Panel Contractor Satisfaction and Whether

Collaboration and Partnering are Happening

in a Bespoke Contract

By;

Masters’ Project Presentation;

By;

Mohd. Norizam Md. Salleh (MPM September 2010 Intake)

Matric No: CGS00534317

Date: Nov. 2012

Content

1.0 Introduction

2.0 Review of Literature

3.0 Research Methodology3.0 Research Methodology

4.0 Data Collection & Analysis

5.0 Discussion, Conclusion and

Suggestion

1.0 Introduction

1. Background Study

2. Problem Statement

3. Objectives of the Study

4. Key Question4. Key Question

5. Scope of Study

6. Significant of the Study

7. Assumption and Limitation

Chapter 1: Introduction

1. Background Study

There are various type of contract uses in construction

business in Malaysia.

• Standard local contract uses are PWD 203a/b, PAM, • Standard local contract uses are PWD 203a/b, PAM,

CIDB, IEM and etc.

• International standard contract uses namely JCT, APM,

ICE, FIDIC, NEC and etc.

• Modified version or bespoke contract were uses in

some industries e.g. oil and gas and telecommunication

industries.

Standard form of contract

(Pros.)

• They have endured years of test.

• Designed by experts in the field.

• Provide a representative viewpoint of the industry they

served and normally be a fair contract.

• Represent both parties on an equal and a fair share basis and

not one-sided. not one-sided.

• Normally express the obligation of all the parties involved and

clarify the project scope well.

(Cons.)

• Always labelled as a traditional contract strategy.

• Blamed for the edgy relationship between the project

provider and the contractors.

• Fail to perform as a team.

Bespoke contracts

• In Malaysia it’s commonly used in the Oil and Gas and

Telecommunication sectors.

• Involved specialist jobs and were carried out by registered

panel contractors .

(Cons.)

• Often labelled as one-sided contract as they were designed • Often labelled as one-sided contract as they were designed

by the clients.

(Pros.)

• Modern contract strategies such as win-win approach,

partnering, joint decisions, collaboration, rewards,

cooperation, trusts and etc. that may help in meeting the

project common objectives time, cost and quality S & S can be

found.

1.2 Problem Statement

• Traditional contract strategies were always identified as a

hindrance to a good working relationship between the

client and the contractors.

• On the other hand, the modern contract strategies

encourage the client and contractors to work as a team,encourage the client and contractors to work as a team,

work collaboratively, smart partnering, “win-win”

approach, trust, cooperative, shared risk, reward and etc.

• It’s encouraging the client and the contractors to work

together towards achieving the common goals - to complete

the project/task - on or ahead of schedule, within budget

and at acceptable stipulated quality, safety and

sustainability.

Problems to be addressed in this study are as follows;

• Are the panel contractors to a bespoke contract

satisfied with the form of contract used and how it is

managed by the client?

• Whether the modern contract strategy is being

practised in a bespoke contract.

1.3. Objectives of the Study

• To identify whether the panel contractors fully understand the

form of contract use, specifically the bespoke form of

contract.

• To identify whether the panel contractors are satisfied with

the bespoke contract that were commonly used in the Oil &the bespoke contract that were commonly used in the Oil &

Gas and Telecommunication Sectors.

• To identify whether the modern contract strategies such as

collaboration and partnering are being practiced in their

contract.

1.4. Key Questions

80% of the key questions are adapted from Chan A. P.

C. et al. (2004) and they are as follows;

1) Panel contractor satisfaction on the bespoke form of

contract uses;

2) Establishment and communication of conflict

resolution strategy;resolution strategy;

3) Commitment to win-win attitude;

4) Regular monitoring of partnering and collaboration

process;

5) Clear definition of responsibilities;

6) Mutual trust;

1.4. Key Questions (cont.)

8) Willingness to eliminate non-value added

activities;

9) Early implementation of partnering process;

10) Willingness to share resources among project10) Willingness to share resources among project

participants.

11) Ability to generate innovative ideas;

12) Subcontractors’ involvement;

1.5 Scope of Study

• Whether the panel contractors fully understand the

form of contract they use especially the bespoke

form of contract.

• Whether the panel contractors are satisfied with the • Whether the panel contractors are satisfied with the

bespoke contract that is commonly used in the Oil &

Gas and Telecommunication sectors.

• Whether the modern contract strategies such as

collaboration and partnering are being practiced in

their contract.

1.6 Significant of Study

• Only a few study conducted related to bespoke

contract.

