1.

0 Acknowledgements

Assalammualaikum w.b.t, best of large beloved to our Prophet saw. Starting ink, We crave the
feeling of gratitude to the Almighty for all His kindness to me for complete the assignment 2
which is Building Information Modelling until complete without any obstacles occurred. Once we
gave birth to feeling happy and satisfied with each of this report during the 2 weeks given on the
run.
Here, we would like to give a million thanks to our both parent for providing everything, such as
money and their advisor, which is the most needed for this report. Internets, books, and all of
that become some of our source to complete this report. They also supported us and
encouraged us to complete this task so that we will not procrastinate in doing it. So much they
sacrifices in order to give us a good education so thank you.
And the most appreciate we would like to express my million thanks to my advisor also as
supervisor. Were giving our plenty of pleasure goes to Mdm Noor Aishah Binti Mohamad
Hamdan because she has directed us to on how to complete the assignment. Further, she
helped us to figure out correct documentation for sources that did not fit in the report.
Alhamdulillah, the result of our relentless efforts to mobilize fully.
Finally, this report can be implemented properly. In addition, those involved directly or indirectly.
We would like to express our thanks and appreciation for you all to help me carry out the tasks
entrusted to it. All the good that you have extended, is very, very much appreciated. Finally,
thanks and greetings to all.

2.0 Introduction
Growth of malaysian economy accelerated to 6.4% in the second quarter of 2014 from 6.2% in
the first quarter, marking the strongest growth since the forth quarter of 2010, and bringing the
first half growth to 6.3%. Growth was supported by resilient domestic demand and reinforced by
higher exports.

Table 2.1 : GDP by sector ( Sources : Economics Performance and Prospects, 2014-2015)

Based

on

table

2.1,

the

construction

industry

and

manufacturing

industr

y are posted positive growth towards the Malaysian economy. The construction industry
contributes significantly in the development process in terms of scale and share for both
developed and developing countries (Wibowo, 2009). The construction industry registered a
double-digit growth of 14.7% in the first quarter 2013 (Malaysian Economy, First Quarter
2013). As development progresses, the construction industry needs to satisfy the expansion
and changes in construction demand (Abdullah et al., 2004). Therefore, the construction
industry plays an important role in the economic development of any country in the world. It
establishes the infrastructure required for socioeconomic development while being a major
contributor to overall economic growth (Abdullah et al., 2004).

3.0 Three (3) main impacts of present economics to construction industry

Main Impacts of present construction economic (2014/2015) on construction industry
3.1 Implementation of goods and services taxes (GST)
Goods and Services Tax (GST) is a multi-stage tax on domestic consumption. GST is
charged on all taxable supplies of goods and services in Malaysia except those specifically
exempted. GST is also charged on importation of goods and services into Malaysia.

Payment of tax is made in stages by the intermediaries in the production and distribution
process. Although the tax would be paid throughout the production and distribution chain,
only the value added at each stage is taxed thus avoiding double taxation. Utusan Malaysia
(2010) stated the implementation of GST will be more comprehensive, efficient, transparent
and effective, thereby enhancing tax compliance. Given that, under the new system,
companies need to keep orderly accounts, the Governments revenue collection is also
expected to increase the economy of Malaysia.
The increased cost of construction and development due to GST, the price of houses could
increase by between two and three per cent, while commercial buildings could see a price
hike of up to six per cent. All types of construction services including construction of
residential houses or agricultural buildings are subject to GST. This is because construction
services are standard rated and it does not matter that residential houses are exempt. GST
will impact property prices moving forward and have arrived at increasing results for
non-residential and residential properties (Lim, 2014).

3.2 BUDGET 2015

Currently, in Malaysian economic condition, Budget 2015 is one of government initiative
that will give impact to a rapid development in construction industry.
The Malaysian Budget 2015 was tabled by Dato Sri Mohd Najib Tun Abdul Razak, Prime
Minister and Finance Minister of Malaysia on 10 October 2014.

