(PDF) Case Study on Mersing Telekom Building

MERSING TELECOMMUNICATION COMPLEX

THE PROJECT MANAGEMENT CASE STUDY ON

MERSING TELEKOM BUILDING

SOLARIS SDN BHD

PROPOSED PROJECT:

THE PROPOSED THREE STOREY

TELECOMMUNICATION EXCHANGE CENTER AND

OFFICE FOR MERSING, JOHOR DARUL TAKZIM .

PROJECT OWNER:

TELEKOM (M) BERHARD

REFERENCE:

PREPARED BY: REVIEW BY: APPROVED BY:

CHUA BOON PIN ELMEY YUSOF RAJA SULAIMAN

DATE: DATE: DATE:

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MERSING TELECOMMUNICATION COMPLEX

EXECUTIVE SUMMARY

This report is written to portray the application of Project Management knowledges for a

selected project, going through the process of planning, allocating of resources, scheduling

of resources, costing to accomplish the given objective in an efficient and prompt manner.

A Project Management Plan (PMP) is a method statement depicts the whole project

working process, during the planning stage of the project. PMP goes indepth of project

with the help of PM Bok Guide, leave no stone unturn for the Proposed Project. From

initial stage, step by step planning and analysis the costing, work schedule, monitoring

cash flow, control the quality of works, until the closure of Project. The Project Success

can be asserted by project planning. In preparing for the proposed Mersing

Telecommunication complex, the project management consultant drafts out this report

covering the following key management areas:

i. Scope Management

Scope involves getting information required to start a project. The work that needs

to be accomplished to deliver the project. Project scope is the listing of tasks to

carry out in accordence to the required quality, quantity and within cost. Work

Breakdown Structure (WBS) is the tool to assist the planning process of scope

management.

ii. Cost Management

The process of estimate the project cost, financial planning and control statement.

iii. Schedule Management

This section cover the Project Works Schedule by using Gantt Chart and Critical

Path method.

iv. Stakeholder Management

The identifing key project stakeholders. Analysis the stakeholders’ influence and

power of decision making towards the sucess of Project.

v. Risk Management

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To determine any potential risk, plot out the risk register, arrest the risk if any and

propose risk mitigation process.

vi. Communication Management

To touch on the flow of communication and it’s process.

Vii Procurement Management

This section deal with procurement contract.

Viii Transition Management / Close out

The final stage of the Project. The inspection, the acceptance from client and official

handing over. The completion stage of project management and financial close out. The

Project team have done their job for this project and moving out to next phase.

Hence PMP is a detail workable Project Plan, it is the hand book for the proposed project.

Traditional wisdom is that planning and analysis are important and the more planning there

is in a project, the more successful the project will be Time spent on these activities will

reduce risk and increase project success. On the other hand, inadequate analysis and

planning will lead to a failed project.

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TABLE OF CONTENT

EXECUTIVE SUMMARY……………………………………………………………..2

PROJECT MANAGEMENT PLAN……………………………………………………8

1.0 INTRODUCTION………………………………………………………………8

1.1 The Company……………………………………………………………8

1.2 The Project Objective and overview………….…………………………9

1.3 The Project brief……………………………………………………...…10

1.4 The Focus Area In Relation To PMBOK……………………………….12

1.5 Key Stakeholder………………………………………………………...13

1.6 Key management area……………………………….………………….14

2.0 PROJECT ORGANISATION…………………………………………………..15

2.1 Key project management team………………………………………….16

2.2 Management roles, responsibilities, accountability and Authorities……17

3.0 PROJECT MANAGEMENT PLAIN MAIN AREAS..…………………………..20

3.1 Scope Management……………………………………...………………20

3.2 Cost Management……………………………………………………….33

3.3 Schedule Management…………………………………………………..44

3.4 Stakeholder Management……………………………………………….48

3.5 Risk Management……………………………………………………….53

3.6 Communication Management…………………………………………..57

3.7 Procurement Management ……………………………………………...61

3.8 Transition Management/Close out………………………………………65

4.0 CONCLUSION…………………………………………………………………70

5.0 RECOMMANDATIONS……………………………………………………….74

REFERENCES………………………………………………………………………….75

APPENDICS……………………………………………………………………………77

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LIST OF FIGURES

Figure 1.1 Mersing location…………………………………………………………11

Figure 1.2 The proposed site locations………………………………………………12

Figure 2.1 The proposed organisation structure for Mersing project………………..16

Figure 3.1 Project life cycle………………………………………………………….20

Figure 3.2 Proposed Telecommunication Complex Site Layout Plan…………….…23

Figure 3.3 Create WBS input, tools & technique, and output……………………….24

Figure 3.4 Proposed WBS for Mersing Telecommunication Complex……………...26

Figure 3.5 Typical template of WBS Dictionary…………………………………….27

Figure 3.6 Project Triple Constraint……………………………………………….…30

Figure 3.7 Project Cost Management Overview……………………………..............33

Figure 3.8 Histogram showing Tender Price compare to Budget Baseline…… ……36

Figure 3.9 Pie Chart shows the weightage of the Budget cost……………………….37

Figure 3.10 Histogram showing Budget versus Timeline……………………………..37

Figure 3.11 Mersing Project S-curve…………………………………………………..38

Figure 3.12 Plan Schedule Management input, tools & techniques and output……….43

Figure 3.13 The Gantt Chart Schedule…………………………………………………46

Figure 3.14 The Human Resource distribution for Mersing Project…………………..47

Figure 3.15 General Identifying Stakeholders…………………………………………48

Figure 3.16 Potential Key Stakeholders………………………………………………..49

Figure 3.17 Stakeholder Analysis for Mersing Project………………………………...50

Figure 3.18 Stakeholder Analysis……………………………………………………...52

Figure 3.19 Risk Assessment Matrix for Mersing Project…………………………….54

Figure 3.20 Distribution of Risk Intensity……………………………………………..55

Figure 3.21 Flow Chart of Communication Management Process……………………58

Figure 3.22 Project Close Out Check List Template………………………………….67

Figure 3.23 Lesson Learn Life Cycle………………………………………………….69

LIST OF TABLES

Table 1.1 Focus Area In related to PMBOK……………………………………………13

Table 3.1 WBS Dictionary for Mersing Project………………………………………...27

Table 3.2 Estimated Project Cost Baseline……………………………………………..35

Table 3.3 Project Budget versus Contract Sum………………………………………...35

Table 3.4 Comparison of Tender Price and Budget Baseline…………………………..38

Table 3.5 High Level Budget for Mersing Project……………………………………..39

Table 3.6 Mersing Project Cost Contingency Plan……………………………………..40

Table 3.7 Critical Path Table……………………………………………………………45

Table 3.8 Risk Register for Mersing Project……………………………………………54

Table 3.9 Risk Response Strategy on Negative Risks and Threats……………………..55

Table 3.10 Risk Response Strategy on Positive Risks and Opportunities……………….56

Table 3.11 Risk Response Strategy on Negative Risk for Mersing Project……………..56

Table 3.12 Communication Matrix for Mersing Project…………………………………59

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LIST OF ABBREVIATIONS

No. Abbreviation Explanation

BLMT Build, Lease, Maintain and Transfer

BOT Build, Operate and Transfer

BQ Bill of Quantity

CIDB Construction Industries Development Board

LAD Liquidated Ascertained Damages

LOI Letter of Intend

LOA Letter of Award

M & E Mechanical and Electrical

PD Project Director

PM Project Manager

PMP Project Management Plan

PMBOK Project Management Body of Knowledge

PQP Project Quality Plan

QESH Quality, Environmental and Safety & Health

QS Quantity Surveyor

SI Site Instruction

SO Superintendence Officer

SOP Standard Operation Procedure

TM Telekom Malaysia Berhad.

TNB Tenaga National Berhad

VO Variation Order

WBS Work Breakdown Structure

WBGL Works Below Ground Level

RWDP Rain Water Down Pipe

GRD Ground

DP Dry Powder

NSC Nominated Sub-Contractor

BWK Brick Work

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THE PROPOSED THREE STOREY

TELECOMMUNICATION EXCHANGE CENTER AND

OFFICE FOR MERSING, JOHOR DARUL TAKZIM .

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The Front View of Mersing Telecommunication Complex

PROJECT MANAGEMENT PLAN

1.0 INTRODUCTION

1.1 The Company;

Company Name: Solaris Sdn. Bhd.

Corresponding Address: 702 Block B, Kelana Business Centre,

97, Jalan SS7/2, Kelana Jaya, Selangor Darul Ehsan.

Email: Solarisselatan@gmail.com

OUR VISION

To excel as “The Project Management Consultant (PMC)” in this Region.

OUR MISSION

To excel as professional Project Manager;

To strictly work in accordance to the QESH Management System;

To comply with the legal requirements.

AREA OF EXPERTISE

i. Building and Civil works Planning & Design;

ii. Turnkey Contract Management; and

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iii. Tendering Management.

Being pioneer to set up Solaries Sdn. Bhd., Ir Raja Sulaiman has a vision to operate

professionally in the field of PMC. The full support and commitment of the team member

has gain sound reputation in the field of PMC as “The Project Management Consultant”.

The management also concerned of site operation safety and health. Organising regular

site inspection and fuming of site to stop mosquito breeding and fight the treat of dengue.

This is part of the community awareness.

Solaris Sdn. Bhd. practicing management system which is conformed to ISO 9001:2015

and ISO 1400:2015. We are in the process of obtaining the OHSAS 1800:2007 standard

certifications.

With leadership of Ir Raja Sulaiman, we are confident that the company will excel and we

are determined and dedicated to:

i. Provide comprehensive Project Management Plan for the client and reduce and

foreseeable risk and financial cost;

ii. Provide our clients with upmost professional management service;

iii. Managing our task to the highest safety and health standard;

iv. Conduct the Development of the project in accordant to the legal requirements and

regulations;

v. Practice the ISO and QESH standard operating system, and quality work standard

in term of craftsman standard and quality materials use; and

vi. Satisfied clients are our greatest pride and fulfilment of success.

1.2 THE PROJECT OBJECTIVE AND OVERVIEW

Mersing is a fishing village and a ferry terminal for ferry to and from Tioman and

surrounding islands. The development of the village is increasing, when the state

government and district office have put in effort to bring in investment to set up factories

and industries estate for SME, for example, factory producing seafood cracker, and other

commercial activities in the surrounding of Mersing. The improved road system leading

from Kuantan to Mersing is widened and it is pleasant to travel in this newly upgraded

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road. It is convenient to approach Mersing via Kluang and Bukit Tinggi Johor. The tourist

promotion campaign on the islands resort and scuba diving helps to draw lot of visitors to

Mersing too. The demand for telecommunication service is increased, upgrade of the

facility is urgently requested, as to provide good service not only during the casual time,

but it is most important during the emergency time.

