The Pros and Cons of Using E-Tendering in Singapore

THE PROS AND CONS OF USING E-TENDERING IN SINGAPORE CONSTRUCTION INDUSTRY First names YAP Last name YEE THARM Abstract: E-tendering is a relatively new and modern technique of tending system. The transaction can be done from business-to-business, business-to-consumer or Business-to-government buy and sale of goods, works and services through the Internet or other networking systems. This paper examines the pros and cons of using E-tendering in the Singapore Construction Industry and the future trend of E-tendering in Singapore.Although E- tendering has been used by the various Singapore Government departments for many years on their procurement of materials and services for local and global with great success, however the private sector in Singapore is still slow in using it as a tendering system. As e-tendering is recognized as a state-of-the-art for procurement which is proven to be efficient by the local Government and other advanced countries (eg. US, UK, China, Hong Kong, Canada etc. ), however the low usage by the private section in Singapore shows that there must be some limitation or disadvantages in using it.May be there are some problems on software and the user not competent to use it for this purpose. Or maybe in Singapore there is a need for the government or a private company to lead and provide a national wide scale of centralizes e-tendering system to cater for all the private tenders in Singapore Construction Industry. Whatever it is, the advantages of E-tendering are far exceeding the disadvantages and it has shown greater potential in the improvement of efficiency to replace the traditional tendering system.Therefore a study to look into the pros and cons of this tendering system is worth the effect. As eventually E-tendering has great potential in increasing efficiency in construction sector in Singapore-tendering by cutting down the-tendering cost and time and reduce the bureaucratic processes in the traditional tendering process. Keywords: E-tender, Singapore’s GeBIZ, E Submission, Information Systems, Pros and cons, Cloud computer, construction. 1. 0 Introduction The use of computer technologies in the world today has revolutionized the processes in the construction industry.The construction industry in Singapore has also faced the same radical and speedy changes in the use of Information Technology (IT) in almost every part of the process of the construction (from pre-tender estimating, tendering, and construction to post tender analysis). Procurement and tendering are an important function for every organisation including construction industry. It is a vital and important activity for a company to gain profit and continue to survive. Especially in Construction Industry, every job is on contract basis, construction company need to secure jobs through tender in order to continue its business.The traditional tendering practices used by Construction Company are largely traditional and involve managing papers or using email to send and receive documents, addenda, correspondence, bid submissions and award notices. With the introduction of submission of tender electronically, time and effort has been shorten tremendously. Other part of the world however electronic tendering has been getting popular over the past few years and is now being commonly used in the United Kingdom, Australia, New South Wales, India, Hong Kong, United States and in China. (The PRC China has been using e-tender for more than 10 years.This year China is celebrating the 10th anniversary of E- procurement rule, their website is www. ccgp. gov. cn). Singapore is a developed country with very good coverage of wireless network and fibre optic cable. The use of computer is very much the common practice of government department and private company. However the use of e-tendering so far in Singapore has been limited to government department procurement. For private construction industry the usage of e-tendering is still limit ed. This paper explore into the pros and cons of using e-tendering in Singapore construction industry and its future development. . 0E-Tendering in the Singapore Construction Industry †¢ E- Tendering in Singapore Private construction: The government department of Singapore has been using E-tendering for more than 10 years, the Singapore Economy Development has also been giving incentive to encourage developers and contractors who are keen in using IT for their business. However up to today the private construction sector in Singapore is still limited in usage of E-tendering. Many Developers and Contractors in Singapore are still finding it more comfortable to use traditional tendering system. †¢ E- Tendering in Singapore Government:The e-tendering used by the government of Singapore is called GeBiz, which come from the word Government Bidding. The GeBIZ, or the Government E tendering, was set up in June 2000. The main objective of this system is to simplify government proc urement and tender activities. It