PROFILE OF THE QUANTITY SURVEYING PRACTICE IN MALAYSIA

Fadhlin Abdullah and Ismail Haron Faculty of Built Environment, Universiti Teknologi Malaysia, UTM Skudai 81310, Johor, Malaysia

ABSTRACT: This paper provides an insight on the findings of a survey undertaken on the profile of the quantity surveying practice in Malaysia. The framework of the survey is to examine current scenario and identify perceptions on future directions of quantity surveying practice in Malaysia. This was based on a survey of quantity surveying firms using semi-structured self-administered postal questionnaires. The results indicated that although current scenario is dominated by traditional practices, there is evidence that the practices have diversified from the traditional boundaries. Future directions of quantity surveying practice will be influenced by the countrys industrialization drive, structural transformation of the economy, future technology breakthroughs, the significance and importance of ICT in future construction activities and increased globalization of construction markets. The paper provides data that can be used for comparative purposes among international quantity surveying practices and as the basis to aspire to future challenges and needs. Keywords: Quantity Surveying, current scenario, future perceptions

1.

INTRODUCTION Malaysias economic development and transformation process has created the environment for the development of the construction industry and fuelled growth in construction development projects. Quantity surveying practice plays an important role in any construction development projects. The environments for quantity surveying practice have changed along with the countrys rapid economic development. The roles of quantity surveyors have also evolved along with the changes. Future development prospects and changes will have implications on the development of the profession. On the other hand, there have been concerns in the past few years on the role and future of the quantity surveying profession (RICS, 1998). The QS Think Tank Report by the RICS has noted that many clients are critical of traditional quantity surveying services and are demanding a different and more comprehensive range of services (Page et.al., 2004). Although there is a general lack of published data on the development and current scenario of the quantity surveying practice in Malaysia, anecdotal evidence suggests that the scenario in Malaysia parallels the findings by RICS. Hence, in order to aspire to future challenges and needs, a reliable understanding of the present situation as well as the future perceptions of the quantity surveying practice is required.

2.

SURVEY DETAILS The objectives of the survey are to examine the current scenario of the quantity surveying practice and identify future directions likely to be undertaken by them. A population survey of the 275 registered quantity surveying firms was undertaken with a 19% response rate. The survey was carried out by semi-structured self-administered postal questionnaires. The 19% response rate is low, but falls within the normal response range of postal surveys (Leedy, 1993; de Vaus, 1996). The respondent firms are divided into 3 categories of sizes and their characteristics generally fell within the respective sizes. Hence, the respondent firms were assumed to be representatives of the target population. Descriptive data analysis was adopted which involved organizing the data, generating categories, constructing and presenting explanations. SURVEY FINDINGS The survey findings are categorized into the structure of quantity surveying practice, current scenario of practice, research and development undertaken, usage of ICT, export of quantity surveying services, and identifying future directions of quantity surveying practice.

3.

3.1

Structure of QS practice: Category of registration of firms There are 4 categories of registration status of firms and their breakdown is shown in Table 1. Table 1. Category of registration Status % of firms Sole proprietorship 48 Partnership 15.4 Body corporate 36.6 Multi disciplinary practice Total 100

-1-

Size of firms Firms are categorized into 3 different sizes based on the data collected relating to the total number of workforce (inclusive of all categories of staff) as shown in Table 2. The Table also shows the breakdown of respondent firms into the various sizes. The scenario suggests that the firms are predominantly small to medium sized organizations where 90% of the firms have a total staff of 1-30. Table 2. Sizes and breakdown of firms according to total workforce Size Total workforce % of firms Small 10 40.4 Medium 11-30 50 Large >30 9.6 Total 100 The relationship between different category and size of firms Figure 1 reflects that sole proprietor firms are small to medium sized firms where 28.8% are small and 17.3% are medium sized firms. Partnership firms are predominantly medium sized firms where 17.3% are medium sized firms. Body corporate firms are scattered over the different sizes with 11.5% small, 15.4% medium and 9.6% are large sized firms respectively. This suggests that small sole proprietor firms are the main type of firm
% of different category of firms

35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1-10 11-30 > 30 Size of firms Sole proprietor Partnership Body Corporate

Figure 1.

The relationship between size of firms and the category of firms

Workforce The number of workforce of respondent firms range from 1 to 100. The total number of workforce for all respondent firms in relation to the sizes of firms is shown in Table 3. Table 3. Number of workforce Size Small Medium Large Total % of firms 40.4 50 9.6 100 Total workforce 144 470 291 905 Average size of workforce 7 18 58

The workforce of respondent firms is categorized into professional, sub-professional and others as shown in Figure 2. Professional staffs are those with a degree in quantity surveying (which includes management staff consisting of directors, partners and associates). Sub-professionals are those with a diploma in quantity surveying. Others include other technical and non-technical staff.