Some of the programmes highlighted in Budget 2015 are as below:

RM1.3 billion allocated to build 80,000 units under the 1Malaysia Peoples Housing
Programme

Ceiling of household income raised to RM10,000 from RM8,000 to enable more people
to own houses

Rent-To-Own Scheme to be introduced for individuals who are unable to obtain bank
financing

National Housing Department to get an allocation of RM644 million to build 26,000 units
under the Peoples Housing Programme

Syarikat Perumahan Negara Bhd to build 12,000 units of Rumah Mesra Rakyat, 5,000
units of Rumah Idaman Rakyat and 20,000 units of Rumah Aspirasi Rakyat on
privately-owned land

The government to extend the 50 per cent stamp duty exemption on instruments of
transfer and loan agreement until December 2016

The government to raise the ceiling price of Skim Rumah Pertamaku to RM500,000

Age of borrowers to qualify for the scheme will be increased to 40 years from 35 years
Sources: MY BAJET (2014)

From the key highlighted in Budget 2015 above, we can see that Budget 2015 will give a
big impact to construction industries. The Rent-To-Own Scheme for example, will help
those without the ability to obtain financing. Thus, in overall, this budget will increase in
demand for construction especially in residential-category.
3.3 Inflation
In economics, inflation is a sustained increase in the general price level of goods and
services in an economy over a period of time. When the general price level rises, each unit
of currency buys fewer goods and services. Consequently, inflation reflects a reduction in
the purchasing power per unit of money. Inflation has become a worse problem that affects
the entire construction industry. Owners are not only paying for the increased costs of
facilities and capital but also paying for premiums of the construction prices. This is because
of the uncertainties of inflation and its side effects. Meanwhile, contractors are faced with
severe uncertainty in bidding and financing work on projects. Productivity is affected because
contractors cannot accurately forecast long-term returns on their investments and are

required to divert necessary capital to meet resource costs. So, owners and contractors must
plan for these effects and attempt to reduce the risks entailed.
The Malaysian economy is expected to remain on a steady growth path in 2014, expanding
by 4.5%-5.5% than 4.7% in 2013. The growth momentum will be supported by better
performance in the external sector among some moderation in domestic demand (Bank
Negara Malaysia, 2013). The demand for our services can be reduces by rising inflation,
interest rates, or construction costs. In addition, we bear all of the risk of rising inflation with
respect to those contracts that are fixed price and may be at risk to the effects of rising
inflation with respect to those contracts that are guaranteed maximum-price. Because a
significant portion of our revenues are earned from cost-reimbursable type contracts which is
approximately 85.8% during fiscal in year 2008, the effects of inflation on our financial
condition and results of operations over the past few years have been generally minor.
However, if we expand our business into markets and geographic areas where fixed price
and lump sum work is more prevalent, inflation may have a larger impact on our results of
operations in the future. Therefore, increases in inflation, interest rates or construction costs
could have a material adverse effect on our business, financial condition, and results of
operation (Jacob, 2008).

4.0 Probable adjustment for typical building project.

There are probable adjustment for typical building project that get from main impacts of present
economics to construction industry.
CASE STUDY SELECTED BACKGROUND
PROJECT

CADANGAN
PERUMAHAN

MEMBINA
1

DAN

MENYIAPKAN

SKIM

(PR1MA)

YANG

MALAYSIA

MENGANDUNGI 200 UNIT RUMAH TERES 1 TINGKAT 2

UNIT TNB DAN 1 UNIT SISTEM RAWATAN BERPUSAT, DI
SG.GELUGOR, PULAU PINANG
CLIENT

SIME DARBY PROPERTY BERHAD

PERIOD OF

1 YEARS

CONSTRUCTION

CONSULTANT ARCHITECT

ARKITEK ZAA SDN.BHD (No Syarikat: 603123-D)