• Whether the modern contract strategy such as

collaboration and partnering are practised.collaboration and partnering are practised.

• Whether the panel contractor fully understood the

bespoke contract.

• Might benefit other sectors.

1.7 Assumption & Limitation

Due to limited time this study is limited to a bespoke

form of contract used by a Natural Gas

Operator/Supplier.

The targeted group is the panel contractor’s personelThe targeted group is the panel contractor’s personel

that exposed to form of contract uses.

Will not discuss in detail the construction scope and

form of contract used.

Will not discuss detail comparison between bespoke

form of contract and standard contract.

Chapter 2: Literature Review

1. Introduction

2. Panel Contractors Satisfaction

3. Bespoke Contract

4. Collaborative Approach4. Collaborative Approach

5. Partnering

6. Research Instrument

7. Summary

2.1 Introduction

In carrying out this research, the relevant topics

in construction contract administration and

interpretation such as panel contractor

satisfaction, bespoke contract, collaboration and

partnering were identified and discussed.partnering were identified and discussed.

The identification of keywords and important

terminologies related to these research objectives

were also defined.

2.2 Panel Contractors Satisfaction

• Geyskens, I & Steenkamp (2000) urged that, the satisfaction level is

one of the key factors which affect partnership development.

However, satisfaction is a vague/unclear term. The contemporary

measurement for partnership is concentrated in economic

satisfaction and social satisfaction (Cited by Wong, 2009).

• Wong (2009) - There are five sub-directions to support fine tuning

of Economic and Social Satisfactions. They are profitable; discount;of Economic and Social Satisfactions. They are profitable; discount;

quality enhancement; effectiveness; selling and marketing for

Economic Satisfactions and feeling hostility; tactful criticism;

mutual interaction; apocalypse; and polices for Social

Satisfactions.

• Therefore it’s concluded, the panel contractor’s satisfaction to the

form of contract uses in the contract can be seen at the level of

pleasure the contractors feel such as how the contract were carried

out and whether it satisfies them economically and socially.

2.3 Bespoke Contract

Bespoke is a British English word meaning an item made to a

buyer's specification (personalised or tailored).

The characteristic points of bespoke/tailoring contracts are the

client/project provider's are in total control over the form of

contract terms and the way the project should be managed.

Basically, "bespoke contract" describes a high degree of

"customisation" on how the form of contracts are structured and

the relation between the client/project provider's and

contractors. That is the reason why it is usually used in the

specialised industries such as oil and gas, telecommunication,

power plant and etc.

2.4 Collaborative Approach

The meaning of collaboration, is working together to achieve

common goal.

In traditional ‘adversarial’ system, conflict, hostility and litigation

between the client and contractors are normal phenomena. Such a

climate actively militates against collective learning and knowledge

sharing between parties. In opposition, under “collaborative

working”, contractors share risks, pool knowledge and work togetherworking”, contractors share risks, pool knowledge and work together

to solve problems at all stages and levels in the productive system, a

process conceptualised as “knotworking” by some theorists (Bishop

et al., 2009).

Collaborative innovation occurs when organisations tap into a user’s

expertise, and through collaborative support, is able to reduce their

costs and increase satisfaction. Collaboration is a shift from a

command-and-control state of mind to connect and collaborate

which is towards modern strategy (Sawhney, 2002).

2.5 Partnering

“Partner/partnering” can be defined as a friend who shares a

common interest or participates in achieving a common goal. In the

construction industry partnering approach can be applied in meeting

the three project objectives which are time, cost and quality.

Ashworth (2006) - It is a procedure for improving working

relationships, based on assumption that strong players make each

other stronger; weak ones destroy each other and not only aboutother stronger; weak ones destroy each other and not only about

systems and methods but it is essentially about people, enabling them

to operate more efficiently, effectively and economically.

American Arbitration Association (1993) - Partnering is a synergy, a co-

operative, collaborative management effort among contracting and

related parties to complete a project in the most efficient, cost-

effective method possible, by setting common goals, keeping line

communication open, and solving problems together as they arise .

