DDWQ2513

PROFESSIONAL PRACTICE 1

SEMESTER 3 ( 2021/ 2022 )

TOPIC : OTHERS ORGANISATION & PARTIES INVOLVED IN

THE CONSTRUCTION INDUSTRY
LECTURE NAME : SR. TS. YUSMADY BIN MD. JUNUS
CLASS : 2DDWQ
SECTION : 11

NO. NAME MATRICS NO. IC NO PERSON

1) LIM SHI KEI A20DW1732 020623-08-0528

2) MUHAMMAD SHAMIL FAWWAZ BIN A20DW0722 021208-14-0081

MOHD SHAKIRIN

3) MUHAMMAD SYAZWAN BIN A20DW2580 020626-01-0883

RAHMAT
TABLE OF CONTENTS
No. Table Of Content Page

1 1.0 Scope Of Work 3

2 2.0 Introduction 4-5

2.0.1 Other Organisations and Parties Involved in the Construction Industry

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3.0 Financial Institution
3.0.1 Bank
3.0.2 Finance Company 6-10
3.0.3 Tenant Company
3.0.4 Creditor Company
3.0.5 Insurance Company

4 4.0 Construction Worker 11-12

4.0.1 Technology
4.0.2 Technician
4.0.3 Skill Workes
4.0.4 Semi Skill Workers
4.0.5 Unskilled Workers

5 5.0 Material & Machinery Supplier 13-14

5.0.1 Supplier
5.0.2 Nominated Supplier
5.0.3 Manufacturer
5.0.4 Importers
5.0.5 Distributors
5.0.6 Domestic Supplier

6 6.0 Conclusion
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7 7.0 Reference
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1.1 SCOPE OF WORKS

NAME INDIVIDUAL WORK

Lim Shi Kei • Financial Institution

Muhammad • Material & Machinery Supplier

Syazwan

Muhammad Shamil • Construction Worker

Fawwaz • Introduction
• Conclusion
• Reference
• Compile report

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2.1 INTRODUCTION

2.1.1 Other Organisations and Parties Involved in the Construction Industry.

The organisations and individuals involved in a construction are determined by the client’s
choice of “procurement route” to structure their relationships. The procurement route is selected in
response to several factors, including:

i. the project’s nature and complexity;

ii. the client’s requirements for its delivery; and
iii. the portfolio of specialist expertise from the construction industry that must work together to
iv. ensure the project is a success.

It is important that everyone understands their role in the project and that of those around them.
Only by ensuring that the required expertise and role of each different organisation (and, in somecases,
individuals) involved in the project are clearly defined and well understood will the ambiguity about “who
does what” that can lead to mistakes and disputes be avoided. The number and identity of the
organisations involved in a building project can vary considerably depending on its nature, the
procurement route used to structure it, and the portfolio of expertise required to deliver the project. It is
critical to identify, particularly in large projects, the parties involved in that project, the terms of the
respective appointment, the scope of each individual’s.

I. The Construction Client

The Client is the person/company for which the building is being built. The Client will define the aesthetic
and functional needs for their building. They usually rely on experts to select products, Clients only get
involved because of special requirements such as sustainability or life time value/costs. Traditionally it
is the Architect that guides the Client when it comes to product selection. Yet Clients with large property
portfolios will often indicate preferred products.

II. Specialist Consultants

There are Specialist Consultants for an array of subjects; sustainability, acoustics, fire, security to name
just a few. Most will not get involved in product selection, but do write the overall performance
specification, which indicates the performance criteria that must be attained by the chosen product. So
Specialist Consultants indirectly influence product choice. It is usually the Architect who is responsible
for interpreting these requirements. Requirements can present conflicting demands and the consultant
may then advise on the best way to achieve a result – that is suggest products. So it’s important that
they know what benefits your products can deliver. Specialist Consultants will be interested in how your
product meets performance and safety requirements.

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 III. Architect

The Architect develops the buildings’ design, taking the Client’s brief and combining it with the advice
of the Specialist Consultants. This then has to be developed to meet the requirements of the Building
Regulations and increasingly sustainability. Architects have significant involvement in product selection.
Architects want to understand how your product contributes to their overall design and the building’s
performance. They are often short on time so it is important, when presenting your product, that the
information is easy to understand and to the point. Provide tools, such as pre-written specification
documents, to make it easy for the Architect to specify your product.

