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CITP Buzz (Issue No.3/2020)

16 Mar 202029 May 2020

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Construction Industry Transformation Programme 2016-2020

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CITP Buzz (Issue No.3/2020)

16 Mar 202029 May 2020

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Ministry of Works Malaysia

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Policy & Strategy Division
Tingkat 24, Menara Dato Onn
Pusat Dagangan Dunia Putra (PWTC)
No 45, Jalan Tun Ismail
50480 Kuala Lumpur

Telephone: +603 4047 7271
Fax: +603 4047 7140
Email: pmo@cidb.gov.my

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Quality, Safety & Professionalism
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Quality, safety and professionalism are primary prerequisites towards transforming our national construction into a responsible, developed industry. These fundamentals are to be ingrained into everyday practices, creating high quality products, safe and healthy environment at construction sites and ease of doing business for construction permits.

Case for Change

Lack of adequate emphasis on quality assessment and assurance
- Lack in quality-rated building as clients and consumers may not demand for quality
- Limited number of standards for materials and structures that are in line with internationally recognised standards
- Low take up rate of a rating system for buildings called the Quality assessment System in Construction (QLASSIC) that assesses contractor workmanship and a broader quality assurance for construction of building
- Insufficient number of independent quality assurance and quality control (QA/QC) assessment hinders consumers from fully discerning quality of construction and distinguishing industry players that offer higher quality standards
Poor conditions on worksite, including workers’ amenities and safety and health standards
- Negative reputation due to poor safety and health practices in Malaysia construction
- Shortage of relevant safety officers contribute to the high numbers of fatalities and accidents
- Failure to meet minimum standards of workers’ living conditions, especially foreign workers
Complex regulatory framework, processes and procedures, which lead to delays in permits and approvals
- Challenging ease of doing business with rigid regulatory framework and procedures, specifically pertaining to issuance of licenses and permits.
- Long red tape as Malaysia takes over 74 days to issue construction permits, compared to only 24 in Singapore.
Room to enhance public perception of the industry and awareness of initiatives to improve the image of the industry
- Negative perceptions about safety, quality, environmental friendliness and adoption of technology deter many from making a career in construction.

2020 Aspirations

Quality, safety and professionalism have to be ingrained in the culture of the construction industry.

Focus Areas

Focus Area 1: QUALITY
Quality Assessment and Improvement

4 KPI

More than 30% of total number of residential building projects achieve a minimum QLASSIC score of 65 by Q4 2020
25% of non-residential buildings with project value more than RM10 million adopt QLASSIC and achieve minimum scoring of 65 from January 2021 onwards
100% public affordable housing projects achieve minimum QLASSIC score of 65 by Q4 2020
5 new construction material product standards (Schedule 4 of CIDB Act 520 – Conformance to Material Standard) adopted by the industry by Q4 2020

What is new in CITP Midterm Review?

Affordable Housing
QLASSIC assessment include residential and non-residential buildings as well as affordable housing in the assessment
Construction Material Standard
Regulate conformance of Material Standard to 5 new construction material products

Focus Area 2: SAFETY
Emphasis on Safety Culture

2 KPI

Reduction of number of worksite fatalities and injuries by 10% annually from Q1 2021 onwards (2020 as baseline)
Occupational Safety and Health in Construction (Management) or OSHCIM to be enacted by January 2020

What is new in CITP Midterm Review?

Reducing Fatalities
Worksite fatalities to be reduced by 10% anually
SHO/SSS/DP
Each construction worksite must have at least one SHO/SSS/DP (Excavation, piling, concreting, demolition, scaffolding, blasting, trafic management, safety net & belt)
New Regulation
New regulation to be gazetted on high risk activities (falsework, temporary structure, lifting operation, working at height)

Focus Area 3: PROFESSIONALISM
Instilling Professionalism in Malaysian Construction Industry

5 KPI

400 CIDB registered construction-related companies have adequate procedures to combat bribery in line with MS ISO 37001:2016 (Anti-Bribery Management System) by Q4 2020
All public projects to adopt Gerbang Nilai by Q4 2020
All public and private projects using BIM to adopt National Specification for Construction by Q4 2023
All civil engineering projects for public and private sector to adopt MSCESMM by Q4 2020
Construction projects with value RM50 million and above must be managed by accredited Construction Manager by Q4 2023

What is new in CITP Midterm Review?