BAY AVENUE, NO. D-15-2
LORONG BAYAN INDAH 2
11900 BAYAN LEPAS, PENANG
TEL: 604-630 8868 FAKS: 604-6308867
E-MEL :Info@zaa.com.my

CIVIL

AND

STRUCTURE JUB UTARA

ENGINEER CONSULTANT

56-1ST & 2ND FLOOR

PERAK PLAZA, JALAN PERAK
10150 PULAU PINANG
TEL: : 04 2285441 FAX: 04-228 5546

MECHANICAL &

PERUNDING HPL SDN.BHD (565035-V)

ELECTRICAL ENGINEER

CONSULTING

CONSULTANT

ELECTRICAL ENGINEERS

ENVIROMENTAL,

8-01, WISMA PANTAI

MECHANICAL

&

JALAN WISMA PANTAI

12200 BUTTERWORTH, PENANG
TEL: (604) 3337990 FAX: (604) 3317337
E-MAIL: hplsb@tm.net.my
QUANTITY SURVEYOR

ZAAS KONSULT
NO.71, 1ST FLOOR, JALAN DAGANGAN 2
PUSAT BANDAR BERTAM PERDANA 1
13200 PULAU PINANG
TEL: : 04-5756980 FAX: 04-5756980

LAND SURVEYOR

JURUUKUR BESTARI

CONSULTANT

2753, 2ND FLOOR JALAN CHAIN FERRY

TAMAN CENDERAWASIH
13600 PTAI, PULAU PINANG
TEL: 04-398 6505 FAX: : 04-399 6505
EMAIL: j_bestari@hotmail.com

4.1 Implementation of GST

It is a given that with the introduction of GST for the first time in Malaysia, there are
bound to be uncertainties. Nevertheless, the direction from the Government in
treating residential properties as an exempt supply and non-residential properties as
a standard rate supply with GST at 6% is firm.
Thus, in this project for example, are fall into categories of tax-exempt items.
However, the reality is that tax-exempt goods are only exempted from GST at the
point of sale that is when each of this house are sold to the buyers.
The goods and services which are used during construction in the making of these
tax-exempt goods are not exempt from GST.
For example, the price of each house in this project is tax-exempt but the materials
such as marble, concrete, steel, roof tiles, bricks, sand, cement, wood, electricity and
so on are not tax-exempt.

Thus, as quantity surveyors, consideration must be taken at the indirect cost incurred
in material supply chain due to implementation of GST in Malaysia. Proper
adjustments must be made in estimate especially for this project because this project
is built as the government initiative to produce low cost house to help people owns a
house.

4.2 BUDGET 2015

In this present economic condition (2014/2015), the government has structured few
initiatives and tabled it in Budget 2015. This project is one of the examples, the
implementation of programmes highlighted by the government to enhance the sector in
construction industry.

Thus, this project is constructed using IBS concept as its method of construction. IBS
method has been chosen due to its benefits in high quality and aesthetical value of
products, cleaner and safer construction sites, faster construction, greater unobstructed
span and overall lower total construction costs.

Undoubtedly, IBS offers rapid construction for the contractors. IBS method has saved up to
29 per cent from the overall duration of the entire project compared to the usual
conventional method.

As far as the time factor is concerned, such time saving can lead to savings of labour,
material and other costs. The usage of precast concrete components such as precast
columns, beams, slab panels and wall panels was the major contributor to the rapid speed
of construction. The erection of precast beams and columns as well as the installation of the
precast wall panels and slabs took less than four months for the whole area of construction.

IBS method is a best probable adjustment for the programme highlighted in Budget 2015
that gives impact to construction industries as it helps in reducing overall total construction
cost.

4.3 Inflation

When the inflation occur the price of items and services will increase, so day to day
essential things like food, fuel, consumer goods are become costly, and this also effect
individual and company. Therefore, the raw material prices hiking and similarly services are
also become costlier. Thus, the material of cement, steel, etc increase so would be the total
cost of construction will be increase.