The current set of telecommunicating equipment is housed in a 40 foot container. The

capacity of the equipment is far from coping up with the demand of the end users. There is

urgently in need to expend the number of telephone line, internet system and increase the

size of communication capacity. The operation, sale and service office is in a small

wooden hut. Hence it is badly in need of a proper building designed to house all the

required telecommunication equipment.

Telekom Malaysia Berhad (TM) consider the situation and agree the go ahead of

increasing the capacity of the telecommunication service.

The proposal design criteria of the project as follow:

i. To design a well-planned building to house the communication equipment;

ii. To facilitate the rapid demand of internet facilities;

iii. To increase the capacity of the telecommunication ability by 10 folds (in stages);

iv. To provide administration facility and

v. To provide sales and services front office.

1.3 THE PROJECT BRIEF

The selected location for the proposed Project at Lot 497,Jalan Ismail , Bandar Mersing,

Daerah Mersing, Johor Darul Takzim.

The Proposed three storey building consists of sales and service office at ground floor,

occupy about one third of the ground floor area. The other two third consist of computer

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flooring; will house the telecommunication computer system. A backup batteries room and

a workshop.

Main telecommunication system will be installed on first and second floor. Portable water

tank is located on the roof floor and all air-conditioning units will be located in the rood

floor.

There are other ancillary buildings like Pump house for fire fighting, TNB (Tenaga

National Board) substation, guard house and Telecommunication Steel Tower.

The Project focus on the three storey building, whereby most construction activities will be

on this building. Other ancillary buildings’ and installation works can fit into the schedule,

as the working schedule of the main building is the critical path. Therefore it is a clear

case study of the critical path, where the works take the longest time to complete, while

other works can tagged in between and can be completed before the main building

completion.

THE SITE LOCATION

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Figure 1.1 : Map showing the location of Mersing , Johor Darul Takzim

Source : Adopted from Google Map

Figure 1.2 : The Proposed Site location

Source : Adapted from Google Map

1.4 THE FOCUS AREA IN RELATION TO PMBOK

The preparation of this Project Management Plan is drawn out inaccordance to the Project

Management Body of Knowledge (PMBOK, 6th Edition). The Planning Structure of this

report uses PMBOK’s guideline of Project Life Cycle of Initiation, Planning, Organising,

Execution, Tracking, Controlling and Close out. The Project’s Objective have to be

sucessfully fullfiled, leave not chance for any mistake to take place and reduce the risk to

the minimium.

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Table 1.1 : Forcus Area In Relation to PMBOK

No Focus Area PMBOK Focus Area PMBOK

Section Ref

1 Scope

Management

What is Project Management

Project Intergration &Scope

Management

5

2 Cost

Management

Project Cost Management 7

3 Schedule (Time)

Management

Project Time Management 6

4 Stakeholder

Management

Project Stakeholder Management

Stakeholder Influences &

Project Life Cycle

13

5 Risk Management Project Risk Management 11

6 Communications

Management

Project Communications

Management

10

7 Procurement

Management

Project Procurement

Management

12

8 Transition Management

Close out

Source: Derived from the research paper and PMBOK 6th Edition (2017)

1.5 KEY STAKEHOLDER

Internal stakeholder

i. The Owner or owner’s representatives of the Project;

ii. The Project management team;

iii. Contractors and sub contractors;

iv. The supervisor, craftman and labour force.

External stakeholder

i. The Local Authorities;

ii. The Suppliers and Vendors of Building Material, Plant & Equipements;

iii. The Telecommunication users/ End users;

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iv. The Creditors / Financiers;

v. Local community;

vi. Consultant

vii. Auditor; and

viii. The NGO (Non Government Organisation).

1.6 KEY MANAGEMENT AREAS.

This Project Management Plan (PMP) will be written in accordance to PMBOK, 6th

Edition (Project Management Body of Knowledge, 2017 ) key management areas and

guild line for Project Planning, Scheduling, Control, tracking towards the final stage of

closing the project. The Key PMBOK management areas will be discuss in detail as

follow:

i. Scope Management;

ii. Cost Management;

iii. Time (Schedule) Management;

iv. Stakeholder Management;

v. Risk Management;

vi. Procurement Management;

vii. Communication Management; and

viii. Transition Management / Close

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2PROJECT ORGANISATION

INTRODUCTION TO PROJECT ORGANISATION

Project organisation is grouping each every individual with the right capability performing

the correct task. The ultimate aim of the organisation is to fulfil the set goal. Let’s discuss

some of the known organisation structure as follow:

FUNCTIONAL STRUCTURE

A functional organization structure, people who have the same skill or knowledge be group

together to perform similar task. So all civil engineers are placed in the construction

department and the marketing staffs are in the marketing department, operations, senior

management and human resources departments. Team members are group by their

speciality and work independently.

The advantages of this kind of structure include quick decision making, because the group

members can easily communicate. They can also learn from each other, since they already

possess similar skill sets and interests.

The Mersing Project Organisation using FUNCTIONAL STRUCTURE.

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2.1 KEY PROJECT MANAGEMENT TEAM

The Proposed Project Management team is structured to the need of this project. The

proposed project is not a large operation, therefore we proposed to use functional

Organisation Structure for efficient operation. The Key Project Management Team as

shown below:

Figure 2.1: The Proposed Organisation Structure for Mersing Project

Source: Derived for this report

Project Director is the main key team leader; he liaises between the owner representative,

the local authorities, the consultants, Project Manager and the working team.

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Surveyor

Solaris Sdn Bhd (PMC) Project

Director

Quantity Surveyor

(QS)

Project Manager/

Contract Manager

Site Manager/Site

Engineer

Building Supervisor

Structural

Contractor

M & E

Contractor

Engineering

consultant

M & E

consultant

Architect

Consultant team

Staff

Contract & Safety

Team

M&E Supervisor

Staff

Contract &

Procurement

Safety & Health

MERSING TELECOMMUNICATION COMPLEX

2.2 MANAGEMENT ROLES, RESPONSIBILITIES, ACCOUNTABILITY AND

AUTHORITIES

PROJECT DIRECTOR

i. The leader of the whole Project Management Team;

ii. To coordinate and oversee the success of the Proposed Project;

iii. To acts as Superintendence Officer ( SO );

iv. Establish objectives, policies and strategies to meet the Project’s requirement;

v. Defines responsibility and authority of the key team member; and

vi. Liaison officer with the owner representative.

PROJECT MANAGER

i. To lead the project team and manage the whole project externally and internally;

ii. To communicate well to all levels internally and externally;

iii. To liaise with the consultants on design related works;

iv. To implementing the Project as per the approved drawing;

v. To conduct periodic meeting to track the progress and the quality of the Project.

vi. To ensure the progressive claim is in order;

vii. To establish risk assessment meeting and to strategy the action remedial or

prevention plan;

viii. To liaise with the local authorities, compliance to all regulation requirement;

ix. To monitor the quality standard applied and compliance;

x. To take appropriate action when work progress is behind time schedule and make

catch up plan to meet the close up;

xi. To control the cost of the Project and not to over run the cost;

xii. Be effective lead with sound technical skills; and

xiii. Be Empathetic and enthusiastic.

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SITE MANAGER / SITE ENGINEER

i. To overall in charge of the site operation, quality assurance, work force monitoring,

site safety & health treat;

ii. To liaise with all level of personal at site on technical matter, if necessary feedback

to consultant team for assistance;

iii. To follow up liaising with local authorities;

iv. To communicate at all level;

v. To negotiate for procurement’s best deal;

vi. To plan the whole construction works and mitigate any problem arises; and

vii. To track the progress of works and monitor the progress.

CONSULTANT TEAM

i. To design the building to suite the owner required perimeter and needs;

ii. To liaise with the local authorities on statutory requirement;

iii. To inspect the construction work is done and maintain in accordance to

specification;

iv. To prepare the tendering documents; and

v. To survey and demark the working boundary and building position.

CONTRACT AND SAFETY TEAM

i. To prepare contract for purchase of building materials;

ii. To organise the storage area and logistic materials, plants and equipment;

iii. To prepare contract for successful contractor and sub-contractors;

iv. To establish safety rules and regulation in accordance to QESH requirement;

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v. To prepare the risk registration and draw out strategies to overcome or preventing

the risk to occur;

vi. To inspect the site for Safety and Health related problem. Immediate action is

prompted;

vii. To monitor cost and expenditure, ensure the cost stay within the budget;

viii. To monitor VO (Variation Order ) and SI (Site Instruction ) for progressive claim;

and

ix. To maintain and upkeep the site storage and keep track on material flow to reduce

wastages;

SUPERVISOR

i. Assist the Project Manager to all aspect of works at site;

ii. Record the site diary and control the progress of works;

iii. Supervise work in progress for safety, in accordance to specification and correct

quality and quantity;

iv. Plan ahead of the contractor on physical works, hold meeting with contractor for

material requirement and work force head count;

v. Supervise and conduct the necessary test at site or outside and monitor the outcome

of test results to confer to the standards of practice or specification before proceed

to next stage of construction works; and

vi. Check the setting out and confirmed the positioning and floor high is correctly

measured and transferred.

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3PROJECT MANAGEMENT PLAIN MAIN AREA

3.1.0: SCOPE MANAGEMENT

Project scope management is the process to define and include all work required to

complete the project successfully ( PMBOK 2017 ). The process includes

i. Initiation:- Authorizing the project or phase;

ii. Scope planning:- developing a written scope statement or work statement (Project

Charter);

iii. Scope definition:- subdividing the project into smaller, more manageable

components, that is Work Breakdown Structure (WBS );

iv. Scope verification:-formalizing acceptance of the project scope;

v. Scope change control:- controlling change.

vi. Collect Requirements; and

vii. Validate Scope

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Figure 3.1: Project Life Cycle

Source: Adopted from Google search

3.1.1 THE PROJECT SCOPE STATEMENT ( SOW )

The Proposed project is not a large one; the site is divided into 5 zones.

i. The 3 storey main building;

ii. The Communication Tower;

iii. The Main Entrance & Guard house, and rear gate;

iv. The Sub-station; and

v. The Fire fighting pump house and water tank.