Gerbang Nilai
All public project to adopt Gerbang Nilai for successful project delivery
Adequate Procedures
Adequate procedures by constructions related companies in gearing towards compliance to MS ISO 37001:2016 (Anti Bribery Management Systems)
Accredited Construction Manager
Construction projects managed by accredited Construction Manager
National Specification
BIM-enabled National Specification to be developed

Environmental sustainability agenda in the construction industry will be robustly developed and rolled out as a model to the emerging world. High compliance to the environmental sustainability ratings and practices will make Malaysia a low carbon, sustainable building and infrastructure hub. Efficient waste management will propel Malaysia’s infrastructure to be more resilient and sustainable, while aiding environmental protection and ensuring the people’s living standards are of high quality.

Case for Change

Lack of sustainability-rated construction; buildings and infrastructure not totally resilient to natural calamities
- Negative perceptions and apathy in environmental sustainability is resulted from overarching policies and regulations on sustainability ratings and assessments
- Lack of comprehensive rating tools such as GBI, MyCREST that can assess and preclude the usage of materials and practices that counters sustainability
- Absence of mandate to hire contractors certified in environmental management such as ISO 14000
- Lack of adoption of sustainable materials and practices, resulting in built environment that may not reliably weather natural calamities such as heavy flood
High carbon emissions and energy usage of buildings
- High consumption of energy and water among residential and commercial buildings, which produce high emissions and waste
- Low market demand for sustainable building solutions today has resulted in a weak ecosystem for sustainability
High volume of construction and demolition waste dumping
- High waste and low recycling contributes to rapidly depleting landfills, increasing environmental pollution and negatively impacting on living conditions of Malaysians
- Limited awareness and guidance on adopting sustainability practices, lack of regulatory and operational frameworks for responsible waste management add to the challenges

2020 Aspirations

Environmental sustainability to support the sustainability goal under the 11th Malaysian Plan

Focus Area

Focus Area 4: SUSTAINABILITY
Sustainable Development Goals

6 KPI

50% of new infrastructure projects more than RM100 million to be certified in Sustainable INFRASTAR or ay acceptable sustainable infrastructure tool from Dec 2020 onwards
Sustainable solid waste management assessment report on at least 20 randomly selected construction sites produced quarterly from Q1 2020 onwards
70% of new public sector building projects more than RM50 million adopted MyCREST and certified in MyCREST from December 2020 onwards
CO2 emission study for Malaysian construction industry value chain (design to material manufacture to transport logistics to construction site) to be completed by December 2019 (working with Ministry), including possible incentive/disincentive for budget submission
4 Mt CO2 equivalent reduction per year (to be reviewed by January 2020)
3 guidelines on Resilient Construction focus in design and project management published by Q4 2020

What is new in CITP Midterm Review?

Sustainable INFRASTAR
New infrastructure projects more than RM100 million certified in Sustainable INFRASTAR
CO2 Emission Baseline
CO2 emission baseline in construction industry will be studied
Resilient Construction
Three guidelines on Resilient Construction to be published
Solid Waste Management
Sustainable construction solid waste management assessment report to be produced

Productivity is the primary engine of growth towards Malaysia’s high-income target. As a vital sector to the nation’s advancement, the construction industry will lead with high productivity levels through efficient adoption of new technologies and modern practices coupled with high-skilled, highly paid workforce.

