.4 of PWD203A stipulate the
contractors to bear all repair of defective works from his own costs. This research
investigated the contractors’ approach to this issue in relation to Preliminaries and
their controls to minimize the impact.
The past and present market knowledge related to the construction industry,
movement of prices of materials, technology was no exception to be considered for
the anticipation of market impacts particularly the costs of materials and labors. Khi
V. Thai (2009) insisted the market experience and knowledge critical for the
procurement officers to enable them to make decisions such as on the procurement
approaches comprise of know-how of planning, budgeting and authorizing for
effectiveness, efficient and economical. CIDB (2015d) vide National Construction
Costs Centre (N3C) detailed the present statistic of the building materials, materials
costs, machinery etc. It provided a good basis to access the movement of crucial costs
in Malaysia particularly in the Klang Valley.
40
CIDB (2015d) established the indices of the cost of present scenario to form the basis
of built up rates, guide for sufficient consideration for the contractors to make a
critical decision on employment, transportation, sub-contracting purposes, etc.
Dell’Isola (2003) opined market driving factors and issues on risks could be confusing
and complicated thus required reasonable principles of economic knowledge on
construction materials and methods of construction. This research investigated the
contractors’ sensitivity against the present market prices and their approaches in
pricing the Preliminaries.
3.2.3 Indirect Prices
Ellsworth (2011) described indirect prices or costs dealt with soft cost elements as a
result of necessary activities related to the construction and intangible in nature. These
costs (generated or likely to be generated) were necessarily considered at the planning
and implementation stages of the projects. Hendrickson & Au (2000) considered
indirect prices related to non-productive activities influenced the estimation approach
of Preliminaries.
Hendrickson & Au (2000) explained non-productive activities such as flagmen

required to divert the traffic for the road construction, which did not directly
contributed to the road construction efficiently compared to the paving workers was
considered as indirect price. Similarly, the non-productive activity occurred when
workers were required to repair the unsatisfactorily completed works. Age,
experience, and leadership are common factors related to non-productivity. Other
factors such as absents, time-outs, holidays, strikes etc., were typical non-productive
activities.
Apart from the above, indirect prices influenced the way contractors estimated the
Preliminaries, amongst the possible factors, were discussed herein; Memon et al.
(2014) found the construction industry in Malaysia was having the severe concern of
time overrun, thus, to be reduced despite the complexities and uncertainties of the
industries. Issues like financial difficulties, under performance of sub-contractors,
41
labors and materials shortages or bad projects management were phenomena. This
research investigated the contractor's approach in dealing with the non-productive
activities and appropriately priced in the Preliminaries.
Ethical improprieties such as petty bribery and entertainments, undue compensations

and misuse of power remain debatable. Such cases remained tacit in the construction
projects. The indirect cost of Preliminaries affected the actual construction cost with
either negative or positive impacts. Vee & Skitmore (2003) discovered in Australia
some degree of ethical improprieties in the construction [that could be significant to
the variation of price] such as in particular collusive tendering (44%), fraudulence
(35%) and bribery (26%). Refer Table 3.2.
Table 3.2: Ethical Improprieties

Unfair conduct 81%
Negligence 67%
Conflict of Interest 48%
Collusive tendering 44%
Fraudulence 35%
Confidentiality breach 32%
Violation environment ethics 20%
Bribery 26%
Note: Vee & Skitmore (2003)
Transparency issues; Lengthy bureaucracy requirements and delay in awarding the

contract (such as additional mandatory registration and extension of tender validity
period). Shu Hui et al. (2011) were pessimistic that any price escalation i.e. due to
inflation or interest rates etc., forced to be shouldered by the contractors. Shu Hui et
al. (2011) discussed that some procurement of site items influenced by an
irresponsible person due to personal benefit and not based on actual needs. Materials
inspection at source and testing was subjective as it may require expensive overseas
trips. This research investigated such requirement and practical approaches by the
contractors in capturing the price in Preliminaries.
42
Sime Darby Property (2013) experienced site activity obstructions due to squatters’
demonstration (stand-off) as a result of specific compensation issues. This occurrence
resulted in the certain amount of compensation, delays, idling of resources, etc.,
related to it. Such issues required a diligent site inspection and anticipation, as the site
was not free from encumbrances at the point of tender. As such this indirect price
needed to be considered by the contractors in the Preliminaries.
Canadian Construction Association [CCA] (2012) based on the study in the Canadian
construction industry, recognized the difficulty for an organization [Contractors]
despite familiarity with the local and market influencing factors to establish an
accurate and consistent tender price. They found that tender price estimation
[including the Preliminaries] in construction was based on the mere sound
approximation that reflected several pertinent variables such as the size of projects,
scope of work, its complexity, locality, and logistic of the projects.
CCA (2012) urged the construction industry to review related factors in the event that
the variations between the tender estimates and the final project cost exceeded the
recommended degree of accuracy in between 5% to 10%. The necessity to improve
those factors that influenced price predictability, such as component and project
nature, issues anticipation and assumption during the estimate preparation process
could be paramount. This finding was very much similar to the Malaysian context
where the above variables may be explored.
Due to the complexity and uncertainty, it was common that indirect prices were
‘taken’ as sundry costs to the projects without much due diligence investigation or
prediction however the impacts may be significant. The indirect price truly an
additional (extra cost) to the price in Preliminaries if it was not considered during the
tender stage.
43
3.2.4 Percentage of Preliminaries In Construction Project
Significantly, the percentage of Preliminaries from the tender price was in the region
of 2% to 12% depended on the nature of the projects. Turner & Townsend (2013)
reported the construction Preliminaries price for Malaysia was approximately 10%.
Keng & Ching (2012) however found the average percentages for Malaysia
construction industry were between 3.60% and 7.94%. Smith (1990) in his research
concluded that the said percentage for infrastructure & industrial buildings was 3.60%
and residential earned 7.94%. Keng & Ching (2012) finding indirectly fall within this
ambit.
3.3 Summary
The tender stage was absolutely a competition. The best offer would normally win the
tender after a strict evaluation by the clients. Sound price consideration was the
ultimate task in any tender and obligatory to the contractors. Several aspects of
historical information, nature of works and updated market knowledge and skills
would be among the crucial factors to be considered. No doubt that the ICT skills
played a crucial role in the process. Therefore, the contractors had no choice but to
continuously improve their skills and competencies to obtain the competitive edge.
The difference between costs and prices was the profit. However, the contractors must
not unscrupulously overprice or bluntly under-price the items or else may not be
competitive. The contractors would offer the best value to the clients. Price in
Preliminaries was noticeably difficult due to uncertainty and complexity. However,
the price components needed to be identified although the scope of work was not
specific. The writer had seen this as a challenging task to the contractors due to the
risk associated with it. The combination of planning and collaborative competencies
between key members and Contract Managers / Estimators enhanced the accuracy of
rates’ estimates particularly in Preliminaries where prices being exposed to the
uncertainties and variation.
44
Project complexity was identified being the most critical part when considering the
Preliminaries. The contractors were demanded to have the knowledge of all aspects
related to the price estimates. Lack of knowledge and experiences seem to be the
hurdles to the contractors in dealing with complexity and other critical variables such
as technology, social and legal aspects. Complexity emerged from the project
requirements and contractors’ ability to identify the complexity at an early stage of the
projects provided a better understanding. The contractors to have proper price
planning in order to improve accuracy in estimates especially in keeping and
organizing historical price data.
Indirect prices or costs dealt with soft cost elements as a result of necessary activities
related to the construction and intangible in nature. Indirect prices related to non-
productive activities thus influenced the estimation approach. Pre-tender price
estimations including Preliminaries were generally based on mere sound
approximation.
Upon deliberated reviews of the issues pertaining to variation in the price of

Preliminaries in Chapters 2 and 3, specific Research Methodology and strategies were
outlined in Chapter 4.
45
CHAPTER 4 : RESEARCH METHODOLOGY
4.0 INTRODUCTION
Harwell (2011) defined research design as the overall research process from initiation
to completion of the research on a specific topic or subject area encompassing
conceptualization i.e. identifying problems, objectives and scopes, literature review on
previous researchers related to the subject area, conduct research questionnaires
interviews, establish research methodology i.e. either qualitative or quantitative or
mixed methods, discussions and conclusions.
Creswell (2009) proposed many strategies such as quantitative, qualitative or mixed.

The writer adopted mixed method strategy encompassed (1) Content Analysis of
tender bid documents to establish variables and research gaps, (2) Questionnaire
Survey using Quantitative Method for comparison of prices in Preliminaries and
attitudes of contractors and (3) Semi-structured Interviews (Qualitative Method) on
selected contractors to verify variables and attitudes. In general, the
Phenomenological approaches were adopted for the research methods.
4.1 Research Design
4.1.1 Content Analysis
Content Analysis was the core of this research to provide baseline information and
data to understand and verify the variation of price in Preliminaries. Due to
confidential of information, the tender bid documents were obtained from a registered
Civil Engineering consultant where the writer had limited access. The target
population was contractors registered with CIDB grade G7 category CE involved in
the construction projects within the State of Selangor / Klang Valley for the past 10
years. This was necessary to obtain considerable numbers of the completed civil
construction projects.
46
CIDB (1995) specified the tender capacities for Grade G7 were unlimited. The writer
adopted category CE (Civil Engineering). The construction projects of civil
engineering were normally ranged between 1 to 3 years of duration or longer
depending on the size of the projects. The reasons for selection of G7 Contractors
were mainly due to; (1) G7 Contractors involved in high impact tender exercises in
terms of scales, risks, costs or complexities due to their strengths and capabilities, (2)
G7 Contractors were usually backed up by qualified individuals and the firms were
more organised and (3) Category CE dedicated to the contractors of Civil Engineering
works, and the contract administrations were normally by the Civil Engineers that
referred to the profession of the writer himself, where he had the knowledge and
familiarity. The detailed explanation is discussed in Chapter 5.
4.1.2 Questionnaire Survey using Quantitative Method
The Questionnaire survey (Quantitative Method) focused on collecting and analyses

of data namely (1) Awareness of critical items in Preliminaries, (2) Contributing
factors and impacts of variation in Preliminaries and (3) Corrective actions to
minimize variation in Preliminaries during tender stage. John W Creswell (2009) laid
down the main purpose was to obtain the attitude or behavior of the respondents
(contractors). For this research, it inclined towards understanding the attitudes of the
contractors and to confirm the existent of significant price variation in Preliminaries.
The detailed explanation is discussed in Chapter 6.
4.1.3 Interview using Qualitative Method
Qualitative Method used in this research to form part of the mixed method strategies
due to intention to focus on understanding the issues i.e. variation of price and
adopted experiences of the respondents and their thoughts. Harwell (2011) and
Creswell (2009) described qualitative as the method to explore the meaning, the
reality of issues and its purpose. The subjects might not like to discuss tender prices
openly due to its sensitivity or confidentiality. Boeije (2009) and Creswell (2009)
suggested the best method use Semi-structured Interviews based on open and flexible
47
approaches. However, the protocols led to common questions and answers. The
detailed explanation is discussed in Chapter 7.
4.1.4 The Research Process
The general view of the research process illustrated in Figure 4.1
Figure 4.1: Research Process Flow
48
4.1.5 Research Approach
The research approach generally adopted mixed method as described in the previous
section. Creswell (2003; 2009) outlined the research design approach as depicted in
Figure 4.2.
Figure 4.2 : Strategies of Inquiry

Note: Creswell (2003)
4.2 Research Methods
The research initially based on literature reviews to find the gaps. References to the
newspaper articles or online website pages (if any) were provided but limited to less
than 20% sufficient to initiate possible causes for further research. Content Analysis
of the past tender documents of civil works’ projects (Qualitative Method)
encompassed items of Preliminaries provided an indicative trend of contractors’
approaches during tender stage.
49
Frese & Sauter (2006) adopted Content Analysis of articles for 24 areas of project
management. Keng & Ching (2012) collected 33 project samples of various types of
buildings’ constructions and recommended the higher samples would provide a better
result. Deliberation of document sampling for this research is discussed in Chapter 5.
4.2.2 Questionnaire Survey
The Questionnaire Survey (Quantitative Method) was carried out to determine the
demography of contractors’ awareness of variation of price, contributing factors &
impacts in construction Preliminaries and their acceptance of the facts. The
contractors were also asked to prioritize their opinions on the possible guides derived
from the previous researchers’ findings to minimize the impacts. Strictly, the research
instrument adopted questionnaires based on the researchers’ findings as discussed in
the previous Chapters 1 to 3. Strategies of inquiries adopted Creswell (2003).
4.2.3 Semi-structured Interview
The Semi-structured Interview (Qualitative Method) was carried out to generally

understand the contractors’ personal opinions, certain approaches and methodologies
based on their experiences not discovered from the Content Analysis and structured
Questionnaire Survey. The selection of contractors for the interview was based on
random respondents from the Questionnaire Survey. Deliberation of sampling
selection is discussed in Chapter 7. The interview was supportive to the Content
Analysis and Questionnaire Survey. Strategies of inquiries adopted Creswell (2003).
4.3 Research Instruments
The Content Analysis was selected as a research instrument to analyze the shortlisted
tender bid documents received from the consultant. In total, six (6) tender documents
comprised of 25 Preliminaries from 25 contractors were reviewed in a strict
environment due to their confidentiality. The objective was to identify issues in
50
Preliminaries and their impacts contributed to the variation. The research procedure
and findings are discussed in Chapter 5.
4.3.2 Content Analysis Protocol
The tender documents were handled with confidential and strictly used for the purpose
of the research. A search for the documents was initiated by an introductory call and
followed by an appointment and a visit to explain the purpose. Upon availability of
the documents, a time frame of one week was spent to review. Upon completion, the
documents were safely returned to the consultant in good order accompanied by a
letter of appreciation. Based on the analysis, the writer identified areas for further
deliberation and met the selected contractors for semi-structured qualitative
interviews. The procedures are deliberated in Chapters 5 and 7.
4.3.3 Questionnaire Survey
The citation survey was adopted based on the researchers’ citations as discussed in
Chapters 1, 2 and 3. The Likert scale was used throughout the instrument except for
the Part I – Demography. Five parts namely Parts I, II, III, IV and V were designed for
different purposes as detailed below. The questionnaire instrument was presented in
Appendix D.
• Part I – Demography. This part was the basic information about the
respondent backgrounds without prevailing the names or companies to respect
the confidentiality.
• Part II – Awareness. This part was to investigate the awareness of the

respondents on critical items of Preliminaries.
• Part III – Contributing Factors. This part was to investigate the

respondents’ agreements on the contribution factors that influence the
variation of Preliminaries during tender stage.
51
• Part IV – Possible Impacts. This part was to identify the possible impacts as
a result of variation in the price of Preliminaries during tender stage.
• Part V – Corrective Action. This part was to propose the corrective action to
minimize variation in the price of Preliminaries during tender stage.
The detailed approach is discussed in Chapter 6.
4.3.4 Semi-structured Interview
Semi-structured Interviews were carried out on selective respondents. As discussed in

item 4.2.3, the interview was supplementary to the Content Analysis and the
Questionnaire Survey. The findings from respondents were disseminated and analyzed
to ascertain variation of price severity and possible corrective actions were proposed.
Akbar et al. (2015) adopted “exploratory” Semi-structured Interview as a tool to

confirm the issues identified during the literature review, this provided initial
understanding based on first-hand information. They had interviewed 25 faces namely
the clients, consultants, and contractors selected based on their respective expertise.
Olawale & Sun (2010) carried out Semi-structured Interviews with 15 relevant
practitioners from 15 companies and average duration for each was 30 minutes. Tah
et al. (1994) had sent Questionnaire Surveys to 22 contractors comprised of building
and civil categories and 7 contractors had responded and interviewed.
For this research instrument, 4 respondents were interviewed based on the findings of
Chapters 5 and 6. Selective critical issues required dynamic responses and informal
expression of attitudes hence provided comprehensive understanding to the writer.
The detailed approach to the identification of critical issues, the establishment of
sufficient sample size, and determination of the cut-off limit by adopting the concept
of saturation point are discussed in Chapter 7.
52
4.3.5 Interview Protocol
The interview technique was generally initiated by introductory calls and followed by
making appointments and face-to-face interviews. The observation was done at
locations or places convenient to the respondents and in an easy environment. Boeije
(2009) suggested the research plan outlined must not rigid and should not restrict its
flexibility.
4.3.6 Research Matrix
Table 4.1: Research Matrix
Research
Research Questions Research Target
Aim Objectives
(RQ) Methods Group
(RO)
To establish To investigate Why did the Content Analysis Preliminaries
non- the factors of variation in the price of Registered
conclusive variation price of Preliminaries in CIDB
general guides of contractors construction projects Contractors
to minimize bidding on the exist and it grade G7,
variation in same project contribution factors? Category CE
price of nature & scope
Preliminaries of work
in construction To identify the What were the Questionnaire and Registered
projects during impacts of possible impacts to Semi-structured CIDB
tender stage variation price pre-tender estimates Interviews Contractors
to pre-tender related to the grade G7,
estimates accuracy of Category CE
Preliminaries?
To propose How did the Triangulation of Registered

actions to Construction Content Analysis, CIDB
minimize industries ensure Questionnaire and Contractors
variation price correct estimate of Semi-structured grade G7,
of Preliminaries Preliminaries costs? Interviews Category CE
4.3.7 Significance of Research
The findings provided a better understanding of the right procedure in construction

Preliminaries for the implementation of accurate price procedures. Identification of
the causes and impacts had allowed the writer to propose constructive actions to
improve accuracy in the price of Preliminaries during tender stage.
53
CHAPTER 5 : CONTENT ANALYSIS OF
PRELIMINARIES
5.0 INTRODUCTION
The Content Analysis (Qualitative Method) encompassing the bills of Preliminaries

provides an indicative trend of G7 grade CE Contractors’ approaches during the
tender stage. The Preliminaries against the tender sum established by Keng & Ching
(2012) was in the range of 3.60% and 7.94%. This research re-assessed the situation
by referring to the present pricing trend by the Malaysian civil contractors of class G7
grade CE. The analysis identified the causes of significant price variation in
Preliminaries and attitudes of the contractors during tender stage. The selected
projects were located in the Klang Valley, District of Klang, Selangor.
Due to the confidentiality reason, the documents obtained from the consultant on 31
December 2015 were limited to 25 tender documents from 6 separate tender exercises
called between 2011 and 2015. The documents were strictly for educational purposes
as presented in this chapter. For the record, all available tender documents had been
shortlisted by the consultant for the tender evaluation stage. The documents were
handled in strict care and confidential based on trust and personal relationship
between the writer and the consultant. For sample population purposes, one tender
document equivalent to one contractor. Refer Table 5.1
Table 5.1 : Tender Documents
Tender Tender
Scope of Works Year of Tender
Identification Document
Tender 1 Earthwork 3 2010
Tender 2 Road & Drain 3 2015
Tender 3 Road & Drain 5 2015
Tender 4 Main Infra 5 2012
Tender 5 Sewerage 4 2014
Tender 6 Main Infra 5 2011
Total Samples 25
54
Roscoe (1975); Rahim et. al. (2014) suggested that the appropriate sample sizes
acceptable for the survey were between 30 and 500. Roscoe (1975) as referred to by
(Hill, 1998) also said that 10 to 20 samples would be sufficient for tight controls
situation. Considering the documents used for this research were treated as
confidential and under strict use, hence 25 tender documents were within this ambit,
and therefore, the sample population was considered sufficient.
The tender documents for the civil works encompassed Earthwork, Sewerage,
Drainage and Main Infrastructure were reviewed with detailed analyses on the
Preliminaries. The contractors’ pricing strategies to winning the tender bid and their
attitudes towards compliance with the obligatory requirements clearly exhibited in
their tender bid documents. The tender competition demanded a great deal of
compromise, thus contributed significant effects to the variation in the price of
Preliminaries. This Chapter observes the contractors’ behaviors or attitudes and
preferences in selecting preliminary items to price.
5.1 Methodology
The selection criteria of the samples documents were based on the following;
• The Tender Documents were for the Civil Engineering works
• As discussed in Chapter 4, item 4.1.1, the documents were from the projects
executed within the past 10 years i.e. between 2011 and 2015 and located in
the State of Selangor, District of Klang,
• The tender participants were CIDB registered contractors Grade G7, category
CE (Civil Engineering work) and conformed to the requirement of this
research.
• The said tenders adopted (PWD203A, 2010) Conditions of Contract thus

provided a common platform for the Preliminaries and general conditions. The
55
writer was fully aware of other conditions of contract such as IEM.CE are also
used for the civil engineering construction contracts in Malaysia.
• The Preliminaries bills in the said tender documents were comprehensive. The
writer realized that simple form of Preliminaries in the tender documents may
not suitable and will not provide sufficient variables or data for comparison of
prices purposes.
The Preliminaries were summarized into 30 common items as discussed in item 2.6 of
Chapter 2, Table 2.4 to facilitate the analysis. Due to confidentiality and the promise
given by the writer to the contributory consultant, sensitive information such as detail
of the tenders was not disclosed. Creswell (2009) recommended the sensitive
information such as the contractors’ names, tenders, Clients, Consultants, etc., was to
be masked for ethical issue reason.
5.2 Summary of Preliminaries
The summary of 6 Tenders is presented in Table 5.2. The tender sum ranges from
RM2.0 Million to RM60.0 Million and the Preliminaries vary between 1.05% and
9.37% of the tendered sum. The overall average Preliminaries against the tendered
sum is 4.82%.
Table 5.2 : Percentage (%) of Preliminaries Against Tendered Sum
Tender Sum Preliminaries Actual Average

TENDER Contractor
(RM) (RM) % %
1 5,278,777.60 255,750.00 4.84%

Tender 1 2 8,838,000.00 542,081.00 6.13% 6.06%
3 7,609,028.00 547,000.00 7.19%
4 11,625,940.59 814,989.91 7.01%
Tender 2 5 9,330,000.00 424,769.00 4.55% 5.73%
6 11,854,516.40 667,000.00 5.63%
56
Table 5.2 Continued
7 3,131,570.00 102,300.00 3.27%
8 2,540,282.00 83,600.00 3.29%
Tender 3 9 2,852,030.50 138,000.00 4.84% 4.95%
10 2,570,800.00 218,000.00 8.48%
11 1,998,845.00 97,000.00 4.85%
12 28,517,000.00 1,070,351.50 3.75%
13 27,888,888.00 911,798.50 3.27%
Tender 4 14 21,786,609.00 950,000.00 4.36% 3.23%
15 18,666,666.00 412,500.00 2.21%
16 25,920,516.80 658,000.00 2.54%
17 9,229,490.00 865,000.00 9.37%
18 8,863,950.00 419,000.00 4.73%
Tender 5 6.36%
19 4,882,462.00 250,000.00 5.12%
20 15,083,067.00 936,900.00 6.21%
21 53,927,928.40 2,632,000.00 4.88%
22 55,803,780.00 1,124,252.00 2.01%
Tender 6 23 60,088,888.00 799,816.85 1.33% 2.62%
24 59,744,083.20 2,275,926.00 3.81%
25 51,888,888.00 546,480.00 1.05%
Overall Average 4.82%
5.3 Range of Preliminaries In Relation To Tendered Sum
5.3.1 Average Range of Preliminaries
The variations of Preliminaries between tenders are tabulated in Table 5.3 to

determine the average range of Preliminaries. Refer to Figure 5.1 for graphical
presentation.
57
Table 5.3 : Percentage of Preliminaries against Tendered Sum
Tender Lowest Average Highest Difference

Tender 1 4.84% 6.06% 7.19% 2.34%
Tender 2 4.55% 5.73% 7.01% 2.46%
Tender 3 3.27% 4.95% 8.48% 5.21%
Tender 4 2.21% 3.23% 4.36% 2.15%
Tender 5 4.73% 6.36% 9.37% 4.65%
Tender 6 1.05% 2.62% 4.88% 3.83%
Average 3.44% 4.82% 6.88% 3.44%
9.37%
8.48%
7.19%
6.88%
6.36% 7.01%
6.06%
5.73%
4.84% 4.82% 4.88%
4.73% 4.95%
4.55% 4.36%
3.44%
3.27% 3.23%
2.62%
2.21%
1.05%
Tender 1 Tender 2 Tender 3 Tender 4
Tender 5 Tender 6 Average
Figure 5.1 : Percentage of Preliminaries Against Tendered Sum For Civil

Engineering Tenders
Figure 5.1 shows the Preliminaries range between 1.05% and 9.37% of the tender
sum, thus giving a range of 8.32%. Turner & Townsend (2013) recommendation of
10% is safely assumed to adopt the highest value therein.
On the other hand, the finding of this study shows that the average percentages of
Preliminaries are between 3.44% and 6.88%. As previously discussed in Chapter 2,
item 2.3; Keng & Ching (2012) had predicted the percentages of Preliminaries were
between 3.60% and 7.94% for the building construction work. The differences to this
58
research finding are between 0.16% and 1.06% and marginal. It is noted that the
average Preliminaries of the building work has a slightly different from the Civil
Engineering construction but still within the range. The subject is therefore further
analyzed in the subsequent discussions to establish the absolute average Preliminaries
against the tender sum for the Civil Engineering work.
5.4 Analysis of Preliminaries
The tender sums are sorted in ascending order to verify any significant relationship
between the Preliminaries and the tender sums based on the ranking of tenders. Refer
to Table 5.4. The trend of Preliminaries against the tender sums is graphically
presented in Figure 5.2.
Table 5.4 : Ranking of Tenders
Tender Sum Preliminaries

