(Attn: Ir. Ts. Ahmad Muzahar Mohd Zainal / Ir. Ts. Safrina Mohd Aziz)
Dear Sir/Madam,
We refer to Contract No. PO0000100800 for the above-mentioned works, and to the Contractor’s submission Ref. AIS/ADPRSB/SBSL/A/006-REV2 dated 24 August 2026 on the Rationalisation of Rates.
We are pleased to submit herewith, for your approval, the Recommendation for Approval of the Rationalisation of Rates – reviewed and recommended by the Consultant and agreed with the Main Contractor, ADP Resources Sdn. Bhd.:
Kindly be informed that the rationalisation is revenue-neutral and does not vary the Original Contract Sum of RM 6,613,113.00; accordingly, no Variation Order is required.
Thank you.
Yours Faithfully,
DPI KONSULT SDN BHD
IR HILMI BIN OMAR
Managing Director
| a. | Project Name | : | STRUCTURAL REPAIR AND WATERPROOFING OF BUILDINGS, REPLACEMENT OF HANDRAILING AND OTHER ASSOCIATED WORKS AT SUNGAI BATU AND SUNGAI LABU WATER TREATMENT PLANT |
| b. | Contract No. | : | PO0000100800 |
| c. | Name of Contractor | : | ADP RESOURCES SDN. BHD. |
| d. | Name of Consultant | : | DPI KONSULT SDN. BHD. (Civil & Structural Engineering Consultant) |
| e. | Contract Sum | : | RM 6,613,113.00 (Letter of Award Ref. LOA/PCW/PO0000100800 dated 15 May 2026; inclusive of all incidental costs, charges and taxes) |
| f. | Approved Variation Order | : | NIL |
| g. | Revised Contract Sum | : | RM 6,613,113.00 (Revenue-neutral rationalisation; net change RM 0.00) |
| h. | Contract Period | : | 18 Months (15 June 2026 commencement until 14 December 2027 completion) plus 24 months DLP |
| i. | Adjustment of time (AOTC) | : | NIL |
| j. | Extended completion Date | : | NIL |
| k. | Defects Liability Period | : | 24 months from the Certificate of Practical Completion (CPC) |
| l. | Liquidated Ascertained Damages (LAD) | : | RM 2,102.00 per day |
| m. | Source of Fund | : | CAPEX 2026 (Pengurusan Air Selangor Sdn. Bhd.) |
| n. | Others (Securities & Insurances) | : | Performance Bond: RM 330,655.65 (5% Bank Guarantee) Contractor's All Risk Policy: RM 6,613,113.00 Public Liability Policy: RM 1,000,000.00 | SOCSO / WC: Complied |
The objective of this paper is to seek approval from the Contract Administrator (C.A.) to approve the rationalisation of rates due to unreasonable price quoted for certain items in the tender award for Contract No. PO0000100800. The rationalisation of rates exercise is carried out to correct wrongly priced, unfair or unrealistic pricing for certain items in the Bill of Quantities without changing the Original Contract Sum. The rationalisation was proposed by the Contractor (submission Ref. AIS/ADPRSB/SBSL/A/006-REV2 dated 24 August 2026) and has been reviewed and is recommended by the Consultant.
This project was awarded to ADP Resources Sdn. Bhd. as the Contractor, with site possession and commencement on 15 June 2026 and the overall project scheduled for completion by 14 December 2027. The works under this Contract comprise the construction and completion of the following works:
The Works primarily involve reinstating defective waterproofing materials, addressing water seepage issues at the Clear Water Tanks (CWT), replacing defective handrailings in the Treatment Process Area, and other associated repair works at Sungai Batu Water Treatment Plant and Sungai Labu Water Treatment Plant. The objective is to restore the structural integrity, watertightness, occupational safety and operational efficiency of the facilities in accordance with good engineering practice.
Scope of Works by Facility:
All works shall be carried out with good engineering practice, adhering to the C.A. and local authority guidelines on working hours, traffic control, health, safety and environment, and in accordance with the Conditions of Contract, construction drawings and specifications.