ZONE 1: THE 3 STOREY MAIN BUILDING

Ground floor consist of Front office, which house the reception area, 2 executive rooms,

one discussion room, Some display area and 3 number customer service counters. There is

staircase for access to other floor. Female & Male toilet includes some service ducts for

Piping and cable respectively. Standby Battery Room is next to Dust proof and pressurised

room for sophisticated communicating equipment’s (The installation of the sophisticated

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communicating equipment’s and computer system will be done by TM own Technical

Division.). There is a fire escape stair at the rear portion of the Ground Floor.

Second and Third floors are the computer raise floor system for the telecommunication

exchange and computer system. Special pressuriser Dry power fire fighting system is

installed for Second and Third Floors where all equipment’s are related to electricity.

Sprinkle system being installed for Ground floor and front office.

The whole building is fully installed with Air Conditioning. The second and third floor

have the privilege for a stronger and enhanced Air Conditioning System for both below

raise floor and above raise floor.

Septic tank for 15 persons is installed to service Ground, second and third floor Toilets.

Surau for male and female separately constructed on third floor near to staircase lobby for

the convenience of the TM staff.

Loading bay at the rear of the building, there is horst crane for second and third floor. The

wall is to be roller shuttle instead of brick wall for the hosting area.

The roof is flat roof, to be waterproof. Service Water Tank for toilets is to be installing

here and all the air conditioning external units are arranged in zone and label according to

the corresponding units and floor level for easy identify during maintenance and repair.

External Works Around Main Building

Access road linking Main entrance and rear entrance. In front of the front office is the car

park for TM customers. At the rear of the building is the loading bay. Landscaping on

verge between road kerbs to the fencing. Plants and grass will be planted for shed and

greenery. Street light will be install along the access road, car park and loading bay.

There will install fencing light at every fencing pole.

ZONE 2: THE COMMUNICATION TOWER

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It is a 150 meter steel structure tower. There is two nos. 10x10 ft. control room servicing

the tower before connection to the main building. Communication satellite disks and

connection to be install and control by TM Technical personal.

ZONE 3: THE MAIN ENTRANCE AND GUARD HOUSE AND REAR GATE

The Main Entrance is the main access for the public and staff. There is a Guard house

complete with WC facilities for security personals. A rear gate is installed for the

maintaining staff and access for equipment’s.

ZONE 4: THE SUBSTATION

The substation is a double chambers station. TNB main supply is connected at this

substation and step down the current for a stable supply to the main building ( exchange

building) and Tower. The equipment’s, transformers and switch gear will be installed by

TNB personal.

ZONE 5: THE FIRE FIGHTING PUMP HOUSE AND WATER TANK

The will be a Fire fighting pump house with 500 gallons of water tank, ready for any

incident of fire outbreak. In the computer raise floor system where water is hazardous, dry

power fire fighting system is specially installed for electrical installation. Together there is

2 numbers of Fire Hydrant which is connected to the main water supply for emergency.

The Site Plan as follow:

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Figure 3.2: Proposed Telecommunication Complex Site Layout Plan

Source: Derive from the research

3.1.2: WORK BREAKDOWN STRUCTURE ( WBS )

Work Breakdown Structure (WBS) is a powerful tool which breaks each task into smaller

and manageable components. These small and manageable components are achievable

and deliverable.

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Figure 3.3: Create WBS: inputs, Tools & Technique, and Output

Source : Adopted from PMBOK, 6th Edition)

An Effective Work Breakdown Structure:

i. Is a deliverable-oriented grouping of project elements;

ii. Is created by detail planning and analysis;

iii. Contains 100% of the work defined by the scope or contract and captures all

deliverables (Internal, External, Interim) in terms of work to be completed;

iv. Defines the context of the project, clarifies the work and communicates project

scope to all stakeholders;

v. Is expressed as a chart or outline, providing a graphical or textual breakdown;

vi. Arrangement of all major and minor deliverables in a hierarchical structure - and is

constructed so that each level of decomposition contains 100% of the work in the

parent level;

vii. Should contain at least 2 levels;

viii. Evolves along with the progressive elaboration of project scope, up to the point of

scope baseline, and thereafter in accordance with project change control - allowing

for continual improvement; and

ix. Employs a coding scheme for each WBS element that clearly identifies the

hierarchical nature of the WBS when viewed in any format.

To develop WBS, one has to follow the guideline and reference to key documents such as

(may not limited to):

i. The Project Charter;

ii. The Project problem statement or scope definitions;

iii. The appointment Contract or agreement; and

iv. Project Management Practice.

Understanding the WBS process, Let us start working on the WBS for this project. Since

the project is divided into different Zone, the work break down decomposition of work

trade will be by each individual Zone. With this effect, any alteration and change on any

Zone will not affect or cross over to other Zone. The Zoning will help to monitor, track

and control the progress of each Zone.

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Figure 3.4: Proposed WBS for Mersing Telecommunication Complex

Source : Derived from this research paper

Table of Works Breakdown Structure (WBS ) is enclosed in Appendix 1: WBS schedule ,

Appendix 2: WBS schedule (continue), Appendix 3 Inspection Check list and Appendix

4:Close Out check list, for cross reference with Figure 3.4. This table will be utilized in

the Project Transition and Close Out as Inspection, Testing and commissioning check list.

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Proposed 3 storey Telecommunication Complex

Site Survey

and setting out

Off Site Tower

Steel structure

Fabrication

Footing &

Ground Beam

Temporary

Access

Site Office &

temp. Utilities

Local Authorities’

approval & to start work

Design &

Technical

Site Preparation

Piling

Pile Cap &

Ground beam

Below Ground

Level Cable

Trench

Below Ground

Level Water

Reticulation &

sanitary piping,

manhole, pump

sump

External Road kerf

& road work

Water main at rear

entrance

Road side

monsoon drain &

manhole

Electrical wiring

system

Installation of

Steel Tower

Pile Cap &

Ground beam

GH Structure

Roofing

Main & rear

Entrance Gate

sliding door

railing

Water proofing to

Roof

Below Ground level,

street lighting cabling

Instal sliding

door

Air conditional

system

Septic tank

installation & Hydrant

piping

Footing &

ground beam

Substation

structure

Footing &

ground beam for

pump house

Footing for Water

tank

Pump house

Water tanl

Water proof

to flat roof

Below

Ground level

cable trench

Power supply for

pump & lighting

CCTV wiring

system

Pump installation

Sanitary

system for

WC

Wiring for

lighting &

power for

Fire Fighting

control panel

& CCTV

control panel

Zone 1

Main Building

Zone 2

Communication Tower

Zone 3

Guard House

Zone 5

Fire Fighting

Zone 4

Sub Station

MERSING TELECOMMUNICATION COMPLEX

3.1.3 WBS DICTIONARY

WBS dictionary is a document prepared with detailed information about deliverables,

activity, with milestones, dates, resources, costs, quality and time schedule for each

component as descript in the proposed WBS. WBS can be plotted using spread sheet

record WBS element name, provides description of works in that element at a minimum.

A designated field of Statement of Work (SOW) is covered by that WBS element. This

mapping relates the two structures to each other and opens up a lot of capabilities for

understanding how the project is planned, how it is performing and what is the cost.

WBS Dictionary records information’s of the project, not limit to the following:

i. Name of Project and Project Number (if any);

ii. Project Manager Name;

iii. Date & Document Number;

iv. WBS Code;

v. Resources Requirement and Allocation;

vi. Cost Estimation;

vii. Name of the components and work Description;

viii. Quality Need and Acceptance Criteria; and

ix. Due Date.

Figure 3.5 : Typical template of WBS Dictionary

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Source : Adopted from Google Search

Table 3.1 shows Proposed WBS Dictionary for Mersing Telecommunication Complex

derived from the Bill of Quantity (BQ).

Table 3.1 : WBS Dictionary for Mersing Project

Source: Derived from this research paper

3.1.4: SCOPE BASELINE

Scope baseline consist of :

i. Work Breakdown Structure (WBS );

ii. Work Breakdown Structure Dictionary; and

iii. Scope statement.

We have cover WBS and WBS Dictionary on 3.1.2 and 3.1.3 respectively. For Scope

statement we have make a check list derived from 3.1.1: Scope Structure (SOW ). This

check list is useful for final inspection of the deliverable during the close out stage and it is

enclosed in Appendix 4.

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Project Scope deals with the specific requirements or deliverable task to complete the

project. Scope is important to manage on any project, if Project Manager cannot control

the scope of the project; it is not likely to deliver the project on time and within budget!.

Stakeholder’s expectation to the project play a key factor in managing and establishing

scope Stakeholders can often have new demands, e.g. that the requires to alter design

during the course of project, and Project Manager needs to be able to assuage their

expectations. This can especially be the case in long term projects where there might be

new stakeholders introduced in the middle of the project.

In order to accommodate the requests of stakeholders, and new demands that arrive

naturally as projects unfold, Project Manager needs to be able to manage change. This can

include managing change requests. When managing change requests, be sure to

accommodate those that are necessary to achieve project goals and deliverables.

These scope management steps are all essential because the amount of time take for each

task requires is critical and effecting the Quality and Cost of the Project. In turn it will

impact the cost and whole schedule of the Project.

3.1.5 PROJECT GENERAL ASSUMPTION

The general assumption of the Project is to complete the project in time, within budget and

will not change for the whole duration of Project. PMBOK advocates that Project

assumption is a factor in Planning Process that is considered to be true, real or certain after

without any proof or demonstration. Assumption 2 extreme answers – true or not true. The

one assumption turns out to be not true, and this change can impact the Project decisions,

estimation and the designs. Assumptions play an important role in developing the risk

management plan. Therefore, as a project manager you must collect and identify as many

as assumptions you can. It will assist you in developing a sound risk management plan

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This PMP makes a few assumptions for Mersing Telecommunication Complex:

i. Weather during North East Monsoon will start at end of November and stop around

January next year. The assumption references to the meteorological report. Extra

time allowance for works and tasks during that period will be lengthened;

ii. Due to site constrain, there is a school nearby, Project schedules and stop the

external operating activities during the school break time period to avoiding jam up

the traffic and post hazard to the passer-by;

iii. The budget of the project has been allocated and the fund was tabled during the last

TM general meeting and approval was given to commence work at the earliest date

possible. Hence the design plans have to be ready before commencement;

iv. Assume that relevant stakeholders will support the Project throughout the whole

duration of the Project;

v. Consultants have submitted Plans to Authorities for approval and follow up action

to speed up the approval; and

vi. There is provisional sum and NSC sum reserved for any changes or unforeseen

occurrence for the Project.