Contractor Actual (%) Tender Rank
(RM) (RM)
11 1,998,845.00 97,000.00 4.85% 1
8 2,540,282.00 83,600.00 3.29% 2
10 2,570,800.00 218,000.00 8.48% 3
9 2,852,030.50 138,000.00 4.84% 4
7 3,131,570.00 102,300.00 3.27% 5
19 4,882,462.00 250,000.00 5.12% 6
1 5,278,777.60 255,750.00 4.84% 7
3 7,609,028.00 547,000.00 7.19% 8
2 8,838,000.00 542,081.00 6.13% 9
18 8,863,950.00 419,000.00 4.73% 10
17 9,229,490.00 865,000.00 9.37% 11
5 9,330,000.00 424,769.00 4.55% 12
4 11,625,940.59 814,989.91 7.01% 13
6 11,854,516.40 667,000.00 5.63% 14
20 15,083,067.00 936,900.00 6.21% 15
15 18,666,666.00 412,500.00 2.21% 16
14 21,786,609.00 950,000.00 4.36% 17
16 25,920,516.80 658,000.00 2.54% 18
13 27,888,888.00 911,798.50 3.27% 19
12 28,517,000.00 1,070,351.50 3.75% 20
25 51,888,888.00 546,480.00 1.05% 21
59
Table 5.4 Continued
21 53,927,928.40 2,632,000.00 4.88% 22
22 55,803,780.00 1,124,252.00 2.01% 23
24 59,744,083.20 2,275,926.00 3.81% 24
23 60,088,888.00 799,816.85 1.33% 25
Preliminaries
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
1,998,845.00
2,540,282.00
2,570,800.00
2,852,030.50
3,131,570.00
4,882,462.00
5,278,777.60
7,609,028.00
8,838,000.00
8,863,950.00
9,229,490.00
9,330,000.00
11,625,940.59
11,854,516.40
15,083,067.00
18,666,666.00
21,786,609.00
25,920,516.80
27,888,888.00
28,517,000.00
51,888,888.00
53,927,928.40
55,803,780.00
59,744,083.20
60,088,888.00
Tender Sum (RM)
Figure 5.2 : Preliminaries (%) Versus Tendered Sum
Reference to Figure 5.2, it is found that the percentage of Preliminaries is in the

declining pattern as the tender prices increase. The rugged pattern of Preliminaries
indicates significant variation in prices with a declining pattern of average -5.93% as
derived in the following calculation;
60
(Equation 5.1)
Average Average Highest % Preliminaries – Average Lowest % of Preliminaries
Declination = Range of Tendered Sum
Rate
= 6.88% - 3.44%
RM2 Million - RM60 Million
= 3.44%
-RM58 Million
= -5.93%
From the analysis, it is found that the variation of price in Preliminaries during the
tender stage is very much dependant on the nature of the projects. The more
complicated tasks may warrant the more costs in terms of resources or indirect costs.
It is an indication that the higher the tender price shows the more complex or
diversified the project is. However, at the same time, the majority of the Preliminaries
items such as general particulars & contractual obligation, legislation & regulation,
and communication facility are normally similar in terms of requirement and
compliance to the Conditions of Contract.
On the other hand, the variables beyond the contractors’ control such as the Insurance,
Performance Bond and CIDB Levy are percentage dependant against the tender price.
The percentage is either fixed by the financial institutions or stipulated in the tender
requirement or Condition of Contract. Based on this argument, the variation of price
of Preliminaries is inevitable but considerable based on complexities, standard
requirements and fixed pre-requisition. The average declining rate generally reflects
the average actual price to be incurred in compliance with the Preliminaries
requirement and not solely determined by the tender price.
5.4.1 Analysis of Preliminaries Based on Actual Percentage (%)
Figure 5.2 depicts the actual Preliminaries pattern represented by the Preliminaries
percentage (%). It is undulating ruggedly across the tender price, thus confirms
significant variation in the price of Preliminaries during the tender stage. The
variation is huge and inconsistent and not proportion to the tender price. For example,
61
the tender price in the region of RM2 Millions has Preliminaries between 3.29% and
8.48% (Difference = 5.19%). The range of Preliminaries for the tender price of RM9
Millions is between 4.55% and 9.37% (Difference = 4.82%).
For vertical comparison, the tender price in the region of RM9 Millions has higher
Preliminaries compared to the tender price in the region of RM2 Millions. This would
certainly increase the price of Preliminaries thus creates significant variation. The
region of tender sums is between RM2.0 Mil and RM11.0 Mil. Refer Table 5.5
Table 5.5 : Difference in Price of Preliminaries
Region of Tender Sum Range of Preliminaries (%) Difference (%)

RM2.0 Mil. 3.29% - 8.48% 5.19%
RM8.0 Mil. 4.73% - 6.13% 1.4%
RM9.0 Mil. 4.55% - 9.37% 4.82%
RM11.0 Mil. 5.63% - 7.01% 1.38%
5.4.2 Tolerance
The writer found that the percentage of tolerance in the preliminaries was a subject of
interest since early 2000, such as by Boussabaine (2007) and could be tested herein
for the reliability. He anticipated that the percentage of Preliminaries very much
affected by the nature of the projects and site difficulties or constraints. Boussabaine
(2007) said that for the highly restricted or confined areas warrant an extra cost by
50% above the average due to extra resources or special techniques required.
Geographical factor such as sloping terrain or poor soil condition is expected to incur
additional 23% of the average cost of Preliminaries. In reference to the project sites of
the reviewed sample documents, the sites were situated in the non-restricted areas.
Sloping or poor soil condition could be accepted as the constraints.
As such, in reference to Boussabaine (2007), ±23% of the average cost of

Preliminaries may be adopted as the tolerance. Based on the sample documents, the
average tolerance derived from Boussabaine's is 1.11%. Refer Table 5.6.
62
Table 5.6 : Derivation of Tolerance Based on Boussabaine's
Average Addition @ 23%

Tender
Preliminaries % of Preliminaries
Tender 1 6.06% 1.39%

Tender 2 5.73% 1.32%
Tender 3 4.95% 1.14%
Tender 4 3.23% 0.74%
Tender 5 6.36% 1.46%
Tender 6 2.62% 0.60%
Average 4.82% 1.11%
Based on Boussabaine (2007), the higher and the lower limits of average percentage
of Preliminaries against the tender sum i.e. 3.44% and 6.88% showed in Table 5.3
may be adjusted (but not conclusive) to 3.71% and 5.93% respectively. Refer Table
5.7
Table 5.7 : Tolerance Limits of Preliminaries at ± 1.11%
Preliminaries Percentage (%)

Higher Limit 5.93%
Average 4.82%
Lower Limit 3.71%
In addition, the writer further verifies Boussabaine's theory using the standard
deviation formulae to propose the most acceptable percentage (%) limits of the
Preliminaries against the tender sum. Considering the average percentage of 4.82%,
the standard deviation is calculated herein. Refer Table 5.8
63
Table 5.8 : Establishment of Standard Deviation
Tender Average Mean Difference

Variance
Tender 1 6.06% 1.23% 0.015%
Tender 2 5.73% 0.91% 0.008%
Tender 3 4.95% 0.12% 0.000%
4.82%
Tender 4 3.23% -1.60% 0.025%
Tender 5 6.36% 1.54% 0.024%
Tender 6 2.62% -2.20% 0.049%
Average Variance 0.024%
Standard Deviation δ 1.56%
The population (N) represents the larger samples and the standard deviation is derived
based on the following formulae;
Population, N=6
Average Variance = (1.23)2+(0.91)2+(0.12)2+(-1.60)2+(1.54)2+(-2.20)2
N–1 (Equation 5.2)
= 0.121
5
= 0.024
Standard Deviation δ = √ 0.024
= 1.56
Based on Standard Deviation of 1.56 as derived above, the higher and the lower limits
of Preliminaries are recalculated. Refer Table 5.9
Table 5.9 : Tolerance Limits of Preliminaries using Standard Deviation = ± 1.56%
Preliminaries Percentage (%)

Higher Limit 6.38%
Average 4.82%
Lower Limit 3.26%
In comparison, the differences in both approaches are within 0.5% as presented in

Table 5.10
64
Table 5.10 : Comparison Between Boussabaine And Standard Deviation
Boussabaine (2007) Standard Deviation δ Difference
Highest Limit 5.93% 6.38% 0.45%
Lowest Limit 3.71% 3.26% 0.45%
Assuming both approaches are acceptable, the writer suggests the standard deviation
approach would result in a wider tolerance between the lowest and the highest limits
of Preliminaries percentage against the tender sum. Boussabaine (2007) may provide a
rule of thumb basis for consideration; however, the tolerance provided by the theory is
narrower compared to the standard deviation, therefore more stringent. The writer is
in the opinion that the standard deviation format would be more suitable to be
adopted. Hence, the considerable limits of Preliminaries are between 3.26% and
6.38%.
Based on this consideration, 9 out of 25 samples documents are found to be beyond

the tolerance with 5 are low (indicated by **) and 4 are high (indicated by *). This
constitutes 36% of the samples and therefore the accuracy of affected tenders is
dubious. Refer to Table 5.11
Table 5.11 : Review of Preliminaries (%)

Tender Sum Preliminaries
Contractor Actual (%) Tender Rank
(RM) (RM)
11 1,998,845.00 97,000.00 4.85% 1
8 2,540,282.00 83,600.00 3.29% 2
10 2,570,800.00 218,000.00 8.48%* 3
9 2,852,030.50 138,000.00 4.84% 4
7 3,131,570.00 102,300.00 3.27% 5
19 4,882,462.00 250,000.00 5.12% 6
1 5,278,777.60 255,750.00 4.84% 7
3 7,609,028.00 547,000.00 7.19%* 8
2 8,838,000.00 542,081.00 6.13% 9
65
Table 5.11 Continued
18 8,863,950.00 419,000.00 4.73% 10
17 9,229,490.00 865,000.00 9.37%* 11
5 9,330,000.00 424,769.00 4.55% 12
4 11,625,940.59 814,989.91 7.01%* 13
6 11,854,516.40 667,000.00 5.63% 14
20 15,083,067.00 936,900.00 6.21% 15
15 18,666,666.00 412,500.00 2.21%** 16
14 21,786,609.00 950,000.00 4.36% 17
16 25,920,516.80 658,000.00 2.54%** 18
13 27,888,888.00 911,798.50 3.27% 19
12 28,517,000.00 1,070,351.50 3.75% 20
25 51,888,888.00 546,480.00 1.05%** 21
21 53,927,928.40 2,632,000.00 4.88% 22
2.01%**
22 55,803,780.00 1,124,252.00 23
marginal
24 59,744,083.20 2,275,926.00 3.81% 24
23 60,088,888.00 799,816.85 1.33%** 25
5.4.3 Analysis of Preliminaries Based on Modified Percentage (%)
In reference to item 5.3.1, and as discussed in item 5.4.2 the writer suggests that the
percentages of Preliminaries against the tender sum be within the average range of
3.26% and 6.38%. The writer assumes the lowest tender price to have highest
percentage and the highest tender price to have the lowest percentage. Based on this
assumption, the writer modifies the actual Preliminaries percentages using
interpolation method. The result is shown in Table 5.12.
Table 5.12 : Comparison of Actual % And Modified % of Preliminaries
Cantractor Tender Sum Actual % Modified % Difference % Tender Rank

11 1,998,845.00 4.85% 6.38% 1.53% 1
8 2,540,282.00 3.29% 6.35% 3.06% 2
10 2,570,800.00 8.48% 6.35% -2.13% 3
9 2,852,030.50 4.84% 6.33% 1.50% 4
7 3,131,570.00 3.27% 6.32% 3.05% 5
19 4,882,462.00 5.12% 6.23% 1.10% 6
66
1 5,278,777.60 4.84% 6.20% 1.36% 7
3 7,609,028.00 7.19% 6.08% -1.11% 8
2 8,838,000.00 6.13% 6.01% -0.12% 9
18 8,863,950.00 4.73% 6.01% 1.28% 10
17 9,229,490.00 9.37% 5.99% -3.38% 11
5 9,330,000.00 4.55% 5.99% 1.43% 12
4 11,625,940.59 7.01% 5.86% -1.15% 13
6 11,854,516.40 5.63% 5.85% 0.22% 14
20 15,083,067.00 6.21% 5.68% -0.53% 15
15 18,666,666.00 2.21% 5.48% 3.27% 16
14 21,786,609.00 4.36% 5.32% 0.96% 17
16 25,920,516.80 2.54% 5.10% 2.56% 18
13 27,888,888.00 3.27% 4.99% 1.72% 19
12 28,517,000.00 3.75% 4.96% 1.20% 20
25 51,888,888.00 1.05% 3.70% 2.65% 21
21 53,927,928.40 4.88% 3.59% -1.29% 22
22 55,803,780.00 2.01% 3.49% 1.48% 23
24 59,744,083.20 3.81% 3.28% -0.53% 24
23 60,088,888.00 1.33% 3.26% 1.93% 25
Preliminaries
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
1,998,845.00
2,540,282.00
2,570,800.00
2,852,030.50
3,131,570.00
4,882,462.00
5,278,777.60
7,609,028.00
8,838,000.00
8,863,950.00
9,229,490.00
9,330,000.00
11,625,940.59
11,854,516.40
15,083,067.00
18,666,666.00
21,786,609.00
25,920,516.80
27,888,888.00
28,517,000.00
51,888,888.00
53,927,928.40
55,803,780.00
59,744,083.20
60,088,888.00
Actual '% Modi:ied % Tender Sum (RM)
Figure 5.3 : Actual And Modified Preliminaries (%) Versus Tender Sum
67
Figure 5.3 depicts actual and modified Preliminaries percentage (%) in comparison to
the tender sum. The contour line of modified percentage of Preliminaries moderately
reduces as the tender price increases. Considering the standard deviation of ±1.56%
(Refer Table 5.8), 15 of 25 Preliminaries are nearly accurate. This constitutes 60% of
the sample size. Refer Table 5.13
Table 5.13 : Preliminaries With Difference of ±1.56%
Contractor Tender Sum Actual % Modified % Difference % Tender Rank

11 1,998,845.00 4.85% 6.38% 1.53% 1
9 2,852,030.50 4.84% 6.33% 1.50% 4
19 4,882,462.00 5.12% 6.23% 1.10% 6
1 5,278,777.60 4.84% 6.20% 1.36% 7
3 7,609,028.00 7.19% 6.08% -1.11% 8
2 8,838,000.00 6.13% 6.01% -0.12% 9
18 8,863,950.00 4.73% 6.01% 1.28% 10
5 9,330,000.00 4.55% 5.99% 1.43% 12
4 11,625,940.59 7.01% 5.86% -1.15% 13
6 11,854,516.40 5.63% 5.85% 0.22% 14
20 15,083,067.00 6.21% 5.68% -0.53% 15
14 21,786,609.00 4.36% 5.32% 0.96% 17
21 53,927,928.40 4.88% 3.59% -1.29% 22
22 55,803,780.00 2.01% 3.49% 1.48% 23
24 59,744,083.20 3.81% 3.28% -0.53% 24
5.4.4 Comparison of Prices of Preliminaries, Actual %, and Modified %
Table 5.13 shows tabulation of tender sums in ascending order to show the significant
change of Preliminaries. The comparison between the actual percentage (%) and
Modified Percentage (%) of Preliminaries are graphically presented in Figure 5.4.
68
3,000,000.00
Preliminaries (RM)
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
Tender Sum (RM)

500,000.00
- 1,998,845.00
2,540,282.00
2,570,800.00
2,852,030.50
3,131,570.00
4,882,462.00
5,278,777.60
7,609,028.00
8,838,000.00
8,863,950.00
9,229,490.00
9,330,000.00
11,625,940.59
11,854,516.40
15,083,067.00
18,666,666.00
21,786,609.00
25,920,516.80
27,888,888.00
28,517,000.00
51,888,888.00
53,927,928.40
55,803,780.00
59,744,083.20
60,088,888.00
Actual Preliminaries Modified Preliminaries
Figure 5.4 : Comparison of Actual And Modified Price of Preliminaries Against

Tendered Sum
The average Preliminaries pattern adopted 4.82% as recommended in item 5.2

represented by the green line. The incremental price of Preliminaries for the higher
range of tender sums exceeding RM15 Millions found to be higher if compared to the
actual Preliminaries as quoted by the contractors. This situation triggers the Engineers
or Contract Managers that the percentage of Preliminaries for the higher tender sum
could be lowered
5.5 Analysis of critical items of Preliminaries
The contractors’ strategies in pricing the Preliminaries are further explored by

verifying the critical items as previously discussed in Chapter 2. For comparison
purposes, the contractors are identified by numeric representation for example
Contractor 1, Contractor 2 and so on. The selected tender documents for this research
are either the completed contracts or contracts in the Defects Liability Period stage.
69
The review adopts a total of 25 Preliminaries’ bills of quantities of shortlisted
contractors obtained from the consultant on 31 December 2015. 25 Preliminaries bills
are the total available documents released by the consultant to the writer.
5.5.1 Simplification of Items of Preliminaries
Reference to the 30 critical items of Preliminaries as discussed in Chapter 2 refer to

Table 2.4, the items of 6 tender documents are simplified as follows to facilitate
comparison purposes. The consultant adopts PWD203A (2010) Conditions of
Contract for all tender documents as typically used for the Civil Engineering works.
Other typical Conditions of Contract used for the civil work is IEM.CE (2011)
Conditions of Contract.
The items of similar purposes or carry the same meanings are grouped in the
Preliminary items. Refer Table 5.14. The grouping was validated by a G7 contractor
on 26th March 2016 vide a face-to-face interview at his office situated in Shah Alam.
The same validation was sought from the consultant’s Project Manager responsible for
the tenders on 10th March 2016.
Table 5.14 : Preliminaries’ Items Grouping
1 General Particulars & Contractual obligation

1.1 Statutory obligation
1.2 Inspection of site
1.3 Project signboard
1.4 Contract Documentation fee
1.5 Methods statement
2 Insurances
2.1 Insurance against personal injuries and damage to properties
2.2 Insurance of Work
3 Workmen’s compensation
4 Performance bond
5 Setting out
6 CIDB levy
7 Superintending Officer Office
7.1 Office accommodation for SO & his staff
70
8 Contractor’s Office And Storage
8.1 Contractor's office and accommodation
9 Shop Drawings / As-built drawings
9.1 Design of temporary work by the Contractor
9.2 As-built drawings
10 Work programme
11 Hoarding & Fencing
11.1 Temporary hoarding, Gantry, Fencing, etc.
12 Client / Employer requirement
12.1 Provision for survey instruments and chainmen
12.2 The Contractor shall operate & maintain Quality Assurance Sys.
13 Contractor’s Plant (Scaffolding, tools, temporary sheds, vehicles, etc.)
13.1 Conveyance of plant and materials on site
13.2 Vehicle & Maintenance for SO & his staff
14 Site security & administration [Admin & supervisory staff]
14.1 Employment of Workmen
14.2 Foreman and assistants
14.3 Measurement and valuation of work including variation
14.4 Bills of Quantities
14.5 Contractor's superintendent, Site Agent & Staff
14.6 Overtime for Employer's and Consultant's supervisory staff
15 Material Testing
15.1 Materials and workmanship
15.2 Materials testing, sample, labs & staff
16 Protection of works / Protection of existing services
16.1 Protection of work
16.2 Protection of existing services
17 Temporary supply i.e. water, electricity
17.1 Water and electricity supply
18 Communication facility
18.1 Hand phone lines for SO and his staff
19 Temporary access
19.1 Access for the S.O. to the site
19.2 Access to the site
20 Temporary accommodation for workers
21 Legislation & regulations
21.1 Employees Social Security Act 1969
21.2 Stamp duty to be borne by Contractor
21.3 Suspension or stoppage of work
71
21.4 Compliance with Authorities requirement
21.5 Permit and licenses
21.6 Liaison with Local Authorities
21.7 Notification to DOSH of accident
22 Safety & Health
22.1 Safety, Health & Welfare of Contractor's employees
22.2 Site boots and protective helmets
22.3 First Aid kit
22.4 Mosquito Prevention
23 Maintenance of public access
23.1 Maintenance of existing road & protection of traffic
23.2 Temporary protection & temporary diversion of public utilities
23.3 Protection of existing rivers, services, roads & slopes
24 Sanitation
25 site waste disposal / Site Clearing
25.1 Clearing of site/Cleaning down
26 Noise & pollution control
26.1 Control of dust and smoke pollution
27 Drainage, Erosion And Sediment Control / Keeping site dry
27.1 Keeping site dry
27.2 Site Drainage
28 Site photographs / record / Progress Report
28.1 Photographic records of work
28.2 Daily & monthly progress report
28.3 Site Records
29 Nominated Sub-Contractors (Profit & Attendance)
30 Site Cleanliness And Preparation [mobilization & demobilization]
30.1 Possession of site
30.2 Completion of work
30.3 Mobilization & Demobilization
30.4 Commissioning & handing over upon Practical Completion
30.5 Commissioning & handing over upon DLP
5.5.2 Contractor’s Attitude during Tender Stage
Based on 30 items of Preliminaries, 25 Contractors’ pricing frequencies are measured.

Table 5.15 and Figure 5.5 show the frequency patterns.
72
Table 5.15 : Frequency of Contractors Pricing The Preliminaries
Total
Tender Tender 1 Tender 2 Tender 3 Tender 4 Tender 5 Tender 6
Percentage
No Of Contractors 3 3 5 5 4 5 25
Scope Of Work Earthwork Road & Drain Road & Drain Main Infra Sewerage Main Infra
Preliminaries
(1) General Particulars & Contractual
2 3 5 5 4 5 96%
obligation
(2) Insurances 3 3 5 5 4 5 100%
(3) Workmen’s compensation 3 3 5 5 4 5 100%
(4) Performance bond 3 3 4 5 4 5 96%
(5) Setting out 2 3 4 5 4 5 92%
(6) CIDB levy 3 2 4 5 4 5 92%
(7) Superintending Officer Office 3 0 0 5 1 5 56%
(8) Contractor’s Office And Storage 2 3 3 5 3 4 80%
(9) Shop Drawings / As-built drawings 2 2 5 5 4 5 92%
(10) Work programme 2 0 1 1 2 0 24%
(11) Hoarding & Fencing 0 0 0 0 0 5 20%
(12) Client / Employer requirement 2 2 2 2 3 3 56%
(13) Contractor’s Plant (Scaffolding,
3 2 0 5 2 5 68%
tools, temporary sheds, vehicles, etc)
(14) Site security & administration
2 3 4 4 3 4 80%
[Admin & Supervisory staff]
73
(15) Material Testing 2 2 2 1 3 5 60%
(16) protection of works / Protection
2 0 2 2 2 5 52%
of existing services
(17) temporary supply i.e. water,
2 2 3 5 4 5 84%
electricity
(18) Communication facility 3 2 0 5 1 5 64%
(19) temporary access 2 0 0 1 2 3 32%
(21) Legislation & regulations 2 3 5 5 4 5 96%
(22) Safety & Health 2 2 4 4 3 3 72%
(23) maintenance of public access 2 0 3 2 2 4 52%
(24) Sanitation 0 0 0 0 0 0 0%
(25) site waste disposal / Site Clearing 1 1 4 3 3 4 64%
(26) Noise & pollution control 0 0 2 2 3 4 44%
(27) Drainage, Erosion And Sediment
2 0 2 0 3 5 48%
Control / Keeping site dry
(28) Site photographs / record /
2 2 3 2 3 5 68%
Progress Report
(29) Nominated Sub-Contractors
0 0 0 0 1 0 4%
(Profit & Attendance)
(30) Site Cleanliness And Preparation
3 3 4 4 3 4 84%
[mobilization & demobilization]

Preliminary Items Priced By Contractors 63.33% 52.22% 50.67% 62.00% 65.83% 78.67% 62.67%
74
100%
100%
96% 96% 96%
92% 92% 92%
84% 84%
80% 80%
72%
68% 68%
64% 64%
60%
56% 56%
52% 52%
48%
44%
32%
24%
20%
4% 4%
0%
Figure 5.4 : Frequency of Contractors Pricing The Preliminaries

