Furniture procurement in higher education institutions case study: Kolej 9 and 10, Universiti Teknologi Malaysia

Abstract

Furniture is one of the basic amenities provided by Higher Education Institutions (HEIs) in Malaysia in order to support and ease the activities done by their students, lecturers and staffs. It is provided in an effort to ensure the learning process can be conducted smoothly, appropriate learning environment can be created, and with the thought that it can assist them in producing effective and efficient work performance. Despite its significance, limited scientific and economic research has been undertaken to examine the best method in procuring the furniture. Therefore, there are situation arise whereby there are unseen costs in the management of the furniture which resulted in the higher costs to manage and maintain it during the furniture economic life span. Therefore, this study aims to ascertain the best procurement method that can be employed by the HEIs by identifying the total costs involved in the whole life cycle of the furniture in UTM’s hostels as well as identifying the most beneficial procurement option (buy-in or leasing) by conducting sensitivity analysis. The study was conducted through a quantitative analysis method by using life cycle costing analysis (LCCA) and sensitivity analysis. From the analysis, it is discovered that the costs elements that contribute to the whole life cycle costing of the furniture is the initial costs, operating and maintenance costs, replacement costs, salvage value, base date, economic life span as well as the discount rate. Through the identification and the analysis made through LCCA and sensitivity analysis, the findings indicates that although furniture owned by UTM through buy-in method has the highest initial costs which contributed to 97% of the total of its life cycle costing but they are generating more savings in the long terms rather than leasing. Therefore, the study concludes that, the best procurement option for the furniture in HEIs in Malaysia is buy-in method rather than leasing.