3.1.6 PROJECT CONSTRAIN

The Constrains as defined by PMI, are non-other than Project Scope, Time and Cost.

Quality of works must not be sacrificed when any constrain is being altered. Thus the

Cost

The

financial

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MERSING TELECOMMUNICATION COMPLEX

commitment of the project is dependent on several

variables. There are the resources involved, from

materials to people, which include labour, plant and

machineries costs. There are other outside forces that

can impact a project, which must be considered in the

cost of the work.

Figure 3.6: Project Triple Constraint (source; PMI)

Source: Adopted from PMI

There are also the fixed and variable costs inherent in any project.. This can seriously

come into play with the use of contract workers or outsourcing, for example sub contract

some portion of works to sub contractor.

Cost processes include cost estimating to figure out the needed financial commitment for

all resources necessary to complete the job. Cost budgeting creates a cost baseline. Cost

control works to manage the fluctuation of costs throughout the project.

There are several methods for estimating project cost:

i. Historic Data: Using the costs of passed projects for comparison;

ii. Resource Costs: Determining the rate of cost for goods and labour by unit;

iii. Bottom Up: Estimating from the lowest- to the highest- level work package;

iv. Parametric: Measure statistical relationship between historic data and other

variables;

v. Vendor Bid: Average of some vendor bids on supply;

vi. Reserve: Aggregate cost of activities; and

vii. Quality Analysis: Estimate cost of highest quality for activities.

Cost is one of the more complicated points on the Triple Constraint triangle. To ensure that

the estimated rates are as accurate as possible, it’s recommended to use project

management tools to calculate the cost variances.

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3.1.7 TIME

The schedule is the estimation of time allotted to each task in order to complete the project,

or producing the deliverable. The first step is to derive all the necessary tasks from the start

to the finish of the project. A Work Breakdown Structure (WBS) is used to take the large

project goal and break it down into a series of more manageable tasks. These tasks are then

prioritized, dependencies are linked, and then placed on a timeline. The Project Schedule is

drawn using Gantt Chart, and determine duration for each task. Passed Project data can be

referring for accurate estimation.

According to the Project Management Body of Knowledge (PMBOK), the schedule can be

managed through a process of time management. Those steps are as follows:

i. Plan Schedule Management: Creating policies, procedures and documentation for

planning, executing and monitoring the project schedule;

ii. Define Activities: Identifying and documenting what actions must be done to

produce the project deliverables;

iii. Sequence Activities: Identifying and documenting the logical order of work to be

most efficient;

iv. Estimate Activity Resources: What type and how many materials, people,

equipment, supplies, etc. are needed to perform each activity;

v. Estimate Activity Durations: How long will it take to complete each activity with

the resources allocated;

vi. Develop Schedule: Analyse activity, duration, resources and timeline to develop a

schedule. Useful tool to assist in scheduling is Microsoft Project Software; and

vii. Control Schedule: Comparing planned schedule to actual progress to determine that

the project is on track.

3.1.8 `PROJECT SUCCESS FACTORS

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The community of Mersing have long waiting for the upgrade of the telecommunication

system. There is no return but to go all out to make the Project success. The brainstorming

section has identified the Factors which will affect the Success of the Project.

i. The full commitment from the team member, owner, and all stakeholders is

important factors governing the success of the Project;

ii. Quality assurance;

iii. Proper project planning;

iv. Practice good communication; and

v. Work within budget.

3.2 COST MANAGEMENT

The Cost Management is the process to ensure the project is completed within the

approved budget ( PMBOK 2017 ). The Cost management sets a baseline for Project Cost,

where Project Manager is governed by this baseline for their decision and direction when

managing Project cost. Project Cost Management includes activities and tools assisting

Project Manager to complete the Project within the approved budget.

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Figure 3.7: Project Cost Management Overview

Source: Adopted from PMBOK 6th Edition.

3.2.1 RESOURCES PLANNING

In the initial phase of a project the required resources to complete the project activities

need to be defined. Work Breakdown Structures (WBS) and historical information of

comparable projects can be used to define which physical resources are needed. The

required for time, material, labour, equipment, etc. Once the resource types and

quantities are known the associated costs can be determined.

Our team of Quantity Surveyor works on the taking off works quantity, using Work

Breakdown Structures to define the physical resources required, e.g. time, material, labour

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MERSING TELECOMMUNICATION COMPLEX

and equipment to complete the proposed project, and has determined the baseline of cost

estimation.

3.2.2 ESTABLISH PROJECT COST BASELINE

Several cost estimating methods

can be applied to predict how much it will cost to

perform the project activities. The choice for the estimation method depends on the level

of information available. Analogous estimating using the actual cost of previous or

similar projects can serve as a basis for estimating the current project. Another option is

to use parametric models

in which the project characteristics are mathematically

represented. Estimates can be refined when more information becomes available during

the course of a project. Eventually this results in a detailed unit cost estimate with a high

accuracy. Remaining uncertainties in estimates that will likely result in additional cost

can be covered by reserving cost (e.g. using escalation and contingencies).

The cost estimate together with project schedule form the input for cost budgeting. The

budget gives an overview of the periodic and total costs of the project. The cost estimates

define the cost of each work package or activity, whereas the budget allocates the costs

over the time period when the cost will be incurred. A cost baseline is an approved time-

phased budget that is used as a starting point to measure actual performance of project’s

progress.

Table 3.2. : Estimated Project Cost Baseline

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Source: Derived from this research paper

As for the Proposed Project the estimation of the project Tendered cost as appended

below:

Table 3.3: Project Budget versus contract sum

Source: Derived from this research paper

Cost budget (baseline) is the estimated cost budget of the project which is approved by the

company before the Project tendering exercise.

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The comparison Budget versus Timeline as shows below:

Figure 3.8: Histogram showing Tender Price Compare to Budget Baseline

Source: Derived from this research paper

The main budgeted cost is the Main Building at Zone 1, its recorded 74.91% of the

total budget price. It is due to this Main Building is designed to house the sophisticated

telecommunication equipment. Therefore lots of facilities focus on the main building,

especially the installation of air condition system, raised floor system and back up battery

room for emergency use.

Figure 3.9 shows the cost weightage by using pie chart.

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MERSING TELECOMMUNICATION COMPLEX

Figure 3.9 : Pie Chart shows the weightage of the budget cost.

Source : Derived from this research paper

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Figure 3.10: Histogram showing Budget versus Timeline

Source: Derived from this research paper

Figure 3.11: Mersing Project S-Curve

Source: Derived from this research paper

Table 3.4: Comparison of Tender Price and Baseline Budget

Source: Derive from this research paper

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3.2.3 PROJECT BUDGET ( HIGH LEVEL)

Table 3.5: High Level Budget for Mersing Project

Source: Derived from this research paper

The high level Project Budget consist of :

i. Labour costs;

ii. Material costs; and

iii. Non-labour costs.

The high-level; budget provides the Project Sponsor and estimate of the total

expenditures expected for the project and allocate fund to support the project. A high-

level budget is a summary of estimated costs to complete the high-level project

milestones.

The proposed project expected to profit of 19.16% at the value of RM16,087,300.00.

The profit level is slightly lower than 20%, for any changes and risk arises will has

impact on the profitability. Project Management Consultant has to monitor and tracking

the project closely not to go off the schedule, budget and eliminate any possible ricks.

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There are some reserved fund to take care of unexpected risks and changes. This sum is

useful when in need, and the expenses for change and risk will eat into the budgeted

profit.

3.2.4 COST BUDGET AND CONTINGENCY FOR RISKS

The PMC estimate some fund for any unforeseen Risks. It is due to unknown possible

problem or any need to alter plan or perhaps some change of environmental requirement,

any little change may affect the cost, the time of completion of project. Therefore

allocation for the contingency sum of RM8 million is located as provisional sum. Any

alteration of work or additional work can be taking care of. It is about 10 per cent of the

total budget sum. On top the provisional sum an allocation of RM3.5 million as sum for

Nominated Sub Contractor (NSC) is allocated if there is in need to employ other

contractor or special contract to take care of specialised to and unexpected task. So the

total allocation as contingency of the project is about close to 13.70 per cent of the total

budget price as show in Table 3.6. The allowance of anything below 10% for

contingency is a bad budget.

Table 3.6: Mersing Project Cost Contingency Plan

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Source: Derived from this research paper

3.2.5 COST CONTROL

Cost control is concerned with measuring variances from the cost baseline and taking

effective corrective action to achieve minimum costs. Procedures are applied to monitor

expenditures and performance against the progress of a project. All changes to the cost

baseline need to be recorded and the expected final total costs are continuously

forecasted. When actual cost information becomes available an important part of cost

control

is to explain what is causing the variance from the cost baseline. Based on this

analysis, corrective action might be required to avoid cost overruns.

Dedicated cost control software

tools can be valuable to define cost control procedures,

track and approve changes and apply analysis. Furthermore, reporting can be enhanced

and simplified which makes it easier to inform all stakeholders involved in the project.

Projects are updating the project cost estimates, monitoring the costs of the project,

controlling the project costs, calculating and releasing specific contingencies, calculating

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the margins and analysing profitability. The most important challenges based on our

empirical study are the following:

Due to uniqueness of each project there is no accurate information for pricing and setting

up appropriate contingencies in the sales phase. For example, cost of purchasing unique

services is difficult to estimate. Prices of resources can vary during a long project, which

causes problems for estimating costs. In complex projects, there are more project

management and integration engineering costs, which are more difficult to calculate that

product costs. Numerous legal entities require their own margin calculation.

Profitability of the project is difficult to calculate and requires well-designed transfer

pricing when project is implemented in several independent business units. If the project

size is large as compared to parent organization, cost overruns may results financial

challenges to parent organization.

3.2.6 CHANGE BUDGET ALLOCATED

High uncertainty leads to large contingencies. Multiple contingencies are related to the

different WBSs, so perceiving the total value of the contingencies is challenging. Long-

term and high-value projects require the use of the percentage of completion (POC)-

method. This requires the use of the recognition of accrued revenue, which leads to

contingencies having to be released during the project. There are two stakeholders, the

owner of the project and authority will cause change of project planning or statutory

change of bylaw. A contingency sum is reserved to take care of this kind of change.