IV. Engineer

Working with the architect will be a number of engineers that are responsible for structural, mechanical
and electrical design. The Structural Engineer is a key member of the Project Team. Structural
Engineers design the skeleton or structure of the building, enabling Architects to focus their talents on
creating a design that satisfies their client’s demands. Structural Engineers will monitor the progress of
an Architectural project. They create initial design models, using in-depth mathematical and scientific
knowledge. When work has begun, they inspect the work and advise contractors. Structural Engineers
must ensure their designs satisfy given criteria, that they are safe, serviceable and perform well. They
will want to understand how your product meets their performance requirements.

V. Contractor

The Contractor oversees and manages the construction of the building for the Client, following the
Architect and Engineers’ designs. The work is delivered under a contractual agreement. The Main
Contractor will select Sub-contractors based on the capability, availability and price. Sub-contractors
include many specialist trades. The Contractor is looking for products that offer ease of installation,
good availability & represent value. They want confidence that their Sub-contractors are familiar with
installation, to avoid complications. They need to know that building work will not be delayed by lack of
product availability and that product cost remains within the estimate, so they can remain profitable.

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3.0 Financial Institution
Financial institution is a company engaged in the business of dealing with financial and
monetary transactions such as deposits, loans, investments, and currency exchange. Besides that,
financial institutions encompass a broad range of business operations within the financial services
sector including banks, trust companies, insurance companies, brokerage firms, and investment
dealers. The role of financial institutions is to provide financial facilities to generate construction projects.
A common type of financing provided by financial institutions such as Extension Financing is Bridging
Loan.

Structure of finance is based on equity and debt, equity finance, bank finance and market debt.
Equity and debt is a business organisation is able to finance its activities by obtaining additional financial
from owner, generating internal finance by producing and retaining profits and borrowing from other
sources. External borrowing can be obtained from banks, building society or similar institutions, capital
market and client. Developers of development are more inclined to borrow via external sources. This is
because it is more costly and difficult to finance a development by raising equity. By borrowing also the
developer is able to transfer more of the development risk to the lender. Equity finance is provided by
institutions like insurance companies and pension funds via two ways which is forward funding and
forward sale. Forward funding is the institution purchases the site and provides funds for the
construction of building. Forward sale is the institution initiates an early commitment to purchase the
development upon its completion. Bank finance is bank loans for development finance can be done in
three forms which is the interest rate changes may be fixed or otherwise, normally not fixed. The interest
of the loan can either be paid on an ongoing basis over the period of implementation, or after project
completion or when the project is ready to be rented out. The loans can be secured on the project itself
or normally by utilising fixed assets. Market debt is a loan from the market can be secured by a charge
on the business’s assets. The charge can be in the form of security like debenture or other types of loan
stock. The use of bonds and stocks are more common whereby a fixed return on the capital will be paid
to the lender at the end of the loan duration.

Equity risks and returns should there be a failure in business. The equity holders will be the last
persons to receive any compensation. They normally do not receive full returns of their investment. In
fact, the bond holders, banks and other lenders are given priority to make claims on the company
assets. By way of compensation, the equity holders expect high returns. For example obtaining equity
financing is actually more expensive than debts. The cost is measured by its dividend yield which is
calculated by dividing the current dividend with the market price of the share. With risky is holding the
company equity will benefit from the appreciation of the company’s asset value. When the value of a
company’s asset is increase, the shareholder’s wealth rises with it, while the value of the debt remains
unchanged. Then, when during inflation it is best that the investors maintain their share equity in a
company. During recession and in particular when there is a drop in business assets, the leaders benefit
because their debt value remains the same. In a situation of a drop in prices, the real value of debt will
increase.

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3.0.1 Bank

Bank is an institution that deals in money and its substitutes and provides other financial
services. Banks accept deposits and make loans and derive a profit from the difference in the interest
rates paid and charged, respectively. Financial institutions is divided into two types which is banking
system and non-bank financial intermediaries. First is central bank which owned and controlled by the
government. The main functions are controlling the government’s financial matters like fixing interest
rate, currency withdrawal, foreign exchange control, supply of money in the economic. For example
Bank Negara Malaysia. Second is banking institutions, it is included Commercial Banks, Finance
Companies, Merchant Banks and Islamic Banks.