was part of the programme for businesses under the e-Government Action Plan (2000–2003) in Singapore. GeBIZ is a one-stop centre for suppliers to have access to all procurement opportunities in the public sector and to trade electronically with the government departments. The Singapore government E-tender website address is at http://www. ebiz. gov. sg/. Now 100% of the Singapore government Tenders or Quotations are using GeBIZ as a platform for procurement for good and services. As of today, Infocomm Technology (ICT) has become a major part of the Singapore public sector's DNA for public administration and service delivery. Due to the result of Singapore e-government efforts, Singapore has been consistently recognised as a leader in major international benchmarking studies. Our Singapore Government’s innovative efforts in using ICT have also gained local and worldwide recognition and awards.More importantly, the citizens and businesse s have embraced in e-government service. In 2010, almost 9 out of 10 of Singapore citizens and businesses expressed satisfaction with the overall quality of government e-services. (http://www. egov. gov. sg/about-egov-introduction) The process of using Singapore’s GeBIZ: Company who wishes to tender for government job need first to apply as a member of Singapore’s GeBIZ. Upon approved as a member, a password for log in to GeBIZ is given to the company. There are two categories of E-tendering in the GeBIZ. Tender – Goods or services estimated to be valued above $7,000 Singapore dollar. †¢ Quotation – Goods or service estimated be valued below $7,000 Singapore dollar. Once a member log on the GeBIZ, the searching for specific notice can be done by indicating the search condition as shown below by clicking on the â€Å"GO† button. [pic] Figure 1 – searching for a tender (source from http://www. gebiz. gov. sg/. ) For viewing of the details of the-tender and quotation notice, simply click on the â€Å"GO’ button of the screen below. [pic] Figure 2 – viewing of posted tender or quotation. source from http://www. gebiz. gov. sg/. ) The constractor can download or view directly the drawings and specifications posted in the GeBIZ to estimate the-tender price. Tender price can then be submitted to the website electronically. Once the-tender is closed, the-tender will be evaluated by the relevant governmant authority (who post the tender) and the result of the-tender will be announced on the GeBIZ for public information. Hardware and Software requirement for GeBIZ tendering in Singapore. The following are the required hardware and software for a contractor to use the Singapore GeBIZ.In order to use the Singapore Government e-tendering GeBiz, A contractor needs to have a computer meet the following recommended system requirement. The computers which do not meet these requirements might not be compatible and un able to use the system for tender. Hardware – Computer must have a minimum 500MHz processor or higher with a hard disc at least 64 MB RAM, the internet connection to be minimum 256kbps or higher. Software – Computer with a Windows Operating System consist of Windows 2000, Windows XP or Window 7. As for Internet Browser, having a Internet Explorer 6. , 7. x, 8. x and 9. 0 will be enough. 2. 1How E-Tendering works E-tendering is an electronic tendering solution to facilitate the complete-tendering process from the advertising of the requirement through to the signing of the contract. This includes the exchange of all relevant documents (drawing, specifications etc) in electronic soft copy format. In other words E-tendering is a process of carrying out entire-tendering Cycle Online including submission of Price Bid in such that Efficiency, Economy, Speed of Internet can be achieved without the use of paper form of hardcopy.It also eliminates the need to transfer of docume nts between the Client and bidders. E-tendering Cycle can be broken in key modules as the figure below: Figure 3 – The E- tendering cycle 2. 2Traditional Tendering System vs. E tendering The advantages of traditional tendering compare to E-tendering System can be summarised as below: Traditional Tendering System †¢ Longer Procurement Cycle More time needed to print tender documents for all the contractors requesting for tendering. A normal construction tender using traditional tendering system can take up to 2 to 4 months for a cycle. †¢ More ExpensiveThe printing of tender documents such as drawings and specifications are costly and a lot of money is spent for plants and labour for transportation of the documents. †¢ Paper Based Procurement Traditional tendering basically is paper based procurement, documents such as drawings, specifications and forms are printed on paper, which is not environmentally friendly. †¢ Restricted Mobility Paper based tender do cument is not mobile and inconvenient to bring it along for reading and estimation. These documents also require large storage space and it is labour intensive to handle. †¢ Can’t do work on HolidaysThe-tender documents