Usually change made by the owner, it is fair to claim from the owner, since the final design

plan was tabled for the client approval, and the design of the facilities is in accordant to the

requirement of the client needs. Where change made by the authority is something not

likely to happen. Since the by law and those requirements are all set and proven to be

acceptable. Therefore the contingency sum usually will not be use, unless un-avoided

circumstances a raised.

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3.3 SCHEDULE ( TIME ) MANAGEMENT

Schedule or Time Management is the document record the allocation of 3 main items:

i. What to do?

ii. When to do and take how long to do it? And

iii. Who to do it?

The Project is break down into deliverables tasks, and it can be sub divided into many

smaller tasks. Each smaller task cannot start work until other related track has completed

the work or near to complete the task. The dependency of tacks will be reflected in the

schedule. This Dependency linkage of tasks formed the longest time period to complete

the Project as termed Critical Path.

Each has the man hour or machining time to complete the task, the working hour time the

quantity of task is the time taken to complete the task. E.g. plastering of wall, skill craft

man can plaster 80 sq. meter of wall. If the total wall area is 800 sq. meters, then his team

of 3men (craft man plus two helpers) can complete plastering wall in 10 days.

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There are other researchers have made up the full working time for every task and trade.

With the BQ, it is easy to work out the time sheet of each task and trade. As plotting the

schedule, it is much easier by using Microsoft Project.

Figure 3.12 : Plan Schedule Management: inputs, Tools & Techniques, and Outputs

Source : Adopted from PMBOK 6th Edition (2017)

3.3.1 THE PROJECT SCHEDULE

The main activities of Mersing Telecommunication Complex are focus on Zone 1, where it

is going to house the sophisticated equipment and the networking. Every stages of

construction of the building works are the milestone of the project. The total time taken to

construct the building will be the critical path of this project. The construction time for

auxiliary buildings and steel tower can easily fit during the construction period of 30

months.

Table 3.7, Appended the written critical path planning for Mersing Telecommunication

Complex. It important to work within the time frame, because the telecommunication

equipment delivery time is fixed to this time table mile stone (Refer to Appendix 7:

Schedule Mile Stone – Critical). The sophisticated equipment are not allow to store under

weather condition, especially in Mersing, where the sea is close by and the salty

atmosphere will damage the equipment.

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Table 3.7: Critical Path Table

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Source: Derived from this research paper

3.3.2 THE GANTT CHART SCHEDULE

The schedule of the project as per the critical path table is drafted into Gantt chart as

follow:

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Figure 3.13 The Gantt Chart schedule

Source: Derived from this research paper

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From the Gantt Chart schedule, the fabrication of steel tower member will start as early as

after confirmation of fabrication purchase order was made. The installation or erection of

the steel tower will commence after the concrete foundation gain the full strength. The

time taken will be longer since test and commission is carryout stage by stage. A checklist

of test and commission is enclosed in Appendix 3 & 4. The process is essential at the stage

of handing over the plant and equipment.

The work force of the site head count from 5 persons during the piling stage, it gradually

increase to the highest number of 60 workers. Figure 3.14 shows the distribution of work

force.

Figure 3.14: The Human Resources distribution for Mersing Project

Source: Derived from this research paper

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3.4 STAKEHOLDER MANAGEM,ENT

The stakeholder of the project include internal and external stakeholder. The identifying

stake holder for any given project as per the figure shows:

Figure 3.15: General Identifying Stakeholder

Source: Adopted from Google search

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3.4.1 IDENTIFY KEY PROJECT STAKEHOLDER

Although the project of Mersing Telecommunication Complex is a small project, but the

key project stakeholders are similar to any other Project. Solaris Sdn Bhd has identified

the following key project Stakeholder as shown in Figure 3.16:

Figure 3.16: Potential Key Stakeholder for Mersing Project.

Source: Derived from this research paper

The Internal stakeholders

i. Board of Directors: Solaris Sdn. Bhd. Board of Directors are the owner of the

company, their interest mainly focus on the profitability of the company. The

project undertake by the company would bring in revenue to the company, so it is

a concern for Board of Directors to be of interest towards the Project’s Progress;

ii. Managers and Project Manager: Manager and Project Manager are the key

Management personnel who manage the Project. Their main concern is the success

of the Project.

iii. Project Team: The key and direct participant of the Project. The success of project

means the yardstick of their capability of managing the Project; and

iv. Project Coordinator: Staff coordinates to all party internally as well as externally,

especially with the local authorities. Project Coordinator’s responsibility is to

Getting approval on drawings and designs prior to commencement of Work.

During the Close Out, he will arrange for authorities’ inspection and getting the

final certification of fitness etc.

The External stakeholders

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i. Suppliers for materials and equipment: Building material supplier, ready mix

vendor, excavator & crane vendors;

ii. Sub-Contractor for all trades: Sub-con on building work, Brick layer, plasterer and

concreter. Sub-con for electricity wiring and plumbing;

iii. Local authorities, Bomba, Town council, Health etc.;

iv. Creditor or Banker;

v. Consultant, Engineer, Architect, QS & Surveyor;

vi. TM the owner;

vii. Community, People of Mersing;

viii. The customer of TM (End users);

ix. The neighbouring school; and

x. The NGO.

3.4.2 STAKEHOLDER ANALYSIS

The process of brainstorming, collecting and understanding quantitative and qualitative

information of potential stakeholder and determine whose interest should by mitigate,

communicate with them and monitor them throughout the whole duration of the project.

i. To identify, recognize and acknowledge the potential stakeholder;

ii. To access the likely action & reaction of stakeholder project situation;

iii. To determine the stakeholders’ influence and interest; and

iv. To establish strategy and plan to communicate and mange with project stakeholder.

Figure 3.17: Stakeholder Analysis for Mersing Project

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Source: Derived from this research paper

(additional info on appendix 8)

High Power, less interested people (Keep Satisfied): The Sub-cons, Suppliers and Local

Authorities are the people need to keep them satisfied;

High Power, highly interested people (Manage Closely): fully engage these people and

make the greatest efforts to satisfy them, they are the owner and company board of

Directors;

Low Power, highly interested people (Keep informed): Provide sufficient information

for these people. Dialog with them so as no major issues arises;

Low Power, less interested people (Monitor): Monitor these people, sufficient

communication will keep them happy.

3.4.3: STRATEGY TO DEAL WITH PROJECT STAKEHOLDER

i. TM Bhd. is the Project Owner, and Board of Directors they are the key player of

the project, the highly interested and high power bodies and both has the say in the

project and with great interest of the project success. – Engage and consult

regularly.

ii. The Suppliers, the sub-con and local authorities. They are of High power and less

interest group:- To meet their needs. Engage & consult on interest area. Try to

increase level of interest and aim to move into the next level of higher

interested group.

iii. The Project Team:- General communication, memo. Try to increase their level

of interest and aim to move into the next level of higher interested group.

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iv. The Creditor, User or customer, NGO:- Show consideration. Keep them

informed & consult on their interest area. They are the potential supporters

and goodwill ambassador.

Figure 3.18: Stakeholder Analysis

Source: Adopted from Google search

3.4.4 STAKEHOLDER ENGAGEMENT PLAN

Stakeholder Engagement Management is the process of communicating and working with

stakeholders to meet their needs and expectations, and to address issues as they occur.

Stakeholder Engagement Management, the process of systematically foster appropriate

stakeholder engagement in project activities throughout the life of the project. The key

benefit of this process is to allow the Project Manager to increase support and minimize

resistance from stakeholders, significantly increasing the chances to achieve project

success (PMBOK 5th Edition).

To effectively manage stakeholder engagement, the Mersing Project will utilize the

Communication Plan and strategies identified the stakeholder and communicate with them

on project related information in a proactive and timely manner. Leveraging the

information provided in the Communication Plan (i.e., stakeholder groups, communication

items, purpose, method of communication, and frequency), the project will have the ability

to increase support and minimize stakeholder resistance throughout the life of the project.

Managing stakeholder engagement helps to increase the probability of project success by

ensuring that stakeholders clearly understand the project goals, objectives, benefits, and

risks.

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In line with the analysis above, the project team will be actively listening and soliciting

input and feedback to make sure that communications are being received and understood

by targeted stakeholder. The feedback captures important information to help making

necessary adjustments and to respond to any problem areas.

3.5 Risk Management

Risk Management is the systematic process of identifying, analysing, and responding to

project risk. It also includes maximizing the probability and consequences of positive

events and minimizing the probability and consequences of adverse events to project

objectives ( PMBOK 6 ). The effect of uncertainty on objective as defined by ISO 31000

(2009).

3.5.1 Project Risk register

As defined by ISO 73:2009 – a risk register to be a “Record of information about

identified risks”. A Risk Register can contain many different items. There are

recommendations for Risk Register content made by the Project Management

Institute Body of Knowledge (PMBOK) and PRINCE2.

A typical risk register contains:

i. A risk category to group similar risks;

ii. The risk breakdown structure identification number;

iii. A brief description or name of the risk to make the risk easy to discuss;

iv. The impact (or consequence) if event actually occurs rated on an integer scale;

v. The probability or likelihood of its occurrence rated on an integer scale;

vi. The Risk Score (or Risk Rating) is the multiplication of Probability and Impact and

is often used to rank the risks; and

vii. Common mitigation steps are Identify, Analyze, Plan Response, Monitor and

Control.

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3.5.2 RISK MATRIX

Figure 3.19: Risk Assessment Matrix for Mersing Project

Source: Adopted from Google search

To determine the Risk, Project Team have to sit down, brainstorming and list down the

potential risks. The risk register is compute red as table below:

Table 3.8: Risk Register for Mersing Project

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Source: Derived from this research paper

From the table 3.8 above, we plotted the Risk Register Number into the Risk Matrix, the

result as follow:

Figure 3.20: Distribution of Risk intensity

Source: Adopted from Google search

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Risk 1 and 10 are the two most critical risks. Risk 2, 3and 9 are less critical but still is on

the high side. Risk 4, 5, 6, 7 and 8 are of medium risk.

Table 3.9: Risk Response Strategy on Negative Risks and Threats

Risk Response

(negative /

threat)

Detail Description

Avoid A risk response strategy whereby the project team acts to eliminate the

threat or protect the project from the impact. It involves the removal of

tasks that contain the risk from the project or utilized alternative

means.

change the project scope, resources, time impact. This is the easiest

way of removing risk from a project.

Source: Derived from this research paper

Table 3.10: Risk Response Strategy for Positive Risks or Opportunities

Risk Response

(positive /

opportunities)

Detail Description

Exploit This strategy seeks to eliminate the uncertainty associated with a

particular upside risk by ensuring the opportunity definitely happens.