By this impacts Malaysias construction need more worker for the becoming construction.
The need for Industrial Building System (IBS) in the country was growing in sync with
growing demand in the construction industry, as reflected in the registration of over 200 IBS
suppliers with CIDB to date. The use of IBS has increased in private sector projects as the
cost of labour has increased. Apart from being less labour-intensive, IBS also could ensure
quality, prompt completion and reasonable price for construction.

The system has

contributed significantly towards the building of projects related to affordable housing in the
country.

5.0 Sources of cost data

5.1 Technical Press
Many of the cost data that is required by the quantity surveyor are published in journals,
magazine, and other materials related to design, building, management and construction
industry as well as built environment. Among the information that can be obtained are prices
of construction resources like price of materials labour wages, and the hire purchase price
of plant. The magazine, The Malaysian Surveyor which is published by ISM, contains cost
information like elemental cost analysis, studies on cost of materials and labour wages,
basic wage rates of labour and sub-contract labour and a brief report on property market in
Malaysia. The magazine that is published 4 times a year also contains articles on the
profession of quantity surveying, estate management, land surveying, building surveying,
construction and the ISM activities.
Most other journals are published weekly or monthly. The frequent publishing gives the
Quantity Surveyor very clear update information. This short time frame will allow for quick
publication of current information. The other types of journal that could be referred to are
Architects Journal, The building, Smart Investor, Journal of Valuation and Property
Services.
It is one of the most frequent types of cost data used by Quantity Surveyors. There is much
information that can be obtained from this source such as:

Price of materials

Cost indices

Economic trends

Labour wages

The hire-purchase price of plant

Elemental analysis
Other information that can be obtained in the technical press is also consisting of brief report
on the property market in Malaysia. Articles on the Quantity Surveying profession, estate
management, land surveying, construction and ISM activities. It is very suitable to be used
by the QS as the cost indices is useful to updating historic information and the level of
economic trends, market condition can also being take into consideration.
5.2 Contract Documents & Bills of Quantities
This type of source is the main source of information used by the Quantity Surveyor. The
quantity surveying firms have many of these data for different designs or types of buildings.
The information obtained includes the schedule of rates of each element, the basic
materials rate, labours rate, plant and equipments rate, contract period, the defect liability
period of project and the overall cost of the project/building.
It is important when inspecting the contract documents to understand the conditions and
factors that influence the rates in the document. Changes to rate may be due to several
factors especially size, type and location of project, conditions of contract, market conditions
when the project is tendered and contract period.
Here are the typical contents in a contract document:

Instructions to tenderer

Tender form

Conditions of tender

Specifications

Preambles to all trades

Preliminary works and general conditions

Bills of quantities

a) Building works
b) External works
c) Mechanical and electrical works

Appendix
In the BQ, the rates may be change or vary due to several factors. Thus, it is really important
to understand the factors that lead to variation in the rates. The detailed information on the
project can be obtained easily.
Several examples of factors:

A. The distribution of preliminaries items

The rate is different between one contractor and other contractor because it might be based
on the background of the contractor, the facilities may be different. For example site office,
toilet and etc.
B. Location of site
The location index is different between each state. Thus, the rate will be vary.
C. Site techniques
Different contractor use different methods of construction which lead to variation of rates.
5.3 BUILDERS PRICE BOOK
These are considered sources of traditional cost data in countries like the United Kingdom
which are published annually by several well-known organizations. However the price book
is not yet published locally. Overseas publication could be referred to if construction is
carried out overseas. Some of the books that could be referred to are:

Spons Architects & Builders Price Book

Spons International Construction Costs Handbook

Spons Asia Pacific Construction Costs Handbook

Spons Mechanical & Electrical Services Price Book

Hutchins Priced Schedules

Griffiths Building Price Book

Laxton Wessex Priced Book

Laxtons Building Price Book

Some of the information that could be obtained is consultants fees, rate for various types of
labors, price rate of materials, labor constants, building cost index, building cost limit and
others. For example, Spons Asia Pacific Construction Costs Handbook contains price
information for the Asia Pacific countries including Malaysia. The types of information
available are data on the population, the economic and geographical aspects, construction
output and the cost data of several major materials.