are usually placed at the office and the working hour for office is usually 9am to 5pm. No work can be done after these hours and during weekend and public holidays. †¢ Prone to Human errors Paper documents are prone to human errors, as missing of pages or printing errors. Blur print due to low ink or no ink for some pages can happen. †¢ Content not sharable Tendering documents such as specifications are usually A4 size and can only viewed by a person alone, unlike e-tender document which can be projected to a big screen and shared by as many people as possible for group discussion and meeting. †¢ Physical SecurityTender documents stored in the office especially those documents which have sensitive cost information, e. g. Filled up Bill of Quantity. These documents can pose a business security threats as they are valuable to the competitive contractors. †¢ Wastage of space to store bids Unlike e-tender the documents, the document for traditional tenering need physical space for storage. E – Tendering System †¢ Shorter Procurement Cycle E – Tendering system is computer based; the cycle is much shorter as compare to traditional tendering system. One major saving of time comes from the cutting down of transporting of documents. Economical Due to the fact that hard copies of the documents are expensive, it is very much economical to store and use the soft copies in the computer and website. The cost of using the computer and software are quite fixed. †¢ Environmentally Friendly As compare to traditional tendering system, E-tender consumes almost no paper. Hence it is very environmentally friendly. †¢ Anytime – Anywhere Bidding E-tendering can be conducted any time anywhere i. e. 24 hours a day, 360 days a year and globally anywhere as long as there is Internet connection. †¢ Bidding is possible on HolidaysBidding is possible even during weekend or Public Holiday, as long as before the tender is closed. †¢ Automated & Accurate process As e-tender is automatically carried out by the computer, hence it minimized the human. The process will be accurate and almost instantly done. †¢ Shareable Content The content for E-tender documents is easily shareable among the company staff, as long as they have a computer or laptop and a given a password. The content also easily shared in a group meeting with a projector, which is a conducive environment for group discussion. †¢ Fool-proof SecuritySecurity for the documents is fool-proofed as only authorized people with the password can access to the virtue documents. †¢ Lifelong storage on CD Document stored in the CD or hardisk for e-tender can last for eternity (provided that the CD and hardisk wil l last as long) as compare to paper documents. It is also easy retrievable. †¢ One click access to bids When all the calculation for the-tender sum is done, it is only one click away from bidding. 2. 3Pros and cons to call for e-tenders. Pros to the Suppliers/Contractors †¢ Anytime & Anywhere Bidding Due to the development of wireless communication, E-tendering is globalized.Everywhere in the world as long as you are connected in the website, bidding is possible. †¢ Fair, Free and Fearless participation for vendors. As all vendors registered are treated as equal, the competition is fair, free and no barrier. †¢ No dependence on Newspaper, Courier. All posting is website base, hence the publicity does not require Newspaper or Courier service. †¢ No Administrative hassle The administrative is very much simple and simplified as all documents can be view through the computer screen. †¢ Can carry out all tendering process from any computer E-tendering is web based.Hence any computer, laptop or even I phone can do the job. †¢ Economical Saving on traveling cost is tremendous. As the link between the Client and contractor is through internet, it minimizes the physical travelling. †¢ Reduces efforts & cost of bidding The efforts for each individual staff and the manpower required for preparation of tender is reduced, hence the over cost of bidding is less. †¢ No tenders can be missed because of distance The bosses of the client or contractor may be travelling overseas, but they can access to the E-tender website anytime anywhere in the world. Miss viewing of the tender has become the past. Can submit bid at last minute The closing of E-tender is link to the time. As no travelling is needed to the client’s office to submit a tender, contractor can always clip the submit on the last minute/second. Pros to the-tendering Authorities/Clients †¢ Completely Automated Process The E-tender process in clients’ comp uters are all automated, the list of bidding contractors is sorted out in the ascending order from lowest price to the highest. †¢ Shortens Procurement Cycle Most of the clients hope that the procurement cycle be short, the E-tendering is best able to achieve this requirement. Economical and Environment Friendly As E-tender system required minimum paper, all information is stored in the computer for processing and retrieving. A computer