75
Based on Figure 5.4, it shows the pattern of the contractors pricing the Preliminaries.
The 100% score means all contractors would have priced for the said item and 50%
means only a half of the contractors would have priced the item. The Preliminaries are
sorted based on the pricing frequencies in descending order to indicate the priority.
Refer Table 5.16
Table 5.16 : Contractors’ Pricing Frequencies
Preliminaries Frequency
(1) Insurances 1.00
(2) Workmen’s compensation 1.00
(3) General Particulars & Contractual obligation 0.96
(4) Performance bond 0.96
(5) Legislation & regulations 0.96
(6) Setting out 0.92
(7) CIDB levy 0.92
(8) Shop Drawings / As-built drawings 0.92
(9) temporary supply i.e. water, electricity 0.84
(10) Site Cleanliness And Preparation [mobilization & demobilization] 0.84
(11) Contractor’s Office And Storage 0.80
(12) Site security & administration [Admin & Supervisory staff] 0.80
(13) Safety & Health 0.72
(14) Contractor’s Plant (Scaffolding, tools, temporary sheds, vehicles, etc) 0.68
(15) Site photographs / record / Progress Report 0.68
(16) Communication facility 0.64
(17) site waste disposal / Site Clearing 0.64
(18) Material Testing 0.60
(19) Superintending Officer Office 0.56
(20) Client / Employer requirement 0.56
(21) protection of works / Protection of existing services 0.52
(22) maintenance of public access 0.52
(23) Drainage, Erosion And Sediment Control / Keeping site dry 0.48
(24) Noise & pollution control 0.44
(25) temporary access 0.32
(26) Work programme 0.24
(27) Hoarding & Fencing 0.20
(28) temporary accommodation for workers 0.04
(29) Nominated Sub-Contractors (Profit & Attendance) 0.04
(30) Sanitation 0.00
76
No doubt that items (1) Insurances and (2) Workmen’s Compensation, being top of
the table are the most crucial and priced by all contractors during the tender stage. The
reason is fairly understood that the contractors will not be allowed to commence any
physical work without the execution of the items. The items are mandatory.
The top seven namely items 1 to 7 are initial crucial items required to kick off the
projects and majority are related to the legislative requirement and compliance, hence
received utmost attention by the contractors. Though Items 8 to 12 are next crucial
activities but the intensities slightly lesser compared to items 1 to 7 as the execution
are not instantaneous. However, they are still to be completed within a reasonable
time for occupancy.
Based on Table 5.17, items 13 to 25 with frequencies between 0.72 and 0.32 are
average in term of participation by the contractors. Some of the contractors, however,
paid less importance to the crucial items such as item (13) Safety & Health with a
frequency of 0.72. This translated as only 18/25 contractors had priced for it. The
costs are definitely to be incurred in compliance with the present mandatory Safety &
Health regulations.
Similarly, for item 25 (Temporary Access) with a frequency of 0.32 is translated as

only 8/25 of contractors had priced for it. The contractors had decided not to price
could be due to the costs had already been priced elsewhere or the nature of work does
not require a temporary access or due to out of ignorance. Based on the writer’s
experience as a civil engineer and the site observations, any civil construction site
particularly involving G7 Grade CE Contractors would normally require a temporary
dedicated access to and fro the construction site, duly maintained throughout the
construction period complete with a wash through facility to clean up the construction
vehicles’ tyres before leaving the site and the necessary flagmen. Thus, the element of
costs did exist. Where did the Contractors distribute the expenses?
Items 26 to 30 are the lowest in the frequency table. Without considering items 28
(Temporary Accommodation for Workers) and 29 (Nominated Sub-Contractor), Items
26 (Work program), 27 (Hoarding / Fencing) and 30 (Sanitation) are totally not been
77
given priority by the contractors. Truly the items are crucial such as item 26 to
monitor the site progress, item 27 to hoard against the unauthorized trespassers and
item 30 to provide sanitation facility for the workers respectively. However, items 28
and 29 are dependent on the nature of work and may not apply to that project site.
The strategies of several contractors (if we may assume) by purposely not to price the
crucial items despite the works are certain could be dubious. Therefore costs
rationalization for such items to reflect the actual activities prior to award of tender
may be necessary.
The above discrepancies exhibit the typical causes of the variation of price in
construction projects at tender stage. The aim of contractors to minimize as much as
possible the price of Preliminaries (in order to keep the overall tender sum low to win
the project) could be the factor. However, if that was not the case, then the lack of
experience of the Contract Managers / Estimators could be speculated.
5.5.3 Ranking of Preliminaries Based on Contractor’s Frequency
Based on Table 5.16, the contractors’ pricing frequencies are further assessed for the
items group ranking. The writer adopts the following Standard Score to measure the
intensities of the contractors’ actions. Refer Table 5.17. The scores are derived from
Figure 5.5
Table 5.17 : Percentile Rank
Score Rank
75% and above High
25% - 75% Average
25% and below Low
78
Source: Schneider (2014)
Figure 5.5 : Standard Score Diagram
All contractors accepted 12/30 Preliminaries items are crucial and ranked high with
the score exceeding 75% and above. This constitutes 40% of the items. Refer Table
5.18. The prices are expected to be competitive and provide variation based on the
Contractor’s tender strategies. The rank indicates the items are extremely crucial and
therefore received the utmost attention.
Table 5.18 : Rank High for 12 Items of Preliminaries
(1) Insurances 1
(2) Workmen’s compensation 1
(3) General Particulars & Contractual obligation 0.96
(4) Performance bond 0.96
(5) Legislation & regulations 0.96
(6) Setting out 0.92
(7) CIDB levy 0.92
(8) Shop Drawings / As-built drawings 0.92
(9) temporary supply i.e. water, electricity 0.84
(10) Site Cleanliness And Preparation [mobilization & demobilization] 0.84
(11) Contractor’s Office And Storage 0.8
(12) Site security & administration [Admin & Supervisory staff] 0.8
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The following 13/30 items received the scores between 25% and 75% are ranked
average. This constitutes 43% of the items. Refer Table 5.19. This range of
Preliminaries items would provide a significant variation of price due to differences of
contractors’ attentiveness. The contractors’ intentions to spread the cost of
Preliminaries into other items are exhibited by reducing the frequencies of pricing on
the related items.
Table 5.19 : Rank Average for 13 Items of Preliminaries
(13) Safety & Health 0.72

(14) Contractor’s Plant (Scaffolding, tools, temporary sheds, vehicles, etc) 0.68
(15) Site photographs / record / Progress Report 0.68
(16) Communication facility 0.64
(17) site waste disposal / Site Clearing 0.64
(18) Material Testing 0.60
(19) Superintending Officer Office 0.56
(20) Client / Employer requirement 0.56
(21) protection of works / Protection of existing services 0.52
(22) maintenance of public access 0.52
(23) Drainage, Erosion And Sediment Control / Keeping site dry 0.48
(24) Noise & pollution control 0.44
(25) temporary access 0.32
The following 5/30 items scored below 25% and ranked low. This constitutes 17% of
the items. Refer to Table 5.20. The contractors did literally not price the items and it
was doubtful whether the contractors had considered the items as crucial for the
construction. Insufficient pricing of the said items means the costs will have to be
recovered from other items in the Bills of Quantities. Though the contractors absorbed
the costs for lack of price but the tendency to cut corners would be a major concern to
the construction managers.
Work program, hoarding & fencing, workers’ accommodation and sanitation were not
given sufficient price consideration and therefore would create significant variation in
the Preliminaries at tender stage. Nominated Sub-Contractors may be excused, as the
tender may not provide such requirement based on nature of the tender.
80
Table 5.20 : Rank Low for 5 Items of Preliminaries
(26) Work programme 0.24

(27) Hoarding & Fencing 0.20
(28) temporary accommodation for workers 0.04
(29) Nominated Sub-Contractors (Profit & Attendance) 0.04
(30) Sanitation 0.00
5.6 Analysis of Preliminaries in Tender
Due to the likeness of pricing pattern of Preliminaries during the tender stage between
contractors, the writer chooses a random sample for a further discussion. The writer
selected Tender 2. Other tenders are enclosed in Appendices C1 to C6.
5.6.1 Nature of Tender 2
The nature of Tender 2 is for the Road & Drain contract. The tender was called in
November 2015 and the duration to complete the project was five months. The project
was located in the District of Klang, Selangor. Three contractors were shortlisted and
evaluated for the tender award by the consultant. The Preliminaries of Tender 2 is
presented in Table 5.21
Table 5.21 : Tender 2 – Road & Drain
CONTRACTOR CONTRACTOR CONTRACTOR

PRELIMINARIES 1 2 3
Total Contract Sum 11,625,940.59 9,330,000.00 11,854,516.40
Duration (Months) 5.00 5.00 5.00
% of Preliminaries against
7.01% 4.55% 5.63%
Contract Sum
(1) General Particulars &

5,000.00 6,000.00 45,000.00
Contractual obligation
(2) Insurances 80,000.00 20,000.00 52,000.00
(3) Workmen’s compensation 60,000.00 5,500.00 28,000.00
81
(4) Performance bond 40,000.00 14,000.00 230,000.00
(5) Setting out 20,000.00 30,000.00 15,000.00
(6) CIDB levy - 9,640.00 18,000.00
(7) Superintending Officer Office - - -
(8) Contractor’s Office And
10,000.00 20,000.00 20,000.00
Storage
(9) Shop Drawings / As-built
7,500.00 5,000.00 -
drawings
(10) Work programme - - -
(11) Hoarding & Fencing - - -
(12) Client / Employer requirement 2,500.00 5,000.00 -
(13) Contractor’s Plant
(Scaffolding, tools, temporary - 127,629.00 6,000.00
sheds, vehicles, etc)
249,999.20 50,000.00 30,000.00
(15) Material Testing 1,999.84 - 5,000.00
(16) protection of works /

- - -
Protection of existing services
(17) temporary supply i.e. water,

1,000.00 10,000.00 -
electricity
(18) Communication facility - 5,000.00 3,000.00
(19) temporary access - - -
(20) temporary accommodation for
- 27,000.00 -
workers
(21) Legislation & regulations 61,080.00 60,000.00 94,000.00
(22) Safety & Health 500.79 - 14,000.00
(23) maintenance of public access - - -
(24) Sanitation - - -
(25) site waste disposal / Site
- 10,000.00 -
Clearing
(26) Noise & pollution control - - -
(27) Drainage, Erosion And
Sediment Control / Keeping site - - -
dry
(28) Site photographs / record /
2,000.00 - 7,000.00
Progress Report
82
(29) Nominated Sub-Contractors

- - -
(Profit & Attendance)
(30) Site Cleanliness And

Preparation [mobilization & 273,410.08 20,000.00 100,000.00
demobilization]
Preliminaries 814,989.91 424,769.00 667,000.00
The Preliminaries percentages are varied between 4.55% to 7.01% of the tender sum.
The following diagram compares the tender sum and the Preliminaries.
Total contract Preliminaries
11,625,940.59 11,854,516.40
9,330,000.00
814,989.91 424,769.00 667,000.00
CONTRACTOR 1 CONTRACTOR 2 CONTRACTOR 3
Figure 5.6 : Tender 2 – Preliminaries Vs Tender Sum
Table 5.22 : Tender 2 – Preliminaries % Differences Comparison
Contractor Contractor 1 Contractor 2 Contractor 3

Preliminaries 7.01% 4.55% 5.63%
Contractor 1 7.01% - 2.46% 1.38%
Contractor 2 4.55% 2.46% - 1.08%
Contractor 3 5.63% 1.38% 1.08% -
The matrix shows a significant discrepancy between the Preliminaries.
Despite the contractors are bidding for the project that carries the same nature of
contract, complexities, client, contract duration, the scope of works and condition of
83
contract but the variation of price of Preliminaries is unavoidable. For example, the
difference between the highest and the lowest prices of Preliminaries (i.e. Contractor 1
and Contractor 2) is 2.46%. Similarly, the comparison between Contractor 2 and
Contractor 3 results in a discrepancy of 1.08%. To further determine the variation, let
us proceed to compare with the range of Preliminaries between 3.26% and 6.38%.
Table 5.23 : Tender 2 – Preliminaries % Comparison To Recommended Range
Contractor Preliminaries % of Range of Preliminaries Comparison

Contract Sum (Refer item 5.4.3)
Difference
Contractor 1 7.01%
+0.63%
Contractor 2 4.55% 3.26% to 6.38% Within Range
Contractor 3 5.63% Within Range
It shows that the Preliminaries of Contractors 2 and 3 are within the acceptable range
and Contractor 1 exceeds by +0.63%. The Preliminaries of Contractor 1 seem to be on
the higher side, thus grossly varied from others. It triggers the assumption that certain
items in the Preliminaries could have been overpriced. Based on the detailed review, it
is found that Contractor 1 has excessively overpriced 2 Preliminaries’ items, namely
items 14 and 30 as shown in Table 5.24. The contractor may have a reason for such a
higher price and could be verified during the tender negotiation / tender interview
stage.
Table 5.24 : Tender 2 – Overpriced Items For Contractor 1
Preliminaries Contractor 1 Contractor 2 Contractor 3

249,999.20 50,000.00 30,000.00
(30) Site Cleanliness And
Preparation [mobilization & 273,410.08 20,000.00 100,000.00
demobilization]
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Despite that, Contractor 3 has also priced 5 times higher than Contractor 2 for item 30.
However, since the Preliminaries of Contractors 2 and 3 are within the acceptable
limit, the said price can be rationalized upon successful tender.
5.7 Summary
Twenty-five tender documents from 6 separate tender exercises were analyzed. The
analysis revealed that the percentage of Preliminaries against the tendered sum is
within the average range of 3.26% and 6.38%. The finding confirms Keng & Ching
(2012) i.e. 3.60% and 7.94%. Percentage of Preliminaries reduces as the tender price
increases.
Based on 30 critical items of Preliminaries (Table 5.16), 12 items (Table 5.18)

received the highest priority (frequency higher than 80%) by the contractors mostly
due to a mandatory requirement. 13 items (Table 5.19) are paid less priority
(frequency 30% to less than 80%) such as Safety & Health and waste disposal. 5 items
(Table 5.20) received the least priority with a frequency less than 30% such as for
work program, hoarding & fencing. The contractors’ attitudes create significant
variation in the Preliminaries of a construction project at tender stage.
Despite the contractors are bidding for the same project with common nature of the
contract, complexities, client, contract duration, the scope of work and condition of
contract but the variation of price of Preliminaries is unavoidable.
The subsequent Chapter 6 discusses the Likert survey carried on the sample
population of CIDB registered contractors, category CE for the Districts of Klang and
Petaling. The contractors’ awareness of critical items of Preliminaries, Contributing
and impacts factors and possible corrective actions are discussed.
85
CHAPTER 6 : DATA COLLECTION AND ANALYSIS OF
QUESTIONNAIRE SURVEY
6.0 INTRODUCTION
As discussed in Chapter 5, it is proven that the variation in price estimates of

Preliminaries does exist in the construction industry, therefore remain as a major
concern of how to minimize the impacts. Jaggar & Morton (1995) and Masrom (2012)
found that the accuracy was very much influenced by variables. It has significant
impacts to the construction projects such as cost overrun, manipulation of work to
cushion unpriced activities, lack of compliances, delays etc. It revealed the variation
of price in Preliminaries was influenced by the way of contractors’ approaches, such
as experiences, competencies, attitudes, strategies, methodologies, etc., in pricing the
Preliminaries.
This chapter specifically measures the awareness of the CIDB registered G7, Grade
CE Contractors in the State of Selangor which responsible for the preparation and
execution of the construction Preliminaries. The contractors’ awareness of critical
items of Preliminaries, contributing and impact factors and possible corrective actions
are discussed. The understanding of the issues would provide significant anticipation
or readiness of the industry to comprehend.
6.1 Sampling Population
The selection of the State of Selangor was based on the following consideration.
Figure 6.1 depicts the State of Selangor is the leading state in Malaysia with the
highest value of construction work done. CIDBb (2015) registered Selangor as the
second highest population of G7 Contractors in Malaysia after the Federal Territories.
The construction activities are indeed concentrating in the State of Selangor, therefore,
would provide better construction activities information.
86
Source: (Department of Statistics Malaysia, 2015)
Figure 6.1 : Value of Construction Work Done By Location of Project
Further consideration was made to select contractors within the Klang Valley.
ExpatGo (2014) mentioned that the Klang Valley comprised of the Federal Territories
and four districts within the State of Selangor namely District of Petaling, District of
Klang, District of Gombak and District of Hulu Langat. CIDBb (2015) listed a total of
1,316 registered G7 Grade CE Contractors in the State of Selangor. Hence, the total
population of G7 Contractors Grade CE registered with CIDB in the Districts of
Petaling (830) and Klang (177) totaling to 1,007. This constituted 77% of the
population and majority.
The two districts are strategically located and adjacent to each other thus and within
reach of the writer. The District of Klang, in particular, is related to the origin of
tender documents as reviewed and discussed in Chapter 5. As such, the findings of
this chapter will have a significant correlation. Being the most populated registered
G7 Grade CE Contractors in the State of Selangor, it was expected to provide
sufficient samples for the data collection and to provide the wider option. Based on
these reasons, the Districts of Petaling and Klang were selected for the research.
87
6.2 Methodology
Palys (2008) suggested 9 purposive sampling strategies such as Stakeholder Case,

Extreme Case, Typical Case, Paradigmatic Case, Maximum Variation Case, Criterion
Case, Theory-Guided Case, Critical Case, and Negative Case samplings. As the
research subject was not unusual in any way in the construction industry and involves
the same key individuals (or positions) involve in the pricing of Preliminaries or
having significant influence over the price during the tender stage, the Typical Case
sampling strategy was deemed as appropriate.
As discussed in item 6.0, the sampling population was 1,007.
The Taro Yamane statistical formula was applied to determine the right sample for
distribution of survey instrument. Refer Equation 6.1. Ajay & Micah (2014) suggested
this simplified formula as suitable to establish an acceptable proportion of a large
population.
The formula; (Equation 6.1)
Where: n = Required sample size;

N = Population of G7 Grade CE Contractors, State of Selangor for Districts of
Petaling and Klang = 1,007;
e = Tolerance for error level 0.05;
1 = Constant
Hence, the sample size computed by the above formula, n = 287
6.2.1 Design of Instrument
For data collection, the citations survey adopted Likert Scale was used. To measure
the impacts, the scales of 1 to 5 to indicate the lowest to the highest preferences were
designed. Respondents were requested to state their agreements or disagreements
88
guided by 40 researchers’ citations as discussed in Chapter 2 and Chapter 3 selectively
distributed within five parts to represent the objectives of the research. 40 citations
were within the acceptable numbers based on the following findings;
Anderson (2015) said for the citation survey, numbers of citations varied between the
countries and preference, for instance Canada and the United Kingdom adopted 60-70,
Australia adopted 40-50 and New Zealand being the lowest with 20-25 citations.
Based on the survey, Anderson found that 55% of the respondents described accurate
citations as critical and 45% said very important as the indicators for the local ranking
survey. Anderson (2015) spelled the most important factor to be considered was the
citations to be industry relevance as clear indicators about the services provided.
6.2.2 Validation of Instrument
The instrument was presented in Appendix D and validated by the Consultant’s

project manager, a Consulting Engineering Firm directly responsible for the tenders
discussed in Chapter 5 on 10th March 2016. The instrument was also reviewed and
validated by a G7 contractor based in Shah Alam on 26th March 2016
The parts of the instrument with respect to the following objectives;
• Part I – Demography of participant

• Part II – Awareness to critical Preliminaries & purposes
• Part III - Agreement to contributing factors of variation
• Part IV – Appreciation to impact of variation
• Part IV – Concurrence to corrective actions to minimize variation
6.2.3 Data Collection
The writer used several approaches to extend invitations to the G7 Grade CE

Contractors starting March 2016. The writer adopted the convenient approach but
purposive in nature. The target group was distinctive by the nature of G7 Contractors
involved in the civil engineering construction and the respondents were specifically
89
for the qualified persons involved in the pricing of Preliminaries of the construction
projects during the tender stage.
Initially, the writer took the approach by utilizing the email engines. After several
weeks of sending the invitations to the target group, the writer realized the response
through email was poor. Follow up calls were made but the results were not
encouraging enough despite promises by the respondents to return the instruments.
Only several respondents had returned the instruments by emails.
The writer realized the poor response and immediately re-strategized by adopting the
most vigorous approaches described herein.
a) An initial approach where the writer had sent Email using respondents’
registered email addresses with CIDB preceded or followed up by courtesy
calls on varied days. (Typical email is shown in Appendix F and returned
email is shown in Appendix G)
b) The writer simplified the method by switching to online google form

where the respondents were provided with the following link vide
invitation through emails, SMS, and whatsApp applications;
https://docs.google.com/forms/d/1sqAYfjQnDeIEXOXrSsnleoh2RHVfCnt
niDACXFEAYLk/viewform
c) The writer made face-to-face meet up with the respondents during a

seminar entitled International Construction Weeks at Kuala Lumpur City
Centre on 12th April 2016
d) The writer had tried to meet face-to-face with the G7 Contractors from
Selangor at the International Conference on Social Sciences and
Humanities (SOSHUM’2016) on 19th April 2016 at Kota Kinabalu, Sabah
where the writer had presented a paper entitled “Challenges of Accurate
Estimation in Preliminaries of Construction Projects”. The paper will be
published in the Advanced Science Letters ISSN:1936-6612 (Print):
EISSN: 1936-7317 (Online), SCOPUS/ISI Indexed (Q3/Q4 Journal Rank
90
by SCIMAGOR. Refer Appendix A. However, no participants of G7
Contractors from the State of Selangor.
e) The writer made face-to-face approach by visited the respondents’ offices

and submitted the survey forms by hands
f) By snowball approach where the writer obtained feedback from the

respondents through recommendations of other respondents or Engineers
or Contract Managers who have access to them
In anticipation of the submission of the dissertation in June 2016, the data collection
cut-off date was fixed at 30th April 2016 to allow sufficient time for the writer to
proceed with data analyses and preparation of the dissertation. Table 6.1 depicted
responses from participants through several mediums.
Table 6.1 : Respond of Participants
Total Population of Contractors G7 Grade CE, Districts of Petaling & Klang = 1,007
Required sample size = 287
Medium Invitations sent Received
Email 300 23
By hands (face to face) 30 16
Google Forms (online) 50 17
Snowball - 11
Total 380 67
The total responses collected from the respondents by the cut-off date 30th April 2016
was 67/287. This constituted 23.4%. The writer had carried out due diligent to obtain
the required sample size through several means as discussed above but to no avail.
The writer was very optimistic that the collection of the required sample could be
achieved if the longer time was available, say 6 months. The cut-off date was
implemented to allow sufficient time for data analysis and finalization of the
91
dissertation. To note that the submission of the dissertation was on 10th June 2016 and
sufficient consultation with the supervisor were crucial prior to the due date. The
writer acknowledged and aware that the higher the sample data, the most accurate
analysis will be.
As the exit for this situation, the writer sorted to adopt the following researchers’
recommendation. Rahim et. al. (2014) suggested that the appropriate sample sizes
acceptable for the survey were between 30 and 500. Waris et. al. (2014) in his
research to investigate the contractors’ approaches and considerations for the on-site
construction plants, only received 86 completed questionnaires using similar Likert
survey and approaches from a 400 sample size of the CIDB registered G7 Contractors
in the State of Selangor and Kuala Lumpur and constituted only 21.5% responses.
Waris et. al. (2014) quoted from Akintoye (2000) and Dulami et al. (2003), that such
response rate was acceptable as the feedbacks from the construction industry in the
region of between 20% and 30% normally. The researchers’ findings were very much
similar to this research in terms of the target population of G7 using purposive
sampling, selection of the survey instrument using Likert Scale and the approaches to
obtain the feedbacks. For this research, the writer received a total of 23.4% responses
from 287 of sample size. Considering the responses were within the stipulated range
of 20% to 30%, therefore, the writer hinged on the researchers’ findings and adopted
their opinions for the analysis.
6.3 Statistical Analyses
IBM SPSS Statistics Version 23 Release 23.0.0.0 was used throughout the statistical
analyses in this chapter.
6.4 Demography
A total of 67 respondents with the following components in Table 6.2 had returned the
completed survey instruments. The respondents’ representatives (or referred to as the
respondent) are the qualified persons who have directly involved in the price of
Preliminaries of the construction projects at tender stage.
92
Table 6.2 : Hierarchy of Respondent
Position Participation %
Project Director 19.40%
Project Manager 40.30%
Contract Manager 8.96%
Contract Manager 31.34%
Total 100.00%
6.4.1 Respondent’s Background
As the research focusses on the Civil Engineering works, contractors, Engineers and
Quantity Surveyors are expected to be the majority professions of the key persons
responsible for the pricing of Bills of Quantities particularly the Preliminaries during
the tender stage. Engineers represent 55.22%, Quantity Surveyors represent 35.82%,
Architect represent 1.49% and others represent 7.46%. The involvement of the
Architect is noted to indicate that this profession may also be required to price during
the tender stage. Others are the sub-professionals and executives of related fields.
Based on the respondents’ positions and qualifications, all respondents hold offices
for administrative responsibilities and decision making to represent the contractors
during the tender stage.
Figure 6.2 : Profession of Respondents
93
6.4.2 Respondent’s Experience
Based on Table 6.3, a total of 43.3% of the respondents are having more than 16 years
of experience and represent majority to the sample group. The second total highest is
32.8% having experience between 6 and 10 years. The third and the fourth ranks are 1
to 5 years of experience (11.9%) and 11 to 15 years of experience (11.9%)
respectively.
Table 6.3 : Respondent Experience
Cumulative
Frequency Percent Valid Percent
Percent
Valid 1-5 Years 8 11.9 11.9 11.9
6-10 Years 22 32.8 32.8 44.8
11-15 Years 8 11.9 11.9 56.7
> 16 Years 29 43.3 43.3 100.0
Total 67 100.0 100.0
6.4.3 Respondent’s Competency Level
Employment Studies Institute [ESI] (2016) described that competency is a level

required to perform a task or tasks successfully and has a correlation to the specific
scope of works. Trinder (2008) said Spatial Sciences Institute Australia adopts 10
years of experience for their candidates to be certified. CornellUniversity (n.d.)
specifies the competency levels are based on the following scale;
Table 6.4 : Competency Level
Years of experience Competency Level

Less than 2 years Learning
2 to 5 years Applying
More than 5 years Mastery
94
Based on Table 6.4, the respondents’ experiences are measured to determine the
reliability of the collected data. The respondents having more than 10 years of
experience constitute 55.2%. However, if more than 5 years of experience as a
benchmark then the reliability of the responses collected for the survey is 88.0%.
Therefore, the writer suggests that the responses presented herein are reliable.
6.5 Awareness of Critical Preliminaries
6.5.1 Reliability Coefficient
The Preliminaries are meant to measure the degree of understanding of the respondent
on the thirty critical Preliminaries items. The consistency of the items is verified using
Cronbach’s alpha analysis. Refer Table 6.5
The equation for the standardized Cronbach's alpha is presented below;
(Equation 6.2)
Where N = Number of items
C-bar = Average inter-item covariance
V-bar = Average Variance
From the formula, it can be seen that Cronbach’s alpha value increased by increasing
the number of items (N)
Table 6.5 : Reliability of Critical Preliminaries Items
Case Processing Summary
N %
Cases Valid 67 100.0
a
Excluded 0 .0
Total 67 100.0
a. Listwise deletion based on all variables in the procedure.
95
Reliability Statistics
Cronbach's Cronbach's Alpha Based