6.0 Suitability of selected sources for preliminary estimate

6.1 Preliminary Estimates
Early in the planning stages of a project, both owners and designers need, and often
demand, an indication of the cost of the project at completion. Since the project has not yet
been designed, estimates prepared at this time have a low expectation of accuracy. One of
the important purposes of these preliminary estimates is to provide information to an owner
or client on the initial stage so that a decision can be made to proceed with the project. The
expected accuracy is no better than within 20-30%. Project comparison is a method of
preparing preliminary estimates when cost data for comparable completed projects is
available. If the comparison project differs substantially in size, adjustments need to be made
for the economy of scale. These are three example of sources cost data and its suitability:
6.2 Technical Press
Technical press is known as a journal, magazine and other material that related to
construction industry. When we do a preliminary estimation for a certain project, cost data are

the most important for a quantity surveyor to estimate the cost of project. In example, the
magazine published are The Malaysian Surveyor that are really suitable magazine for the
quantity surveyor as a reference to make a preliminary estimates.
Most preliminary estimates were estimates by using a GFA method or unit method. However,
The Malaysian Surveyor didnt have the unit method. This magazine has a ECA which shows
a GFA per square metre or in certain cases square feet. ECA also can be used for estimate a
breakdown of an element. However, not all published magazine have the similar type of
building function in term of ECA. Another problem to use ECA in this magazine is the location
index. The years index should not be a problem because this magazine was published 6
times a year. If the location is different with the proposed project, we have to convert the
location index to the proposed index.
Cost data obtained from the technical press is suitable to be absorbed into the calculations of
preliminary estimates. The data from the technical press is induced from the GFA and
calculate the ECA. Moreover, they releases updated cost data plus reliable based on the fact
that it is published by a trusted source that is the Institute of Surveyors Malaysia. Therefore,
the cost data published by this technical press is absolute trustworthy. So, the estimates can
be done properly and secure. Unfortunate events of further mathematical error could also be
prevented.
6.3 Contract Documents & Bills of Quantities
The function of BQ has not changed very much ever since it was introduced about hundred
years ago. In the traditional procurement system, BQ is used mainly for project costing and
as part of tender document for soliciting competitive tenders from contractors. It is a uniform
document for contractors to estimate or price the work on precisely the same basis, thus
allowing for the fairest bidding. (Willis et al., 2002). Later, it was found that BQ can be used
for other further purposes, at any stage of the project development i.e. during the pre-contract
and post-contract phases of a construction. (Molloy, 2001; Willis et al., 2002; Turner, 1979).
To the quantity surveyors, BQ are also used for project costing or estimating, for assessing
tenders, price negotiation, and valuation of interim payment and variation orders and for the
settlement of final account. It is considered as a multi-purpose document.
Other than that, BQ is used widely as a guideline for the work to be executed by the
contractors on site. They have to make sure that the work follows the specifications and

requirements as stated in the BQ. Moreover, all the contents in the BQ consist of the actual
price tendered. So, they have to meet the requirements but still according to the price. As in
the preliminary estimates, we just have to consider several main elements in the BQ and
calculate roughly. Therefore, BQ plays an important role in the making and preparation of
preliminary estimates.
6.4 Builders Price Book
Rates in this book include contractor overhead and recovery margins but do not include main
contractor preliminaries except for two sections building prices per functional unit and
building prices per square metre which are both within approximate estimating.
For preliminary estimate costs before drawings are prepared or very little information is
available, users are advised to refer to average overall building prices per functional unit and
multiply this by the proposed number of unit to be contained within the building or building
prices per square metre rates and multiply this by the gross internal floor area of the building
measured within internal wall to arrive at an overall initial order of cost estimate. These rates
include preliminaries, but make no allowance for the cost of external works or fees or
provisional services.
Where preliminary drawing are available, one should be able to measure approximate
quantities for all the major components of a building and multiply these by individual rates
contained in the building cost models or approximate estimating rates sections to produce an
elemental cost plan. This should produce a more accurate estimate of cost than simply using
overall prices per square metre. Labor and other incidental associated items, although
normally measured separately within bills of quantities, are deemed included within
approximate estimating rates. These rates do not include preliminaries or fees for provisional
services.