can be used for 3 to 5 years, as for traditional tendering documents it is disposed once it is used. †¢ Greater Transparency The E-tendering website is open to all the authorized and registered members; hence all of them are able to see the data posted in the website with great transparency. †¢ Improvement in work culture in the departments It create a more friendly and conducive working culture in the departments, as less miscommunication between staff occur. System aided Evaluation process After the closed of tender, the E-tender sys tem will automatically aid in evaluating the most suitable tender. It cut down the time for evaluation. †¢ Minimize Human errors Most of the process is carry out in the computer, hence minimize human errors. †¢ Minimal Storage Space A computer is all you need for storage of all the tendering document. Printing out of hard copy is only needs required. †¢ Change in Perception The perception of a company will be changed as E-tendering is implemented for a Client. It will become a more progressive and proactive organization. Lesser hassle of communication and administration Communication between client and contractor, among staff will be much easier through computer and administration will have lesser hassle. The cons or disadvantages of using e tender †¢ Cost The initial cost to set up the computer system can be quite costly. As E-tender required the purchase of expensive hardware and the necessary software. †¢ Staff The company need to employ staff competence in the use of e-tendering system or train up their existing staff to use the e-tendering system.Security of the e-tendering system – An effective and secure e-tendering system needs to make sure that any communication that passes through the system is secure and safe. As all the data are passing through the open networks such as the internet. Care must be taken to ensure that all the information passed between tenderers and the Client be treated as confidential. The major risks are that confidential information transmitted over opened networks may be exposed to or altered by malicious parties. There is also the risk of malicious parties generating false messages, impersonating other parties or denying that messages have been emailed. . How to overcome these limitations †¢ Cost Construction Company can get a loan from bank to purchase the e-tendering system, through the saving of the e-tendering process; soon the cost would be recovered. †¢ Staff Company can directly employ e-tender system competence staff to from the employment market; alternatively can send their staff to be trained to use the system. Security – One of the major problems of e-tendering is to prevent the unauthorised usage of the e-tender account. The following are a few new computer technologies in the market which are capable of overcoming these problems. †¢ BiometricsBiometric verification of two authorized users can be used in for tender opening process. This method is using finger print of any two authorized individual; the web page will not be able to open if two fingers print doesn’t match. This appliance also helps to establish that user remains physically present when Tender opens. [pic] Figure 4. – Biometrics appliance †¢ Role Base Access This will only allow access to website on the basis of rights allocated to an authorised User or Group of Users. This ensure that Tampering by unauthorized person become not possible. The existing Orga nization hierarchy also can be mapped into the system. pic] Figure 5. – Role Base Access appliance †¢ Time Based Access The system ensures that no activity can be carried out before due date & Time for e. g. Tender cannot be opened even by authorized User before due date. Server Time cannot be tampered as it is mapped to National Standard Time Server. [pic] Figure 6 – Time Based Access Security System With all these security tools in place to ensure security of the website, the usage of e-tendering is getting more and more secure nowadays. 5. Scope of future of e-tendering – Cloud computing The future e-tender is by using Cloud computing. Just what is clouding computer?It is not sitting among the cloud to do the job, it is instead of using our own server to store data, cloud computing is using cloud server for storage of data and retrieving from them. The focus is on the website and not the computer hardware. When the data is needed for large processing, it can be scale up as much as one can instantly and once work done it is released back to the cloud. The working principle is like using the computer power from the cloud instead of using the company’s own computer hardware. It is just like payment for paying for electricity and gas instead of having our own generator and having a large gas storage tank.Cloud computer is also like hiring a car to travel instead of buying a car. The advantages of using cloud can be listed as below: †¢ Scalability – Glow and shrink as and when you wanted. †¢ Instant – It can be turn on and off anytime any place you like. †¢ Economical – Pay for the time you use and there is no need for the hardware and it is time saving. In other words it is pay as you use [pic]Figure 7. – Cloud computing system (Source from Google cloud computing image) 2. 