2.6 Research Instrument

Only item/factor i), was designed by the author and the rest

items/factors ii) to xi) (80% of the questionnaires) were adapted

from Chan A. P. C. et al., (2004);

i. Panel contractor satisfaction on the bespoke form of

contract uses;

ii. Establishment and communication of conflict resolution

strategy;

iii. Commitment to win-win attitude;iii. Commitment to win-win attitude;

iv. Regular monitoring of partnering and collaboration

process;

v. Clear definition of responsibilities;

vi. Mutual trust;

vii. Willingness to eliminate non-value added activities;

viii. Early implementation of partnering process;

ix. Willingness to share resources among project participants.

x. Ability to generate innovative ideas;

xi. Subcontractors’ involvement;

2.7 Summary

To achieve satisfaction, whatever form of contract used, the players

need to understand and carry out their obligations well as per

stipulated in the contract.

This study can also determine whether modern contract strategies

such as collaboration, partnering, win-win approach, jointly resolve

problems, reward, cooperation, trust and etc. were practised.problems, reward, cooperation, trust and etc. were practised.

Outcome of this study should be able to determine whether the

panel contractors have fully understood the form of contract

(bespoke contract) use; whether they are satisfied with the

bespoke contract that is commonly used in the oil and gas and

telecommunication sectors; and whether the modern contract

strategies such as collaboration and partnering are being practised

in their contract.

Chapter 3: Methodology

3.1 Introduction

3.2 Research Design

3.3 Survey Method

3.4 Sampling3.4 Sampling

3.5 Likert Scale

3.6 Data Analysis

3.7 Research Frame Work

3.1 Introduction

Research methodology or research can be defined as a systematic

approach in search of specific answers that can be tabled for those

problems that have been identified.

A research should be carried out to go through a certain

systematic process to initiate new findings (Ranjit Kumar, 1996).

The moment a method to carry out a research is identified, it isThe moment a method to carry out a research is identified, it is

important to make the intentions and objectives are

understandable and clear. Master’s projects should not be over

ambitious and its process must tally with the resources available.

It should portray the total research methodology carried out in

relation to research design, population, the research instrument,

questionnaire design, data collections, data verifications, analysis

process and summary.

3.2 Research Design

This research is a descriptive study and will use quantitative

method to address all the questions arising in the problem

statements and the key questions. The survey will be carried out

using structured questionnaires and semi-structured interviews

that are distributed and conducted within a specific group.

Mohd. Majid (2000) stated that a descriptive research is a study

to assemble information and to explain what is happening. This

statement has been supported by Wiersma (1995) and he had

added that the descriptive study is able to portray or give the

information about certain thing, at certain time and decision

making for future plan.

3.3 Survey Method

i) Semi structures interview

ii) Questionnaires.

Part A – Respondent’s Background

Part B - contain the necessary questions that arePart B - contain the necessary questions that are

designed in order to identify and determine

whether the research’s problem statements and

the study objectives can be met. 80% of the

elements in these questionnaires were adapted

from Chan A. P. C. et al. (2004).

3.4 Sampling

Respondents

The research will focus on a selected group that will consist of

the people who work with the panel contractors of a Natural Gas

Provider. Among the respondents that will be targeted in this

study are the contractors’ owner and the contractor’s

management level e.g. the project managers, contract managers,management level e.g. the project managers, contract managers,

construction manager and engineers.

Distribution of the Questionnaires

Via postage, email and by hand.

3.5 Likert Scale

Likert scale with a measurement point 1 to 5 to examine how

strongly subjects agree or disagree with a statement is adopted

in this study.

3.6 Data Analysis

All the data collected will be stored and analyse

using Statistical Package for Social Science 18.0 for

Windows (SPSS).

It also uses to identify the reliability of the data

collected.collected.

SPSS assist the author to elaborate on various

statistical tests and the interpretation of the result

analysed

3.7 Research

Frame Work

These research steps

provided a clear

methodology framework.

- Provides proper steps- Provides proper steps

on how the study should

establish the conceptual

model and

- to improve the level of

understanding to the

research methodology.

Chapter 4: Discussion, Conclusion and

Recommendation

4.1 Introduction

4.2 Findings

4.3 Result from Data Collection4.3 Result from Data Collection

4.4 Testing Goodness of Data

4.5 Summary

4.1 Introduction

The questionnaires were focused on the respondent’s knowledge,

understanding and experiences to a form of contract uses by a

natural gas provider. All the data gathered were stored and

analysed using SPSS 18.0.

The data were analysed to determine and identify whether the

results collected from the survey are addressing the research

objectives;objectives;

• To identify whether the panel contractors have fully understood the

form of contract they use especially the bespoke form of contract.

• To identify whether the panel contractors are satisfied with the

bespoke contract that were commonly used in the oil and gas and

telecommunication sectors.

