Issues of Payment Procurement Process for Industrialised Building System (Ibs) Project

Abstract

This research paper intends to investigate the issues of payment procurement process for Industrialised Building System (IBS) Project. There are many differences of payment procurement process between conventional and IBS project. The IBS project requires upfront payment as compared with conventional project. Up to this moment, there is no single solution to this issue. Very often, the IBS contractor faces financial difficulty leading to the bankruptcy and delaying in the project completion. Thus, a preliminary study was undertaken with 21 samples of respondents that have a variety of background occupational. The findings from the study revealed that the issue of payment for IBS contractors comprises of five (5) main factors which are high initial cost, difficulty in securing timely and adequate financing, lack of integration at design stage, difficulty to get loans from financial institution and increment of material prices. Findings from this study may help the decision makers including the government or Construction Industry Development Board (CIDB) to formulate a new procurement process especially for the IBS contractor. The findings will be used for the financial model framework for the IBS contractor in the future.

Constraints in Implementation of Industrialised Building System (IBS) Project: Contractors’ Perspective

“…The first-ranked factor of constraints was high initial cost, which is aligned with the finding by Dzulkalnine et al (2016) stated that the high initial cost is a result of setting up the factory in order to implement the IBS. The majority of the factors that contribute to the high initial cost include purchasing new machinery, training labour, purchasing new equipment, and purchasing all of the necessary equipment to begin production.…”

“…Several factors can contribute to the high initial cost. According to Dzulkalnine et al (2016), the high initial cost is a result of setting up the factory in order to implement the IBS. The IBS contractor must pay an up-front payment of up to 30% or more.…”

“…This issue was raised again by a respondent in research by (Ali et al, 2018), where the respondent stated that they will have to pay an additional cost for transportation due to the IBS manufacturer's location being far from the site. Besides that, Dzulkalnine et al (2016) stated that the price of the raw material change every three months which can affect the cost of the production. Furthermore, the higher the cost of the materials it will simultaneously increase the initial cost of the production leading to the difficulty of the contractor to maintain the steadiness of the profit.…”

Business Model Elements for Industrialised Building System

“…Moreover, targeting customers is very important for companies that want to venture in IBS because payments made to the IBS contractor cannot be the same amount as what is paid for conventional projects, since the starting cost is not the same. It is therefore vital for IBS contractors to be paid the initial payment from the client in order for their business to sustain (Dzulkalnine et al, 2016;Hadi et al, 2017).…”

Improving Contractors’Practices of Industrialized BuildingSystem (IBS) Implementation in Construction Industry

“…The practices of a progress payment to the contractors in IBS project might not be paid in a similar method as a traditional project since the preliminary budget in unequal. Therefore, it is crucial for the contractor to obtain the preliminary payment for project sustainability and this recommendation is suggested by many researchers such as Dzulkalnine (2016) andMohd Amin et al (2017a). Provide procurement mechanisms and strategy for IBS adaption should be adequately and updated on all relevant project documentation.…”