N of Items
Alpha on Standardized Items
.948 .948 30
The Cronbach’s alpha coefficient measured on the thirty items of the critical
Preliminaries items is 0.948. It suggests that the relevant items have relatively high
internal consistency or reliability. UCLA (2016) suggested that Cronbach’s alpha is
to measure the internal consistency and a reliability coefficient equals or higher than
0.70 is considered as "acceptable" in most research situation of social science.
6.5.2 Degree of Awareness of the critical Preliminaries
Using item statistics analysis, the Preliminaries are sorted based on mean in
descending order. The degree of awareness is determined by Likert scale of 1 to 5
being (1) Not Aware, (2) Least Aware, (3) Slightly Aware, (4) Aware and (5) Most
Aware.
Table 6.6 : Ranking of Awareness Level
Item Statistics
Std.
Mean N
Deviation
(1) Insurances 4.4478 .61011 67
(2) Site photographs / Record / Progress Report 4.3881 .60190 67
(3) Shop Drawings / As-built Drawings 4.3731 .64751 67
(4) Work Program 4.3582 .68978 67
(5) Workmen's Compensation 4.3284 .66030 67
(6) Contractor's Office And Storage 4.3284 .66030 67
(7) Performance Bond 4.3134 .65618 67
(8) Contractor's Plant (Scaffolding, tools, temporary sheds, vehicles,
4.3134 .70084 67
etc)
(9) Hoarding & Fencing 4.2985 .65169 67
(10) Safety & Health 4.2985 .71806 67
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Table 6.6 Continued
(11) Site-Cleanliness And Preparation (i.e. Mobilization,
4.2985 .67454 67
Demobilization)
(12) Temporary Access 4.2836 .66983 67
(13) Temporary Supply i.e. Water, Electricity 4.2687 .77032 67
(14) Setting Out 4.1940 .65687 67
(15) Client / Employer Requirement 4.1940 .70149 67
(16) Temporary Accommodation for Workers 4.1940 .74343 67
(17) Superintending Officer Office 4.1791 .67252 67
(18) Site Security & Administration 4.1642 .68749 67
(19) Communication Facility 4.1642 .73023 67
(20) Maintenance of Public Access 4.1194 .78860 67
(21) Drainage, Erosion And Sediment Control 4.1194 .78860 67
(22) Materials Testing 4.1045 .74130 67
(23) Site Waste Disposal 4.0597 .75640 67
(24) General Particulars & Contractual Obligation 4.0448 .66133 67
(25) CIDB Levy 4.0448 .89498 67
(26) Protection of Works 4.0299 .75819 67
(27) Legislation & Regulation 4.0000 .85280 67
(28) Sanitation 4.0000 .81650 67
(29) Nominated Sub-Contractors (Profit & Attendance) 3.9701 .77792 67
(30) Noise & Pollution Control 3.9403 .83268 67
Summary Item Statistics
Maximum / N of
Mean Minimum Maximum Range Variance
Minimum Items
Item
4.194 3.940 4.448 .507 1.129 .020 30
Means
Based on the analysis, the overall mean is 4.194 shows that all respondents have
satisfactory aware the importance of critical Preliminaries. However, continuous
improvement of awareness must be acquired through direct learning or courses. The
items with a mean value less than 4 would be given the utmost priority for
improvement. In conclusion, G7 Contractors Grade CE are aware of the importance of
the critical Preliminaries.
97
6.6 Contributing Factors of Variation in Price of Preliminaries
6.6.1 Objective
The objective is to investigate the contributing factors of variation in the price of

Preliminaries.
6.6.2 Contributing Factors
Sixteen issues or problems’ statements derived from the researchers’ findings as

discussed in the previous chapters provide the basis for questionnaires in the survey
instrument. The writer listed down in the form of researchers’ statements and allowed
the respondents to rank their level of agreement based on experiences in the
construction industry. Refer to Part III of the survey instrument in Appendix D. Based
on the issues as stated in Part III of survey instrument; the writer summarizes the
statements to establish the Contributing Factors that influence price variation in
Preliminaries during tender stage. Refer Table 6.7.
Table 6.7 : Derivation of Contributing Factors
Item Citation Issues Contributing Factors

1.1 Tak et al. (2002); Tah et Variation of Preliminaries varies Variation between
al. (1994); Solomon between contractors despite tendering contractors despite
(1994); Ghani (2006);
Phillips (2009); Akbar the same project that shares common tendering project of similar
et al. (2015) nature nature
1.2 Ghani (2006) Pricing of Preliminaries was most Variation due to different
difficult and exposed to large approach and
variation between contractors due to understanding
different approaches and
understandings
1.3 Shakantu et al. (2003) Contractor priced the items using Variation due to respective
and Popecu et al. (2003)
compound rates derived based on background information &
their respective anticipations or strategies
guesses, methodologies, strategies
and background information or
knowledge, thus provide variation
98
Table 6.7 Continued
1.4 Tah et al. (1994) Differences of markups by Variation due to Markup
contractors and indirect cost would factor
be the contributing factors to the
variation.
1.5 Tak et al. (2002); Ali & Underestimation of overhead for site Variation due to indirect
Zakaria (2012); Rahmat management and general operation of cost
& Ali (2010)
the construction project would create
significant inaccurate price
estimation to the overall tender
1.6 Ellsworth (2011) Non-productive activities provide Variation due to non-

variation productive activities
1.7 Saunders et al. (2013) Contractors’ Contract Managers Variation due to

facing huge challenges to determine uncertainties
the uncertainties and risk myriad that
exist in the construction projects and
to analyze the impacts and anticipate
the outcomes
Lack of accuracy & consideration on project complexity

1.8 (Sailaja et al., 2015) Lack of accuracy to perform well Variation due to lack of
within allocated time leads to a loss accuracy
to the party or organization.
1.9 (Sailaja et al., 2015) Internal efficiencies could be Variation due to

measured, analyzed, structured for efficiencies
intensive improvement
1.10 Azman et al. (2013); Accuracy of preliminary was Accuracy of Preliminaries

Popecu et al. (2003); absolutely crucial is absolute necessary
Masrom (2012)
1.11 Ferraby & Odgers Key persons to have the required Variation due to lack of
(2007) experience and well understand the experience of key person
project’s complexities
1.12 Lim (2012) Inaccuracy of cost estimation due to Variation due to

gross underestimation of price underestimation of price
Lack of anticipation of indirect cost

1.13 (Vee & Skitmore, 2003) Ethical improprieties such as treats, Variation due to ethical
collusive tendering occurred in the improprieties
construction
1.14 Abdul Rahim et al., Huge financing on treatments or Huge financial

2008)
compensations due to site accidents commitment due to site
accidents
1.15 Haefeli et al., 2005); Limited knowledge in the costs of Variation due lack of
Yilmaz & Celebi (2015) occupational accidents & minor anticipation on
accident difficult to estimate compensation cost
1.16 (Yilmaz & Celebi, Occupational accident was difficult to Occupational accident cost
2015)
estimate difficult to estimate
99
The consistency of the items provided in the instrument to measure the contributing
factors is verified using Cronbach’s alpha analysis. Refer Table 6.8. UCLA (2016)
outlined the acceptance criteria for the analysis > 0.7. The Cronbach’s Alpha 0.863 >
0.7 thus the variables are internally consistent and therefore reliable.
Table 6.8 : Reliability of Contributing Factors’ Items
N %
Valid 67 100.0
a
Cases Excluded 0 .0
Total 67 100.0
Cronbach's Alpha N of Items

.863 16
6.6.4 Agreement of Contributing Factors in Price of Preliminaries
Using the statistical analysis, the ranking of contributing factors is sorted based on
mean in descending order. The contractor's opinions are sought by using the Likert
scale of 1 to 5 being; (1) Disagree, (2) Least Agree, (3) Fairly Agree, (4) Agree and
(5) Strongly Agree.
Table 6.9 : Ranking of Contributing Factors Based on Mean
Item Statistics
Std.
Mean N
Deviation
(1) Variation due to lack of experience of key person 4.4328 .63303 67
(2) Variation due to lack of accuracy 4.1194 .76915 67
100
(3) Variation between Contractors despite tendering
4.0597 .69371 67
project of similar nature
(4) Variation due to uncertainties 4.0448 .82449 67
(5) Variation due to respective background information &
4.0299 .65064 67
strategies
(6) Variation due to underestimation of price 4.0000 .73855 67
(7) Variation due to different approach and understanding 3.9701 .77792 67
(8) Variation due to Mark-up factor 3.8507 .74374 67
(9) Variation due to indirect cost 3.8060 .85704 67
(10) Variation due to efficiencies 3.8060 .67955 67
(11) Accuracy of Preliminaries is absolute necessary 3.7015 .79801 67
(12) Variation due to ethical improprieties 3.7015 .79801 67
(13) Occupational accident cost difficult to estimate 3.7015 1.03008 67
(14) Variation due lack of anticipation on compensation
3.5970 .93840 67
cost
(15) Variation due to non-productive activities 3.5075 .95937 67
(16) Huge financial commitment due to site accidents 3.4925 .91076 67
Based on the mean value, the respondents’ agreements are ranging between 4.43
being the highest and 3.49 being the lowest. Literally, all factors are between strongly
agreed and fairly agreed. The experience of the key person is the most crucial and to
be given highest priority. This can be seen from the frequency test that 50.7% of the
respondents strongly agreed. Refer to Table 6.10
Table 6.10 : Variation due to lack of experience of key person

Cumulative
Percent
Valid Strongly Agree 34 50.7 50.7 50.7
Agree 28 41.8 41.8 92.5
Fairly Agree 5 7.5 7.5 100.0
Total 67 100.0 100.0
For the lack of accuracy factor, almost 50% of the respondents agree that it
contributes to the variation in the price of Preliminaries. Refer to Table 6.11
101
Table 6.11 : Variation due to lack of accuracy
Cumulative
Percent
Agree 33 49.3 49.3 82.1
Fairly Agree 10 14.9 14.9 97.0
Least Agree 2 3.0 3.0 100.0
Total 67 100.0 100.0
All the remaining factors received the same pattern in votes by the respondents with
the majority of the respondents are ‘Agree’ to the factors. However, the following 3
factors have received mild ‘Disagree’ votes ranging from 1.5% to 3.0% only or 1 to 2
respondents. Refer to Tables 6.12, 6.13 and 6.14. Despite that, the majority of the
votes for the affected factors are ‘Agree’. Thus, all contributing factors showed in
Table 6.9 are therefore acceptable.
Table 6.12 : Huge financial commitment due to site accidents

Cumulative
Percent
Agree 29 43.3 43.3 53.7
Fairly Agree 23 34.3 34.3 88.1
Least Agree 6 9.0 9.0 97.0
Disagree 2 3.0 3.0 100.0
Total 67 100.0 100.0
Table 6.13 : Occupational accident cost difficult to estimate

Cumulative
Percent
Agree 22 32.8 32.8 58.2
Fairly Agree 21 31.3 31.3 89.6
Least Agree 5 7.5 7.5 97.0
Disagree 2 3.0 3.0 100.0
Total 67 100.0 100.0
102
Table 6.14 : Variation due lack of anticipation on compensation cost
Cumulative
Frequency Percent Valid Percent Percent
Agree 21 31.3 31.3 50.7
Fairly Agree 27 40.3 40.3 91.0
Least Agree 5 7.5 7.5 98.5
Disagree 1 1.5 1.5 100.0
Total 67 100.0 100.0
6.7 Impacts on Accuracy of Preliminaries
6.7.1 Objective
The objective is to identify the impacts of variation in the price of Preliminaries to

tender estimates.
6.7.2 Impacts Factors
Based on the researchers’ findings as discussed in the previous chapters, several

pertinent possible impact factors on the accuracy of Preliminaries are selected for the
questionnaires in the survey instrument.
Impact factors are derived based on a simplification of issues mentioned in the survey
instruments in Part IV. The derived impact factors carry the same meaning and to
facilitate the analyses and discussion.
103
Table 6.15 : Derivation of Impact Factors
Item Citation Issues Impact Factors

2.1 Ghani Preliminaries & General Condition was Preliminaries determine the success
(2006) one of the components in the BQ and or failure of a project
being the most crucial
2.2 Ashworth Contractor’s profit margin influenced Profit Margin influences the final
(2010)
variation in price [of Preliminaries] price of Preliminaries
2.3 Wood & Ability to identify the complexity at the Complexity increases the risk of
Gidado
early stage of project would provide price accuracy
(2008)
better understanding thus reducing the
risks [particularly variation in price]
2.4 Abd Rashid BQ was a tool to obtain fairness on the Poor pricing of Preliminaries results
et al. basis the contractors pricing the works.
(2006); in poor implementation quality
Ghani Fairness must exist in the Preliminaries
(2006)
2.5 Dell’Isola Lump Sum was not a correct Lump Sum price imposes risk, thus
(2003)
representation of scheduling and tendency to grossly overpriced
therefore prone to be as source of error
on the estimates
2.6 Leicht et al. Proper planning and realistic Proper planning & realistic
(1999) and
anticipations are crucial to ensure anticipation ensures project success
Frese &
Sauter project success
(2006)
2.7 Tah et al. Risks implication if the non-productive Unbillable non-productive activities
(1994) activities [i.e. revisit completed works reduce profitability
for repair, cleaners, tasks not related to
works] incurred but not priced in the
tender
2.8 Akintoye Pricing a tender was not an easy task High competition, risk &
(1991)
due to fragmentation of the industry complexity requires tedious tender
itself and high competition and to deal pricing
with risks and complexity
2.9 Carlos 80% of construction failures due to 20% 80% of construction failures due to
(2015)
of inaccuracy of Preliminaries caused 20% of inaccuracy of estimates
cost overrun, unrealistic schedules,
error in price estimates, giving priority
towards tender price competition and
lack of project planning
2.10 Wong et Myth oh ‘lowest tender price win’ may "Lowest tender price win" results in
al. (2000) influence the contractors to neglect the compromise of accuracy
accuracy of Preliminaries
The consistency of the items provided in the instrument to measure the impact factors
is verified using Cronbach’s alpha analysis. Refer Table 6.16. UCLA (2016) outlined
104
the acceptance criteria for the analysis > 0.7. The Cronbach’s Alpha is 0.823 higher
than 0.7 thus the variables are internally consistent and therefore reliable.
Table 6.16 : Reliability of Impact Factors
N %
Valid 67 100.0
a
Cases Excluded 0 .0
Total 67 100.0
Cronbach's Alpha Based N of

Cronbach's Alpha
on Standardized Items Items
.823 .823 10
Using the statistical analysis, the ranking of impact factors is sorted based on mean in
descending order. The respondents’ opinions are sought by using the Likert scale of 1
to 5 being; (1) Very Low Impact, (2) Low Impact, (3) Medium Impact, (4) High
Impact and (5) Very High Impact.
6.7.4 Ranking of Impacts on Accuracy in Preliminaries Based on Mean
Based on the feedbacks received from the respondents in a survey carried between
March 2016 and April 2016, the data is analyzed using SPSS on Descriptive Statistic.
The result of the impact factors as discussed is sorted by using the mean in descending
order. It can be concluded that the greater the mean value the greater the impact
factor.
105
Table 6.17 : Ranking of Impact Factors Based on Mean
Item Statistics
Std.
Mean Deviation N
(1) Proper planning & realistic anticipation ensures project
4.4776 .63623 67
success
(2) Complexity increases the risk of price accuracy 4.3134 .72214 67
(3) Lump Sum price imposes risk, thus tendency to grossly
4.1343 .77646 67
overpriced
(4) High competition, risk & complexity requires tedious tender
4.1194 .64013 67
pricing
(5) Poor pricing of Preliminaries results in poor implementation
4.1045 .78111 67
quality
(6) "Lowest tender price win" results in compromise of accuracy 4.0299 .81594 67
(7) Unbillable non-productive activities reduces profitability 3.8657 .77646 67
(8) 80% of construction failures due to 20% of inaccuracy of
3.8507 .80253 67
estimates
(9) Preliminaries determine the success or failure of a project 3.7164 .96619 67
(10) Profit Margin influences the final price of Preliminaries 3.5970 .92211 67
Maximum / N of
Minimum Items
Item Means 4.021 3.597 4.478 .881 1.245 .072 10
With the mean value of 4.4776 and being the highest score, the respondents agreed
that the proper planning and realistic anticipation would ensure the project success.
On the other hand, the profit margin with the lowest mean value of 3.5970 is not
considered much as a contributor to the impacts on the accuracy of Preliminaries
during tender stage. Ashworth (2010) mentioned that the profit margin is determined
based on the difference between the construction cost and the operation cost i.e. the
contractors’ prices spent on works done. Therefore, the profit margin is a variable
based on the contractors’ own expectations on how much profits they want to make
out of the projects.
106
To note that maximum Likert scale of 5 constitutes the utmost impact and 4
constitutes the high impact. The average mean equals 4.021 with the average variance
equals 0.072 statically mentioned that despite the items are ranked to indicate the
degree of impacts based on the respondents’ attitudes, but the differences are narrow.
The range equals to 0.881shows the marginal dispersion. Hence, the results strengthen
against each other and the impacts factors discussed herein are therefore crucial.
Based on the results, the respondents are unanimously agreed that the factors would
impact the variation in Preliminaries.
6.7.5 Ranking of Impacts on Accuracy in Preliminaries Based on Range
Another angle to identify the impacts of variation in price is by looking into how
dispersed the attitudes are among the respondents. The narrower the range indicates
the more convergence of attitudes amongst the respondents.
To further verify the crucially of the impact factors, the exploratory data analysis, and
descriptive statistics are performed using SPSS. The rank of impact on accuracy in
Preliminaries is calculated using the standard measures of dispersion on each variable.
The higher the range values the higher the dispersion. Refer Equation 6.3.
(Equation 6.3)
Dispersion Range = Highest score of Likert Scale – Lowest score of Likert Scale
Say,
Likert scale 1 to 5
Highest score of Likert Scale 5
Lowest score of Likert Scale 3
Thus,
Dispersion Range 5–3=2
The dispersion test using the range parameters determines the diversification of the
respondents’ opinions. Refer Table 6.18
107
Table 6.18 : Ranking of Impact Factors Based on Range
Range Frequency Percent Impact

(1) Proper planning & realistic anticipation
2 37/67 55.2% Very High Impact
ensures project success
(2) Complexity increases the risk of price
2 31/67 46.3% Very High Impact
accuracy
(3) High competition, risk & complexity
3 42/67 62.7% High Impact
requires tedious tender pricing
(4) "Lowest tender price win" results in
compromise of accuracy
(5) Lump Sum price imposes risk, thus
tendency to grossly overpriced
(6) Unbillable non-productive activities
reduce profitability
(7) Poor pricing of Preliminaries results in
poor implementation quality
(8) 80% of construction failures due to 20%
of inaccuracy of estimates
(9) Preliminaries determine the success or
failure of a project
(10) Profit Margin influences the final price
of Preliminaries
The results using the range analysis would give a more stringent priority impact list
compared to the results based on the mean analysis. The priority is discussed herein;
Based on the above ranking, “(1) Proper planning & realistic anticipation ensures
project success” and “(2) Complexity increases the risk of price accuracy” are being
ranked first and second top impact factors with very high impact on the accuracy of
variation in Preliminaries. The undoubted attitudes by respondents are clearly shown
by the narrow dispersion range equals to 2.
Five variables are ranked third to seventh with dispersion range equals 3 respectively
comprise of “(3) High competition, risk & complexity requires tedious tender pricing,
(4) "Lowest tender price win" results in compromise of accuracy, (5) Lump Sum
price imposes risk, thus tendency to grossly overpriced, (6) Unbillable non-productive
activities reduces profitability and (7) Poor pricing of Preliminaries results in poor
108
implementation quality”. The respondents agreed these variables contribute high
impacts that influence in the pricing of Preliminaries during the tender stage.
Three variables are ranked eighth to tenth with dispersion range equals 4 respectively
comprise of “(8) 80% of construction failures due to 20% of inaccuracy of estimates,
(9) Preliminaries determine the success or failure of a project and (10) Profit Margin
influences the final price of Preliminaries”. The respondents agreed these variables
contribute high impacts that influence in the pricing of Preliminaries during the tender
stage. However considering the wider dispersion range equals 4, the strength is
slightly weaker compared to the dispersion range equals to 2 and 3. Despite that, the
attitudes of the majority of respondents are biased toward high impacts.
The respondents unanimously agreed that all variables as discussed herein contribute
high impacts to the variation in Preliminaries, particularly at tender stage. The
mistreatments of the factors by the contractors during tender stage would certainly
bring about significant variation in the price of Preliminaries.
6.7.6 Individual Analysis of Impacts on Accuracy in Preliminaries Based on

Frequency
The frequency analysis using SPSS measures the intensity of attitudes of respondents
over the impact factors. The writer discusses the how the respondents’ attitudes
diverge on each item. This analysis would provide some scientific understanding of
how the contractors behave as the contractors would likely to apply the same thinking
to their price of Preliminaries during the tender stage.
(1) Proper planning & realistic anticipation ensures project success
Valid Cumulative
Frequency Percent
Percent Percent
Valid Very High Impact 37 55.2 55.2 55.2
High Impact 25 37.3 37.3 92.5
Medium Impact 5 7.5 7.5 100.0
Total 67 100.0 100.0
109
The attitudes of the respondents show strong agreement that proper planning &
realistic anticipation definitely ensures the project success. 55.2% agreed that the
variable would certainly impose a very high impact. As such the chance of having a
high variation of Preliminaries if not taken seriously by the contractors is
distinguished. The respondents’ agreement is further reinforced with total percentages
of very high and high impact factors give 92.5%. Only less than 10% of the
respondents said the factor would contribute a medium impact for the project success.
Memon et. al. (2011); Ferraby & Odgers (2007); (Sailaja et al., 2015) findings for the
said variables are therefore validated by this industry survey.
Based on the frequency analysis, the dominant attitude of the respondents for this
factor is a very high impact.
(2) Complexity increases the risk of price accuracy
Valid Cumulative
Frequency Percent
Percent Percent
Valid Very High Impact 31 46.3 46.3 46.3
High Impact 26 38.8 38.8 85.1
Medium Impact 10 14.9 14.9 100.0
Total 67 100.0 100.0
When dealing with the complexity of the workplace issue, the majority of the
respondents accepted that it contributes a very high impact on the accuracy of price in
Preliminaries during the tender stage. Nearly 50% of the respondents consider it as the
most pertinent factor to be paid serious attention. 38.8% of respondents may tone
down their preferences a little bit but agree the issues would cause a high impact on
the accuracy of the price of Preliminaries at tender stage. The combination of both
attitudes gives a total of 85.1%, thus indicates the item is crucial and mandatory for
the contractors to consider.
However about 15% of the respondents opined the issue would contribute a medium
impact to the accuracy of Preliminaries. The decision is understandable as it very
much depends on the anticipation of the respondents. The impacts depending on how
they deal with the issues and the nature of the projects. Less consideration would
110
certainly receive less attention, thus creates a gap in the accuracy of the price of
Preliminaries.
As previously discussed in Chapter 2, to deal with the complexity, it is heavily

depending on the contractors’ experiences and ability to anticipate and sufficiency of
documents. Tower & Baccarini (2012) said the critical factors to be scrutinized by the
contractors during the tender stage among others are the sufficiency of document and
complexity of projects such as difficulties or constraints and existing work in hands.
The contractors are practically had no jurisdiction or less over these factors and
therefore require thorough price consideration to avoid mistakes.
factor is a very high impact.
(3) High competition, risk & complexity requires tedious tender pricing
Valid Cumulative
Frequency Percent
Percent Percent
Valid High Impact 42 62.7 62.7 62.7
Very High Impact 17 25.4 25.4 88.1
Low Impact 1 1.5 1.5 100.0
Total 67 100.0 100.0
The majority of the respondents agreed that the tender pricing being the tedious tasks
due to high competition amongst the contractors, risk & complexity associated with
the projects. 62.7% admitted high impact and 25.4% have a more extreme and
admitted the factor has a very high impact. Both attitudes constitute 88.1% is
sufficient to indicate its importance and requires serious consideration by the
contractors. A dedicated approach and strategies should be implemented when dealing
with this factor.
However, 7 others respondents said the factor as medium impact. Out of surprise, 1
respondent even opined the factor as having low impact. This constitutes only 11.9%
from the respondents. Akintoye (1991) clearly warned about the importance of the
111
said factor is not easy due to high fragmentation of the industries. It is also clearly
understood that due to challenges in the construction market, it surely requires a
tedious and systematic approach involving statistical information, benchmarking
analysis, Strength Weakness Opportunity and Threat (SWOT) analysis, skills and past
experiences of similar nature, etc., by the contractors.
The fracture of such approach by the contractors would speculate about insufficient
costs justification would be made and lack of decisions making encountered. As such
the writer strongly anticipates it would certainly have an impact on the accuracy of
Preliminaries. Based on the frequency analysis, the dominant attitude of the
respondents for this factor is high impact.
(4) "Lowest tender price win" results in compromise of accuracy
Valid Cumulative
Frequency Percent
Percent Percent
Low Impact 4 6.0 6.0 100.0
Total 67 100.0 100.0
This type of procurement has been the myriad of the construction industry and being
widely practice in Malaysia. The government agencies such as JKR and JPS have
been adopting the mean and cut-off approach to obtain the best offer and at the same
time ensure the integrity of the tender price. However, the DBOT projects would
prefer the concept of the lowest tender price win. Ali (2016); Thien (2008) reported
that the MRT Sungai Buloh-Serdang-Putrajaya (SSP) Line and Bakun Dam projects
awarded to Gamuda-MMC JV and Sime Darby-led consortium respectively were
awarded based on merit and the lowest tender price.
Based on the feedbacks, the majority of the respondents agreed that this impact factor
carries a significant impact on the price of Preliminaries at tender stage. The
agreement is manifested by the majority of the respondents (52.2%) said the factor
contributes a high impact whilst 28.4% opted for a very high impact. Hence a total of
112
80.6% of the respondents agreed that the said factor somehow requires the final tender
price at tender stage to be ‘very’ competitive. The clients’ preference related to the
award of contract needs to be observed. Hence, provides the winning strategy for the
contractors. Notwithstanding that, in the quest to win a construction project, the
Quality and Time must not be compromised.
Despite the above, 13 respondents consider the factor would cause either medium or
low impact to the price of Preliminaries. This could be the respondents do not much
concern about optimizing the price of Preliminaries after the draft tender pricing. This
action could be driven by the limited time ‘normally’ allocated for the tender period.
Smith (1990) cautioned that accurate tender requires detailed pricing but he admitted
that error in price estimation is largely due to the limited time available at tender
stage. The contractors require a complete formulation how to overcome such situation.
factor is high impact.
(5) Lump Sum price imposes risk, thus tendency to grossly overpriced
Cumulative
Percent
Very High
23 34.3 34.3 82.1
Impact
Medium Impact 10 14.9 14.9 97.0
Low Impact 2 3.0 3.0 100.0
Total 67 100.0 100.0
The lump sums prices are normally applied to the Preliminaries of construction
projects definitely impose a great deal of risk, therefore, the tendency to have errors
such as overpricing of items. This is clearly understood that the contractors shall
normally consider sufficient buffer merely based on their anticipations, historical and
projection data to base on, past experiences on similar nature of projects, etc. Should
the large lump sum item be broken down to a smaller lump sum items or using the
provisional amounts to minimize the risks?
113
The impact of the lump sum price to the Preliminaries is treated as having high
significant with 47.8% said it would contribute to high-impact and 34.3% agreed that
it should be upgraded to a very high impact. The two scales, however, create a very
thin line of interpretation about its importance. The total of 82.1% however, indicates
the factor imposes the highest degree of importance to the impacts of Preliminaries.
About 15% of the respondents considered the factor would cause a medium impact
and therefore would take a moderate approach in term of their methodology to arise to
the near accurate prices. 3% of the respondent, however, do not see the factor as
crucial. The writer assumes the respondents may look as no different between the
lump sum and other units such as provisional quantities or items. The prices are
treated as having equal impacts. Based on the frequency analysis, the dominant
attitude of the respondents for this factor is high impact.
(6) Unbillable non-productive activities reduce profitability
Valid Cumulative
Frequency Percent
Percent Percent
Medium Impact 19 28.4 28.4 76.1
Low Impact 2 3.0 3.0 100.0
Total 67 100.0 100.0
The indirect costs or non-productive costs as discussed in Chapter 2 are always not
taken much concern during the tender stage. The objective at that time is only to
complete the tender and submit on the closing date. Rough estimation based on sound
anticipations and intelligent guesses must be performed in dealing with this subject.
Tah et al. (1994) highlighted about the risk associated with this issue and hence a
serious consideration needs to be carried out by the Contractor.
The factor is rated as high impact in the range analysis and mean analysis as presented
in the earlier items. The high impact is agreeable by 47.8% of the respondents and
20.9% of respondent treated the factor as contributing a very high impact. Both scales
constitute 68.7%. The intensity seems to be drastically dropped below 80% if
114
compared to the earlier 5 factors. The total scores of about 70% are within the range
of high impact in the range analysis.
The medium impact is agreeable by 28.4% of the respondent but surprisingly 3% of

them said the factor gives a low impact on the variation of price of Preliminaries.
(7) Poor pricing of Preliminaries results in poor implementation quality
Valid Cumulative
Frequency Percent
Percent Percent
Medium Impact 14 20.9 20.9 98.5
Low Impact 1 1.5 1.5 100.0
Total 67 100.0 100.0
Abd Rashid et al. (2006); Ghani (2006) insisted that the fairness must exist in the
pricing of Preliminaries. Unscrupulous pricing of Preliminaries would result in
inaccuracy of the bills. This is exhibited by means of unrealistic prices for the items,
prices on the items that carry the same meaning, unpriced items despite their
importance, etc. The following are typical examples;
Based on the abstract of Tender 4 showed in Table 6.19, by comparing the 5 render
documents, it clearly shows 5 different tender prices on a preliminary item though
tendering the same project and shared the same scope of work, complexity, and
geographical condition. The range of price is RM242,000.00, thus indicates how wide
disperse are the prices. As such, the accuracy is dubious. Which contractors have near
accurate figures? Are their rates realistic enough for the scope of work? All answers
are arbitrary unless the breakdown of rates is verified.
115
Table 6.19 : Abstract of Tender 4 – Main Infra
Contractor Contractor Contractor Contractor Contractor