Case for Change

Largely low-skilled workforce and inadequate or mismatch in training and development
- Employers unwillingness to invest into upskilling of workforce
- Gaps in training modules
- Poor manpower planning, where skill requirements go undiagnosed
Over-reliance on low-skilled foreign labour
- Misconception of locals perceiving the industry as challenging work with limited career progression
- Low cost of hiring foreign workers make it more attractive for industry players3. Limited adoption of modern practices, mechanisation and IBS
Limited adoption of modern practices, mechanisation and IBS
- Vague definition of components qualifying as IBS and lacking in standard
- Lack of training for design consultants on ways to incorporate IBS into their designs and forced to redesign for manufacturing and assembly, leading to delays
- Issues in cash flow for contractors who are awarded IBS contracts during procurement of IBS components. Upfront large deposits are required before component delivery as well as delayed client payments
- Imposition of high import duties on IBS manufacturing equipment and installation machinery, impeding IBS adoption for manufacturers and contractors
Limited adoption of information technology such as BIM
- Lack of skilled talent pool able to prepare plans in BIM and effectively utilise it to liaise with stakeholders across the value chain
- High cost of adoption of BIM software and upgrade of hardware to be compatible with the BIM software
- Resistance in BIM adoption as it requires changing current ways of working
- Lack of a standard object library hinders design consultants from accessing information needed
- Limited availability of usage guidelines customised to Malaysian landscape impedes the simplification process of complex implementation
- Lack of knowledge amongst local authorities and regulators on BIM-ready hardware and software, delaying process permits and approvals effectively
- Lack of awareness and training amongst local authorities staff on BIM’s benefits
- Lack of collaboration and coordination among various disciplines, including integration with the operations of a building, such as facility management for successful BIM implementation
Lack of data and information-driven decision-making in the industry
- Lack of awareness on the benefits of data sources
- Lack of frequently updated data and only a few reliable sources that provide comprehensive and consistent information
- Lack of comprehensive data set that includes all upcoming construction projects, price and cost and other important construction metrics
- Lack of detailed and optimised analyses on data set that could be used to generate robust products and guide decision-making
High proportion of sub-scale SMEs, including Bumiputra SMEs and entrepreneurs
- High proportion of sub-scale SMEs, including Bumiputra SMEs and entrepreneurs
- Limitation in reaching industry players as the industry is highly fragmented - SMEs make up 90% of contractors and majority of professional firms are sole proprietors
- Low entry requirement driven by non-stringent registration criteria makes it easy for small contractors to fulfill
- Low specialization among Bumiputra contractors who may not offer high quality services
- Restriction on the ability to invest in technology and the building up of a high-calibre workforce due to the subscale nature of the majority of industry

2020 Aspirations

The productivity in the construction industry must be underpinned by the drivers of workforce, technology and processes

Focus Areas

Focus Area 5: SKILLS TRAINING
Upskilling Malaysia Workforce

3 KPI

10% increase in the annual number of accredited skilled workers registered with CIDB from January 2019 onwards (January 2019 as baseline)
Industry absorption rate of 80% of all skills training done by CIDB after January 2020
Mandating independent tracer study on all skill trainings by CIDB by Q2 2019 to measure the industry absorption rate and implementation of digital tools by Q4 2020

What is new in CITP Midterm Review?

10% annual increase in CIDB registered & accredited skilled workers
More effective CIDB skills training as there will be at least 80% absorption rate of the participants into related industry
Mandatory Tracer Study for all CIDB skills training program via digital tool

Focus Area 6: TECHNOLOGY
Aligning with Changing Technology

6 KPI

80% of total number of projects with project value RM10 million and above to achieve 70 IBS score by Q4 2020
80% of total project number of private projects with project value RM50 million and above to achieve 50 IBS score by Q4 2020 and 70 IBS score by Q4 2025
100% of all public building projects above RM100 million (for JKR building projects) to use BIM Level 2 by Q4 2020
70% of private and public building projects above RM10 million to adopt BIM by January 2021
BIM e-submission (Auto-Checker) by all PBT with city status (bertaraf Bandaraya) by Q4 2021
Digital construction and Industry 4.0 Roadmap 2020-2025 endorsed by CITP MC by January 2020

What is new in CITP Midterm Review?