The summary of breakdown costs for the aforesaid works as per Letter of Award / tender quoted is tabulated in Table 1.
| Part | Description | Amount (RM) |
|---|---|---|
| A | GENERAL & PRELIMINARIES | 348,000.00 |
| B | CIVIL & STRUCTURAL WORKS | 5,915,113.00 |
| C | PROVISIONAL SUM | 350,000.00 |
| Total Contract Sum – Letter of Award | 6,613,113.00 |
There is a need to rationalise the prices and rates in the Bill of Quantities (BQ) due to the unreasonable price for certain items. The rationalisation of rates was proposed by the Contractor and subsequently reviewed and recommended by the Consultant. The adjustment of rates was carried out on items which were identified as unreasonable without changing the Original Contract Sum. Every addition to a rate is offset by an omission elsewhere so that the Original Contract Sum of RM 6,613,113.00 is preserved exactly; consequently, no Variation Order is required. Paragraph 4 of the Letter of Award Ref. LOA/PCW/PO0000100800 expressly provides for the rationalisation of prices and rates on their reasonableness with the Contract Sum remaining unchanged.
The adjustment of rates was carried out on items which were identified as unreasonable without changing the Original Contract Sum. “Tender BQ Rate” is the original rate in the Contract Bill of Quantities; “Rationalised Rate” is the rate recommended for approval as submitted in Contractor’s Ref. AIS/ADPRSB/SBSL/A/006-REV2. The full rate-by-rate schedule is set out in Appendix B. The summary of the rationalized BQ items is tabulated in Table 2 below:
| Item | Description | Unit | Qty | Tender Rate | Rat. Rate |
Movement | Administrative Remarks |
|---|---|---|---|---|---|---|---|
| Section A – General and Preliminaries | |||||||
| A1.001 | Performance Bond | L.S. | 1 | 10,000.00 | 22,000.00 | +12,000.00 | Rationalized Rate due to unreasonable low price rate |
| A1.002 | Contractor’s All Risk + Public Liability Insurance | L.S. | 1 | 5,000.00 | 8,500.00 | +3,500.00 | Rationalized Rate due to unreasonable low price rate |
| A1.004 | CIDB Levy | L.S. | 1 | 5,000.00 | 8,500.00 | +3,500.00 | Rationalized Rate due to unreasonable low price rate |
| A1.011 | Project signboards (2 no.); remove on completion | L.S. | 1 | 10,000.00 | 6,000.00 | (4,000.00) | Rationalized Rate due to unreasonable high price rate |
| A1.012 | Keep works clear of water incl. dewatering | L.S. | 1 | 20,000.00 | 10,000.00 | (10,000.00) | Rationalized Rate due to unreasonable high price rate |
| A1.021 | PEPC-endorsed As-Built drawings | L.S. | 1 | 10,000.00 | 5,000.00 | (5,000.00) | Adjustment Rate |
| Section A Subtotal – Additions RM 19,000.00 = Omissions RM 19,000.00 | 0.00 | Net RM 0.00 | |||||
| Section B – Civil and Structural Works | |||||||
| B01.011 | Flat roof top area – substrate repair (polymer mortar patch) | m² | 300 | 427.00 | 300.00 | (38,100.00) | Rationalized Rate due to unreasonable high price rate |
| B01.016 | Watertight tape at expansion joint, CWT (Type 2) | m | 400 | 385.00 | 350.00 | (14,000.00) | Rationalized Rate due to unreasonable high price rate |
| B02.010 | Temporary works for crack repair operations | L.S. | 1 | 7,217.00 | 10,195.00 | +2,978.00 | Rationalized Rate due to unreasonable low price rate |
| B05.002 | 1,100 mm galvanised steel railing (CHS, baluster, anchors) | m | 338 | 18.00 | 220.00 | +68,276.00 | Rationalized Rate due to unreasonable low price rate |
| B05.003 | 800 mm galvanised steel railing, same specification | m | 1,323 | 18.00 | 220.00 | +267,246.00 | Rationalized Rate due to unreasonable low price rate |
| B08.008 | Roof floor area – pressure-injection crack repair | m | 2,100 | 125.00 | 110.00 | (31,500.00) | Rationalized Rate due to unreasonable high price rate |
| B08.009 | Flat roof top area – substrate repair (surface prep + mortar) | m² | 300 | 450.00 | 300.00 | (45,000.00) | Rationalized Rate due to unreasonable high price rate |
| B08.010 | Roof floor area – re-profiling / screed levelling of substrate | m² | 5,760 | 150.00 | 115.00 | (202,800.00) | Rationalized Rate due to unreasonable high price rate |
| B10.006 | Flush door 900 × 2,100 c/w fittings, ironmongery, painting | No. | 5 | 1,500.00 | 500.00 | (5,000.00) | Adjustment Rate |
| B10.007 | Timber flush door 1,500 × 2,100 c/w fittings, ironmongery | No. | 2 | 1,800.00 | 500.00 | (2,600.00) | Adjustment Rate |
| Section B Subtotal – Additions RM 338,500.00 = Omissions RM 338,500.00 | 0.00 | Net RM 0.00 | |||||
Movement figures: + green = addition, (red) = omission. All amounts in Ringgit Malaysia (RM).