Preliminary
1 2 3 4 5
(13) Contractor’s 250,000.00 168,000.00 75,000.00 8,000.00 40,000.00
Plant (Scaffolding,
tools, temporary
sheds, vehicles, etc)
Notes: All prices are in Ringgit Malaysia
Similarly based on the abstract of Tender 1 showed in Table 6.20, Contractor 2 did
price both items that carry the same meaning. On the adverse effect, Contractor 1 did
not price either item. In contrast, Contractor 3 is more alert about the requirement and
only priced for the necessary item.
Table 6.20 : Abstract of Tender 1 – Earthwork
Preliminaries Contractor 1 Contractor 2 Contractor 3

Keeping site dry - 10,000.00 5,000.00
Site Drainage - 10,000.00 -
Notes: All prices are in Ringgit Malaysia
The survey revealed that 34.3% of the respondents accepted this impact factor as the
very high impact on the accuracy of Preliminaries. 43.3% said the factor would cause
a high impact. The combination of both categories is 77.6%, thus reveals the
importance of the impact factor. 20.9% however, would like to take the average
attitudes by agreeing the said impact factor would have a medium impact on the
accuracy of Preliminaries. 1.5% of the respondents or only 1 person is taking the stand
for the low impact. Due to a low percentage, this attitude is negligible. Based on the
frequency analysis, the dominant attitude of the respondents for this factor is high
impact.
116
(8) 80% of construction failures due to 20% of inaccuracy of estimates
Valid Cumulative
Frequency Percent
Percent Percent
Medium Impact 18 26.9 26.9 77.6
Very Low Impact 1 1.5 1.5 98.5
Low Impact 1 1.5 1.5 100.0
Total 67 100.0 100.0
Carlos (2015) adopted the Pareto principle that 80% of the consequences normally
due from 20% of the causes. In the context of this research item, the principle
warrants a great consideration on the possible 20% of faulty drivers that would give
bad impacts to the accuracy of Preliminaries. Among others are unrealistic schedules,
error in price estimates, giving priority towards tender price competition and lack of
project planning. 50.7% of the respondents agreed to the high impact consequences
due to negligence to consider its fact. 19.4% said the factor has a very high impact. In
total, 70.1% respondents agreed to the impact factor. However, 26.9% take it as
medium impact and 1.5% as low impact. Based on the frequency analysis, the
dominant attitude of the respondents for this factor is high impact.
(9) Preliminaries determine the success or failure of a project
Valid Cumulative
Frequency Percent
Percent Percent
Medium Impact 16 23.9 23.9 67.2
Low Impact 7 10.4 10.4 98.5
Total 67 100.0 100.0
Ghani (2006) specified the Preliminaries & General Condition is one of the
components in the BQ and being the most crucial bill and therefore, must be properly
and tediously priced. The writer agrees that the inaccuracy of Preliminaries such as
grossly under-priced would certainly bring about the failures of the projects. The
117
Preliminaries contain the massive scope of work encompassing the general
requirement, compliance with the law and regulations, recurrence items,
immeasurable general items and administrative work. The items involve direct and
indirect costs consideration.
In total 64.2% of the respondents comprise of 43.3% voted for a high impact and
20.9% for a very high impact agreed that the accuracy of Preliminaries determines the
success or failure of a project. 23.9% of the respondents, however, said the impact is
medium. This would be translated as the respondents may have compromised about
the importance of Preliminaries in the bills of quantities. For the sake of the doubt,
this attitude could be based on their knowledge that the accuracy of Preliminaries may
not entirely contribute to the success or failure of a project.
Similarly, 10.4% consider the factor as low impact means the accuracy of
Preliminaries might not be considered as determining factor at all. Out of surprise,
1.5% of respondents said the factor contributes a very low impact on the success or
failure of a project. These attitudes would be cautious as all researchers have a
unanimous agreement that Preliminaries are in fact the most important document in
the bills of quantities. The subject was duly discussed in Chapter 2. Despite the above
and based on the frequency analysis, the dominant attitude of the respondents for this
(10) Profit Margin influences the final price of Preliminaries
Valid Cumulative
Frequency Percent
Percent Percent
Medium Impact 20 29.9 29.9 73.1
Low Impact 7 10.4 10.4 98.5
Total 67 100.0 100.0
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Ashworth (2010) opined that the profit margin influences variation in price [of
Preliminaries]. This is true in a sense that the higher the markup factor anticipated by
the contractors the higher the price of Preliminaries would be and vice versa.
43.3% of the respondent agreed that the profit margin influences the final price of
Preliminaries and of high impact. Despite that, 29.9% considered it would create as
medium impact. However, 14.9% have a more serious approach and measured the
factor as very high impact. Considering very high and high impacts as crucial, a total
of 58.2% of the respondents are in favor that the profit margin would significantly
influence the final price of Preliminaries. The contractors may adopt either bottom-up
or top-bottom approach in pricing the bill. Either one the contractors may choose the
element of markup factor to include the profit margin will be incorporated.
The low impact and very low impact attitudes constitute 11.9% of the respondents.
The attitudes perhaps due to the assumption the built up prices in the Preliminaries do
not carry much profit margin consideration, hence not impacting the accuracy of
Preliminaries. The attitudes, however, are dubious as the profitable margin is always
the main objective of any business. Based on the frequency analysis, the dominant
attitude of the respondents for this factor is high impact.
6.8 Corrective Actions to Improve Accuracy of Preliminaries
6.8.1 Objective
The objective is to propose the corrective actions to minimize variation in price of

Preliminaries
6.8.2 Corrective Factors
Based on the researchers’ findings as discussed in the previous chapters, several

pertinent possible corrective factors to minimize variation of Preliminaries are
119
selected for the questionnaires in the survey instrument. The writer would like to
advise the reader that the proposed corrective factors presented herein are not
exhaustive and may be expanded. Corrective factors are derived based on a
simplification of issues mentioned in the survey instruments in Part V. The derived
corrective factors carry the same meaning and to facilitate the analyses and discussion.
Table 6.21 : Derivation of Corrective Factors
ITEM CITATION ISSUES CORRECTIVE

FACTOR
3.1 Abd Rashid et al. (2006) Uniformity of tender as crucial Compulsory uniformity of
[All tenders provided with similar tender
information, notices, visits,
inspections, etc.]
3.2 Ghani (2006) Fairness must exist [i.e. Promote fairness in pricing
Contractors to duly price all of Preliminaries
required items with reasonable
price]
3.3 Ghani (2006) Preliminaries as an important Differentiate between items
document that needs to be priced to be priced and for
except for the descriptive items information
3.4 Solomon (1993) Adjustment to price in No discrimination
Preliminaries would provide a important items to gain
competitive edge. Not competitiveness
discriminating important items to
gain competitiveness
3.5 Smith (1990) Contractors’ obligation to estimate Obligation to estimate the
the price as accurately as possible price as accurately as
possible
3.6 Akintoye (1991) Present information must be Utilization of statistical
utilized in order to anticipate or information to forecast the
forecast the future demand, price, price
and competition
3.7 Hesami & Lavasani Due to competition and to remain Quality is not
(2014)
competitive on a project, the compromised for reduction
contractors may consider the of price
option of decreasing the price
while maintaining the required
qualities
3.8 Josephson & Saukkoriipi Contractors to broaden the focus Anticipate transfer of site
(2003)
and anticipate transfer of site quality cost by Client
quality costs by Client (such as
routine improvement works of the
construction site)
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3.9 Holm et al. (2005) ; Accuracy of price estimation by Accuracy of price through
Elfaki et al. (2014)
thorough inspection of the required in-depth understanding the
scopes and sound prediction scope and anticipation
3.10 Dell’Isola (2003) Detailed assessment [i.e. Breakdown of price instead

breakdown rates] would be more of Lump Sum wherever
suitable compared to the possible
percentage [i.e. Lump Sum]
3.11 Smith (1990) Collaborative support from the Collaborative support from
management and team members management & team
involved in the tender process members
would improve accuracy of
Preliminaries
3.12 Wong et al. (2000) Industry to shift from practices of Industry to shift from
“…lowest-price wins…” to "lowest tender win" to
“…multi-criteria selection….” "multi-criteria selection"
3.13 Popecu et al. (2003) Tender preparation cost was part of Tender preparation cost is
the cost in Preliminaries, thus to be part of Preliminaries, thus
priced to be priced
The consistency of the items provided in the instrument to measure the corrective
factors is verified using Cronbach’s alpha analysis. Refer Table 6.22. UCLA (2016)
outlined the acceptance criteria for the analysis. The Cronbach’s Alpha is 0.742 higher
than 0.7 thus the variables are internally consistent and therefore reliable.
Table 6.22 : Reliability Test

N %
Cases Valid 67 100.0
Excludeda 0 .0
Total 67 100.0
Cronbach's Alpha Based
Cronbach's Alpha N of Items
on Standardized Items
.742 .757 13
121
Using the statistical analysis, the ranking of corrective factors is sorted based on mean
in descending order. The respondents’ opinions are sought by using the Likert scale of
1 to 5 being; (1) Not Suitable, (2) Least Suitable, (3) Fairly Suitable, (4) Suitable and
(5) Most Suitable.
6.8.4 Ranking of Corrective Actions To Improve Accuracy of Preliminaries
Based on the feedbacks received from the respondents in a survey carried between
March 2016 and mid-May 2016, the data is analyzed using SPSS on Descriptive
Statistic. The result of the corrective factors as discussed in item 6.7.2 is sorted by
using mean values in descending order. The writer suggests that the greater the mean
the greater the priority.
Table 6.23 : Ranking of Corrective Factors Based on Mean
Item Statistics
Std.
Corrective Factor Mean N
Deviation
(1) Industry to shift from "lowest tender win" to "multi
4.2388 .76057 67
criteria selection"
(2) Utilization of statistical information to forecast the price 4.2090 .64049 67
(3) Collaborative support from management & team
4.1940 .74343 67
members
(4) Obligation to estimate the price as accurately as possible 4.1642 .68749 67
(5) Breakdown of price instead of Lump Sum wherever
4.1343 .73640 67
possible
(6) Compulsory uniformity of tender 4.0597 .71522 67
(7) Differentiate between items to be priced and for
3.9851 .74859 67
information
(8) Accuracy of price through in-depth understanding the
3.9552 .56227 67
scope and anticipation
(9) Promote fairness in pricing of Preliminaries 3.9254 .61085 67
(10) Quality is not compromised for reduction of price 3.8209 .90328 67
(11) Anticipate transfer of site quality cost by Client 3.7910 .53760 67
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(12) Tender preparation cost is part of Preliminaries, thus to
3.7910 .96196 67
be priced
(13) No discrimination important items to gain
3.7164 .79403 67
competitiveness
Maximum / N of
Minimum Items
Item
3.999 3.716 4.239 .522 1.141 .033 13
Means
Thirteen corrective factors are analyzed based on the mean. The mean score is 3.999
with the range equals 0.522 and the variance equals 0.033. Based on the average mean
score, the corrective factors presented in Table 6.17 are fall within the “suitable”
scale. As such, the writer suggests that the above corrective factors are acceptable for
further consideration. The highest mean is 4.239 and the lowest mean is 3.716 shows a
small dispersion range of 0.522. This indicates the majority of respondents are almost
consistent in their expression of attitudes.
The following discussions and analyses are based on mean values in descending
order; the higher the mean value the stronger the attitudes.
(1) Industry to shift from "lowest tender win" to "multi-criteria selection" being
top of the list shows the aspiration of the respondents for the construction
industry to award the tender based on merit in order to promote the accurate
price, quality and time in the tender exercise particularly the Preliminaries.
(2) “Utilization of statistical information to forecast the price” is seen as the most
practical mean to ensure the correct approach and reliable data to forecast the
near or accurate price. Rich of information is crucial; such as the movement of
items’ rates for the past years, direct and indirect costs for similar nature of the
project, known solutions to the common or unique problems due to
123
complexities, etc.
(3) “Collaborative support from management & team members” is equally crucial
to promoting the reliability of prices by correct strategies through expansion of
ideas and experience of the team members. The respondents agreed this factor
deserves the third highest priority to signify the importance.
(4) “Obligation to estimate the price as accurately as possible” is deemed to be

crucial and onus on the contractors. This would eliminate the blunder prices or
pluck from the air rates or unpriced items. Missing prices on crucial items
shall not be permitted in the Preliminaries. Irreconcilable prices or hard to
justify should warrant explanations from the contractors during the tender
interview. The assumption that the contractors deemed to distribute the
missing prices elsewhere in the BQ is not wise or not justified and would
impose the uncalled for construction risks particularly involving glaring items
such as hoarding and access road.
(5) “Breakdown of price instead of Lump Sum wherever possible” scores a mean
value of 4.1343 and considered high on the priority list. As such carries
significant determination from the respondents. The Preliminaries are
commonly priced using the lump sum rates in Malaysia construction industry.
Based on the content analyses carried out in Chapter 5, it is found that not all
Preliminaries are unable to be measured. The provisional quantities may be
more suitable for measurable items such as project signboard, access road,
hoarding and site office. The provisional sum may be more suitable for items
such as water and power supplies. The fixed percentage sum for items such as
CIDB’s levy and insurances that are calculated at the time of tender.
(6) “Compulsory uniformity of tender” means the value is 4.06 thus suitable to be
considered as one of the crucial corrective actions. The contractors must be
given a fair chance to clear all doubts by allowing them to verify the
sufficiency of information. The tender briefing and site visit are vital and shall
be made mandatory and all queries and answers to be disseminated equally to
all contractors. This is crucial to ensure a complete understanding of the work
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and proper assessment of the site constraints and complexities by participating
contractors prior to the pricing of tender. The aim is to obtain fair and as
accurate pricings as possible during the tender stage, thus avoid fallacious
tender variation.
(7) “Differentiate between items to be priced and for information” is recommended as the
Preliminaries are an open-ended bill. Based on the Content Analysis in Chapter 5, it is
observed that the contractors have priced entirely based on their own understanding as
no specific guidelines to how they should price. For example, some items are meant
for information only but were priced. The writer suggests the following items in Table
6.24 are only general statements to caution the contractors. However, some
contractors may dispute it based on different thoughts or understandings and decided
to price such items. The pricing of the general statements would bring about unforced
variation to the Preliminaries during tender stage.
Table 6.24 : Price on General items
(8) “Accuracy of price through in-depth understanding the scope and anticipation”
requires reasonable prices statistical knowledge, skills, and experiences of the
Contract Managers. The in-depth knowledge is gained through continuous
exposure to the same nature of work over a reasonable period of time. As
discussed in item 6.3.3 the minimum period of time to master the skill is 5
years.
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Based on the literature reviews as discussed in Chapters 2 and 3, all
researchers agreed that the experiences and skills of the Contract Managers to
perform sound price estimations based on the past data and the active
contributors, would ensure the most accurate price of Preliminaries and thus
reduce the gaps of price variation.
(9) “Promote fairness in the pricing of Preliminaries”. This attitude must exist and
uphold always by the contractors to duly price all required items with
reasonable prices. Excessive profit taking and grossly estimated prices would
be avoided. Unfairness in the price of Preliminaries would cause the tender
becoming expensive and not competitive. Fairness in the pricing of
Preliminaries means to promote the optimization of Cost that commensurates
with the acceptable Quality and complete within stipulated Time, hence meet
the clients’ satisfaction. The contractors’ reputations building-up thus creates
more business opportunities due to developed trust of the clients.
(10) “Quality is not compromised for reduction of price” would promote a win-win
scenario for the clients and the contractors. Hesami & Lavasani (2014) finding
is relevant to the present scenario in the construction industry. As discussed in
Chapter 3, due to fierce tender competition nowadays, the contractors may
have the tendency to reduce the tender price, especially for the award of a
contract solely based on the lowest price win.
The writer envisages that lowering the price of tender does not mean lowering
the quality as well. The contractors shall not compromise with the quality of
work at all as it would spoil own integrity and reputation. Lowering the price
without considering the reasonable profit margin is not wise at all. The project
would certainly run into a serious construction risk. Hence, the tender price
must be competitive within acceptable profit margin. If the contractors
adopting the same approach then the gaps of variation of price in Preliminaries
between them would be minimized.
126
(11) “Anticipate transfer of site quality cost by clients” is the required component
in the price estimation of Preliminaries during the tender stage. Josephson &
Saukkoriipi (2003) has a constructive finding and suggested that the
contractors broaden the focus and anticipate transfer of site quality costs by
clients (such as routine improvement works of the construction site). It is truly
a serious factor as the contractors likely not to anticipate the consequences or
worst of all not realizing the necessary indirect costs associated with it.
For example, a large sewerage system, the present practice by IWK is that
IWK conditionally accept the phased completion of the sewerage system to
facilitate any issuance of the CCC of that phase and the developer is obliged to
maintain the system until all phases are completed for IWK to take over. Prior
to the handing over, a full-blown CCTV test will be carried out for the entire
completed sewerage system and any damages are to be rectified. It is normal
that the responsibility to maintain the quality during this period and the final
overall CCTV test will be transferred by the developers to the contractors at no
extra cost.
The Condition of Contract must be fully observed and the contractors have all
right to get this matter clarified during the tender exercise. The clients may
provide the supplementary item if necessary for the contractors to price or else
deemed to be covered by the Preliminaries under “Compliance with
Authorities requirement” as discussed in Chapter 5. Hence the experience of
the Contract Managers is crucial for the accurate pricing.
(12) “Tender preparation cost is part of Preliminaries, thus to be priced” is being

amongst the lowest corrective action agreed by the respondents. It is common
that in the most tenders’ exercises, the cost of tender preparation is being
considered as the contractors’ own responsibility. Is this assumption fair to the
Contractor? Popecu et al. (2003) opinion to price the cost in the Preliminaries
is worth to be considered due to its cost significance.
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For example; say 3 executives are required for 1 Man-Month each to prepare
the Tender Bid. Assume the average basic salary of RM10,000.00 a month per
person, thus the total operation cost to be incurred is RM30,000. If applying an
average profit + reimbursable, say 40%, then the price rate is RM52,000.00.
The cost of tender preparation is truly significant. The writer agrees with the
researchers that this cost needs to be captured and claimable from the clients.
Hence the inclusion of such cost may be considered in the Preliminaries under
the item of “Contract Documentation fee” as mentioned in Chapter 5. The
price of that item is not merely to cover the purchase of the documents alone.
(13) “No discrimination on important items to gain competitiveness” is the

important factors to be addressed and attended by the Project Managers in
their consideration for award of tender. Based on the lowest rank of
respondents’ attitudes, it shows less priority being given perhaps due to lack of
emphasis or mandate by the Project Managers. Based on the Content Analysis
in Chapter 5, it was found that many contractors did not bother to price the
critical items in the Preliminaries though necessary or priced the items
unscrupulously. As discussed in Chapter 3, it is understood the intention of the
contractors is nothing else but to get the cheapest price possible to win the
projects. Haunted by the idea of the “lowest-price win” concept. However, no
doubt that intelligent adjustments based on knowledge and experiences in the
tender price particularly the Preliminaries would provide a competitive edge to
the contractors.
Popecu et al. (2003) suggestion is still valid today due to the slow process of
the understanding not only to the contractors but also to all players in the
construction industry. His opinion that adjustment to the price in Preliminaries
would provide the competitive edge, however, must be in an intelligent way.
Discriminating important items to gain competitiveness will create the
integrity problems.
128
6.8.5 Analysis of Corrective Actions to Improve Accuracy of Preliminaries
Based on Frequency
Based on the ranking of the corrective actions as presented in the preceding item, the
discussion in this item is to understand the respondents’ dispersion of attitudes. Table
6.25 depicted the varied percentages of opinions from ‘Not Suitable’ to ‘Most
Suitable’.
The analyses in this item are not the stand alone statement but to be read in
conjunction with item 6.7.4 as they are reinforcing each other in establishing the
recommendation for the corrective actions. The proposal shall serve as preliminary
guides to the contractors to reduce the variation of price in Preliminaries based on the
identification of consequences and impacts. This method has allowed the writer to
propose constructive actions to improve the accuracy of price estimates during the
tender stage.
Table 6.25 : Frequency Analysis of Corrective Factors
129
(1) Industry to shift from "lowest tender win" to "multi-criteria selection".
Valid Cumulative
Frequency Percent
Percent Percent
Valid Least Suitable 2 3.0 3.0 3.0
Fairly Suitable 7 10.4 10.4 13.4
Suitable 31 46.3 46.3 59.7
Most Suitable 27 40.3 40.3 100.0
Total 67 100.0 100.0
The majority of respondents have common attitudes that the corrective factor
is either suitable (46.3%) or most suitable (40.3%). The combination of the
factor gives 86.6%. Respondents opted for fairly suitable (10.4%) have not
shown strong attitudes but not rejecting the suitability of the factor. 3% of the
respondents have the least agreement. Hence based on the respondents’
majority agreements, the corrective factor is accepted.
(2) Utilization of statistical information to forecast the price
Cumulative
Percent
Valid Fairly Suitable 8 11.9 11.9 11.9
Suitable 37 55.2 55.2 67.2
Most Suitable 22 32.8 32.8 100.0
Total 67 100.0 100.0
More than a half of the respondents agreed on the suitability of the factor.
Most suitable factor opted by 32.8% of the respondents and suitable is 55.2%.
Hence the total respondents strongly showed their attitudes are 88.0%. 11.9%
of respondents opted for the fairly suitable have not shown strong attitudes but
not rejecting the suitability of the factor. Hence based on the respondents’
majority agreements, the corrective factor is accepted.
130
(3) Collaborative support from management & team members
Cumulative
Percent
Suitable 31 46.3 46.3 62.7
Most Suitable 25 37.3 37.3 100.0
Total 67 100.0 100.0
46.3% accepting the factor as suitable followed by 37.3% agreed on the factor
as the most suitable to be considered. The total 83.6% respondents have
expressed their strong preference, thus constitutes the majority. Fairly suitable
attitudes by 14.9% of respondents show the moderate concurrence while 1.5%
of respondents opted for least suitable is considered as showing the weakest
agreement to the factor. However, the representation is too small and therefore
negligible. Hence based on the respondents’ majority attitude, the corrective
factor is accepted.
(4) Obligation to estimate the price as accurately as possible
Cumulative
Percent
Suitable 37 55.2 55.2 68.7
Most Suitable 21 31.3 31.3 100.0
Total 67 100.0 100.0
The majority of respondents’ attitudes show 55.2% is in favor of suitable.

