A comparative study on Indonesia and Malaysia contractor selection practices

Abstract

Contractor selection is one of the main phases in the construction project faced by the clients. The contractor roles is to transform the design into reality. It plays an important role in the successful of the project because wrongful in selecting a contractor will result in failure of the construction project. Previously predominant contractor selection process used is „low-bid?. But right now, clients tend to move away from a "lowest price wins" principle, to multi criteria selection approach. In order to procure the capable contractor, every country including Indonesia and Malaysia has guideline for contractor selection. In Indonesia, the guideline is Permen PU No. 43/2007. This guideline predominantly use an approach called “the lowest bid”. In some instances it is occasionally unsatisfactory, the lowest bid is considered too low and it becomes a major concern for the owner. Meanwhile, in Malaysia, the various criteria for selection of contractors were practiced by the government. Public Work Department (PWD) issued a Tender Assessment Guide through SPKPKR Bil. 4/1993 and use of “Cut-Off” Price method for tender evaluation. Therefore, there is different in approach in the current tender evaluation practice between Indonesia and Malaysia. The aim of this study is to identify areas for improvement in contractor selection through comparative study between Malaysian and Indonesian practice. To achieve the aim of the study a documentary analysis on the current tender evaluation practice for the project that used government funds in both countries is conducted using the SWOT analysis. According to the results of the comparative SWOT analysis of tender evaluation practice in both countries, there are 8 (eight) areas for improvement to the current Indonesian tender evaluation practice which consist of 3 (three) areas which can be done by maintaining the strengths of the current tender evaluation practice and 5 (five) areas of improvements to overcome the weaknesses of the current practice. In conclusion, the result of this study can be used by the related bodies to improve the tender evaluation practice in Indonesia