7.0 Related on appropriateness of the sources with impact of the present economic
conditions to construction industry
7.1 Technical press
One of the cost data source for cost forecasting and control that industry familiar with is from
the technical press. There is no doubt that most of Quantity Surveyors would use their own
collected data as the best source of cost data. This is because they are familiar with the
projects background and issues compared to source from technical press which little is
known on the background of project. However, the technical press is concerned with building
management and design. This shows that the quality and quantity of cost data from journals,
magazines and etc. is being improved from time to time.

30 years back, there is no any technical press published regarding cost of buildings. When
construction industry is expanding and become advance in time, large number of clients
demanding for a better cost control. Thus, cost analysis and forecast are being devoted in the
press, more spaces are given to this section as they realised it is necessary and demand by
the construction members.
Some of the information that can be found in journals, magazines and etc. includes elemental
analysis, resource costs, and measured rates, cost indices with future cost projections,
industry economic performance analysis, different types of building cost studies, and also the
rapid changes in the level of resource costs and measured rates in a very short period. It is
very fast materials of cost data resources as it had largely replaced the annual traditional
priced books.

7.2 Contract Documents & Bills of Quantities

A BOQ is basically a listing by trade of certain construction components that make up the
total project. The project may be an office building or a warehouse. The BOQ documents
quantities for each element of the building type such as cubic meters of concrete foundations
or square meters of roofing material. BOQs are used frequently to assist in developing
tenders or bids for projects throughout the world.

The BOQ may be provided by an

independent party or in house by the bidding contractor. Once the quantity of concrete
footing is known a unit price to cover for material, labor and equipment is applied to develop
the cost of each line item or component. The total project is basically a summation of all the
individual line items. Various levels of sophistication in terms of measurement detail and
description exist with BOQs but the same principals apply.
Prices will be varying based on the economic conditions that occurred presently in our
country. As we all know, BOQ is a document used in tendering in the construction industry in
which materials, parts, and labor (and their costs) are itemized. It also (ideally) details the
terms and conditions of the construction or repair contract and itemizes all work to enable
a contractor to price the work for which he or she is bidding. The pricing of each element is
going to be different because even though every item is going to be impacted by these
economic conditions, we have to take into account that other factors comes into play. For

example, materials price differ from each other based on location because some sites are
near thus the price will be lower.
It is important for future estimating purposes because it really impacts the construction cost.
We take GST for example; the Government has announced that GST is going to be
implemented next year. The economists have predicted that it will impact the construction
industry. Based on this statement, we can predict that the prices will be different. The data
from BOQ is less going to be reliable because data that are available from BOQ does not
include the effect of GST onto the items. It will be much more difficult to estimate when GST
is implemented.
7.3 Builders Price Book
The choice of particular price book by a builder or surveyor will depend on a large number of
factors. The use of price book over a number of years may be difficult to change, especially
when price book has provided satisfactory service during that time. The contents may not
always be what is required,but tradition dies hard. The familiarity of particular layout and
knowing just where to find the right information or whether it exists at all, are important
considerations.
When a surveyor is trying to predict a future tender sum, or a builder is trying to submit
competitive price, each must be aware that market conditions can seriously undermine their
forecast. During the twelve months, although increases in costs in the basic labour rates and
materials will have occurred, tender price will not always have followed similar pattern. The
competitive state of the market is therefore influenced by the local supply of contracts and the
demand for the work by available contractors. The influence of the method of tendering may
be also affect the prices used.