Report on Procurement and Contract: IBS Analysis, NEC4 ECC & FIDIC

This report provides an analysis of contract and procurement in the context of construction, focusing on Industrialized Building Systems (IBS) in Malaysia and a comparison between NEC4 Engineering and Construction Contracts (ECC) and FIDIC 2017. The IBS analysis covers its benefits, challenges, and implementation status in Malaysia, highlighting the need for modern construction methods. The comparison between NEC4 ECC and FIDIC 2017 examines conditions guiding payment, project programming, and dispute resolution methods, emphasizing the differences in payment processes, programming requirements, and approaches to resolving conflicts. The report concludes by advocating for the adoption of modern methods and effective contract management in the construction industry.

CONTRACT AND
PROCURMENT

Table of Contents
PART 2............................................................................................................................................3
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................1
PART-3............................................................................................................................................2
MAIN BODY...................................................................................................................................2
Comparison of conditions guiding payment................................................................................2
Comparison of conditions guiding project programming............................................................3
Comparison of dispute resolution methods..................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

PART 2
INTRODUCTION
Procurement system in construction refers to the organizing and coordination of parties in
project in order to develop their contractual relationship and is considered as main contribution
in the project. The analysis covers the various positive and negative aspects of the Industrialized
Building System, various methods from which the information has been obtained and opinions of
Nurulhuda Binti Ahamad1, Ain Naadia Binti Mazlan, Rosli Mohamad Zin, Siti Asiah Tukirin.
MAIN BODY
Industrialized Building System(IBS) is the word which is used by the government of the
Malaysia as a symbol of the construction of buildings in Malaysia. IBS is defined the techniques
and methods of the construction where the elements are constructed in a controlled environment.
The scope of IBS ids growing with the increase in the demands of the low-priced housing and to
increase the quality and productivity of the construction industry(Ahamad et.al, (2020). The
execution of IBS gives a lot of benefits to the construction industries such as it reduces the
unskilled researchers, reduce the wastage of the materials used in the construction of the
buildings and increased awareness about the environment protection and promotes safety at
construction sites. Many builders are not familiar with the new construction procurement
systems, and they continue to us the systems they are familiar without understanding the benefits
of new systems. As a result they face different challenges as the old procurement systems are
less effective and not appropriate in the current market. Various companies are still using the
traditional procurement methods which raises the issues such as rework, consumption of time,
increasing cost on construction, barrier in communication and other problems associated with the
construction(Wen, and Mishra, 2018). The construction companies using inappropriate
procurement systems tend to face more difficulties, increase in the construction cost, conflict
among the project contractors and payment disputes among the contractors.
The economic rate of the Malaysia expanded at a faster rate and the fundamental growth
was in various sectors of the industry including the construction sector. It has been observed that
the with the use of IBS and invention in the construction process has enhanced the growth of the
construction industry which also contributes in the growth of the GDP of the

country(Simeoni,et.al, 2019). The construction sector requires more skilled labour for the
efficient management of the industries. As it is seen that in construction of building, skilled and
professionals are required such as contractors, architect etc. The benefits of using Industrialized
building systems is that it reduces the time consumed in the construction process, proper
strategic plans, avoid the wastage of resources and materials during the complex process and
reduces the risk involved in the construction sector. There are many benefits of IBS, but still the
implementation of IBS is very low as there is lack of proper awareness among the clients, or they
do not have correct information about the IBS. Some contractors have the view that
implementing the IBS will incur huge cost as the contractors have strict control over the budget
in order to maximize the profit margin(Kedir, and Hall, 2021). Today's building systems requires
high skill and knowledge that the contractors do not have because of the use of traditional
systems and that is why the implementation if IBS is low due to lack of knowledge and research
work in the contractors.
Research methodology mount the way to manage the research methods and provide
guidance to the researcher on the methods to be applied and analysing the data. In order to clarify
the study, the data was collected by conducting the interview sessions with the experts and
analysing the data through various methods and sampling method was used in order to obtain
information regarding the current importance of the IBS(Wuni, et.al, 2019). The interview
session has been conducted by the selected persons who have implemented the IBS in their
organization. All the interviews conducted were recorded and transcribed. There are various
elements involved in the construction projects, but from the interviews conducted and it
identified the position of person in the IBS project and it was observed that there were 5 IBS
projects :3 from the Quantity Surveyor and 2 experts were the project manager. From the above
report, it is observed that IBS has very limited scope as only few companies have the knowledge
about the IBS and lack of awareness has resulted in the increased cost in the construction
projects that can be reduced by gaining and having proper knowledge about the modern systems
introduced in the construction sector.
From the study, it can be concluded that there is need for the construction industry in
Malaysia to adopt the new and innovative methods in the construction sector and reduce the
application of old and traditional methods for the sustainable construction in the country(Jin,
et.al, 2018). Government is also making efforts through CIDB Malaysia in order to promote and