31.3% of the respondents agreed that the factor is most suitable. However,
11.9% expressing weaker preference by opting for the fairly suitable and 1.5%
is less suitable. From the survey, it can be seen that the majority agreed on the
importance of the factor with a total of 86.5% of the respondents either opted
for the suitable or most suitable category. Hence based on the respondents’
majority attitude, the corrective factor is accepted.
131
(5) Breakdown of price instead of Lump Sum wherever possible
Cumulative
Percent
Valid Not Suitable 1 1.5 1.5 1.5
Suitable 38 56.7 56.7 70.1
Most Suitable 20 29.9 29.9 100.0
Total 67 100.0 100.0
The combination of factors i.e. suitable (56.7%) and most suitable (29.9%)
constitutes 86.6%. The respondents are agreeable that the corrective factor is
suitable to promote accuracy in the pricing of Preliminaries, thus reduce the
unnecessary variations amongst the contractors at the tender stage. Fairly
suitable category opted by11.9% of the respondents indicates no objection to
the proposed factor. However, out of surprise, 1.5% of the respondent
considered this factor as not suitable to be considered. Hence based on the
respondents’ majority attitude, the corrective factor is accepted.
(6) Compulsory uniformity of tender
Cumulative
Percent
Suitable 33 49.3 49.3 71.6
Most Suitable 19 28.4 28.4 100.0
Total 67 100.0 100.0
The majority shows that 49.3% agreed that the factor is suitable. Thus almost
50% of the respondents are in agreement of its importance. However, the most
suitable category indicates 28.4% and the fairly suitable is 22.4%. In
conclusion, all respondents do not object about the importance of uniform
tender in terms of information, requirement and dissemination of queries and
answers during the tender exercise stage expected from the clients.
Therefore, any missing documents or ambiguities of information must be

given utmost attention by the contractors; such as to raise the queries and
expect the clearer answers from the clients. Certain action to minimize the
132
uncertainties is therefore expected from the contractors. Based on the
respondents’ majority attitude, the corrective factor is accepted.
(7) Differentiate between items to be priced and for information
Cumulative
Percent
Suitable 36 53.7 53.7 76.1
Most Suitable 16 23.9 23.9 100.0
Total 67 100.0 100.0
The majority of the respondents (53.7%) accepted that this corrective factor is
suitable and 23.9% said that the factor is most suitable. Collectively, 77.6% are
in agreement to the suitability of the item. The discussion about the importance
of this factor is deliberated in item 6.7.4
Despite the importance of the item and how it will affect the accuracy and
variation of price in Preliminaries at the tender stage, 19.4% are giving weak
responses by opted for fairly suitable. Worst of all, 2% of the respondents do
not value it as important. However, based on the majority of respondents’
majority attitude, the corrective factor is accepted.
(8) Accuracy of price through in-depth understanding the scope and

anticipation
Cumulative
Percent
Suitable 46 68.7 68.7 86.6
Most Suitable 9 13.4 13.4 100.0
Total 67 100.0 100.0
This corrective factor received 68.7% of the respondents said it is suitable and
being the highest frequency of all items. 13.4% accepted it as most suitable,
hence the total percentage of respondents in agreement to the importance of
the factor is 82.1%. This factor requires high skill and experience of the
133
Contractors to ensure the utmost accurate price estimation. Fairly suitable is
factored by 17.9% of the respondents to indicate their weaker agreement.
Based on the majority agreement, the corrective factor is accepted.
(9) Promote fairness in pricing of Preliminaries
Cumulative
Percent
Suitable 42 62.7 62.7 85.1
Most Suitable 10 14.9 14.9 100.0
Total 67 100.0 100.0
Fairness in pricing is always the issue when dealing with the construction
industry due to fierce competition. However, this value needs to be the attitude
of the contractors to reduce the ambiguous prices and less competitive. 62.7%
of the respondents agreed that the factor is suitable and should be considered.
14.9% have no qualm about accepting the factor as more suitable. The total of
these two perceptions is 77.6% gives a strong agreement to the factor.
However, 22.4% of the respondents have a weaker agreement though
acknowledge its importance. Based on the respondents’ majority, the
corrective factor is accepted.
(10) Quality is not compromised for reduction of price
Cumulative
Percent
Least Suitable 3 4.5 4.5 6.0
Suitable 28 41.8 41.8 76.1
Most Suitable 16 23.9 23.9 100.0
Total 67 100.0 100.0
Like other previous corrective factors, the majority of respondents picked

‘suitability’ as the most valid perceptions. The factor scores 41.8% followed
by ‘fairly suitable’ at 28.4%. ‘Most suitable’ perception is almost similar to the
‘fairly suitable’ at 23.9%. The total of these three perceptions is 94.1% to
show agreement to the factor. Most surprisingly 4.5% of respondents opted for
134
‘least suitable’ and 1.5% said it is not suitable at all. Are they intending to
compromise with the quality when reducing the prices? However, based on the
respondents’ majority, the corrective factor is accepted.
(11) Anticipate transfer of site quality cost by Client
Cumulative
Percent
Suitable 45 67.2 67.2 94.0
Most Suitable 4 6.0 6.0 100.0
Total 67 100.0 100.0
This matter is arbitrary in terms of responsibilities the contractors are to

provide and at the same time the clients have taken possession or benefit of the
partially completed items. For example, the clients used a stretch of the
completed main sewer line (that not fully handed over to the IWK/JPP yet due
to pending completion of the entire sewerage system), for the purpose of
handing over vacant possession of a housing package (completed in phases).
No matter what, to avoid any unaccounted for the price in the Preliminaries
that is actually a financial risk; the contractors ought to consider the transfer of
such cost.
67.2% of respondents are the majority to say that the factor is suitable to be
provided as a guide to the contractors in the pricing of Preliminaries. 6% said
it is most suitable and 26.9% agreed the factor is fairly suitable. None of the
respondents disagreed about the importance of this factor.
(12) Tender preparation cost is part of Preliminaries, thus to be priced
Cumulative
Percent
Suitable 29 43.3 43.3 76.1
Most Suitable 16 23.9 23.9 100.0
Total 67 100.0 100.0
135
This item deserves 43.3% of the respondent's agreements and 23.9% fully
agreed that the tender preparation costs must be considered. The total of 67.2%
constitutes a majority. 22.4% fairly accepted the factor. The wide dispersion of
attitudes revealed by the survey shows the respondents are having different
thoughts or understanding towards the subject. They may be cautious about the
cost would incur additional price to the Preliminaries, hence may not be
competitive in terms of getting the lowest tender price.
A total of 10.5% of the respondents said the factor is either least suitable of not
suitable. The reason is clear that they could have accepted the tender
preparation is part of the contractors’ costs. However, based on the
respondents’ majority, this item is accepted as one of the crucial corrective
factors to be considered.
(13) No discrimination on important items to gain competitiveness
Cumulative
Percent
Suitable 40 59.7 59.7 89.6
Most Suitable 7 10.4 10.4 100.0
Total 67 100.0 100.0
Almost 70% of the respondents agreed that the discrimination of important

items in the Preliminaries should be avoided. This represented by 59.7% opted
for ‘suitable’ and 10.4% said it is as ‘most suitable’. 22.4% agreed that the
factor is ‘Fairly suitable’. However, some of the contractors have different
attitudes by saying the factor as ‘least suitable’ (6%) and ‘not suitable’ (1.5%).
The writer is in the opinion that these perceptions are deviated from the
researchers’ findings and determination of the industry through CIDB to
promote accuracy in the price of Preliminaries. However, based on the
respondents’ majority, the corrective factor is accepted.
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6.9 Summary
The total population of G7 Contractors Grade CE registered with CIDB in the

Districts of Petaling and Klang is 1,007. This constitutes 77% of the population and
majority. Citations survey adopting Likert Scale is used. The total responses by the
cut-off date 30th April 2016 was 67/287. This constitutes 23.4% of the sample size.
Waris et. al. (2014) quoted from Akintoye (2000) and Dulami et al. (2003), that such
response rate is acceptable as the feedbacks from the construction industry is between
20% and 30% normally.
A total of 43.3% of the respondents are having more than 16 years of experience and
represent majority to the sample group. 32.8% having experience between 6 and 10
years. All respondents are satisfactorily aware of the importance of 30 critical
Preliminaries items (Table 6.6). However, continuous improvement of awareness
must be acquired through direct learning or courses. The respondents unanimously
agreed 10 impact factors (Table 6.13) contribute high impacts to the variation in
Preliminaries at tender stage. The mistreatments of the factors by the contractors
during tender stage would certainly bring about significant variation in the price of
Preliminaries. 13 corrective factors (Table 6.17) are accepted. The majority of the
respondents are almost consistent in their expression of attitudes.
Further analysis in the subsequent Chapter 7 deliberates the non-exhaustive pertinent

issues (derived from Chapters 5 and 6) in the face-to-face interviews with selected
respondents of the same sample population. Their opinions and attitudes are carefully
observed and analyzed. The findings are crucial to leveraging the writer’s
understanding of the variation in the price of Preliminaries issues.
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CHAPTER 7 : DATA COLLECTION AND ANALYSIS OF
SEMI-STRUCTURED INTERVIEWS
7.0 INTRODUCTION
Based on the discussion in Chapters 5 & 6, the Semi-structured Interviews were

carried out on the selective respondents who have participated in the Questionnaire
Survey. The aim was to obtain their opinions based on general discussion within the
context of variation of price in Preliminaries of the construction projects during the
tender stage. This chapter is a supplementary qualitative research to enhance the
previous discussion based on the respondents’ own interpretations not influenced by
the researchers’ findings.
The respondents were given freedom to express their new ideas in non-formal
approaches. The data was reliable and not rigid as for the structured questionnaire
provided for Chapter 6. The contractors’ perceptions and ideas were enriched using
face-to-face sessions approximately for a 15-minute to a half an hour depending on
the hospitality of the respondents.
The findings of this chapter are used jointly to triangulate with the findings of
Chapters 5 and 6 and discussed in Chapter 8 to arise to a non-conclusive proposal of
constructive corrective actions. The triangulation analysis is however taken from the
CIDB G7 category CE Contractors’ perspectives only.
7.1 Methodology
Based on the findings as discussed in Chapters 5 and 6, selective critical issues were
recommended herein for further analyses through the Semi-structured Interviews to
obtain specific reasons from the CIDB G7 category CE Contractors’ own
perspectives. This approach substantiated the findings of the Content Analysis in
Chapter 5 and the literature reviews in Chapter 6. Hence, the more conclusive
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discussions are established based on valid documents’ reviews, the structured surveys,
and the oral interviews.
The oral interview confirms the researchers’ findings and the writer’s hypotheses and
therefore brings about the more appropriate non-conclusive guides to improve
accuracy or reduce variation in the price of Preliminaries during the tender stage. The
findings provide a better understanding of the right procedure in construction
Preliminaries for the implementation of accurate price procedures.
7.2 Rationale of the Critical Issues
The writer selected 9 critical issues deduced from the previous chapters. The issues
were glaring reasons cited by most researchers for variation in the price of
Preliminaries, thus require further deliberation for greater understanding based on
local context. However, the writer declares that the issues are non-conclusive due to
the diversity of the industry itself. However, the factors herein are amongst the utmost
critical issues and worth for consideration. The critical issues are;
1. Causes of price variation in Preliminaries during tender stage

2. Attitude during pricing of Preliminaries during tender stage
3. Approach to price Preliminaries during tender stage
4. To ensure price accuracy in Preliminaries
5. Collusive tendering / protection money consideration in Preliminaries
during tender stage
6. Mitigation of indirect cost in Preliminaries during tender stage
7. Opinion on lowest tender win approach in awarding the contract
8. Proposed improvement to Preliminaries during tender stage
9. Reasons for non-price items in Preliminaries
The above issues require an in-depth understanding due to serious phenomena and the
interview was able to provide individual information in the local context. It was
crucial to facilitate the cross-comparison between the previous research methods as
discussed in Chapters 5 and 6. Is there any contradiction?
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Some of the new experiences discovered and transcribed in the face-to-face
interviews. Issues like collusive tendering and protection money were not discussed at
length in the literature review due to lack of information. However, through the face-
to-face interview, the writer was able to retrieve some crucial information that would
likely to influence the way the contractors pricing the Preliminaries.
The opinion of respondents against the lowest tender win was sought to understand
their preference and reasons associated with it. Similarly, the writer found that several
critical items were not priced in the Preliminaries. Why did it happen? These answers
are only obtainable through the face-to-face meetings with the respondents. The writer
is able to understand the dynamic processes being practiced by the contractors during
the pricing of Preliminaries of the construction projects. Their varied interpretations
and approaches create phenomena to the Malaysian construction industry.
7.3 Data Collection
To facilitate the Semi-structured Interview, 4 respondents were selected from the

same sample. The interview approach was discussed in Chapter 4. As the writer
adopted more than one method in this research, the number of respondents was
limited. The interview had a very specific purpose and the saturation point was
quickly reached. Mason (2010) mentioned that the saturation point is reached when
new discovery no longer adding any more value or no longer productive.
The transcription of the interview is shown in Appendix H. The respondents

represented by codes R001, R002, R003 and R004 and the comments were grouped
based on specific critical issues or themes.
7.4 Demography
A total of 4 respondents with the following components in Table 7.1 were

interviewed. The respondents’ representatives (or referred to as the respondent) were
the qualified persons who had directly involved in the price of Preliminaries of the
construction projects at tender stage. The selection of respondents was based on their
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willingness to be interviewed and currently having at least one active construction
activity. The availability of the respondents and the writer’s time constraints were the
main factor.
Table 7.1 : Respondents
Respondent Profession Position

R001 Quantity Surveyor Project Manager
R002 Civil Engineer Director
R003 Professional Engineer Project Director
R004 Civil Engineer Director
7.5 Analysis of Crucial Issues
The selective 9 critical issues are analyzed herein to understand the attitudes of the
respondents;
7.5.1 Causes of price variation in Preliminaries during Tender Stage
The cause of price variation not only resulted from the experience of the Contract
Managers or lack of statistical price information but also contributed by the specific
requirement such as the quality procedure embraced by the contractors. Variation in
the price of Preliminaries depends on the need to comply with quality plan embraced
by the contractors. This has caused an additional price in Preliminaries. Comparing to
another contracting firm that not embracing the quality procedures, the ‘quality’
company would be seen as excessively priced the Preliminaries. The overlapping or
double pricing on items with a similar scope of works is another contributor. The
respondents unanimously agreed on the impact of such items in Preliminaries.
"…price escalation due to QLASSIC requirement…" (R003)

"…about duplicate items in the Preliminaries. Once get, eh! that item was also called for the same
thing. I have noticed that…" (R001)
"…overlapping instruction or statement in the Preliminaries caused repeated pricing on items that
carry the same meaning…" (R002)
"…we have to cautiously inspect the Preliminaries to avoid repeated pricing of the same item…"
(R004).
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From the writer’s observation, based on the Content Analysis in Chapter 5, it was
found that most of the tender documents simply copy the entire COCs requirement as
the General & Preliminaries. Such practice resulted in the contractors have a huge
burden to segregate the scope of works or rather feel confused between not to price or
to price the item as it might be required though not specified in the drawings.
Variation of price in Preliminaries depends on the correct assumptions and forecasts.
All respondents agreed that experience and skills of the Contract Managers are of
utmost crucial. Experiences and skills are expected to be one of the main reasons to
establish the price accuracy, hence reduce the unnecessary variation.
"...Preliminaries is difficult to be determined at point of tender…" (R001)

"…sure experience is necessary… it will make us easy as we are knowledgeable…" (R002)
"...May be based on experience. Different Contractors have different level of experiences. Price
based on their own consideration and assumptions…" (R003)
"…variation of price in Preliminaries mainly depending upon experience encompassing approach
& methodology of the Contractors to carry out such work and associated costs…” (R004)
Insufficient time for tender exercise and completeness of tender drawings that provide
a vital document for detail inspection of the scope of work are two other identified
reasons that contribute to the variation in the price of Preliminaries. The short tender
period could be the factor for the inaccuracy of price thus triggers significant
variations. The less organized construction firms or the new entrants may not have a
reliable data bank of past data of similar nature or lack of expertise of the Contract
Managers. The contractors usually adopt rough estimates rather than detailed
estimates in such situation. The matter of facts, the contractors are depending on
tender drawings and specifications to estimate the cost of lump sum items. The
completeness of the drawings is, therefore, crucial.
"...limited tender period thus insufficient time to provide accurate prices…" (R001)
“…of course the drawings are referred to figure out the lump sum items…” (R001)
"…completeness of tender drawings is crucial for Contractor to estimate amount of work and
associated costs…" (R004)
The Preliminaries may be priced based on assumptions and intelligent guesses. Such
action definitely brings about variation without proper justification, thus incur
potential price risks. No doubt certain experiences are required even though for the
intelligent guesses.
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"…price of Preliminaries mostly based on assumptions…" (R002)
"…I priced the items mostly guided by the instincts and say prayers…" (R002)
Another factor that may contribute to the variation in price is the competency level
acquired for the key persons to be hired. A highly experienced person normally are
paid higher salary compared to the less experience. For example, the scope of works
in the Preliminaries for critical items such as Safety Health Environment (SHE)
officer must be an experienced person.
"…cost of safety officer is high thus constitutes higher price when concerning safety…" (R003)
7.5.2 Attitude during pricing of Preliminaries during Tender Stage
Attitude during pricing of Preliminaries is the main factor to ensure the correct figures
are entered and within the capabilities of the contractors’ firm. This encompasses the
contractors’ supply chains, credit facilities they have, etc. All respondents opined that
the pricing of Preliminaries in most instances carried out by the management or
through concerted efforts. The management shall decide the target percentage of
Preliminaries and price accordingly either bottom-up or top-down approach. The
concerted effort is normally practiced in a big organization involving the business
development unit and marketing who has the statistical information.
"…I'll do the costing by my own…" (R004)

“…final price for tender will be decided by the CEO…" (R003)
"…Preliminaries cost is normally 5% to 6% of the tender sum... decided based on experience…."

(R004)
"... during tender pricing QS is not involve. Business Development Unit will involve and they will do
the forecast based on past projects. They will look into all aspects. QS only handles after we have
won the project. Normally the management and the marketing people will get involve..." (R004)
7.5.3 Approach to price Preliminaries during Tender Stage
Pricing of Preliminaries is quite tricky and difficult, especially within a limited time.
Most of the respondent said that the top-bottom approach is the most popular
approach compared to a bottom-up approach. However, it is not denied that the
bottom-up approach would provide the most accurate price. Accurate pricing of
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Preliminaries depends on the approach. Top-Bottom approach could be most popular
due to the urgency to submit the tender within a short period of time. Clients’ attitudes
towards price accuracy are observed.
"…the pricing of Preliminaries normally is top-bottom down approach…" (R003)

"... I am not sure if top bottom or bottom up…" (R001)
"…price of Preliminaries based on top bottom is wrong way of doing…" (R004)
"…many Contractors doing top bottom pricing mainly due to insufficient time…" (R004)
"…study the Client’s behaviour. Difficult Client will do proper pricing, easy Client price simply…"
(R001)
The price of Preliminaries must be done after the trade bills are priced to ensure
accuracy. All insurances and levy are based on the total builder’s costs. While
overhead and administrative works are depending on the total construction period as
proposed in the tender. Despite that, the contractors may not take seriously as the
price of Preliminaries is small compared to the overall tender sum.
"…Preliminaries bill will be considered upon completion of trade bills. All insurances & duties can
be easily calculated based on actual costs…" (R004)
"…Preliminaries sum is only representing a fracture of the total project costs and does not affect
much to overall tender sum…" (R004)
7.5.4 To ensure price accuracy in Preliminaries
The contractors depend very much on the suppliers’ quoted prices (for materials or
specialist services) as a baseline to provide competitive prices. Direct and indirect
costs and profit will be added to the basic cost to establish a price in the Preliminaries.
The basic price is depending on the market drive i.e. Change of economic situation
such as the introduction of GST, inflation, logistic, stock availability, etc. That means
if a Contractor is using past data, say 2 years old as a base price, then he has to
anticipate the appreciation of price for the duration of the contract based on the same
variables. As such, his price would be competitive.
Tender drawings are used as a tool to obtain a breakdown of required items. The
accuracy of tender drawings will minimize the uncertainties and therefore reduce the
chance of large variation in price. For example, the hoarding was not priced just
simply the hoarding requirement was not shown in the drawings. All to ensuring
accurate estimation of price.
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“…of course the drawings are referred to figure out the lump sum items…” (R001)
"…for the lump sum items, we will refer the specifications and drawings in search of detail
breakdown of components required…" (R004)
…normally the mechanical equipment from the supplier came with exclusions. If not aware then the
items likely to be under-priced by the Contractor…" (R003)
"…to ensure accuracy, the price was based on suppliers' quoted costs and detailed quantities
breakdown based on tender drawings…" (R004)
"…for the lump sum items, we will refer the specifications and drawings in search of detail
breakdown of components required…" (R004)
To ensure price accuracy in the Preliminaries, the statistical data and the experience in
similar nature of work are the ideal ingredients. The respondents agreed that the trend
of materials prices must be observed to ensure accurate pricing of Preliminaries. The
prices trend must be observed at least for the past 5 years and forecast for next 5
years. Ohio Department of Education [OhioDOE] (2001) suggested that 5-year
forecast is an appropriate planning tool to create the past and future forecast. The tool
will change periodically when updated data is available. As discussed in Chapter 1,
CIDB’s website is the best source of information. Experienced CE Contractors make
use of the tool and capitalize the Contract Managers’ skills to forecast the near
accurate construction prices particularly the Preliminaries. Competitive price requires
reliable forecast based on prices statistic.
"...May be based on experience. Different Contractors have different level of experiences. Price
based on their own consideration and assumptions…" (R003)
"…accurate pricing of Preliminaries shall be based on the trend of past information and
experiences…" (R004)
Accurate Preliminaries is accepted as crucial due to competition in the industry. To

keep the prices competitive, the contractors usually opt to acquire and use own
machinery. They acknowledged the Preliminaries contain all crucial information and
instructions related to the conditions of the contract and therefore must not be taken
lightly. To stay in a good chance of winning a contract, the respondents agreed that
the prices of tender and Preliminaries, in particular, must be competitive. Marked-up
factors usually will be within the reasonable percentage of the profit.
"…marked-up factor is kept to a reasonable rate due to competition. Price optimisation by means of
using own machineries and accurate prediction of overhead…" (R003)
"…Preliminaries must be done in detail…" (R004)
… due to competition, we will ensure our prices are competitive…" (R003)
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7.5.5 Collusive tendering / protection money consideration in Preliminaries
during Tender Stage
In the Klang Valley, the activity still exists but in a legal way. They work as sub-
contractors at agreed price. The writer believes that this is a result of a concerted
effort by the government to curb gangsterism activities, particularly in the Klang
Valley. Utusan Online (2013) confirmed that the gangsters now changed their
activities into legal businesses following tough actions by the Ministry of Home
Affairs and the Malaysian Police.
However, based on the respondents’ feedbacks, the writer anticipates that the
activities still exist in isolation. In some cases, the contractors are still allowing some
allocation for the protection money and collusive activities in their Preliminaries.
However, to avoid an avoidable collusive activity, the contractors insisted the unusual
costs such as for testing of materials that require an overseas trip, etc., must be duly
specified in the Instruction to Tenderers. This is to avoid hidden costs and provide
transparency to the contract.
"…protection racket is no longer an issue if compared to the old days. Nowadays the licensed site
security service, premix or landscape work became their preferences at 'reasonable' costs" (R003)
"...I am not sure about the protection money but I am sure there is…" (R001)
"…request for protection money is to be accommodated…" (R004)
"…in the preparation of tender normally a portion of miscellaneous cost is allocated for in the
Preliminaries and distributed to several items…" (R004)
"…unusual cost of material testing such as overseas visit & inspection must be specified in the
tender for transparency and to avoid hidden cost…" (R004)
"…testing of materials must be itemised as a provisional sum… contingency sum may be used for
the purpose, all upon instruction by the SO..." (R003)
7.5.6 Mitigation of indirect cost in Preliminaries during Tender Stage
As previously discussed in Chapter 2, the indirect cost is the cost associated with the
activities not foreseen but merely based on speculation during the time of tender.
Becker et al. (2014) defined indirect cost is the price that was not considered in tender
due to additional expenses on activities during construction and supportive in nature.
Based on the respondents’ feedbacks, most common mitigation action being practiced
nowadays is that the contractors likely to transfer the costs of specific work to the sub-
contractors engaged for that portion of works. For example, the sub-contractor who is
146
being engaged for the pavement construction must also take care of the indirect cost
of his portion such as for additional flagmen (if required), overtime claims beyond
normal working hours, compensation for right of way (if necessary) etc., that not
normally considered at the time of tender.
In certain cases, the contractors sub-contract certain scope of work based on a fixed
lump sum to the suppliers or sub-contractors. The sub-contractors are deemed to
consider and incorporate all costs in their price. It is therefore understood that huge
variation of prices in certain activities are very much influenced by the price risks.
“…I would apportioned the extra costs with the sub-Contractors..” (R001)
"…transfer of indirect cost to the sub-Contractor…" (R003)
“…I hold sub-Contractor for the portion of work…” (R004)
Attitudes were expressed that indirect cost must be spent for smooth progress of work.
Spending of the indirect cost may be unavoidable in order to recoup some retention
money such as during the Defects Liability Period. The contractors must make certain
allowances for their price in Preliminaries to avoid unnecessary costs overrun.
Understand that human considerations are not perfect and free from weaknesses. The
indirect costs are seen as a profit opportunity. Supposed the budget was not spent or
less spent than it may turn into the profits of the contractors.
"…during defects liability period to spend money in order to get the retention money released…"
(R003)
"…indirect cost is another element that if you were lucky, you did not spend it or you spent it less
thus it became your true profit. However if you did not price it properly then you have to incur cost
overrun…" (R002)
The practice of EOT without additional payments to the contractors is a risk. Truly it
is being widely practiced in the Malaysian construction industry that the EOTs are
granted without allowing the contractors to claim for the additional costs. The
contractors are more concern about additional costs related to the overhead and
maintenance works that need to be provided as a result of EOTs. The Project
Managers’ decision to award the EOT without allowing for any additional costs such
as the extension of insurances, etc., must be observed from the legal point of view and
not to be discussed herein due to the different scope of research. However, on the
bright side, worth to note that generally, the Conditions of Contract stipulate that if the
147
faults are committed by the contractors, then the remedial works and associated costs
must be borne by the contractors. As such, in all cases, the contractors are trying to
avoid the unforced EOT.
“…must complete the project on time. Extension of time normally without additional pay…” (R003)
"…extension of time kills in terms of additional price of Preliminaries is usually not paid by the
Client therefore being a cost risk to the Contractor…" (R004)
"…extension of time unable to claim additional costs in terms of overheads, maintenance costs for
the site office, signboards etc., it kills…" (R004)
7.5.7 Opinion on lowest tender win approach in awarding the contract
All contractors disagreed with such decision as it will expose to a higher risk and
competencies of contractors are equally at risk. The contractors will be competing for
the lowest tender and start to neglect the true capabilities and risks of the market.
Sharp cut corners will normally unavoidable in order to maintain their margin thus it
is not healthy for the industry. The respondents highlighted about the re-tender of a
non-completed project normally will end up with the construction cost being higher
than the original tender itself.
The Government’s projects adopt the standard ‘cut-off’ price procedure thus, no issue
about the lowest tender win. However, in contrast, the GLCs tend to favor the lowest
tender for the award of the contract. Normally the GLCs would first screen the
contractors with strong financial capabilities prior to evaluating the technical
capabilities during the tender evaluation stage.
"…lowest tender win policy should not be practised as it will exposed the contract to the non-
completion, abandonment and retender due to under-priced and non-performance…" (R003)
"…re-tender of the uncompleted project usually ended up in higher cost and loss of time to the
Client…" (R003)
"…the Client must decide based on bare minimum cost estimated by their competent QS and not
simply adopt the lowest tender win to protect their interest…" (R003)
"…not agree lowest tender win. Must look into their background and past record to ensure
success…" (R001)
"…lowest tender win is truly inappropriate. It usually associate with high risk…" (R004)
"…GLCs tend to favour the lowest tender win. However they require a strong financial and
experience background of the Contractor…" (R004)
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7.5.8 Proposed improvement to Preliminaries during Tender Stage
All respondents suggested the Preliminaries be broken down as much possible and
lump sum for unavoidable cases. The contractors are in fact practicing the breakdown
quantities for the lump sum items for progress claims purposes. This requirement will
provide a more accurate price and reduce huge variation in price between contractors.
Testing of materials or other items exposed to a large cost such as oversea trips for
testing or factory visits must be specified as a provisional sum. Contingency sum may
be utilized for the purpose.
"...I think certain items need not to be lump sum but must be in quantities…" (R001)
"...In the time of claim we still need to present based on the breakdown. Better to declare at the time
of tender…" (R001)
"…some items of Preliminaries can be quantified and priced but subject to re-measurement…"
(R003)
"…lump sum cost will be derived based on broken down items and individually priced to obtain
accurate price…" (R003)
"…Preliminaries with breakdown quantities, provisional items and minimise lump sum items is the
most appropriate way for accurate pricing…" (R004)
"…it is important to perform the breakdown of items and rates though for the lump sum
Preliminaries to arise to most accurate tender pricing…" (R004)
"…price of Preliminaries mainly depending on breakdown of recurrence costs over duration of
project, fixed percentage items and quantified items…" (R004)
"…testing of materials must be itemised as a provisional sum… contingency sum may be used for
the purpose, all upon instruction by the SO..." (R003)
7.5.9 Reasons for non-price items in Preliminaries
The price of tender documentation is either absorbed by the contractors or priced in

the Preliminaries. It depends on the contractors’ own preferences. The contractors
may opt for not to price in the effort to minimize the price of Preliminaries. A
respondent did not realize about the necessity to price as it was construed as the
management costs to the contractors. The writer opines that the costs should be
considered as the contractors had incurred the amounts for the tenders’ preparation.
However, it is to accept that the unsuccessful tender will not be able to recover such
costs and forced to absorb it as the management costs.
"…time input during tender is huge and costly. Never heard about it is being priced…" (R001)
"…cost of tender preparation can be priced in the Preliminaries item but usually absorbed by the
Contractor simply to keep the price low…" (R004)
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For other items in the Preliminaries, the costs are to be borne by the contractors. The
contractors assumed that if the items were not indicated in the drawings then
construed as not part of the scope or items had been priced elsewhere in the
Preliminaries bill as part of other items.
"…I did not price for the preparation of As-built drawings as it was part of the survey cost.
However if you were greedy for profiteering then go for it..." (R002)
"…items not priced usually associated with details provided in the drawings. No detail…” (R004)
"…item not priced such as sanitation due to the cost was included in the site office general
facility…" (R004)
"…it's a trend now the accommodation is no longer provided as the workers will arrange on their
own…" (R004)
7.5 Summary
The overall result confirms the researchers’ findings and the writer’s assumptions and
therefore brings about the more appropriate non-conclusive guides to improve
accuracy (or reduce variation in the price of Preliminaries) during the tender stage.
The findings provide an understanding of dynamic processes experience by the
Malaysian contractors. The information is crucial to reinforce the needs for corrective
actions to promote the culture of price accuracy in Preliminaries among the G7
Contractors. Nine critical issues are glaring reasons cited by most researchers for
variation in the price of Preliminaries, thus require further deliberation for greater
understanding based on local context.
The contractors’ varied interpretations and approaches create phenomena to the