Commercial Banks is the biggest and mist important financial source in Malaysia. There are
two basic services provided by commercial banks which is a place where individuals and companies
deposit and withdraw their money whenever needed and as a place that provides credit facilities for
customers. This bank offers hassle-free financing for construction activities by charging a competitive
interest rate. For example, it has also been regarded as the cheapest loan provider. Commercial banks
provide facilities like overdraft, long-term loans, bridging finances and performance bonds and in many
cases these banks also invest in government securities. Some commercial banks in fact provide
mortgage loan services for housing loans. The loan from commercial banks has generally been
regarded as the cheapest source of finance for clients. However, if a client intends to take a large scale
loan, or as and when a loan is needed for riskier projects, he may well have to apply for financing from
other banking sectors. It has been a practice that commercial banks will advance loans on overdraft
depending on the borrower’s financial standing and type of collateral security offered. The interest rate
charged will normally vary depending on the bank’s current interest rate which fluctuates. In certain
cases nonetheless, the interest rate can be fixed throughout the loan duration. In view of banks being
desirous of maintaining their liquidity ratios, they will normally limit loans for long periods.

Merchant or Investment Bank is primarily to compliment and supplement the activities offered
by other financial institution. The merchant banks therefore are expected to play the role of advisors
and financiers to large companies. They also function as financial intermediaries specialising in capital
market. They offer specialised expertise especially those that are fee-based. Merchant banks have
historically been involved with loans for higher-risk ventures, although their total amount of loan capital
is relatively small and they usually prefer to provide loans only to the larger established companies. As
they deal more with large corporations and provide almost exclusive facilities to them, these banks are
regarded as wholesale banks, distinct from commercial banks and other financial institutions which are
more involved in retail banking. Merchant banks are prevented to compete with commercial banks by
their inability to operate current account. The banks are authorised to operate fixed deposit to
corporations, associations, clubs and other which is subject to minimum tenure and amount by Bank
Negara. The total amount of project development finance is always very high and financing from a
single bank is impractical. The developer or contractor therefore may fulfil the financing needs by
applying to merchant banks.

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 Islamic Banks is Bank Islam Malaysia Berhad ehich is the pioneer Islamic bank operating in
Malaysia under the Islamic Banking Act 1983. Since its establishment, Bank Islam has progressed
tremendously and has branches in each state. The facilities and services offered by these banks are
basically similar to those conventional banks but their operations and activities are based on the
principles and foundations of Islamic practices. For example, these banks accept deposits under
demand and savings deposit and term deposit in the forms of investment deposits and special
investment deposits. Demand deposits do not guarantee any profits or returns and depositors are not
entitled to any share and a nominal service charge may be imposed on them. Meanwhile, saving
account depositors may be rewarded by the bank to a share of the profits generated. As for holders of
investment deposits and special investment deposits, they are also entitled to a share of the investment
profits as agreed by the bank. Islamic Banks provide facilities like letters of credit, project financing,
term financing, trade financing and also corporate financing, all under Islamic principles.

Next is non-bank financial intermediaries which is included provident and pension funds,
insurance companies, development finance institution, savings institution and others.

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3.0.2 Finance Company

Finance company is an organization that makes loans to individuals and businesses, it is

different with a bank finance company does not receive cash deposits from clients and provide some
other services common to banks such as checking accounts. Finance companies borrow money from
sources such as the Federal Reserve System and commercial banks at a low interest rate and lend it
at a higher interest rate so that finance company are normally higher than the interest rates that banks
charge their clients because finance company is make a profit from their interest rates. Finance
company will be needs by most company and individuals which are failed to get the qualify for bank
loans. The functions of finance company are to offer both unsecured and secured loans to individuals
and companies. For example, a company can approach a finance company when it wants to lease or
purchase office equipment such as computers or machinery.

Not all finance company provide bridging finance but almost all of them were involved in end
financing. For example in 2005 AMFinance Berhad offered both packages. Bridging finance was
charged with an interest rate at BLR+(1.5%-2.00%-a maximum of 2.5%) with maximum payback period
of 15 years and margin of up to 50%. Other terms were quite similar to those imposed by commercial
banks. On the other hand, there was an attractive interest rate structure stipulated in the end finance
that was a 30-year repayment period or upon reaching the age of 65 with a margin of up to 95%. Finance
companies in Malaysia is AMFinance Berhad, Affin-ACH Finance Berhad, Bumiputra-Commerce
Finance Berhad, RHB-Delta Finance Berhad, Kewangan Bersatu Berhad and Southern Finance
Berhad.

3.0.3 Tenant Company

Tenant company is the lease is drawn up in its name, and the company pays the rent to the
landlord through an agent. In most cases, the company will provide the property to its employees during
the lease. When a tenant signs a rental lease agreement, a certain amount of responsibilities are
assumed by the tenant. The lease is a legally enforceable contract which defines the relationship
between a landlord, the lessor, and a tenant, the lessee. The lease will define the role of the tenant and
their obligations. It is imperative both parties thoroughly read and understand all terms of a lease
agreement prior to signing it to legally protect themselves. Responsibilities of tenant company are pay
rent when due, be considerate of the landlord’s and other tenants’ rights, keep the premises as clean
and sanitary as the condition of the premises permits, not perform illegal acts or do illegal business on
the premises and other.