spread awareness in adoption of new construction systems like Industrialized Building Systems
as it is identified as the better method in the overall improvement of the performance of
construction in terms of safety and cost-effectiveness. It has various benefits as it reduced the
wastege of materials which is used in the construction of building and ensures safe working
conditions at construction site and cleanliness at the construction site. The present condition is
that many contractors have adopted the traditional systems as they think that adopting the IBS
will cost them lot of funds, and they don't have knowledge about the system due to lack of proper
awareness about the benefits of implementing the IBS(Gao, Low, and Nair, 2018). Despite the
support of government regarding the implementation of IBS in the construction sector. As the
IBS is supported by the government, no specific guild lines or regulations have been made by the
government for the implementation of this modern systems regarding the tender, design and
construction of the project.
CONCLUSION
From the above study, it can be summarized that for the growth of any sector of a
country it is important to adopt the modern methods of operating their business in order to avail
the benefits of the latest and modern methods so that it can retain its position in the market. As
discussed above the implementing the modern techniques like Industrialized Building System in
the construction can improve the work by reducing the wastage of the materials used in building
but also save the extra cost which is incurred in the production of the output.

REFERENCES
Books and journals
Ahamad et.al, (2020) Construction Procurement in Industrialised Building System. IOP Conf.
Ser.: Mater. Sci. Eng. 849 012072
Gao, S., Low, S.P. and Nair, K., 2018. Design for manufacturing and assembly (DfMA): a
preliminary study of factors influencing its adoption in Singapore. Architectural
engineering and design management 14(6) pp.440-456.
Jin, et.al, 2018. A holistic review of off-site construction literature published between 2008 and
2018. Journal of Cleaner Production 202 pp.1202-1219.
Kedir, F. and Hall, D.M., 2021. Resource efficiency in industrialized housing construction–A
systematic review of current performance and future opportunities. Journal of Cleaner
Production 286 p.125443.
Simeoni,et.al, 2019. Integrating industrial waste heat recovery into sustainable smart energy
systems. Energy 175 pp.941-951.
Wen, J.T. and Mishra, S., 2018. Intelligent Building Control Systems.
Wuni, et.al, 2019. Critical risk factors in the application of modular integrated construction: a
systematic review. International Journal of Construction Management, pp.1-15.
1

PART-3
INTRODUCTION
This report covers the comparison between the most used contract NEC4 ECC and FIDIC
2017. It illustrates the differences between the two contracts relating to the payments to the
contractors, process of the project programming and various methods for resolving the disputes
which arise between the parties.
MAIN BODY
The NEC4 Engineering and Construction Contracts(ECC) has been formulated for the
appointment of the contractors for the work related to the engineering and construction work and
authority assigned to the contractors to carry out the work. NEC contracts are purely designes to
provide clarity and flexibility and to build good management. It is a modern method designed for
the clients, designers and contractors so that they can work and coordinate with each other to
achieve the objectives(RUGINĂ, 2021). It is a formalized system introduced by UK which
guides the drafting of the documents on civil engineering and maintenance project in order to
obtain tenders. It is family of standardized contracts that stimulates the good communication
within the parties of contracts.
The International Federation of Consulting engineers(FIDIC) is an international standard
organization for consulting engineering. Its office is located in Geneva and its objective is to
globally represents its services by supporting the interests of the organization by providing
technology services based on natural environment(Sadeghi, et.al,2021). Both the contract that is
NCE and FIDIC are that part of standard families and provide consultancy services. NEC and its
contracts are introduced to provide flexibility and to enhance better management whereas FIDIC
is a traditional contract which has been used for many years and has been recognized as the
standard form of contract. The purpose of comparison between the NEC and FIDIC is to
examine the effectiveness of the standards of the contracts and to avoid the disputes which arises
in the construction industries.
Comparison of conditions guiding payment
Payments made to the contractors is important in order to utilize funds in the management of the
operations of the construction.
2