Digital construction and Industry 4.0 Roadmap as a national agenda to guide the construction industry towards digital future
BIM adoption for private sector is also included as the KPI to ensure the transformation throughout the industry
More stringent roll out of IBS for private sector projects with statewide aspiration
Public sector is supportive in digital construction initiative by implementing BIM e-submission (auto checker) in all PBT with city status

Internationalisation will drive the Malaysian construction players to gain prominence as global players on the international platform as well as significantly elevate its position on the domestic front. Its highly skilled and professional workforce is envisaged to capture the growth beyond domestic market and adapts to the changing environment quickly to be able to compete in the world arena.

Case for Change

Increasingly competitive domestic market, especially with the presence of foreign players
- Enlarged presence by foreign players in the Malaysian construction industry as they obtain bigger market share from year to year
- Lack of Malaysia firms that obtain specialized and highly technical projects across Malaysia
- Intense competitive global landscape, especially due to the significant number of Free Trade Agreements (FTAs), which reduces barriers to competition
- Added pressure on local players to improve their competitive capabilities with emergence of new FTAs
- Lack of familiarity by local players on international standards and specifications pertaining to building materials, quality, workmanship, safety and sustainability to compete effectively
Limited access to enablers to support international expansion, including financing
- Gaps in overseas financing from both private and government sector prove to be the main hindrance for Malaysian companies to win overseas projects and securing working capital overseas
- Limited public sector funding as it is based on restrictions imposed on country and company, whereas large firms face challenges in obtaining project loans, especially if the target market is considered ‘high risk’
- Difficulties by SMEs in meeting loan risk assessment criteria and accurately planning project finance requirements, leading to a higher risk of projects running into losses before completion and in turn impacting credibility
Limited number of Malaysian players participate in construction projects abroad
- Sparse market intelligence and lack of market access have led to difficulties for Malaysian firms to successfully win overseas projects
- Lack of deeper understanding of overseas markets, building cross-border networks and gaining international experience in order to benefit from the thriving global construction market

2020 Aspirations

The CITP aims to nurture ‘Malaysian Champions’, i.e. companies with the potential to become construction industry leaders.

Focus Areas

Focus Area 7: EXPORT
Exporting Construction Services

4 KPI

6x increase in volume of overseas construction projects & construction related products secured by Malaysian companies by Q4 2020
30 new construction-related companies export construction services in the global market before Q4 2020 (2015 as baseline)
First investment of newly setup GLC equity fund for overseas project investment to compliment Malaysian companies equity portion by Q4 2020 portion by Q4 2020
2 Malaysian companies utilizing new overseas guarantee mandate by Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP) & Credit Guarantee Corporation (CGC) Board for overseas construction projects by Q4 2020

What is new in CITP Midterm Review?

Introduce more implementable financing products such as GLIC equity financing and SJPP unsecured loan guarantee for overseas construction projects
30 new construction related companies to export construction services in the global market by Q4 2020
6x increase in volume of overseas construction projects & construction related products secured by Malaysian companies by Q4 2020

Focus Area 8: COMPETITIVENESS
Competitiveness in Construction Industry

6 KPI

One Stop Portal on contractor registration to be rolled out by Q4 2020 and system integration with at least 5 key regulators
14 State Capital PBTs to publish Dealing with Construction Permit (DCP) Manual and 6 PBTs to implement OSC 3 Plus Online by 2020
National Construction Industry Information Centre (NCIIC) with 6 Key Strategic information launched by December 2019 with digital analytics by Dec 2020
Model for forecasting construction cost rolled out by 2020
100 companies, of which at least 30 are Bumiputera controlled companies, to achieve 4 star SCORE rating & above by Q4 2020
200 SCORE rated companies progress by at least 1 star SCORE rating by Q4 2020

What is new in CITP Midterm Review?

100 construction companies to achieve 4 star SCORE rating & above by Q4 2020 including 30% Bumiputera companies
One-Stop Centre on contractor registration integrated with systems by 5 key regulators
Dealing with Construction Permit (DCP) manual will be published by 14 state capital PBTs and 6 PBTs to implement OSC 3.0 Plus online system to ensure the DCP initiative can roll out throughout Malaysia
National Construction Industry Information Centre (NCIIC) to be launched by 2019 and focus on digital analytics
Construction cost forecasting model to be rolled out by 2020 to ease the strategic decision making process based on latest dataset

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