-2-

25.2% Professional Sub-professional 49.4% Others

25.4%

Figure 2. Breakdown of workforce Turnover The turnover of respondent firms ranges from RM80,000.00 to RM8 million. Based on the data collected, the turnover of respondent firms can be divided into 4 different ranges. The total turnover for all respondent firms is shown in Table 4. Table 4. Turnover of respondent firms Range of turnover (RM) % of firms Average turnover (RM) 500,000 36.9 251,579 500,000 1,499,999 45.7 834,496 1,500,000 4,999,999 8.7 1,892,435 5,000,000 8.7 8,289,460 The survey also observes that there is a positive correlation between the number of workforce and turnover of respondent firms. Generally smaller firms with a lower number of workforces have a lower turnover as compared to larger firms with a higher number of workforces. Age of firms The age of respondent firms range between 1 year old to more than 30 years old. Table 5 reflects the age of firms in relation to size. Table 5 reflects that while longevity of firms still remains a feature of the profession, new small firms are dominating the practice in terms of numbers. Table 5. Age of firms in relation to size % of firms in relation to size Small Medium Large 28.6 7.7 47.6 23 9.5 38.5 3.9 4.8 11.5 4.8 3.9 20 4.8 11.5 80 100 100 100

Age of firms (years) 1-5 6-10 11-15 16-20 21-25 26-30 >30 Total

3.2

Current scenario of practice a. Main clients Clients are categorized into the public and private sectors. The main client is determined by the percentage of income derived from the clients. 63.8% of the total income (i.e. the sum of income for all respondent firms) is derived from the private sector clients while 36.2% is derived from public sector clients. This reflects that the private sector is the major client of the respondent firms.

-3-

b.

Types of work undertaken The ranges of different types of work undertaken by respondent firms are shown in Table 6 which indicates that all the respondent firms undertook building works. 51.7% of the respondent firms undertook civil and infrastructure works but the civil and infrastructure works undertaken as a percentage of total work is lower than building works. Other types of works undertaken include marine and independent review consultancy. The survey also observes that there are no significant differences in terms of the types of work undertaken by firms of different sizes. Table 6. The different types of work undertaken by respondent firms

% of work undertaken (as a % of total work) <20 20-39 40-59 60-79 80-100 Total c.

% of firms undertaking building works 13.5 86.5 100

% of firms undertaking civil & infrastructure works 30.6 19.2 1.9 51.7

% of firms undertaking other types of work 9.6 3.8 13.4

Services provided Services provided by respondent firms are categorized into basic and additional services. The breakdown between basic and additional services provided by respondent firms of different sizes is shown in Table 7. Generally, basic services accounted for around 80% of services provided by all firms. On the other hand, additional services accounted for less than 20% of total services rendered by almost 24% of small firms, 46% of medium firms and 60% of large firms. Table 7. Breakdown between basic and additional services provided by respondent firms

Breakdown of services provided 80-100% 60-79% 40-59% 20-39% <20%

% of firms providing basic services Small 66.7 19.0 Medium 65.4 15.4 11.5 3.8 Large 60.0 20.0 -

% of firms providing additional services Small 14.3 23.8 Medium 3.8 11.5 15.4 46.0 Large 20.0 60.0

Table 8 provides an indication that the main basic services provided by respondent firms is preparation of preliminary estimates and cost plan, followed by valuation of work for interim valuation, preparation of BQ/tender documents, preparation of final accounts and preparation of tender reports. It is also observed that the trend is similar in all categories of firm. Table 8. Basic services provided by respondent firms % of firms in relation to the % of basic services provided <20% 20-39% 40-59% 60-79% 80-100% 42.9 19.0 19.0 57.7 7.7 23.1 40.0 40.0 4.8 14.3 33.3 4.8 4.8 15.4 30.8 19.2 40.0 52.4 61.5 40.0 33.3 28.6 4.8 34.6 15.4 15.4 3.8 3.8

Basic Services Preparation of preliminary estimate and cost plan Preparation of BQ/ tender documents Preparation of tender reports & contract documents Valuation of works for interim

Firm S M L S M L S M L S M

-4-

valuations /certificates Preparation of final accounts

L S M L S M L Note:

20.0

20.0

20.0 -

4.8 -

Pricing of BQ

52.4 4.8 57.7 3.8 40.0 38.1 50.0 20.0 S = small firms; M = medium firms; L = large firms