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3.0.4 Creditor Company

Creditor company is an entity that extends credit by giving another entity permission to borrow
money intended to be repaid in the future. Creditor company is a business that provides supplies or
services to a company or individual and does not demand payment immediately is also considered a
creditor company, based on the fact that the client owes the business money for services already
rendered. Creditor company have legal contracts with the borrower and granting the lender the right to
claim any of the debtor’s real assets back the loan.

3.0.5 Insurance Company

Insurance company are financial institution that provide compensation to the parties being
insured with the agreed amount of money should there be any mishaps, in return for a much smaller
amount of money or ‘premium’. Premium is a payment paid by an individual that wishes to insure his
life or risks like fire, thefts, accidents, employer’s liability and other as compensation for losses incurred.
For example insurance company receive a lot of accumulated funds of which part of it can be used to
pay compensation and the remainder to be channelled to other productive activities such as the granting
of loans which is mortgage-loans, hire-purchase loans and security investments. Insurance company
provide development finance with an interest rate as high as the rate charged by merchant banks with
options given upon completion of construction whether to convert the loan into a long-term one or to
purchase the development for investment purposes.

Not many insurance company are actively giving out loans to the construction industry and
most of them only provide long-term loans. As of Mac 2008 , there were only two insurance company
involved which is AIA Insurance and ING Insurance. Both company use the BLR similar to Maybank
Berhad. Insurance company offer conventional end finance with a 30-year repayment period or upon
reaching the age of 60 with a margin between 80-90%. The terms used by these company are almost
similar to those used by bank. There are many types of insurance company in Malaysia such as life and
general business, life business only, general business only, life and general reinsurance business,
general reinsurance business, life reinsurance business and takafur operators.

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4.0 Construction Worker

The term construction worker can be used to cover a huge number of roles within the industry,
but typically it refers to a someone who performs a variety of general construction tasks during all
phases of a construction project. However, there are also those who specialise in certain areas, such
as:

i. Tearing down buildings

ii. Removing hazardous materials
iii. Building highways and roads
iv. Digging tunnels and mine shafts
v. Laying concrete or asphalt

Construction workers will use a variety of tools and equipment in their work, including simple tools such
as brooms and shovels; other equipment is more sophisticated, such as pavement breakers,
jackhammers, and surveying equipment.

4.0.1 Technology

Construction technology,according to the Construction Industry Institute, is "a collection of

innovative tools, machinery, modifications, software, and other technologies used during the
construction phase of a project to enable advancement in field construction methods, including semi-
automated and automated construction equipment."Preconstruction technologies, such as online bid
boards, bid management applications, and digital takeoff systems, may take it a step further. New
building technologies are being created at a rapid speed nowadays. Connected equipment and tools,
telematics, mobile apps, autonomous heavy equipment, drones, robots, augmented and virtual reality,
and 3D printed buildings, which appeared futuristic 10, 20 years ago, are now here and being deployed
and used on job sites all over the world.

4.0.2 Technician

At a level that does not need formal licensure, the Construction Technician conducts
a wide range of skilled construction activities, including maintenance of plumbing, electrical,
heating, ventilation or air conditioning buildings and equipment. Other unlicensed crafts, such
as operating light equipment, carpentry, and painting, may be needed of the Construction
Technician. The Construction Technician performs preventative maintenance on tools and
equipment and follows federal rules controlling safety, environmental protection, hazardous
waste disposal, and the use of common construction chemicals and materials.

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4.0.3 Skill Workers

Employees under this category are those who have received formal training (either on-the-job
training or other training, such as formal training in an institution) for a particular job.The construction
industry's development and success have been dependent on having skilled and productive workforce.
Masons, carpenters, steel fitters, plumbers, plasterers, and painters are skilled professionals in the
building business, and their skills are essential in completing construction projects. stressed that an
effective strategy must take into account that education, training, and lifelong learning policies must
respond to changing skill and knowledge needs in a flexible and timely manner. As a result,
understanding the complexities of the labour market is critical for the construction sector to ensure the
availability of consistent labour capabilities. Laborers with previous experience

4.0.4 Semi Skill Workers

Semi-skilled workers does not need advanced training or specific abilities, but it does
necessitate a greater level of expertise than unskilled labour. Semi-skilled workers often have a high
school diploma but no college diploma. The abilities required are not difficult, but they do entail the
ability to supervise and do repeated activities. These abilities are more likely to be transferrable and
helpful in other occupations.