The grand summary of the rationalised rates is tabulated in Table 3 below, structured in accordance with the Air Selangor Contract Administration submission standard with explicit verification of zero net variance:
| SECTION | DESCRIPTION | AS PER TENDER AMOUNT (RM) |
CONTRACTOR'S PROPOSAL AMOUNT (RM) |
CONSULTANT'S REC. AMOUNT (RM) |
VARIANCE RM |
|---|---|---|---|---|---|
| A | GENERAL & PRELIMINARIES | 348,000.00 | 348,000.00 | 348,000.00 | 0.00 |
| B | CIVIL AND STRUCTURAL WORKS | 5,915,113.00 | 5,915,113.00 | 5,915,113.00 | 0.00 |
| C | PROVISIONAL SUM | 350,000.00 | 350,000.00 | 350,000.00 | 0.00 |
| GRAND TOTAL | 6,613,113.00 | 6,613,113.00 | 6,613,113.00 | 0.00 |
| Original Contract Sum (Letter of Award Ref. LOA/PCW/PO0000100800) | RM 6,613,113.00 |
| Net Variance / Effect of Rationalisation of Rates | RM 0.00 |
| Contract Sum after Rationalisation of Rates | RM 6,613,113.00 |
As confirmed above, total additions of RM 357,500.00 are exactly matched by total omissions of RM 357,500.00. Both Section A (Preliminaries) and Section B (Civil & Structural) balance independently to RM 0.00. The Original Contract Sum remains unaltered at RM 6,613,113.00. Therefore, the rationalisation is completely revenue-neutral and no Variation Order (V.O.) is required.
The tender BQ rate of RM 18.00/m for 1,100 mm and 800 mm galvanised steel railing (Items B05.002 and B05.003) is severely understated and represents a clerical entry error during tender submission. The raw steel material cost alone for circular hollow sections (CHS) is approximately RM 45.00/m delivered to site, excluding hot-dip galvanising to BS EN ISO 1461, cutting, welding, base plates, chemical anchor studs, transportation, safety scaffolding, and site erection.
An independent cost build-up prepared by the Consultant confirms that a fair and reasonable market rate for this specification (complying with Air Selangor and JKR standard details for water treatment plant process walkways) ranges between RM 203.00/m and RM 245.00/m. The rationalised rate of RM 220.00/m is verified as fair, equitable, and competitive. The total movement of RM 335,522.00 restores the Contractor's viability for safety-critical perimeter fall protection along open water process tanks, and is funded entirely by rationalised reductions in screed levelling and surface preparation items under Section B with zero increase to the Contract Sum.
The statutory levy payable to the Construction Industry Development Board (CIDB) under Act 520 is 0.125% of the total contract value. For this Contract (RM 6,613,113.00), the statutory calculation is RM 8,266.39. The tender rate of RM 5,000.00 was insufficient to discharge statutory compliance; the rationalised rate of RM 8,500.00 is aligned with actual payable obligations including administrative processing.
The rationalisation is conducted strictly under the governance of Paragraph 4 of the Letter of Award Ref. LOA/PCW/PO0000100800 dated 15 May 2026, which empowers the Contract Administrator to adjust unrealistic rates while preserving the Contract Sum. The exercise adheres to Pengurusan Air Selangor standard Operating Procedures for Capital Works contracts.
Approval is sought from the Contract Administrator (CA) on the rationalization of rates proposed by the Consultant as detailed in this paper and the attached Bills of Quantities. The rates have been agreed by the Contractor.
Appendix 1: Letter of Award (Ref. LOA/PCW/PO0000100800 dated 15 May 2026)
Appendix 2: Rationalised Bill of Quantities / Rate Schedule (Ref. AIS/ADPRSB/SBSL/A/006-REV2 / DPIK-AIS-SBSL REV.2)