Table 9 indicates that the types of additional services provided by firms of all sizes include feasibility studies, preparation of pre-qualification documents, preparation of BQ for specialist works, pricing of BQ for negotiated tenders, preparation of cost analysis and cost planning, contractual advice, certification of project accounts, and technical & construction cost auditing. It can be deduced from Table 9 that feasibility studies is the main type of additional services provided by all categories of firm. Other additional services undertaken by medium and large firms include management contracting, loss and expenses claim, project management, and evaluation of contractual claims. Although generally the percentage of the additional services provided accounted for less than 20% of total services provided, the scenario indicates that the firms have expanded their scope of services to meet changing needs of the industry. Table 9. Additional services provided by respondent firms % of firms in relation to the % of additional services undertaken <20% 20-39% 40-59% 60-79% 80-100% 38.1 9.5 53.8 3.8 40.0 9.5 34.6 20.0 9.5 23.1 20.0 14.3 30.8 40.0 19.0 19.2 20.0 4.8 15.4 23.8 34.6 20.0 19.2 40.0 20.0 11.5 15.4 -

Additional Services

Firm S M L S M L S M L S M L S M L S M L S M L S M L S M L S M

Feasibility studies

Pre-qualification documents BQ for specialist works Pricing of BQ for negotiated tenders Cost analysis / planning

Tender price index

Contractual advice

Management contract

Continuing professional services Loss & expenses claims

-5-

% of firms in relation to the % of additional services undertaken <20% 20-39% 40-59% 60-79% 80-100% L S BQ for defects & M 7.7 outstanding works L S 4.8 Value engineering / M management L S 9.5 Arbitration / mediation M 15.4 / litigation L S Project management M 7.7 L 20.0 S 9.5 Certification of project M 7.7 accounts L 20.0 S Evaluation of M 19.2 contractual claims L 40.0 S 4.8 Technical & construction cost M 3.8 Auditing L 20.0 S Facilities management M L 20.0 Note: S = small firms; M = medium firms; L = large firms Additional Services Firm 3.3 Measurement Tools The survey reveals that the main measurement tools used by respondent firms are scale rulers and calculators. Other tools used include measurement software, digitizers and CAD. Figure 3 shows the percentage of respondent firms using the various measurement tools.

measurement software

37%

computer aided design

15%

digitizers scale rulers & calculators 0% 10% 20% 30%

33%

98% 40% 50% 60% 70% 80% 90% 100%

% of respondent firms

Figure 3: Measurement tools 3.4 Research & Development Research and development (R&D) activities undertaken by respondent firms are minimal where only 23% of the respondent firms are involved in R&D activities. However, 77% of the respondent firms have indicated their willingness to participate in future R&D activities. Areas of future R&D anticipated by the respondent firms centered on the development of computer software for QS practice.

-6-

3.5

The use of information communication and technology The computerisation rate of respondent firms in relation to the size of firms is shown in Table 10 which ranges between 8% to 100%. Table 10. Computerisation rate in relation to the size of firms Computerization rate 90-100 80-89 70-79 60-69 50-59 40-49 30-39 20-29 10-19 <10 Total % of respondent firms in relation to size Small Medium Large 42.9 27 60 9.5 15.4 23.8 7.7 20 11.5 9.5 11.5 4.8 7.7 20 11.5 4.8 4.8 3.8 3.8 100 100 100

The commonly used software are general office application software with software in the Ms Office group being the most popular. On the other hand, the most commonly used specialist software are for estimating, measurement and documentation of BQ. Almost 85% of firms are involved in exchanging various data information electronically. The main type of data exchanged electronically is BQ, followed by specifications, contract administration data, cost data, architectural drawings, engineering drawings, product information and other consultant drawings. Figure 8 shows the percentage of respondent firms (i.e. those involved in exchanging data electronically) in relation to the different types of data exchanged electronically. Table 11 shows the availability of on-line services among respondent firms. Majority of the firms have more than one form of on-line services.

Table 11. On-line services

On-line services None Internet E-mail Firms web site/Home page Access to cost database Access to specification/product database Teleconferencing Videoconferencing

% of firms 3.8% 57.7% 82.7% 19.2% 9.6% 15.4% 7.7% 3.8%

The respondent firms have demonstrated a low external direct computing links and networking. Table 12 indicates that the major computing links and networking are with clients, other affiliated branches and contractors. Table 12. Direct computing links & networking Links Affiliated branches Clients Contractors Other consultants Construction sites Employees working from home % of firms East Msia 5.8% 5.8% 5.8% -

Peninsular Msia 3.8% 11.5% 3.8% 5.8% 5.8% 1.9%

Other countries 3.8% 3.8% 3.8% -

-7-

3.6

Export of QS services Only 13.5% of the respondent firms have rendered their services outside Malaysia. The main reason cited by respondent firms for not venturing outside Malaysia is no opportunity, followed by insufficient capability and insufficient resources. The survey also reveals that the sizes of respondent firms involved in exporting QS services varies where 1.9% are small firms, 7.8% are medium firms and 3.8% are large firms. Main markets outside Malaysia are Singapore and China; other markets include Vietnam, Thailand, Dubai, Qatar, India, Indonesia, Brunei and England. Firms indicated that income derived from outside Malaysia ranges between 2% to 30% of their total income. Modes of securing projects outside Malaysia include appointment by Malaysian private developers, contractors or investors, bidding as consultants, as sub-consultant to overseas affiliate offices, and as a part of other Malaysian teams. Building works accounted for between 90-100% of total works undertaken by firms outside Malaysia while civil & infrastructure works accounted for between 5-10%. Basic services are the main type of services provided by these firms.