4.0.5 Unskilled workes

simply indicates that the task will be done by someone who lacks specialised abilities and has
had little formal education. Work is frequently simple, yet it is physically hard and requires long hours
in the construction and other industries. There aren't many unskilled labour positions remaining, as
everything appears to need some level of education. Everyone will need to know something about
computers or another sort of technology in order to acquire a job in the future, whether it is computers
or another type of technology.

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5.0 Material & Machinery Supplier

5.0.1 Supplier

'Supplier' (or economic operator) is a broad word used in the construction business to
describe organisations hired to help deliver a constructed asset. Suppliers were once thought
to be organisations hired to supply tangible supplies such as products, materials, and plant,
but their scope has expanded significantly.

5.0.2 Nominated supplier

Nominated supplier are usually suppliers of goods not widely available such as some
traditional building materials or a particular brand of or something that the architect considers
is the most suitable for the particular job. Someone the Employer has told the contractor he
must use. The client will have usually negotiated the terms and price and entered a PC sum
into the tender Bill of Quantities, which you add attendences, profit , again usually in a seperate
Bill item. There are often certain obligations that the Employer remains responsible for such
as programme, but this entirely depends on what is written in the contract.

5.0.3 Manufacture

Many manufacturers create the materials after they’ve been ordered. This can create
a longer wait time than what you’ll receive with wholesalers and distributors. But, if what you
need isn’t something readily available or mass-produced, manufacturers can create large
volume orders to the exact specifications you need. Manufacturers are ideal when efficiency
and intricacy are top priorities.

5.0.4 Importers

The suppliers who import and export those manufactured goods are known as
importers. Importers purchase their materials from one country, and then they sell those same
materials in a different country. Source materials through importers, high-volume orders in
standard sizes are where you’ll find the most benefit. The high-volume helps to offset the costs
incurred through shipping and transporting the materials. It’s not uncommon to buy from a
wholesaler or distributor who sources from importers as well.

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5.0.5 Distrubator

In the supply chain, the distributors are the ones in contact with the manufacturers.
The role of the distributor is that of an intermediary entity between the producer of a product
and another entity in the distribution channel or supply chain, such as a retailer, a value-added
reseller. Distributors play a vital part in keeping the lines between manufacturers and users
operating smoothly. They can expedite response times, enhance a company's reach and even
create value-added packages. Distribution businesses can buy from manufacturers and sell
to retailers, or directly to consumers and/or businesses. Distributors also can provide logistical
and storage support for manufacturers.

5.0.6 Domestic supplier

Domestic or direct are sub contractor the main contractor employs without reference
to the Employer with regard terms and price. There may be specific conditions for their
emloyment such as Employer approval and the incorporation of specific terms required under
the main contract. The main contractor takes full responsibility for the performance of a
domestic sub contractor and adds profit to the rates of work.

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6.0 Conclusion

Understanding each member of the Construction Project Team is important when marketing
building products. Tailoring marketing for each decision maker is important, to represent the key
benefits that answer the issues that matter to them. Knowing who has the most influence on product
selection, at what stage in the construction process, helps to target communications. This is where
research can help. Construction markets present some unique challenges for the marketer. The
Construct Project Team is a complex Decision Making Unit, one that comes together for a specific
project and then is disbanded when construction is complete. The time from product selection to
installation can be lengthy with many decision makers influencing product selection.

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7.0 Reference :

7.0.1 Construction workers

• https://www.missouristate.edu/human/jobdescriptions/8715-construction-
technician.htm
• https://journals.sagepub.com/doi/full/10.1177/2158244020914590
• https://www.constructconnect.com/blog/technology-reshaping-construction-industry

7.0.2 Financial Institution

• https://anyflip.com/eopqr/epac/
• https://anyflip.com/eopqr/duki/
• https://www.encyclopedia.com/finance/encyclopedias-almanacs-transcripts-and-
maps/finance-company

7.0.3 Supplier

• https://image.slidesharecdn.com/assignment2-140103215034-phpapp01/95/pihak-
yang-terlibat-dalam-projek-pembinaan-7-638.jpg?cb=1388785980
• https://www.designingbuildings.co.uk/wiki/Nominated_supplier
• https://www.tandfonline.com/doi/full/10.1080/09537287.2020.1837933

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