• To identify whether the modern contract strategies such as

collaboration and partnering are being practised in their contract.

4.2 Findings

From 13 panel contractors, 48 respondents filled

up and returned the questionnaires.

100% of the survey was carried out among the

respondents related to the panel contractorsrespondents related to the panel contractors

registered with a Natural Gas Provider.

4.3 Result from Data Collection

4.3.1 Demographic of the Respondents

The finding was considered good for this research as

the respondent involved were;

�consisted of matured and experiences workers

�came from high education background�came from high education background

�exposed to the form of contract uses &

�involves in construction management.

Therefore they should be able to understand the

questionnaires and answer them correctly.

Figure 4. 1: Number of Years the Present Company in the Industry

�More than 70% of the companies have been in this industry 11 yearsor more.

Figure 4. 2: Respondents’ Age.

�62% belong to 30 - 39 and 40 – 49 age groups.

Figure 4. 3: Respondents’ Gender.

�81.25% of the respondents are male and 18.75% are female.

Figure 4. 4: Respondents’ Marital Status.

�83.33% were married and 16.67% are single. 62% of

them are 30 years of age or older

Figure 4. 5: Respondents’ Education Background.

� 87.5% pose at least a diploma or higher.

Figure 4. 6: Respondents’ Current Position

�31.25% are engineers, 22.92% are project managers, 8.33% are

construction managers, 29.17% are directors/owners, and

8.33% are others.

Figure 4. 7: Respondents’ Number of Years Working in

Current Company

�About 79% of the respondents have been working in the

company for more than 4 years.

Figure 4. 8: Respondents’ Number of Years Working in Oil

& Gas Industry.

�87.5% of the respondents have been working in the industry

for at least 4 years or more.

Figure 4. 9: Respondents’ Total Number of Years of

Working Experiences

�93.75% of respondents have at least 4 years of working

experiences.

Figure 4. 10: Whether Respondents’ Know What Bespoke

Contract is?

�83.33% of the respondents claimed they knew what a

bespoke contract is and only 16.7% said they do not.

4.3 Result from Data Collection

4.3.2 Findings From the Key Questions

i)Panel Contractor Satisfaction on the Bespoke Form of Contract

Uses

ii) Establishment and Communication of Conflict Resolution

Strategy

iii) Commitment to Win-win Attitude

iv) Regular Monitoring of Partnering and Collaboration Process

iv) Clear Definition of Responsibilities

v) Mutual Trust

vi) Eliminate Non-value Added Activities

vii) Early Implementation of Partnering Process

ix) Willingness to Share Resources among Project Participants

x) Ability to Generate Innovative Ideas

xi) Subcontractors’ Involvement

4.4 Testing Goodness of Data

4.4.1 Reliability Statistics

It is important to check the reliability of the data.

Therefore the data were analysed between their initial

attributes, the whole data were tested for the average

inter-correlations among the items measuring theinter-correlations among the items measuring the

concept using SPSS 18 to verify the data’s reliability.

Carried out on all 50 questions and the questionnaires

fill up by the 48 respondents.

Cronbach's alpha is a reliability coefficient that indicates how

well the items in a set are positively correlated to one another.well the items in a set are positively correlated to one another.

The result shows that the Cronbach's alpha value is 0.950 and

this mean the results are reliable, as the closer it to 1, the

higher the internal consistency reliability is (Sekaran, 2003).

Cronbach alpha based on standardized items is something

similiar but is computed alpha when all scale items are

standardized to have equal means and variances.

Chapter 5: Discussion, Conclusion and

Recommendation

5.1 Introduction

5.2 Summary of main Findings

• Research Objective 1• Research Objective 1

• Research Objective 2

• Research Objective 3

5.3 Limitation

5.4 Conclusion

5.5 Recommendation for Future Studies

5.1 Introduction

All the research objectives listed in Chapter 1, will

be addressed, imprecisely discussed and concluded

via the findings obtained from the research

questionnaires.questionnaires.

5.2 Summary of main Findings;

• Research Objective 1

• Research Objective 2

• Research Objective 3• Research Objective 3

Research Objective no. 1: To identify whether the panel

contractors have fully understood the form of contract they use

especially the bespoke form of contract?

• Majorities of the respondents have fully understood with the

form of contract uses. This can be seen from the answer to

question 11 of Part A, where 83.33% of the respondents

claimed they knew what is bespoke contract is and only 16.7%claimed they knew what is bespoke contract is and only 16.7%

do not.

