Ingenieur Vol 76 ingenieur 2018 October | Page 79

‟ The implementation of the 3rd Generation PBC has proven to be successful in Malaysia. To date, several capability sustainment contracts for Government moveable assets are running efficiently where contractors are paid solely based on their performance. Of late, in order to instill the commitment of Government contractors, clauses on “investment in capability” and the “use of local sub- contractors” have been further strengthened. This is to intensify industry development by urging contractors to retain work in-country, accelerating the growth of the supporting industry and creating high skill jobs especially in the technology intensive areas of MRO components. The commitment and the action taken by the contractors will be monitored and measured via SPMs. The introduction of PBC in Government procurements has also changed the norms in contract negotiations. Usually, the main parameter to be negotiated in Government contracts is the price. With 3 rd Generation PBC, there are many other variables that can be negotiated such as “at- risk margin”, KPI weightages, performance levels, PIP transition stages and others, which make it difficult for the contractor to slant the negotiation to its own advantage. This, in a way, motivates Government negotiators to be more proactive in preparing good negotiation strategies to get the best deal for the Government, prior to negotiating a PBC with the contractors. Amongst the practitioners of PBC to date, many appreciate the fact that PBC simplifies the payment deduction process as it is done in a very objective manner, hence removing elements of subjectivity which can be grounds for challenge by contractors. Unlike the current conventional contracts where LD deductions are calculated and made at a certain time (eg. at the end of the contract) and involve significant paperwork and specific approval process, the deductions in PBC are easily made on “real-time” basis. The self- regulating PBC has drastically simplified contract management in such a way that deductions are made only based on the contract with no other justification/approval required. There is also a general perception that PBC will cost more than a conventional contract. This view is invalid since the cost of a contract is directly related to the scope of work and when a contract is converted to PBC, the contract cost will likely still be based on “man and material”. In fact, all seven Stage 3 PBC capability sustainment contracts implemented above did not experience any significant cost increase. If any, the cost increase must not exceed 15% of the original cost. CONCLUSION The implementation of the 3 rd Generation PBC has proven to be successful in Malaysia. To date, several capability sustainment contracts for Government moveable assets are running efficiently where contractors are paid solely based on their performance. If a PBC on complex moveable assets can be done, the same can also be accomplished on non-moveable assets such as roads/highways, Government buildings, incineration plants, healthcare facilities and the like. Facility Management must take advantage of Capability Sustainment experience in employing the latest PBC version to draw the best from its contractors. Whilst Government procurements through open tender secure the best deal in terms of price, unnecessary leakages/wastages that are often discovered in conventional contracts can still persist and must be dealt with. The 3 rd Generation PBC is therefore a viable solution. 77