According to FIDIC, provisions of the payment are made under the clause 14 Contract Price and
Payment and the builder submits the statements in the electronic form to the engineer and then
the engineer issues the Interim Payment Certificate(IPC) within 28 days from the issue of
IPC(Eggink, 2020.). After issuing the certificate the employer makes the respective payment
after acknowledging the date of submission except for the final statement. The payment process
is done within the 56 days of the Final Payment Certificate after the Performance Certificate
Whereas the payment process of NEC is mentioned under section 5 and is mainly concerned
with defining the dates in order to know the due dates for the application for assessment for the
final payment. The first payment is decided by the PM and the others is based on the terms
mentioned in the contracts. In case of FIDIC, the engineer does the measurement and valuation
in accordance with the provisions mentioned in Clause 12 of the contract.
Comparison of conditions guiding project programming
In the provisions related to the FIDIC 2017, the contractor has to submit whenever the
programmes is contradictory or when the programme is outdated to issue the revised programme
within 14 days(Wang, et.al,2021.). The requirements of the programme is not only limited to the
submission of the necessities in the electronic format and all the activities which are linked with
the programming including the documents whereas in the NEC 4 involve the use of in depth
detailed Accepted programme with specific time period of 28 days and are used directly for the
assessment of the compensation events. The extension of time period of programming depends
upon the project manager assessment work.
Comparison of dispute resolution methods.
Disputes are common in the construction and can have impact on the projects related to the
construction that is costs, delay in completion of projects etc. Disputes among the parties can
arise at any time which can be during the carrying out of the project work or may be after the
project has been completed(Dief, 2017). It is observed that if the conflicts between the parties
are not resolved quickly can impact the cash flow issues for the contractor.
The construction sector have taken various and used cost effective methods to solve the disputes
among the parties to dispute. Various methods are adopted by the companies in order to solve the
disputes such by negotiating, arbitration and by alternate dispute resolution(ADR).
3

Both the contracts lays emphasis on the avoidance of the disputes among the parties. Firstly, the
disputed parties should gain some advice before the concurrence on any allegation and then the
engineer has 42 days to arrive at a conclusion and make efforts for negotiation between the
parties. If the engineer fails to solve the conflict which arise among the parties then the decisions
is made and FIDIC focuses on the avoiding the disputes between the parties. The FIDIC which
is a traditional method and its Dispute Adjudication Board has changed its name to Dispute
avoidance and adjudication board. The NEC4 has changed its board name to Resolving and
Avoiding Disputes(Kelsey, and Punwar, 2017). The NEC4 has retained some options W1 and
W2, where the UK adjudication provisions are applied and where they are not applied. Both the
contracts provide the option for adjudication as a compulsory condition before arbitration
process. The NEC4 has introduced a new option to consult to the senior most representatives of
the parties to dispute. A four-week period is given to the parties to negotiate and also to avoid the
dispute, but does not have any impact on the legal right to adjudicate at any time.NEC4 has also
introduces a new option of W3 for the use of Dispute Adjudication Board and it is applied were
the compulsory UK adjudication provisions do not apply. The DAB of NEC4 is similar to the
FIDIC DAB and both the contracts focuses on the avoidance of the disputes within the parties.
4

CONCLUSION
From the above report, it can be summarized that FIDIC 2017 being a traditional contract
focuses on the accountability and distribution of risk that NEC4 does not.NEC4 involves more
cooperation among the employers in the management of the project work whereas FIDIC 2017
declares to be concentrated more on management.
5

REFERENCES
Books and journals
Dief, E.M.I.A., 2017. Applied Management for FIDIC Contracts, Part One: Segregation of
General Provisions.
Eggink, E., 2020. A practical guide to engineering, procurement and construction contracts.
Taylor & Francis.
Kelsey, S. and Punwar, P., 2017. Variations and the Resolution of Disputes under the FIDIC Red
Books. BCDR International Arbitration Review 4(1).
RUGINĂ, C.R., 2021. Smart contracts technology and avoidance of disputes in construction
contracts.
Sadeghi, et.al,2021. Adopting distributed ledger technology for the sustainable construction
industry: evaluating the barriers using Ordinal Priority Approach. Environmental
Science and Pollution Research, pp.1-26.
Wang, et.al,2021. Owners’ use of contract-based power in construction project transactions:
restrictions from process specificity and uncertainty. Construction Management and
Economics 39(2) pp.117-132.
6

7