• In addition when they were asked in question 1 of the Part B,

whether they have fully understood about the form of

contract uses, majorities answered they do understood with a

median value of 3.833.

Research Objective no. 2: To identify whether the panel

contractors are satisfied with the bespoke contract that is

commonly used in the oil and gas and telecommunication

sectors.

• Satisfaction is low. The feedback gathered from the questions

base on the factor of, “Panel Contractor Satisfaction on the

Bespoke Form of Contract” is that, out of twelve (12)

questions, two (2) agreed, eight (8) undecided and two (2)questions, two (2) agreed, eight (8) undecided and two (2)

disagreeing. Majority of the respondents claimed that they

fully understood the bespoke contract that is shown by the

mean value of 3.833. But most of them are undecided

whether the form of contract use is fairly treated between the

clients and the panel contractors.

Research Objective no. 2 (continued):

• Majority of the respondents are agreed that the payment was

paid on time. The survey outcome also determined that no

safeguard on the unforeseen risks were given by the client but

again the respondents were undecided whether the good

relation between the client and the contractors exist via new

contract strategy was being practised in this contract and

whether the client treated their V.O. and E.O.T. fairly. On thewhether the client treated their V.O. and E.O.T. fairly. On the

other hand when they were asked about taking legal action shall

their V.O. and E.O.T. claims were rejected, majority of the

respondents answered they disagreed to proceed with it. This

disagreement also contributed to contractors’ satisfaction in the

form of contract as less or no arbitration claims are one of the

outcomes towards the practising of modern contract strategy.

• The form of contract and the client does not protect the panel

contractors from the new submerged risk.

Research Objective no. 3: To identify whether the modern

contract strategies such as collaboration and partnering are

being practised in their contract.

• Majority of respondents agreed that most questions under

the key questions of collaboration and partnering,

Establishment and communication of conflict resolution

strategy; Commitment to win-win attitude; Regular

monitoring of partnering and collaboration process; Clearmonitoring of partnering and collaboration process; Clear

definition of responsibilities; Mutual trust; Willingness to

eliminate non-value added activities; Early implementation of

partnering process; and Willingness to share resources among

project participants are happening in the contract that they

served.

Research Objective no. 3 (continued):

• Collaboration and partnering are practised but not up to

maximum. It was not confirmed until what degree they have

been carried out.

• A new contract strategy which includes collaboration and

partnering were practised but they were not properlypartnering were practised but they were not properly

monitored.

5.3 Limitation

• Insufficient sample size for the wide range of questionnaires.

Larger group results will be more accurate

• Honesty of respondents. Some of the respondents might not

be truthful either they do not want to disappoint the client or

they actually do not understand the questions asked.

• Respondents do not really understand or lack the knowledge

about modern contract strategies that involve collaboration

and partnering.

• No tools in confirming whether these respondents really knew

what a bespoke contract is all about and fully understood the

form of contract which is currently used.

5.4 Conclusion

Generally, the first second and third objectives are

totally depending on the answers given by the

respondents. The findings to these objectives were

acquired from the data gathered and analyses fromacquired from the data gathered and analyses from

the survey questionnaires that were filled by the

respondents that belong to the panel contractors of

a Natural Gas Provider.

5.5 Recommendation for Future Studies

• The study on panel contractor satisfaction can also be further

deepened such as to determine their level of satisfaction or

dissatisfaction.

• On the partnering and collaboration, further study can be

conducted in order to determine to what extent they were

practising and the success factors required in order to

improve them.improve them.

• To widen the studies to include the clients’ representatives

but surely some modification to the questionnaires are

required in order to make them suitable for parties, the panel

contractors and the clients’ representative to answer.

• To widen the studies and to carry out studies/surveys among

the other Oil and Gas companies for comparison purposes.

5.5 Recommendation for Future Studies (cont.)

• A study to include the Telecommunication sector too. This is

important as in the later stage comparisons not only can be

made among the companies in the same sector but also

between these two industries.

• A study can be carried out to identify what are the factors that

dissatisfied the panel contractors and the measures required

to be taken in order to improve these situations.to be taken in order to improve these situations.

• A study can also be carried out among the panel contractors

who are dissatisfied with the form of contract and the way

they were practises. This is to determine the reasons what

make these panel contractors are still in this industry

especially when this initial study had shown 70% of the

companies were in this business for 11 years or more but yet

majorities are undecided whether they are satisfied with the

way the contract is managed.

Thank YouThank You