Source: Derived from this research paper

3.5.3 RISK RESPONSE STRATEGY

Table 3.11: Risk Response Strategy on Negative Risks for Mersing Project

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Source: Derived from this research paper

3.6 Communications Management

The Communication Management that details the specific communication products,

events, recipients, timelines, frequency and other pertinent communications information.

Project Management deliverables can be considered principal communications tools.

The objective of the Communications Management process are:

i. To define the stakeholders communications needs of the project;

ii. To conduct stakeholder analysis and identify stakeholders, their roles in the project,

and develop stakeholder management plan;

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iii. To define required messages, appropriate media and channels, task assignments

and timings for communications delivery that will allow project to meet those

needs; and

iv. To ensure that “ The right people receive the right information at the right time to

meet their needs and to achieve project objectives”.

The Communications Management Process is a set of steps taken every time formal

communications are undertaken in and organisation. It helps to ensure the project

stakeholders are kept regularly informed. By using the Communications Management

Process will ensure that no miscommunication occurs, can communicate effectively and

able to receive feedback and improve future communications.

Effective Communications to all level and all stakeholders of the project is essential and is

part and parcel of the Project Management tool and the road to success. Any miss

communications will lead to miss understanding; the message will not be passed on, that is

to say no action to carry out the tasks.

3.6.1 COMMUNICATION MANAGEMENT PROCESS

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Figure 3.21: Flow chart of Communications Management Process

Source: Adopted from Project Communication Handbook (2007)

The Mersing Project Communication Plan as shows in Table 3.5.1 in which is tight back to

the Stakeholder engagement plan.

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MERSING TELECOMMUNICATION COMPLEX

3.6.2 COMMUNICATION MATRIX

Table 3.12: Communication Matrix for Mersing Project

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Source: Derived from this research paper

According to PMBOK, sources of information typically used to identify the define

project communication requirements include, but are not limited to:

i. Project Management Organization charts;

ii. Define Disciplines, departments and specialties involved in the project;

iii. Internal information needs;

iv. External information needs;

v. Project organization and stakeholder responsibility relationships;

vi. Logistics of how many persons will be involved with the project and at which

Locations; and

vii. Stakeholder information and communication requirements from within the

stakeholder register.

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MERSING TELECOMMUNICATION COMPLEX

Communication Methods available:-

i. Interactive communication : Meetings, phone calls, instant messaging,

video conferencing

ii. Push Communication : Letters, memos, reports, emails, faxes, voice

mails, blogs, press releases

iii. Pull Communication : Intranet sites, e-learning, lessons learned

Databases, knowledge repositories

3.6.3 Project Communication Governance

Project governance is a critical element of any project since the accountabilities and

responsibilities associated with an organization’s business as usual activities are laid

down in their organizational governance arrangements. The role of Project Governance

is to provide a decision making framework that is logical, robust and repeatable to govern

an organization activities, and Project change.

The decision making framework is supported by three pillars.

1st pillar : Structure, the governance committee structure or Project Board or Project

Steering Committee. It may include key stakeholder. This will form a

portfolio decision making group. The Policy and procedural documentation

laid down the decision rights of all these committees member and how they

are related.

2nd pillar : People. Project Management is to manage people and the effective way of

managing people is through dialog , that is communication.

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MERSING TELECOMMUNICATION COMPLEX

3.7 PROCUREMENT MANAGEMENT

3.7.1 COMPANY PROCUREMENT POLICY

The company has set up policy (refer Appendix 9) on procurement with the following

objectives;

i. To establish standard policies, procedures and guidelines for reference in

conducting procurement activities within the Company;

ii. To comply with the spirit of Corporate Governance in respect of procurement

processes;

iii. To ensure that procurement of works, services, supply and acquiring professional

services is obtained at a reasonable price, in economic quantity, high quality and

timely delivery;

iv. To provide relevant supporting document at all stages of procurement process

framework; and

v. To ensure that Solaris Sdn. Bhd.’s procurements are obtained at best value and

awarded only to the contractors, suppliers or service providers who offer the best

contract package in terms of cost, service level and quality.

The Company Procurement Policy is attached in the Appendix 1. For Contractor and sub-

con there are various standard form of contract, namely:

% PAM Standard Form of Contract , 2006(With or without Quantity);

% CIDB Conditions of Contract (refer to Appendix 10); and

iii. JKR Standard form of contract for building works 2000.

Above mentioned Standard form of contract are attached in the Appendix.

For the Mersing Telecommunication Complex, the client (TM Bhd.) agreed with the

proposal made by Solaris Sdn. Bhd. to use CIDB Standard Form of Contract ( With

Quantity ). It is due this project mainly concerned with Building Works.

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MERSING TELECOMMUNICATION COMPLEX

3.7.2 General Statement for Procurement Management

Procurement Management is a process and planning to establish and maintain relationships

with the supplier, sub-con and vendors of goods and services throughout the project life

cycle. It is also an essential part of supply chain management.

Procurement Management consist of 4 major processes:

i. Planning Process

The creation of official procurement management plan. The Management has to

decide the mode of procuring, which item by internal sourcing and others

externally outsourced. The mode of procuring will impact the project’s budget and

financial scope. Next step will be preparing procurement documents and draw out

frameworks for vendor and sub-con selection;

ii. Selection Process

Suppliers and sub-con will be informed to participate in the bidding process. The

process of comparing and contrasting suppliers’ and sub-con’s advantages,

disadvantages, and their contractual offerings. Vendors’ proposals are carefully

evaluated and decision of awarding the successful bidders through collaborations

of various committee members;

iii. Administration Process

The administration phase results in the continual creation of procurement

documents and spreadsheets that may drive project changes. A centralized system

of contract change monitoring and control will be used to evaluate and determine

whether potential changes to contracts are needed. There are formal physical

inspections, internal audits and reviews of procurement operations in order to

generate synthesized performance reports that provide real-time feedback; and

iv. Closing Process and hand over of project.

The closing process isn’t just about ending procurement contracts; it’s about noting

weaknesses, documenting successful processes and summarizing the project for future

needs. Some companies prefer to conduct simple audits using performance matrices in

order to grade the overall project. Documentation is important for future projects, which

may involve entirely different teams in new locations. During the closing process,

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MERSING TELECOMMUNICATION COMPLEX

negotiations may be necessary to resolve contract disputes. Ideally, potential issues will be

noted during the administration process in order to begin the mediation process.

For Mersing Project, CIDB Standard Forms of contract (With Quantity) is used (refer to

Appendix 10). The same Standard Forms of contract also used for the suppliers of

materials and Sub-con (refer to Appendix 11).

3.7.3 Procurement Risk Policy

The process of risk management involves a cycle of identifying risks, evaluating their

potential consequences and determining the most effective methods of responding to them.

This means reducing the chances of their occurrence and reducing their impact if they do

occur.

Appropriate procedures are in place to identify and assess all relevant risks throughout the

procurement cycle. As a general principle, risks should be borne by the party best placed to

manage them. While a detailed exposition of risk assessment and management is beyond

the scope of these guidelines, typically, risk will impact the project at different stages and

it should be addressed appropriately as follows:

i. Project risk. This encompasses risk to the project from the inadequate definition or

assessment of the need, scope, scale and financing of the project. These should be

addressed in the business case;

ii. Process risk. This is risk resulting from an inadequate knowledge of national

procurement policy and law and from incorrectly or inadequately carrying out a

procurement procedure. Process risk is addressed by adhering to these guidelines

and to the other documents referenced herein;

iii. Relationship risk. This is risk resulting from inadequate relationships with the contract

holder and the implementation of the project. It is addressed by the contract, the

project management plan, project management procedures and by review

procedures (e.g. mid-term review, independent peer review, etc.);

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MERSING TELECOMMUNICATION COMPLEX

iv. Termination risk. This is risk resulting from inadequate definition of project

boundaries, of ‘project creep. It is addressed by having a business case that

specifies the scope of the project; a contract that states how and when project

change can occur; by change management procedures.

Procurement has the potential to Create Many Risks. It may due to

i. misinterpretation of user needs;

ii. inadequate statement of requirements;

iii. fail to identify potential sources;

iv. impractical timeframe;

v. no response from known quality suppliers;

vi. selecting an inappropriate supplier; and

vii. Ineffective contract management.

3.8 Transition Management / Close Out

3.8.1 Handover of project.

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MERSING TELECOMMUNICATION COMPLEX

This is the stage when all project team are looking forwards to. The stage of handing over

the project means the stakeholders or owner of the project is accepting the quality

specifications of the project. In order to make the handover goes smoothly, there are

documentation of criteria of performance well-kept and documented from the beginning of

the project. This information should be documented in the project management plan,

which include all changes requested throughout the life cycle of the project.

The project may not be complete or handover to the owner if the following process or

documents were not included, but not limited to:

i. Obtain acceptance from customer to formalize close process for the project or

phase;

ii. Full set of as-built drawing;

iii. Final project report;

iv. Provision of training to operate facility;

v. Update risk and work register;

vi. Settle all invoices;

vii. Full documentation on facility warranties and guarantees;

viii. Complete set of M & E operating manual;

ix. Contract final account; and

x. Documentation on lessons learned.

Project Close-Out Process

i. Declaration of Works Completion

PMC or main contractor after going through the process of inspection on all work

done by Sub-cons’ and suppliers’ deliverable works. Site preparation works for

hand over include make good all defects, site cleaning, demobilization of all plants,

and machineries.

ii. Testing & Commissioning

The testing and commissioning was scheduled in the work time sheet. All testing

and commissioning is carrying out in accordance to the specification and the

requirement. Procedure of test is to carry out to the upmost satisfaction of the

tester, if special professional assistance is required.

iii. Issuance of Interim Certificate of Completion

Upon satisfaction of the full testing & commissioning of the Plant & Equipment

installation, list of building works defect being compiled and agreed to complete

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the defect during the defect liability period. Then the certificate of Interim

Completion is Issued.

iv. Application of Certificate of Fitness (CF)

Inspection by relevance Government Departments were arrange, and obtain their

acceptance of the installation in accordance to bylaw. Application for Certificate of

Fitness will be submit with acceptance letter from relevance Departments.

v. From the Project Management record, highlighted alteration of the original drawing

need to be arrest and the complete set of As-Build-Drawing + Hand book +

operating manual + warranty certificates will be compiled. Endorsed As-Built-

Drawing will be submitted 3 months after the issuance of interim certificate of

completion.

vi. Defect Liability Period

The remedial work for defect will be carrying out during the Defect Liability

Period. Final inspection will be carrying out at the end of Defect Liability Period.

vii. Final Contract Account

The owner of the project will issue letter of acceptance to indicate the satisfaction

of the project and accept the project without Liquidated Ascertained Damages

(LAD). When there is no delay on works without valid approval, there will not

impose LAD on PMC and sub-con/supplier. So half moiety is withhold by the

client until the full completion of Defect Liability Period. The owner will return

the Performance Bond to PMC and all contractors/supplier.

viii. Handover Project Ceremony

At the moment of obtaining the certificate of fitness from the authority, a formal

“Handover Project Ceremony” will be organized of commendable moment.