Malaysian construction industry. It is learned that the cause of price variation not only
resulted from the experience of Contract Managers / Estimators or lack of statistical
price information but also contributed by specific requirement such as quality
procedure. Though the experiences and skills are crucial, the matter of facts,
contractors are also depending heavily on the tender drawings and specifications to
estimate the costs of lump sum items. The completeness of drawings is, therefore,
crucial. Contractors are also depending very much on supply chains for the reliability
of material costs. All respondents are agreeable for the items of General &
Preliminaries to be broken down as a way to minimize price variation.
150
The findings of this chapter are used jointly to triangulate with the findings of
Chapters 5 and 6 and summarize in Chapter 8 to arise to a non-conclusive proposal of
constructive general guides.
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CHAPTER 8 : MAJOR FINDINGS AND
ESTABLISHMENT OF GENERAL GUIDES
8.0 INTRODUCTION
This chapter discusses the findings of Chapters 5, 6 and 7 and establishment of

general guides to minimize variation in the price of Preliminaries in construction
projects during tender stage.
8.1 Methodology
Mixed methods are used as a rigorous approach to satisfy the aim through objectives
of the research. The method is logical as a mixture of qualitative and Quantitative
Methods that provides a wider perspective to the writer with comprehensive
approaches to match the need of the research. The research findings are triangulated;
hence the more reliable results established based on unanimous decisions. The
findings of a method clarify the findings of the other methods hence impliedly
confirm the validity of results of the variables in concern.
The Content Analysis provides baseline and feels for the research topic and establish
initial critical issues prior to embarking into a more serious Questionnaire Survey and
Semi-structured Interview. Questionnaire Survey is a more vigorous approach to
measuring the awareness of critical Preliminaries and provides rankings of
contributing factors, impacts of variation in Preliminaries and corrective actions for
minimizing variation in Preliminaries. Finally, the Semi-structured Interview is
conducted to confirm the attitudes of respondents on most critical variation in the
price of Preliminaries issues.
To note that respondents are credible representatives of G7 Contractors. The

respondents hereinafter are referred to as the “contractors” or “contractor”.
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8.2 Major Findings
The following are major findings of variation in the price of Preliminaries of the
construction projects during the tender stage that provide a baseline for the
establishment of non-exhaustive general guides. Due to lack of collected data against
the required sample size, the findings of the research are still subject to improvements.
This research identifies the main factors why the variations in the price of
Preliminaries are paramount and require a big leap of attitudes transformation not only
to the contractors but also to the whole players of the construction industries.
• The research confirms the existence of significance price variation during

Tender Stage of the construction projects during Tender Stage.
• Attitudes of the industry players are identified as the main factor influencing
the accurate pricing of Preliminaries thus require serious transformation for the
betterment of the construction industry.
• The percentage of Preliminaries against tender sum is within the average range
of 3.26% and 6.38%. The finding confirms Keng & Ching (2012) i.e. 3.60%
and 7.94%.
• The variation in the price of Preliminaries is inevitable not only to known

factors like complexities, quality, etc., of the work but mainly due to the
attitudes of the contractors.
• There is the great potential that variation in the price of Preliminaries of the
construction projects during the tender stage to be minimized by correct
Preliminaries bills. General & Preliminaries bills need to be customized based
on the project needs.
• Twelve Preliminaries are ranked high (Table 5.18) with (1) Insurances and (2)
Workmen’s compensation as the highest.
153
• The G7, CE Contractors’ awareness on the importance of critical Preliminaries
items (Table 6.6) is exceptional. However, to upkeep with the advancement of
technologies, endless improvement of awareness must be acquired through
continuous learning, courses or experience.
• The G7, CE Contractors realized and agreed the contributing factors (Table
6.9) are contributing towards the variation in Preliminaries at tender stage.
Variation due to lack of experience appears to be strongly agreed.
• The G7, CE Contractors unanimously agreed the impact factors (Table 6.13)
contribute high impacts to the variation in Preliminaries at tender stage.
“Proper planning & realistic anticipation ensures project success” and
“Complexity increases the risk of price accuracy” are categorized as very high
impact factors.
• The G7, CE Contractors are almost consistent in the expression of positive

attitudes towards the corrective factors (Table 6.23). Two strongest attitudes
are “Industry to shift from “lowest tender win” to “multi-criteria selection” and
“Utilization of statistical information to forecast the price”
• The G7, CE Contractors’ varied interpretations, and approaches create

phenomena to the Malaysian construction industry. It is learned that the cause
of price variation not only resulted from the experience of the Contract
Managers / Estimators or lack of statistical price information but also
contributed by the specific requirement such as the quality procedure.
• Though the experiences and skills are crucial, the matter of facts the G7, CE
Contractors are also depending heavily on the tender drawings and
specifications to estimate the costs of lump sum items. The completeness of
the drawings is, therefore, crucial.
• The G7, CE Contractors are depending very much to the supply chains to
provide reliable material costs for competitive prices.
154
• The G7, CE Contractors prefer the items of General & Preliminaries to be
broken down as a way to minimize the price variation and to achieve an
accuracy of the tender price.
• The insufficient tender period could be the factor for the inaccuracy of price
thus triggers significant variations.
• The G7, CE Contractors insisted the unusual costs such as for testing of
materials that require overseas trips, etc., must be duly specified in the
Instruction To Tenderers (ITT). This is to avoid hidden costs and provide
transparency to the contract.
• Gangsterism in the construction industry particularly the Klang Valley still

exists but in a legal way. They have changed their activities into legal
businesses as sub-Contractors but the G7, CE Contractors need to pay them at
an “agreed” price.
• EOTs are granted without allowing the contractors to claim for the additional
costs.
• The G7, CE Contractors transfer the indirect costs to the sub-contractors or

suppliers for the scope of work sub-contracted to them.
8.3 General Guides
Based on the triangulation of findings from the research methods, the following non-
conclusive general guides are established. The opinion of the G7, CE Contractors may
serve as a fundamental concern for the clients, Engineers or Project Managers to
change or provide necessary improvements for the betterment of the construction
industry. The CIDB may review the proposal presented herein for possible
implementation at the national level as well as to structure the necessary training for
the same purpose.
155
1. Industry to shift from "lowest tender win" to "multi-criteria
selection"
The award of the tender to be based on merit in order to promote the
accurate price, quality and time in the tender exercise particularly the
Preliminaries.
2. Utilization of statistical information to forecast the price

Materials statistical information are crucial; such as the movement of
items’ rates for the past years, direct and indirect costs for similar nature of
the projects, known solutions to the common or unique problems due to
complexities, etc.
3. Collaborative support from management & team members

Promote the reliability of prices by correct strategies through expansion of
ideas and experience from the more experienced team members.
4. Obligation to estimate the price as accurately as possible

Missing prices on items are not permitted. Unjustified prices require
explanations during the tender interview.
5. Breakdown of price instead of Lump Sum wherever possible

The Preliminaries to be customized specifically related to the project’s
scope of work. The Conditions of Contract (if applicable) serve as base
referral documents. For example, the large lump sum item to be broken
down into smaller items. Allow for Provisional Quantities, Provisional
Sum, and Percentage Sum wherever possible.
6. Compulsory uniformity of tender

The tender briefing and site visit are mandatory and all queries and answers
to be disseminated equally to all contractors. All price items in the
Preliminaries are mandatory and must not be left blank or else indicated by
‘Nil’. Tender drawings and specification must be complete.
156
7. Differentiate between items to be priced and for information
The Preliminaries bill structure should clearly differentiate between the
informative statements and the items to be priced.
8. Accuracy of price through in-depth understanding the scope and

anticipation
The contractors are encouraged to acquire prices statistical knowledge,
skills, and experiences. The in-depth knowledge is gained through
continuous exposure to the same nature of work over a reasonable period
of time.
9. Promote fairness in pricing of Preliminaries

This attitude must exist and uphold always by the contractors to duly price
all required items with dignity. Excessive profit taking and grossly
estimated prices would be avoided. Optimize the costs to commensurate
with the acceptable quality and complete within Time.
10. Quality is not compromised for reduction of price

Competitive price of Preliminaries and tender is crucial but the quality of
materials or works shall not be tolerated or compromised.
11. Anticipate transfer of site quality cost by Client

The contractors to broaden the focus and anticipate transfer of site quality
costs by clients (such as routine improvement works of the construction
site) and the necessary indirect costs associated with it.
12. Tender preparation cost is part of Preliminaries, thus to be priced

The tender preparation costs are claimable. The inclusion of such costs
may be considered in the Preliminaries and not limited to the purchase of
the tender documents.
13. No discrimination on important items to gain competitiveness

Crucial items affecting the contract are to be priced and mandatory. ‘Nil’ is
not allowed.
157
8.4 Strength and Weakness of Research
8.4.1 The Strength
The strength of this research; It is pivoted on the mixed-method using three research
methodologies namely Content Analysis (qualitative) on the 25 Preliminaries from 6
tenders, Questionnaire Survey (quantitative) using 40 citations from the previous
researchers and Semi-structured Interview (qualitative) using 9 utmost critical issues
identified from the findings of Content Analysis and the Questionnaire Survey. The
findings of the methods are triangulated to establish the most relevant non-conclusive
general guides to reduce price variation in Preliminaries of the construction projects
during the tender stage, set forth as the aim of this research. The other strength of this
research is the ability to establish the percentage range of Preliminaries for the
construction of Civil Engineering work i.e. between 3.26% and 6.38% of the tender
sum.
8.4.2 The Weakness
The weakness of this research; It only focuses on the G7, CE Contractors’ population
and the discussion and analyses are within this group context. Thus, the result is from
a single perspective. However, truly it is the intention of the writer to study the
behavior of G7, CE Contractors and how they react in dealing with the subject matter.
The expansion of the research to a wider perspective may be considered.
8.5 Summary
The major findings outline significant information about the present practices and
attitudes of G7, CE Contractors in shaping the present construction industry. The
established non-conclusive guides provide constructive proposals to the industry
players particularly G7, CE Contractors to adhere to certain methodologies and
attitudes to minimize price variation in Preliminaries in construction projects during
tender stage. The summary of this chapter is brought forward to Chapter 9 for
comprehensive conclusion and recommendation.
158
CHAPTER 9 : CONCLUSION AND
RECOMMENDATIONS
9.0 CONCLUSION
Variation of price in the Preliminaries which is an integral part of the Bills of

Quantities (BQ) has been the interest of many researchers in the past decades and
accuracy of tender remains as a prime objective. The award of tender mainly
depending on the price of materials performances through a tedious tender evaluation
process by the Engineers or Quantity Surveyors and generally the variation in the
price of Preliminaries is taken as the contractors’ risk. It is always a high expectation
of the clients to obtain a value for money and the worthiness of investment from the
construction projects. The clients entrusted the contractors to perform the required
tasks and expect the projects achieve the required Quality, Time and Costs. The
understanding of the importance of Preliminaries determines the accuracy of price and
contributes value to the construction. This indirectly reduces the chance of
construction to fail and ensures value for money for the projects.
• Objective 1: To investigate the contributing factors of variation in price

of Preliminaries in construction projects during Tender Stage
A thorough investigation of the contributing factors was done and achieved the
required objective. The factors of complexities and uncertainties due to nature of the
projects, skills and experiences of the contractors are eminent. However, this research
identifies the ‘ultimate’ contributing factor is ‘Attitude’. It is paramount and requires a
big leap for attitudes transformation not only to the contractors but also to the whole
players of the construction industries. It is learned that the variation in the price of
Preliminaries is inevitable but the attitude is the most crucial factor that influencing
the accurate pricing of Preliminaries thus requires serious transformation for the
betterment of the construction industry.
159
• Objective 2: To identify the impacts of variation in price of Preliminaries
in construction projects during Tender Stage
The research identifies the potential impacts to the present and future construction
industries in Malaysia. The impacts due to significant price variation in the
Preliminaries are more damaging than benefit. Cheapest price may not offer any
advantage to the clients as it exposes to the possibility of the project failures due to
uncompleted works as a result of budget overrun. Expensive price may cause the
excessive budget to be allocated and the projects may not be economical. These issues
could be arrested by price accuracy policy. It is achievable through the whole
acceptance of the industry players towards the change of attitudes and determination
to shift from the present practices to the better. It affects the overall performance of
the construction projects in terms of Quality, Costs, Time and Satisfaction of the
clients.
It has significant impacts to the construction projects such as costs overrun,

manipulation of work to cushion the unpriced activities, lack of compliances, delays
etc. It reveals that the variation of price in Preliminaries is influenced by the way of
contractors’ approaches, such as experiences, competencies, attitudes, strategies,
methodologies, etc., in pricing the Preliminaries.
Truly, significant price variation in Preliminaries would cause the price uncompetitive
and defeat the purpose. The contractors were toying with high risks and in the case of
grossly underpriced Preliminaries, would lead to failures. Likewise, overpriced
Preliminaries had adverse effects whereby the clients will not get value for money and
the project costs are uneconomical.
• Objective 3: To propose corrective actions to minimize variation in price

of Preliminaries in construction projects during Tender Stage
A thorough review of the corrective factors meets the purpose of this objective. There
is a great potential that variation in the price of Preliminaries of the construction
160
projects during the tender stage to be minimized by correct Preliminaries. The
Preliminaries need to be restructured based on the project needs. The general guides
as proposed in Chapter 8 are non-conclusive but provide a significant way forward for
the industry players to undertake particularly to the G7, CE Contractors and for the
CIDB improvement consideration.
• Aim
To establish non-conclusive general guides to minimize variation in price of

Preliminaries in construction projects during Tender Stage
The aim of the research is satisfied. The non-conclusive general guides to minimize
price variation in Preliminaries in construction projects during the tender stage is
presented in Chapter 8, item 8.3. The in-depth focus into the root causes of variation
in the price of Preliminaries provides a strong basis for the establishment of general
guides. The guides are envisaged to provide some form of a checklist for the
betterment of Malaysian construction industry.
To the advantage of this research, it identifies the percentage of Preliminaries for the
construction of Civil Engineering work is in the range of 3.26% and 6.38% of the
tender sum.
• Limitation of Research
The limitation of this research is unable to collect the respondents’ feedbacks to the
required sample size. However, the returned completed questionnaires are within the
permissible limit based on the researchers’ recommendations. Poor collection of
feedbacks is also due to the limited available timeframe between March 2016 and
April 2016 prior to the submission of the dissertation by 10th June 2016. The writer is
very optimistic that collection of the required sample size could be achieved if longer
time is available, say 6 months.
161
9.1 RECOMMENDATION
The non-conclusive general guides are recommended in Chapter 8. The guides

provide a significant way forward for the construction industry players particularly the
G7, CE Contractors and the CIDB. In addition, the recommended percentage range of
Preliminaries for the Construction of Civil Engineering work is between 3.26% and
6.38% of the tender sum.
The attitudes of the contractors are to change by embracing the culture of accurate
price in Preliminaries to minimize variation. This could be attained through ethics and
skills’ training organize by CIDB or other accredited organizers. The critical change
that needs to be implemented by the construction industry is to break down the “all”
lump sum items in the Preliminaries to measurable items wherever possible. This is a
way forward to minimize the price variation and to achieve an accuracy of the tender
price.
• Recommendation for Future Research
Based on the literature review and observations, the writer anticipates the research to
improve the accuracy of Preliminaries of the construction projects is still scarce. The
available recommended solutions for the problems are still weak and ineffective due
to complexities and uncertainties of the bills. As a way forward, it is recommended for
future researchers to adopt the more rigorous approach, methodology, and creativity
on the subject matter. Research approach from different perspectives may be explored,
such as a focus on how to conclude reliable Preliminaries bills of quantities using a
theoretical framework for accurate tender pricing instead of how to derive accurate
rates. The larger the sample the more accurate data would be. The generalization of
finding surely benefits the construction industry in the long run. It is strongly
recommended to include the additional sample population of the construction industry
players such as the Engineers, Quantity Surveyors, and the clients. Their experiences
are worth than a diamond and it would definitely provide wider perspectives for a
holistic result.
162
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170
APPENDICES
171
APPENDIX A
Paper Presented At Soshum’2016
172

APPENDIX A
Continued

173

APPENDIX A
Continued

174

APPENDIX A
Continued

175

APPENDIX A
Continued

176

APPENDIX B
Typical Bills Of Preliminaries
177

APPENDIX B
Continued
178

APPENDIX B
Continued

179

APPENDIX B
Continued
180

APPENDIX B
Continued

181

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Continued

182

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183

APPENDIX B
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184

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185

APPENDIX B
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186

APPENDIX B
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187

APPENDIX B
Continued

188

APPENDIX B
Continued

189

APPENDIX C1
Tender 1
TENDER 1
Earthwork
PRELIMINARIES CONTRACTOR 1 CONTRACTOR 2 CONTRACTOR 3

Total contract 5,278,777.60 8,838,000.00 7,609,028.00
DuraCon (Months) 9.00 9.00 9.00
% of Preliminaries against Contract Price 4.84% 6.13% 7.19%

(1) General Particulars & Contractual obligation - 12,000.00 34,000.00
(2) Insurances 27,000.00 27,481.00 16,000.00
(5) Setting out - 30,000.00 10,000.00
(6) CIDB levy 6,750.00 15,000.00 10,000.00
(7) Superintending OfJicer OfJice 25,000.00 30,000.00 20,000.00
(8) Contractor’s OfJice And Storage - 30,000.00 43,000.00
(9) Shop Drawings / As-built drawings - 5,000.00 13,000.00
(10) Work programme - 5,000.00 2,000.00
(12) Client / Employer requirement - 12,000.00 13,000.00
(13) Contractor’s Plant (Scaffolding, tools, temporary
sheds, vehicles, etc) 70,000.00 30,000.00 115,000.00
(14) Site security & administration [Admin &
Supervisory staff] - 120,000.00 23,000.00
(15) Material Testing - 30,000.00 10,000.00
(16) protection of works / Protection of existing
services 10,000.00 - 15,000.00
(17) temporary supply i.e. water, electricity - 5,000.00 10,000.00
(18) Communication facility 4,000.00 10,000.00 12,000.00
(19) temporary access - 10,000.00 15,000.00
(20) temporary accommodation for workers - - -
(21) Legislation & regulations - 15,000.00 27,000.00
(22) Safety & Health - 9,100.00 14,000.00
(23) maintenance of public access - 30,000.00 20,000.00
(25) site waste disposal / Site Clearing - - 5,000.00
(27) Drainage, Erosion And Sediment Control /
Keeping site dry - 20,000.00 5,000.00
(28) Site photographs / record / Progress Report - 15,000.00 11,000.00
(29) Nominated Sub-contractors (ProJit &
Attendance) - - -
(30) Site Cleanliness And Preparation [mobilization &
demobilization] 80,000.00 50,000.00 40,000.00

Preliminaries 255,750.00 542,081.00 547,000.00

190

APPENDIX C2
Tender 2

TENDER 2
Road & Drain
PRELIMINARIES CONTRACTOR 1 CONTRACTOR 2 CONTRACTOR 3

Total contract 11,625,940.59 9,330,000.00 11,854,516.40
DuraCon (Months) 5.00 5.00 5.00
% of Preliminaries against Contract Price 7.01% 4.55% 5.63%

(1) General Particulars & Contractual obligation 5,000.00 6,000.00 45,000.00
(2) Insurances 80,000.00 20,000.00 52,000.00
(5) Setting out 20,000.00 30,000.00 15,000.00
(6) CIDB levy - 9,640.00 18,000.00
(7) Superintending OfJicer OfJice - - -
(8) Contractor’s OfJice And Storage 10,000.00 20,000.00 20,000.00
(9) Shop Drawings / As-built drawings 7,500.00 5,000.00 -
(10) Work programme - - -
(12) Client / Employer requirement 2,500.00 5,000.00 -
sheds, vehicles, etc) - 127,629.00 6,000.00
Supervisory staff] 249,999.20 50,000.00 30,000.00
(15) Material Testing 1,999.84 - 5,000.00
services - - -
(17) temporary supply i.e. water, electricity 1,000.00 10,000.00 -
(18) Communication facility - 5,000.00 3,000.00
(19) temporary access - - -
(20) temporary accommodation for workers - 27,000.00 -
(21) Legislation & regulations 61,080.00 60,000.00 94,000.00
(22) Safety & Health 500.79 - 14,000.00
(23) maintenance of public access - - -
(25) site waste disposal / Site Clearing - 10,000.00 -
Keeping site dry - - -
(28) Site photographs / record / Progress Report 2,000.00 - 7,000.00
(29) Nominated Sub-contractors (ProJit & Attendance)
- - -
demobilization] 273,410.08 20,000.00 100,000.00

Preliminaries 814,989.91 424,769.00 667,000.00

191

APPENDIX C3
Tender 3

TENDER 3
Road & Drain
PRELIMINARIES CONTRACTOR 1 CONTRACTOR 2 CONTRACTOR 3 CONTRACTOR 4 CONTRACTOR 5

Total contract 3,131,570.00 2,540,282.00 2,852,030.50 2,570,800.00 1,998,845.00
DuraCon (Months) 4.00 4.00 4.00 4.00 4.00
% of Preliminaries against Contract Price 3.27% 3.29% 4.84% 8.48% 4.85%

(1) General Particulars & Contractual obligation 17,200.00 6,800.00 5,000.00 13,800.00 40,000.00
(2) Insurances 800.00 1,800.00 10,000.00 5,600.00 12,000.00
(3) Workmen’s compensation 800.00 1,200.00 5,000.00 1,300.00 3,000.00
(4) Performance bond 3,200.00 5,000.00 15,000.00 3,300.00 -
(5) Setting out 2,500.00 5,000.00 8,000.00 - 26,000.00
(6) CIDB levy 2,800.00 2,000.00 4,000.00 3,200.00 -
(7) Superintending OfJicer OfJice - - - - -
(8) Contractor’s OfJice And Storage 5,000.00 4,000.00 - 31,900.00 -
(9) Shop Drawings / As-built drawings 1,500.00 1,000.00 8,000.00 7,500.00 2,000.00
(10) Work programme - - 3,000.00 - -
(11) Hoarding & Fencing - - - - -
(12) Client / Employer requirement - 600.00 - 2,000.00 -
sheds, vehicles, etc) - - - - -
Supervisory staff] 30,000.00 22,000.00 40,000.00 77,000.00 -
(15) Material Testing 1,000.00 2,000.00 - - -
services 2,000.00 4,000.00 - - -
(17) temporary supply i.e. water, electricity 1,000.00 - 4,000.00 - 10,000.00
(18) Communication facility - - - - -
(19) temporary access - - - - -
(20) temporary accommodation for workers - - - - -
(21) Legislation & regulations 15,300.00 7,900.00 2,000.00 2,600.00 3,000.00
(22) Safety & Health 1,700.00 2,500.00 3,000.00 7,400.00 -
(23) maintenance of public access 6,000.00 - 16,000.00 45,000.00 -
(24) Sanitation - - - - -
(25) site waste disposal / Site Clearing - 500.00 2,000.00 2,300.00 1,000.00
(26) Noise & pollution control 1,500.00 - 3,000.00 - -
Keeping site dry 5,000.00 1,000.00 - - -
(28) Site photographs / record / Progress Report - 5,300.00 4,000.00 3,800.00 -
Attendance) - - - - -
demobilization] 5,000.00 11,000.00 6,000.00 11,300.00 -