3.7

Future directions In identifying their future directions, 77% of the respondent firms have listed more than one option. Table 13 indicates the future directions likely to be undertaken by respondent firms. Table 13. Future directions likely to be undertaken by respondent firms Future directions % of firms Maintain status quo 48% Formation of multi-disciplinary practice with other professions to provide integrated 44.2% services Strengthen ICT capabilities and maximize use of ICT 42.3% Diversify into non-basic QS services 40.4% Marketing for projects outside Malaysia 38.5% Diversify into non-building works 36.7% Venture into new areas of business (other than QS & the construction industry) 30.8% Consolidate with other QS practice to form larger firms 19.2% Table 14 indicates the non-basic QS services that respondent firms intend to undertake in the future. The scenario suggests that firms are diversifying their services in meeting the changing needs of the industry. Table 14. Non-basic QS services that respondent firms intend to undertake in the future Non-basic QS services Life cycle cost analysis/planning Construction planning Arbitration/Mediation Expert witness/appraisal Insurance valuations Risk management Project/construction management Value management Quality management Facilities/asset management Premises audit (energy etc) Due diligence reports Cost benefit analysis Information management % of respondent firms 40.4% 34.6% 23% 11.5% 23% 15.4% 48% 38.5% 9.6% 15.4% 5.8% 15.4% 11.5% 5.8%

4.

CONCLUSION The survey indicated that there are considerable variations of quantity surveying firms identified by ownership structure, age, financial size and total workforce. Although current scenario is dominated by traditional practices, there is evidence that the practices have diversified from the traditional boundaries. However, investment in R & D by quantity surveying practice is minimal, and income from outside Malaysia is particularly low. There is substantial usage of ICT among quantity surveying firms. Future directions of quantity surveying practice will be influenced by the countrys industrialization drive, structural transformation of the economy, future technology breakthroughs, the significance and importance of ICT in future construction activities and increased globalization of construction markets.

-8-

REFERENCES Burnside, K. and Westcott (1999). A.J. Market Trends and Developments in QS Services, RICS Foundation Research Paper Series. RICS Carrick, H.G. (2000). Profitable QS Practice Benchmarking Business Performance, in Proceedings of the 2000 PAQS Congress. Cairns. De Vaus, D.A. (1996). Surveys in Social Research. UCL Press Limited. London Leedy, Paul D. (1993). Practical Research: Planning and Design. Macmillan Publishing. New York Lin, S.Y (1994). The Malaysian Economy, 1957-1991: An Overview in Naidu, S. and Noor, S.M. (Eds.), Malaysian Development Experience: Changes and Challenges, National Institute of Public Administration, Kuala Lumpur, pp.10-45. Lowry, J. (2003). The Future of Quantity Surveying in the Asia Pacific Region An Australian Perspective, in Proceedings of the 2003 PAQS Congress. Tokyo. Malaysia (1991). Malaysia: The Way Forward (Vision 2020). Government Printers. Kuala Lumpur. Meyer, T. and Nkado, R. (2001). Competencies of Professional Quantity Surveyors: A South African Perspective. Construction Management and Economics, 19, pp.481-491. Ong, H.T. (1999). Challenging Roles for Quantity Surveyors in Malaysia, in Proceedings of the Quantity Surveyors National Workshop. Kuala Lumpur. Page, M., Pearson, S. and Pryke, S. (2004). Innovation and Current Practice in Large UK Quantity Surveying Firms, RICS Foundation Research Paper Series. RICS. Royal Institution of Chartered Surveyors (1991). Quantity Surveying 2000: The Future Role of the Chartered Quantity Surveyor. RICS. Royal Institution of Chartered Surveyors (1998). The Challenge of Change, QS Think Tank 1998, Questioning the Future of the Profession. RICS. Smith, P. (2000). Information Technology and the QS Practice, in Proceedings of the 2000 PAQS Congress. Cairns. Acknowledgements The authors would like to thank the Board of Quantity Surveyors Malaysia and the Institution of Surveyors Malaysia for their funding and assistance in connection with this paper.

-9-