Handing over of project can carry out before the final defect liability period end.

3.8.2 Acceptance issue.

Those criteria including performance requirements and essential conditions which must be

met before project deliverables are accepted. Satisfying all acceptance criteria implies that

the needs of the owner have been met. Acceptance criteria were created before beginning

of project activities. Acceptance criteria not only determine whether the project is

successful it also indicates that the project is complete. It is a check list that contains clear

and measurable items that, when complete, mean that the project has delivered the required

result to owner.

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Figure 3.22 : Project Close Out check list Template

Source: Adopted from Google search

3.8.3 CLOSE OUT OF SUB-CONTRACTORS/ SUPPLIERS

The close out process is the same as total project close out. Individual Contractor has their

tasks to complete and everyone has their own deliverable checklist. The deliverable check

list document a proof of tasks completion with satisfactory standard. The check list and

suppliers’ work order must be accepted and endorsed by the owner’s representation.

3.8.4 ADMINISTRATION CLOSE-OUT

Solaris Sdn Bhd will send out official notice to inform the suppliers for close out of the

project and the termination of the Purchase Order. If there is balance quantity left from

Purchase Order, and other site may require, then redirecting the supply to the site

mentioned.

The Administration Department has to compile all the work order, Purchase order, Labour

time card, machineries time sheet and provide summary for the account department.

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3.8.5 FINAL ACCOUNTS CLOSING

Final statement of account session with all sub-contractors and suppliers to ensure that the

all the tasks in the contract fulfilled and the final account shall include:

i. Adjustment on additional work;

ii. Adjustment on any Liquidated Ascertained Damages;

iii. Adjustment of variation order; and

iv. The agreed retention sum for defect liability period.

Solaris Sdn. Bhd. Has to proceed to Final account with the owner and claim the balance

sum. The same procedure apply to sub-cons and suppliers. There will be retention of half

moiety for the defects liability period (18 months). Upon completion of the defects

liability period and all defects as per defects list were completed satisfactory,

recommendation to release of 2nd moiety.

3.8.6 PROJECT LESSON LEARNED

The learning gained from the process of performing the Project, and the formal conducted

Lessons Learned session will be held during project close-out. This the experiences

distilled from a project that should be actively taken into account in future projects.

Kotnour (1999) said that the project management discipline should embody a framework

of learning. The learning framework will help the project manager accomplish three goals:

i. Deliver a successful project;

ii. Deliver a series of successful projects; and

iii. Build capabilities.

The gained knowledge can be used to train the new staff and sharing of the lesson learned

within the organization can prevent making the same mistake in future.

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Figure 3.23: Lesson Learned Life Cycle

Source: Adopted from Google search

Capture the “what went wrong, what was right, what to improved” to be lesson learned for

future improvement. Communicate and collaborate with team member for information’s

and mistakes. Preventing the recurrent of the same mistake and improve own capabilities.

4. CONCLUSION

4.1 Scope Management

Any given project, there are process to carry out and deliverable. The process of doing the

deliverable with scope of works. Project success depends on the pre implementation

Project planning, and one of the crucial part of the planning is Scope Management. On

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MERSING TELECOMMUNICATION COMPLEX

the Scope Management Planning using WBS to break down the works scope. These action

is helpful for drafting the work schedule, when all tasks are appended. Scope Management

is important as WBS planning will assist in costing too. The list of Task and works break

down will the check list for project close out. Each every task will be inspected and proof

of deliverable. The setting of specification on task is depending on Scope Management

break down list. The Project Scope Management process work on 3 basis elements:

i. Planning: The break down work task and define the work task for the project.

ii. Controlling: The Planning to control , monitor, documenting on scope creep. The

check on change, updating the change, and controlling change.

iii. Closing: The planning of final audit procedures of deliverables and confirm the

work done are in accordance to the specification and quality required.

The Scope Management Planning Statement should include the following:-

i. The overview of the total Project and its final deliverable;

ii. Listing of special requirement for resources or technical support. Advance

arranging specialist schedule to fit in the Project work schedule; and

iii. Arrest the assumptions area which can be a hurdle, and affect the final deliverable.

4.2 Cost Management

It is the costing process of the Project. Cost Management is about estimating cost,

allocation of financial cost, controlling cost, and tracking cost of the Project. Overview of

total budget, provide contingency fund for changes and control the risk of overrun budget.

Calculate the Project cost baseline, monitor the progress spending and control the spending

within the budget.

Cost Planning and estimation process have to be alert and provision of the follow

assumptions to be considered:

i. Be sensitive on Price movement. Any change of unit rate will affect the cost of the

task. A validity period for price offer is one way to protect us from price

fluctuation;

ii. Design change, usually by Owner, then there is possible chance of claim. But if

the design change is due to the change of authorities’ requirement then the

chances of claim is slim. Hence the contingency has to chip in to take care of

the difference;

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MERSING TELECOMMUNICATION COMPLEX

iii. Cost estimate is more concerned on those items or materials which need to import

from overseas. The exchange rate affecting the unit rate and the delivery time

is not consistence. Special items which need licences, control items and

difficult handling items are some area of concern on price negotiation. Usually

special conditions to be set to protect us from unforeseen circumstances.

Cost Management is a sensitive process, reference to previous or similar project’s lesson

learn is important. Control, tracking and monitoring has to apply throughout the whole

Construction period. Tight control on cost expenditure and work within budget will

ensure profitability, otherwise it will be cost overrun.

4.3 Time ( Schedule ) Management

The Time Management, is how to use the time given by the project. Fit in the work

activity for the project deliverable. By using the Work Breakdown Structure, all task will

be allocated with time frame and resources to complete the task.

Microsoft Project software is available to assist in plotting out the whole schedule of the

project. Pre-set the criteria for the project. E.g. working hour per week, Public holiday,

workers daily wage, and overtime etc. can be set before plotting the schedule.

Schedule is planned to set realistic target of activities, and should be an achievable

schedule. Tracking and control make easy when everyone follow the schedule and work

within cost.

4.4 Stakeholder Management

Project of Big or small, situated in town or outside town, there sure involve with different

level stakeholder. They are internal and external stakeholder. They are important, because

they are influencing, miscommunication with stakeholder will lead to work not move

smoothly, it even affect the progress of work. Therefore it is important to mitigate,

communicate closely, and provide necessary information to respective stakeholder. Keep

them informed and get their support towards the project.

Project Manager has to identify and recognized the key respective stakeholders. He has to

plan strategized dealing with these stakeholders. Properly managed stakeholders will help

and speed up the progress of works and obtained all necessary approvals.

4.5 Risk Management

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MERSING TELECOMMUNICATION COMPLEX

For every project, there are risks, therefore Project team have to sit down and list out the

possible risks. Register the identified risk, recognised the risk, analyse and quantified risk

and plan the mitigation strategized to overcome the risks and respond to risk.

Risks can be

i. Avoiding or eliminate the risk by other means;

ii. Strategized plan to reduce the effect of risk to the lowest if this risk can not be

avoided or eliminated; and

iii. Plan ahead and arrest the risk before the risk occur, then the damage will be

reduced.

4.6 Communication Management

Communication Management is an important process to bridge people especially

communicating with the stakeholders. Messages clearly relayed to project team members

and stakeholders to inform of what is expected from them, their roles and responsibilities.

Sending messages to well inform of the Project progress and receive feedbacks.

Communication planning is to identify the flow of communication, who should receive

what information and the frequency of passing messages. Information in the form of

project progress report, which will includes but not limit to the following:

i. Brief detail of project;

ii. Project Budget cost and tender cost;

iii. Forecast S curve versus progressive S curve;

iv. Project Schedule and actual progress;

v. Risk registration and the outcome of arresting risk;

vi. Change process and record. Changes may form part of the variation order;

vii. Site photos to show the actual progress; and

viii. Financial outcome. Payment status to contractors, sub-con and suppliers.

4.7 Procurement Management

Procurement management is actually money management. How to conclude the contract;

what type of contract to use; which contract is most suitable for particular contract. In

general Malaysia contract practice using Standard Forms of Contract, which were

established by respective Institutions. Use correct Standard Forms of Contract for the right

contract. For Mersing Project, it is building works, therefore the forms used is from CIDB

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MERSING TELECOMMUNICATION COMPLEX

Standard Forms of Contract with Quantity. There are other CIDB Standard Forms of

contract specially formulated for sub-cons and suppliers.

4.8 Transition / Close Out

Transition and Close Out is the final process to determine the Project is constructed in

accordance to general good practice and specification set by the standard. The Close Out

take into considerate the follow:

i. Assurance of and agreed upon that all works specified by the drawings have been

completed according to specification and standards;

ii. All materials used are of quality product and test results being compiled for record;

iii. Close out the administration, and record the lesson learn for future reference;

iv. Final account with Owner, all sub-cons and all suppliers. First moiety release and

retention of 2nd moiety until full settlement of maintenance period or Defects

Liability Period (18 months). The list of defects was established during the

commissioning and final inspection period. Final inspection to confirm the

defects are done and completed satisfactory, then only recommending the

release of 2nd moiety.

v. Compile of As Built Drawings, Equipment’s operating manuals, and guarantees as

handing over handbook for the owner safe keeping.

vi. Obtain Certificate of Fitness from the local authorities and to be handed over to the

owner.

vii. Acknowledge letter of appreciation from Owner is important as future job

reference.

5. RECOMMDATION

Mersing Telecommunication Complex is not a big project but the basic requirement are the

same. Prior to site procession, suggest to Solaris Sdn. Bhd. and the sub-com to establish a

check list of what to do and when to do:

i. Site condition and temporary facilities arrangement;

ii. Drawing approval by owner and local authorities;

iii. Application for temporary supply of water and electricity;

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MERSING TELECOMMUNICATION COMPLEX

iv. Submit start work request to local Municipal. Inform the local Municipal of the

inconvenient and the necessary closure of part of road next to the site during

construction;

v. The cooperation and adhering of all site personal be aware of Site Safety and

Health regulations and upkeep the site with cleanliness and tidiness; and

vi. Overview of the whole project discussion and brainstorming, on areas of important,

the scope of work and schedule, planning of resources, site security matter,

establish line of communication, works Quality expected, and stress the

important of on time completion of task.