Preliminaries 102,300.00 83,600.00 138,000.00 218,000.00 97,000.00

192

APPENDIX C4
Tender 4

TENDER 4
Main Infra
PRELIMINARIES CONTRACTOR 1 CONTRACTOR 2 CONTRACTOR 3 CONTRACTOR 4 CONTRACTOR 5

Total contract 28,517,000.00 ############# ############# 18,666,666.00 #############
DuraBon (Months) 13.00 13.00 13.00 13.00 13.00

(2) Insurances 62,000.00 41,509.00 60,000.00 49,000.00 31,000.00
(3) Workmen’s compensation 16,000.00 16,148.50 38,000.00 5,000.00 10,000.00
(4) Performance bond 60,000.00 50,750.00 80,000.00 60,000.00 50,000.00
(5) Setting out 150,000.00 72,250.00 117,000.00 30,000.00 20,000.00
(6) CIDB levy 35,650.00 36,250.00 15,000.00 25,000.00 33,000.00
(7) Superintending OfJicer OfJice 40,000.00 67,000.00 90,000.00 10,000.00 20,000.00
(8) Contractor’s OfJice And Storage 50,000.00 68,000.00 90,000.00 10,000.00 60,000.00
(10) Work programme - - - 1,000.00 -
(11) Hoarding & Fencing - - - - -
(12) Client / Employer requirement 5,000.00 - - 5,000.00 -
sheds, vehicles, etc) 250,000.00 168,000.00 75,000.00 8,000.00 40,000.00
Supervisory staff] 150,000.00 167,741.00 - 80,000.00 60,000.00
(15) Material Testing - - - 10,000.00 -
services - - - 1,000.00 20,000.00
(17) temporary supply i.e. water, electricity 35,000.00 12,350.00 39,000.00 13,000.00 32,500.00
(18) Communication facility 10,000.00 28,000.00 25,000.00 15,000.00 24,500.00
(19) temporary access - - - 1,000.00 -
(22) Safety & Health - 11,000.00 16,000.00 5,000.00 5,000.00
(23) maintenance of public access - 12,000.00 - 5,000.00 -
(25) site waste disposal / Site Clearing 50,000.00 15,000.00 - - 10,000.00
(26) Noise & pollution control - 12,000.00 - 5,000.00 -
Keeping site dry - - - - -
(28) Site photographs / record / Progress Report - 8,050.00 - 7,000.00 -
demobilization] 106,101.50 32,000.00 - 10,000.00 90,000.00

Preliminaries 1,070,351.50 911,798.50 950,000.00 412,500.00 658,000.00

193

APPENDIX C5
Tender 5

TENDER 5
Sewerage
PRELIMINARIES CONTRACTOR 1 CONTRACTOR 2 CONTRACTOR 3 CONTRACTOR 4

Total contract 9,229,490.00 8,863,950.00 4,882,462.00 15,083,067.00
DuraDon (Months) 8.00 8.00 8.00 8.00
% of Preliminaries against Contract Price 9.37% 4.73% 5.12% 6.21%

(1) General Particulars & Contractual obligation 31,000.00 10,000.00 8,000.00 4,500.00
(2) Insurances 14,000.00 45,000.00 45,000.00 31,000.00
(3) Workmen’s compensation 3,000.00 2,000.00 25,000.00 39,600.00
(4) Performance bond 182,000.00 27,000.00 80,000.00 60,000.00
(5) Setting out 2,000.00 20,000.00 46,500.00 5,000.00
(6) CIDB levy 10,000.00 11,000.00 10,000.00 20,000.00
(7) Superintending OfJicer OfJice 10,000.00 - - -
(8) Contractor’s OfJice And Storage 1,000.00 20,000.00 - 30,000.00
(9) Shop Drawings / As-built drawings 11,000.00 15,000.00 17,500.00 206,000.00
(10) Work programme 3,000.00 5,000.00 - -
(11) Hoarding & Fencing - - - -
(12) Client / Employer requirement 13,000.00 15,000.00 - 12,000.00
sheds, vehicles, etc) 21,000.00 10,000.00 - -
Supervisory staff] 19,000.00 45,000.00 - 265,000.00
(15) Material Testing 190,000.00 35,000.00 - 3,000.00
services 23,000.00 20,000.00 - -
(17) temporary supply i.e. water, electricity 5,000.00 10,000.00 10,000.00 50,000.00
(18) Communication facility 6,000.00 - - -
(19) temporary access 2,000.00 15,000.00 - -
(20) temporary accommodation for workers - - - -
(21) Legislation & regulations 35,000.00 29,000.00 8,000.00 35,000.00
(22) Safety & Health 4,000.00 7,000.00 - 4,800.00
(23) maintenance of public access 165,000.00 35,000.00 - -
(24) Sanitation - - - -
(25) site waste disposal / Site Clearing 10,000.00 5,000.00 - 5,000.00
(26) Noise & pollution control 1,000.00 10,000.00 - 10,000.00
Keeping site dry 6,000.00 5,000.00 - 100,000.00
(28) Site photographs / record / Progress Report 20,000.00 13,000.00 - 3,000.00
Attendance) 5,000.00 - - -
demobilization] 73,000.00 10,000.00 - 53,000.00

Preliminaries 865,000.00 419,000.00 250,000.00 936,900.00

194

APPENDIX C6
Tender 6

TENDER 6
Main Infra
CONTRACTOR
PRELIMINARIES CONTRACTOR 2 CONTRACTOR 3 CONTRACTOR 4 CONTRACTOR 5
1

Total contract 53,927,928.40 55,803,780.00 60,088,888.00 59,744,083.20 51,888,888.00
DuraCon (Months) 12.00 12.00 12.00 12.00 12.00

(2) Insurances 95,000.00 136,000.00 68,000.00 182,000.00 65,500.00
(3) Workmen’s compensation 25,000.00 40,000.00 15,000.00 91,000.00 13,500.00
(4) Performance bond 100,000.00 70,000.00 120,000.00 160,000.00 18,000.00
(5) Setting out 30,000.00 80,000.00 98,000.00 150,000.00 18,000.00
(6) CIDB levy 45,000.00 80,000.00 95,000.00 68,278.00 65,000.00
(7) Superintending OfJicer OfJice 5,000.00 10,000.00 5,000.00 8,000.00 5,000.00
(8) Contractor’s OfJice And Storage 70,000.00 20,000.00 50,000.00 - 9,000.00
(10) Work programme - - - - -
(11) Hoarding & Fencing 300,000.00 55,000.00 10,000.00 60,000.00 45,000.00
(12) Client / Employer requirement - 15,000.00 10,316.85 - 9,000.00
(13) Contractor’s Plant (Scaffolding, tools,
temporary sheds, vehicles, etc) 310,000.00 47,000.00 20,000.00 1,097,148.00 26,200.00
Supervisory staff] 100,000.00 105,000.00 5,000.00 - 37,000.00
(15) Material Testing 52,000.00 52,000.00 40,000.00 10,000.00 3,700.00
services 85,000.00 20,000.00 25,000.00 108,000.00 13,500.00
(17) temporary supply i.e. water, electricity 200,000.00 67,000.00 30,000.00 34,000.00 21,400.00
(18) Communication facility 10,000.00 5,000.00 10,000.00 20,000.00 16,000.00
(19) temporary access 100,000.00 - 6,000.00 30,000.00 -
(22) Safety & Health 25,000.00 - - 20,000.00 6,300.00
(23) maintenance of public access 310,000.00 15,000.00 5,000.00 - 14,200.00
(25) site waste disposal / Site Clearing 60,000.00 210,000.00 14,000.00 - 9,000.00
(26) Noise & pollution control 10,000.00 35,252.00 - 12,000.00 18,000.00
Keeping site dry 10,000.00 500.00 10,000.00 12,000.00 4,500.00
(28) Site photographs / record / Progress Report 15,000.00 8,500.00 33,500.00 47,500.00 9,200.00
(30) Site Cleanliness And Preparation [mobilization
& demobilization] 350,000.00 12,000.00 10,000.00 - 31,480.00

Preliminaries 2,632,000.00 1,124,252.00 799,816.85 2,275,926.00 546,480.00

195

APPENDIX D
Questionnaire Survey

196

APPENDIX D
Continued

197

APPENDIX D
Continued

198

APPENDIX D
Continued

199

APPENDIX D
Continued

200

APPENDIX E
Questionnaire Cover Letter
201

APPENDIX F
Typical Email To Respondents
202

APPENDIX G
Typical Email Response
203

APPENDIX H
TRANSCRIPTION OF
SEMI-STRUCTURED INTERVIEWS
1. Causes of price variation in preliminaries during tender stage

RESPONDENT QUOTATION HIGHLIGHTS ANALYSIS
R003 "…price escalation due to Compliance to Variation in price
QLASSIC requirement…" quality of preliminaries
depending on the
need to comply
R003 "…the fine for non- Compliance to
with quality plan
compliance of QLASSIC is quality
embraced by the
3% of the contract some.
contractors
Only 1% of incentive given
for achieving 75% of
compliance…"
R003 "…cost of the safety officer High cost of Depending on
is high thus constitute competent person what competency
higher price when level acquired for
concerning safety…" key persons
R002 "…I did not know how it Wrong Variation of price
happened but one thing for justification in preliminaries
sure that I have wrongly due to lack of
priced the item…" anticipation and
R002 "…the site is not exactly the Incorrect lack of site
same place as the tender as information investigation for
such I have to suffer a justification
considerable amount of
cost…."
R002 "…similar work activities Overlapping, Variation of price
being priced more than once Repeated pricing in preliminaries
in the preliminaries trigger due to repeated
additional profit to the pricing on
contractor." overlapping items.
R002 "…overlapping instruction Overlapping, Items carry the
or statement in the Repeated pricing same meaning but
preliminaries caused described in
repeated pricing on items several parts of
that carry the same preliminaries.
meaning…"
R001 "…about duplicate items in Overlapping,
the preliminaries. Once get, Repeated pricing
eh that item also called for
the same thing. I've noticed
that…"
R004 "…we have to cautiously Overlapping,
inspect the preliminaries to Repeated pricing
avoid repeated pricing of
the same item…"
204
APPENDIX H
Continued
R002 "…price of preliminaries Different Variation of price
mostly based on assumptions. in preliminaries
assumptions…" Require depending on the
experience & correct
skills assumptions and
forecasts. All
R002 "…I priced the items mostly Different respondent agreed
guided by the instincts and assumptions. that experience
say prayers…" Require and skills of the
experience & estimators are
skills utmost crucial
R001 "...preliminaries is difficult Require

to be determined at the point experience &
of tender…" skills
R002 "…sure experience is Require
necessary… it will make us experience &
easy as we are skills
knowledgeable…"
R003 "...Maybe based on Require
experience. Different experience &
contractors have a different skills
level of experiences. Price
based on their own
consideration and
assumptions…"
R004 "…variation of price in Require
preliminaries mainly experience &
depending upon experience skills
encompassing approach &
methodology of the
contractors to carry out
such work and associated
costs...
R001 "... the limited tender period Insufficient time Short tender
thus insufficient time to period could be
provide accurate prices…" the factor for
inaccuracy of
price thus trigger
variations
R001 “…of course the drawings is Completeness of Contractor
referred to figure out the drawings depending on
lump sum items…” tender drawings
and specifications
R004 "…completeness of tender Completeness of to estimate the
drawings is crucial for a drawings cost of lump sum
contractor to estimate the items.
amount of work and
associated costs…"
205
APPENDIX H
Continued
2. Attitude during pricing of preliminaries during tender stage

R003 “… final price for tender Management The pricing of
will be decided by the decide preliminaries in most
CEO…" instances carried out
R001 "... during tender pricing Management by the management
QS is not involve. Business decide themselves or through
Development Unit will concerted efforts.
involve and they will do
the forecast based on past
projects. They will look
into all aspects. QS only
handle after we’ve won the
project. Normally the
management and the
marketing people will get
involve..."
R004 "…preliminaries cost is Management
normally 5% to 6% of the decide
tendered sum... decided
based on experience…"
R004 "…I'll do the costing by my Management
own…" decide
206
APPENDIX H
Continued
3. Approach to price preliminaries during tender stage

R003 "…the pricing of Top-Bottom Accurate pricing of
preliminaries normally is approach preliminaries
top-bottom down depending on the
approach…" approach. Top-Bottom
R001 "... I am not sure if top uncertain approach could be
bottom or bottom up…" most popular due to
the urgency to submit
R004 "…price of preliminaries Bottom-up the tender within a
based on the top bottom is approach short period of time.
the wrong way of doing…" Client’s attitude
R004 "…many contractors Top-Bottom towards price
doing top bottom pricing due to lack of accuracy is observed.
mainly due to insufficient time
time…"
R001 "…study the client’s Observe client's
behavior. The difficult attitude
client will do proper
pricing, easy client price
simply…"
R004 "…preliminaries bill will Preliminaries to Preliminaries will be
be considered upon price last decided at the last
completion of trade bills. stage to ensure
All insurances & duties accuracy.
can be easily calculated
based on actual costs…"
R004 "…preliminaries sum is The contractors do
only representing a not much consider
fracture of the total project cost of preliminaries
cost and does not affect due to small portion
much to overall tender
sum…"
207
APPENDIX H
Continued
4. To ensure price accuracy in preliminaries
R001 “…of course the drawings is Refer tender The contractors
referred to figure out the drawing for depend very much on
lump sum items…” breakdown the suppliers’ quoted
prices as a baseline to
provide competitive
R003 …normally the mechanical Observe
prices. Tender
equipment from the supplier suppliers'
drawings as a tool to
came with exclusions. If not exclusions
obtain a breakdown of
aware then the items likely
required items. All to
to be underpriced by the
ensure accurate
contractor…"
estimation of price.
R004 "…to ensure accuracy, the Price based on
price was based on quoted costs.
suppliers' quoted costs and Refer tender
detailed quantities drawings for
breakdown based on tender breakdown
drawings…"
R004 "…for the lump sum items, Breakdown
we will refer the refers
specifications and drawings specification
in search of detail and drawings
breakdown of components
required…"
R003 "...Maybe based on Require review Competitive price
experience. Different of past data & requires reliable
contractors have a different experience forecast based on
level of experiences. Price prices statistic
based on their own
consideration and
assumptions…"
R004 "…accurate pricing of Review past
preliminaries shall be based data &
on the trend of past experience
information and
experiences…"
R004 "…preliminaries must be Skills & Accuracy to the
done in detail…" experience preliminaries is
required accepted as crucial
R003 "…marked-up factor is kept Skills & due to competition in
to a reasonable rate due to experience the industry.
competition. Price required Experience of
optimization by means of estimators is,
using own machinery and therefore, crucial for
accurate prediction of competitive price
overhead…"
R003 … due to competition, we Skills &
will ensure our prices are experience
competitive…" required
208
APPENDIX H
Continued
5. Collusive tendering / protection money consideration in preliminaries

during tender stage

R003 "…protection racket is no Change to In the Klang Valley,
longer an issue if legalized the activity still exists
compared to the old days. activity but in a legal way.
Nowadays the licensed site They work as a sub-
security service, premix or contractor at agreed
landscape work became price
their preferences at
'reasonable' costs"
R001 "...I am not sure about the Indicates the This indicates in
protection money but I am problem still some excluded cases,
sure there is…" exist they are some
protection and
R004 "…request for protection Indicates the
collusive activities
money is to be problem still
still exist and the
accommodated…" exist
contractors have
R004 "…in the preparation of Miscellaneous allowed this expenses
tender normally a portion cost allocated in their preliminaries
of the miscellaneous cost is
allocated for in the
preliminaries and
distributed to several
items…"
R003 "…testing of materials Avoid hidden The contractor
must be itemized as a cost insisted unusual cost
provisional sum… for testing must be
contingency sum may be specified to avoid
used for the purpose, all hidden cost and
upon instruction by the transparency
SO..."
R004 "…unusual cost of material Avoid hidden
testing such as overseas cost
visit & inspection must be
specified in the tender for
transparency and to avoid
hidden cost…"
209
APPENDIX H
Continued
6. Mitigation of indirect cost in preliminaries during tender stage

R001 “…I would apportion the The risk shared Drastic action; most
extra costs with the sub- with sub-con contractors likely to
contractors..” transfer the costs to the
R003 "…transfer of indirect cost The risk sub-contractors
to the sub-contractor…" transferred to engaged for that
sub-con portion of works
R004 “…I hold sub-contractor The risk
for the portion of work…” transferred to
sub-con
R003 "…during defects liability Spend money to Attitudes are
period to spend money in get money expressed that indirect
order to get the retention cost must be spent for
money released…" smooth progress of
R002 "…indirect cost is another If not priced work. Certain
element that if you were became cost allowance is made to
lucky, you did not spend it overrun, if not avoid cost overrun
or you spent it less thus it spent became
became your true profit. true profit
However, if you did not
price it properly then you
have to incur cost
overrun…"
R003 “…must complete the EOT risk to The practice of EOT
project on time. Extension contractor without additional
of time normally without payments to the
additional pay…” contractor is a risk.
R004 "…extension of time kills EOT risk to Maybe due to the
in terms of the additional contractor contractor’s own fault.
price of preliminaries is No matter what, the
usually not paid by the contractors are
client, therefore, being a determined to avoid
cost risk to the EOT
contractor…"
R004 "…extension of time Additional cost
unable to claim additional incurred not
costs in terms of claimable
overheads, maintenance
costs for the site office,
signboards etc., it kills…"
210
APPENDIX H
Continued
7. Opinion on lowest tender win approach in awarding the contract

R003 "…lowest tender win Disagreed. All contractors
policy should not be Exposed to high disagreed with such
practiced as it will expose risk decision as it will
the contract to the non- expose to higher risk
completion, abandonment and competencies are
and retender due to equally at risk.
underpriced and non-
performance…"
R003 "…re-tender of the Disagreed.
incomplete project usually Exposed to high
ended up in higher cost risk
and loss of time to the
client…"
R003 "…the client must decide Client to protect
based on bare minimum their interest
cost estimated by their
competent QS and not
simply adopt the lowest
tender win to protect their
interest…"
R001 "…not agree lowest tender Disagreed.
win. Must look into their Exposed to high
background and past risk
record to ensure
success…"
R004 "…lowest tender win is Disagreed.
truly inappropriate. It Exposed to high
usually associates with risk
high risk…"
R004 "…GLCs tend to favor the Client to protect
lowest tender win. their interest
However, they require a
strong financial and
experience background of
the contractor…"
211
APPENDIX H
Continued
8. Proposed improvement to preliminaries during tender stage
R003 "…some items of Suggest for All respondents
preliminaries can be break down, suggested the
quantified and priced but provisional preliminaries be
subject to broken down as much
remeasurement…" possible and lump sum
R003 "…lump sum cost will be Suggest for for unavoidable cases.
derived based on broken break down, The contractors are in
down items and accurate fact practicing the
individually priced to breakdown quantities
obtain accurate price…" for the lump sum items
R001 "...I think certain items Quantities for progress claims
need not be lump sum but purposes. This
must be in quantities…" requirement will
provide a more
R001 "...In the time of claim, we Suggest for
accurate price and
still need to present based break down,
reduce huge variation
on the breakdown. Better declare
in price between
to declare at the time of
contractors
tender…"
R004 "…preliminaries with Suggest for
breakdown quantities, breakdown,
provisional items and appropriate,
minimize lump sum items accurate
is the most appropriate
way for accurate
pricing…"
R004 "…it is important to Suggest for
perform the breakdown of breakdown,
items and rates though for accurate
the lump sum
preliminaries to arise to
most accurate tender
pricing…"
R004 "…price of preliminaries Suggest for
mainly depending on breakdown
breakdown of recurrence
costs over the duration of
the project, fixed
percentage items and
quantified items…"
R003 "…testing of materials Provisional sum
must be itemized as a spent at SO
provisional sum… instruction
contingency sum may be
used for the purpose, all
upon instruction by the
SO..."
212
APPENDIX H
Continued
9. Reasons for non-price items in preliminaries

RESPONDEN HIGHLIGHT
QUOTATION ANALYSIS
T S
R002 "…I did not price for the Price The price is either
preparation of As-built considered in absorbed by the
drawings as it was part of another item contractor or items are
the survey cost. However, not indicated in
if you were greedy for drawings thus
profiteering then go for construed as not part of
it..." scope or items have
R004 "…cost of tender Price absorbed been priced elsewhere
preparation can be priced by contractor in the preliminaries bill
in the preliminaries item as part of other items
but usually absorbed by
the contractor simply to
keep the price low…"
R004 "…items not priced Items not
usually associated with specified in
details provided in the drawings
drawings. No detail
means no item to be
required…"
R004 "…item not priced such as Price
sanitation due to the cost considered in
was included in the site another item
office general facility…"
R004 "…it's a trend now the Items not
accommodation is no required
longer provided as the
workers will arrange on
their own…"
R001 "…time input during Price absorbed
tender is huge and costly. by contractor
Never heard about it is
being priced…"
213
AUTHOR’S PROFILE

Ir. Abdul Aziz has cumulative 27 years of experience in Civil Engineering with emphasis
on the infrastructure works. He graduated from Universiti Teknologi Malaysia (UTM) in
1984 with Diploma in Civil Engineering and Polytechnic of The South Bank in 1988 with
Bachelor of Civil Engineering (Commendation). He is a Professional Civil Engineer with
Practising Certificate, Member of Board of Engineers Malaysia and Fellow of Institution
of Engineers, Malaysia (FIEM). He involves a great deal of main infrastructure
development projects in Malaysia and abroad. He is currently attached to Jacobs
Engineering Group Malaysia Sdn Bhd (a Global Consulting Engineers) as a Technical
Director since January 2016. He was a General Manager of Infrastructure in HSS
Integrated Sdn. Bhd. (Consulting Engineers) for 21 years (1994-2015). He worked for
Minconsult Sdn. Bhd. (Consulting Engineers) as a Senior Engineer (1991-1994), Antah
Biwater JV (International Turnkey Contractors) as a Materials Planning Engineer (1989-
1991) and Penpen Construction Sdn Bhd. (a Class ‘A’ Contractor) as a Site Engineer
(1988 – 1989). He was a Technical Assistant for the Public Work Department (JKR)
between 1984-1985 upon his graduation from UTM. Ir Aziz is an active IEM’s
Interviewer for the Professional Assessment Examination (PAE) since 2006. He is an
active Industry Panel for UiTM, Faculty of Civil Engineering since 2009. In the pursuit of
his endless interest in acquiring a higher level of academic knowledge, Ir. Aziz
undertakes his Master Degree in Integrated Construction Project Management (MSc. in
ICPM), Faculty of Architecture Planning & Surveying (FSPU), UiTM (2014-2016).

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UNIVERSITI TEKNOLOGI MARA

VARIATION IN PRICE OF PRELIMINARIES

ABDUL AZIZ ABAS

Dissertation submitted in partial fulfillment of the requirements for

Faculty of Architecture, Planning & Surveying

Name of Candidate : Abdul Aziz bin Abas

Signature of Candidate : .....................................................

Preliminaries were unanimously accepted as an integral part of the Bills of Quantities

CHAPTER 1 : INTRODUCTION ...................................................................................................... 1

Table 1.1: Gross Domestic Product (GDP) – 2015 ...................................................................................................... 2

Figure 4.1: Research Process Flow ................................................................................................................................. 48

1Q 2015 1st Quarter of 2015

BNM Bank Negara Malaysia

CCA Canadian Construction Association

CIDB Construction Industry Development Board of Malaysia

COC Conditions of Contract

DBOT Design Build Operate Transfer

DRIFT Do it Right the First Time

EOT Extension Of Time

ESI Employment Studies Institute

GLC Government Link Company

GST Goods & Services Tax

GDP Gross Domestic Products

ICT Information & Communication Technology

IEM Institution of Engineers Malaysia

ITT Instructions To Tenderer

IWK Indah Water Konsortium

JKR Jabatan Kerja Raya (Public Works Department, Malaysia)

JPP Jabatan Perkhidmatan Pembetungan

JPS Jabatan Pengairan & Saliran

JUBM Juru Ukur Bahan Malaysia

LRT Light Rail Transit

MOF Ministry of Finance

MRT Mass Rapid Transit

n.d. Not Dated

N3C National Construction Costs Centre

NBS National Building Specifications

PAM Pertubuhan Arkitek Malaysia

PETRONAS Petroliam Nasional Berhad (Malaysian National Oil Company

PWD Public Works Department

RMK11 Rancangan Malaysia Ke 11 (11th Malaysia Plan) 2016-2020

SMM Standard Method of Measurement

SOSHUM'2016 International Conference on Social Sciences and Humanities

SPSS IBM SPSS Statistics Version 23 Release 23.0.0.0

SSP Sungai Buloh-Serdang-Putrajaya

SWOT Strength Weakness Opportunity and Threat

TNB Tenaga Nasional Berhad

i.e. id est (that is)

etc et cetera (and other things)

UCLA University of California Los Angeles

1.1 Background of the Research

GDP Based on Economic Activity (2015)

This research investigated the approach of pricing Preliminaries by G7 of

Table 1.2: Summary of Contractors Grades

Grade & Tender Capacity

Table 1.3: Registered Contractors of Category CE, 2015

Total Contractors Registered By Contractor Registered Grade

BNM (2014) reported the construction sector in Malaysia contributed a significant

Table 1.4: Average Daily Wages For State of Selangor

Category of Workers Average Daily Wages for Selangor (RM)

1.1.3 Construction Material Prices

Materials cost was a phenomenon to be one of the contributors to the increase in

Table 1.5: Construction Material Prices