78

ATTACHMENT

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Appendix List

1. WBS Schedule……………………………….77

2. WBS schedule (conti.)……………………….78

3. Inspection list………………………………..79

4. Close out check list………………………….80

5. Schedule 1……………………………………81

6. Schedule ……………………………………..81

7. Schedule Mile Stone – Critical………………82

8. CIDB Standard Forms of Contract…………..83

9. Procurement Policy…………………………..84 to 90

10. Stakeholder Analysis…………………………91

76

Appendix 1

Appendix 2

77

Appendix 3

78

Appendix 4

79

Appendix 5

80

Appendix 6

Appendix 7

81

Appendix 8

82

Appendix 9

83

SOLARIS SDN. BHD.

PROCUREMENT POLICY

PROCUREMENT OF GOODS

PURPOSE OF PROCUREMENT

The overall purpose of procurement regulations is to ensure that Solaris Sdn. Bhd. gets

the highest quality of desired goods and services at the best price possible. Further, the

regulations are aimed at streamlining the process of procurement while maintaining

adequate controls. These procurement procedures apply to all staff involved in the

procurement process and to all types of procurement.

THE PROCUREMENT COMMITTEE

The Solaris Sdn. Bhd. procurement committee shall be composed of Board of Director,

Managing Director, Finance Officer, and administration representatives. The committee

shall meet when there is need to deliberate on issues pertaining to procurement. The key

terms of reference for the committee shall be to:

i) Award tenders ;

ii) Approve orders;

iii) Award contracts; and

iv) Approve variation of contracts conditions

SEPERATION OF DUTIES

There shall be proper separation of duties between::

i) The person who orders a particular purchase from a vendor;

ii) The person who satisfies that the goods supplied are satisfactory;

iii) The person who accepts goods into store; and

iv) The person who authorizes payment.

PROCUREMENT PLANNING

Procurement planning is part of the annual budgeting process. Each departmental

head is responsible for planning his/her project’s estimated procurement needs on an

84

annual basis through the use of the annual procurement plan (APP), which indicates

the items to be bought in the various quarters of the year. The procurement officer

will use the APP to plan for requisitions. It is crucial that the procurement committee

discuss the APP at the beginning of each year and as need may arise within the year.

The APP will also require the final approval of the project coordinator, who will share

it with the executive director for comments before approval.

PROCUREMENT REQUISITION (PR)

Each specific procurement procedure process shall be initiated by procurement

requisitions to the procurement officer from the requesting department and should

show detailed specifications and 2 requirements for the item(s) being requested. They

should also indicate that the item is budgeted for. The PRs allows the departments

flexibility within the overall annual plans regarding specifications, exact quantities,

delivery dates, etc. They are also used to cater for un-planned or emergency

procurement. The PR form will show the following:

i) Items required.;

ii) Quantities;

iii) Delivery dates and locations;

iv) Accounting information;

v) Whether procurement is within APP/budget or emergency or unplanned;

vi) Signature of the preparing person; and

vii) The departmental head.

Some donors do prescribe some conditions or restrictions required to be observed in

the course of procurement pertaining to the project they fund. It is the responsibility

of the procurement committee to ensure that such donor requirements and restrictions

are observed in the procurement of goods and services but within the framework of

Solaris Sdn. Bhd. procurement guidelines.

All requisitions must be signed by the departmental heads or designate, who should

ensure that the item(s) are in APP or should seek authority to procure as per policy.

Any persons designated to authorize requisitions in acting capacity must have the

authority given in writing clearly stating the period authorized.

85

CONTROLS ON PROCUREMENT

Goods and services will only be procured within approved budgets except in case of

emergencies, which has to be approved by the executive director. Thus, in addition to

being responsible for preparing the APP/budget, the departmental heads should

ensure that actual procurement throughout the year remains within the budget. Each

requisition should reference the APP line bearing the item or requisition and if need,

be attached to the page of the APP where such line is contained.

The financial officer shall assist the procurement officer in conducting periodic

checks on procurement activities to ensure that they conform to APPs, donor

procurement requirements, and Solaris Sdn. Bhd. policies and procedures.

It is the responsibility of the person who signs the local purchase order (LPO) to

verify that the following have been, done whether or not he/she actually collects the

goods concerned.

(i) That the correct quantity has been received and signed;

(ii) That the quality and price of goods is as agreed;

(iii) That all goods delivered have been securely and inventory records

appropriately updated; and

(iv) That the delivery note is checked, signed, and forwarded to the financial

officer to await the invoice.

Purchases under petty cash must not exceed the maximum amount established and

documented by the financial officer.

Procurement staff and all members of the procurement committee will be required to

sign a ‘conflict of interest’ document stating that they will not purchase goods or

services from a company they have a vested interest.

THE PROCUREMENT PROCESS REPORT

Upon receipt of requisitions, the procurement officer will first verify that the

requisition is properly approved according to the signing authority. He/she will then

enter the requisition details into the procurement report worksheet. After this, he/she

will begin the process of sourcing for the goods.

86

The procurement report worksheet is updated to reflect requisition as they are

received. It also includes information on status of each procurement requisition,

complete with expected delivery date. This is to be submitted to projects department

on a monthly analysis.

The procurement officer is required to present a monthly financial and narrative

report on procurement to the executive director, through the administrative assistant

and a copy forwarded to the financial officer.

VENDOR SELECTION

Careful selection of vendors should be done to ensure that best possible price,

quality and delivery time available within the markets is obtained. A list of suitable

vendors (the list of pre-qualified vendors), for each type of goods and services based

on letters of introduction and past performance shall be maintained. This will make

the process of vendor identification much faster. The vendor list shall be reviewed

and updated periodically to ensure that current known factors are taken into

consideration. Once the previous year’s list of vendors has been updated and

approved by the procurement committee, procurement of goods, and services can be

effected. Vendor selection for inclusion on the list of pre-qualified vendors will take

place once per year and will be done by the procurement committee.

VENDOR SELECTION CRITERIA

The following set of criteria is essential for deciding on choice of vendors:

i) Price;

ii) Quality of goods/services. Such a justification must be verifiable;

iii) Availability of goods/services within the required delivery time;

iv) After sale services, including availability of parts/supplies;

v) Bidder’s previous records of performance and service;

vi) Ability of bidder to render satisfactory service in this instance;

vii) Financial stability of the vendor;

viii) Availability of bidder’s representatives to call upon and consult with;

ix) Payment terms;

x) Warranty offered; and

xi) Ability to provide samples.

87

PROCEDURE FOR TENDER

The procurement office and the heads of the various departments may recommend

potential vendors but the selection of those invited will be left to the discretion of

the procurement committee. The procurement officer will send an invitation to

tender to each supplier listed to be invited. The vendors will pick up tender

documents at Solaris Sdn. Bhd. offices specifying the goods and details or any

relevant information needed to get accurate bids. All suppliers must receive the same

information.

USE OF DEALERS AND SOLE SUPPLIERS

In the interest of ensuring quality, reliability and timeliness, the procurement officer

may establish purchase agreements or contracts with main dealers of regularly

purchased goods. Where possible due to other factors, the procurement office will

negotiate rates and discounts with the supplier or a method to determine price for

invoice justification. These agreements and prices (net of discounts) should be

reviewed annually to ensure that they are competitive. LOCAL PURCHASE

ORDERS (LPO) WITH VENDORS

The LPO is a contract with vendors should include all information regarding the

goods and services being procured as well as standard terms of delivery, payment

and arbitration in case of dispute. If contracts are precise and clear, possibilities of

disputes will be reduced and Solaris Sdn. Bhd. will stand far greater chance of

receiving the goods and services as expected. Upon selection of a vendor, a legally

binding contract or work order should be drawn-up for the goods and services in

question and signed by both parties prior to procurement. Detailed specifications;

quantities, unit prices, delivery deadlines, locations, and payment schedules must be

specified in such contracts.

ORDER FOR RECURRING REQUISITION

Procurement of a recurrent nature, i.e. where the same goods and services may be

issued several times a year, one vendor may be selected for a period of up to one

88

year. In some cases, particularly for services, contracts for the goods or services can

be drawn up once, which may then be reference every time those goods or services

are required without requiring separate quotations and contracts on each occasion. In

other cases, particularly for regularly purchased goods, vendors can be selected

once, but separate contracts drawn-up on each occasion the vendors are used.

CERTIFYING DELIVERY OF GOODS AND SERVICES

The procurement process cannot be completed without certification that the goods

and services procured have been received entirely to Solaris Sdn. Bhd. satisfaction,

in particular, to the 5 satisfaction of the requisition. The procedure for receiving

goods and services is therefore important in ensuring that vendors have entirely met

their obligations. Once Solaris Sdn. Bhd. has certified that goods and services have

been received to their satisfaction, it has little further resources to complain about a

vendor’s performance; and payment can then be made.

In all cases, the certification of receipts of goods and services is pre-requisite to

Solaris Sdn. Bhd. and the following guidelines are essential for that purpose.

i. The procurement office should ensure that goods and services are checked

against contracts, waybills, invoices, or delivery notes;

ii. Requisition department at the time of delivery will facilitate the receiving

and checking of goods and services whereby the receiving person will have

to sign the delivery notes or any other documents during delivery;

iii. Physical checking should be done by the requisitioning department and not

by the procurement office;

iv. In some cases, receiving of goods and physical checking of goods or services

may be delegated to other Solaris Sdn. Bhd. officers who are so authorized

by the procurement officer. Such might include cases where goods of

services are delivered directly to a project field location; or where specialist’s

technical certification is required; and

v. Any differences between documents done physical checks should be noted

and reported to the procurement officer for action.

PAYMENT-PROCESSING PROCEDURE

89

The recipient department is responsible for preparing payment requisition which

then it forwards to the procurement office for checking and certifying. The

document is then sent to the finance department for further checking and necessary

approval and authority to pay. All payments must be made in accordance to the

contractual terms between the vendor and Solaris Sdn. Bhd. and in reference to the

financial policies.

Appendix 10

90

Stakeholders Analysis

91

Case Study on Mersing Telekom Building

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