6 Types of Cloud computing There are three types of cloud computing in the market: namelyInfrastructure as a servic e (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), it has his advantages and disadvantages. †¢ SAAS-Software as a server – Each offers a different level of user flexibility and control. Saas allows users to run existing online applications. It is the easiest way of using, where off-the-shelf applications are accessed over the Internet. The advantages are Free or paid via subscription, it is accessible from any computer and able to facilitates collaborative working. However its business generic applications may not always suitable for their own business use. PAAS- Platform as a server – Allows users to create their own cloud applications using supplier – specific tools and languages. It provides environment and tools for creating new online applications. Eg. Google has Google App Engine which enables a user to build and host web application on the same system, which no need to worry about hardware. Micro soft has a Window Azure Platfor m. Salesfore has a website called Force. com which can build up and host for free. The system can be rapidly development at low cost and used Private or public deployment.However it limits developers to provider languages and tools and it also have the risk of vendor lock-in. †¢ IAAS- Infrastructure as a server – Allows users to run any applications they are please on cloud hardware of their own choice. Figure 8 – The interrelationship between the Cloud Clients and the three types of cloud computing Cloud computer deployment models [pic] There are four forms of Cloud computing applications: Public cloud Public cloud applications, storage, and other resources are made available to the general public by a service provider. These services are usually free or offered on a pay-per-use model.Generally, public cloud service providers like Microsoft and Google own and operate the infrastructure and offer access only via Internet. Other means of direct connection is not po ssible. Community cloud Community cloud shares infrastructure between several organizations from a specific community with common concerns for example security, compliance, jurisdiction, etc. , whether managed internally or by a third-party and hosted internally or externally. The costs are spread over fewer users than a public cloud, but it is more than a private cloud, so only some of the cost savings potential of cloud computing are realized.Hybrid cloud Hybrid cloud is a composition of two or more clouds; it can be private, community or public. It can remain unique entities but are bound together, offering the benefits of multiple deployment models. By utilizing â€Å"hybrid cloud† architecture, companies and individuals are able to obtain some degrees of fault tolerance combined with locally immediate usability without dependency on internet connectivity. Hybrid Cloud architecture requires both on-premises resources and remote server based cloud infrastructure.The disadv antage of Hybrid clouds is that it lacks the flexibility, security and certainty of in-house applications. Hybrid cloud provides the flexibility of in house applications with the fault tolerance and scalability of cloud based services. Private cloud Private cloud is cloud infrastructure operated solely for a single organization, whether managed internally or by a third-party and hosted internally or externally. Undertaking a private cloud project requires a significant level and degree of engagement to virtualize the business environment, and it will require the organization to re-evaluate decisions about existing resources.When it is done right, it can have a positive impact on a business, but every one of the steps in the project raises security issues that must be addressed in order to avoid serious vulnerabilities. The major disadvantage is because users â€Å"still have to buy, build, and manage them† and hence do not benefit from less hands-on management essentially the economic model that makes cloud computing such an interesting concept. 3. 0 Conclusions In conclusion, this paper finds that e-tendering has many pros and cons in the system. However we can see that the pros have exceeded the cons, i. e. he advantages are far more than disadvantages. With the breakthrough in computer technology and the advancement of science, the various problems face by the user in e-tendering now will be easily overcome very soon. As the construction industry in Singapore is one of the major industries that contributed to the nation building and giving the most impact to the economy, the benefits that brought by the e-tendering will definitely benefit the Construction Industry and Singapore national economy as a whole. However new problems may also appear and these need to be overcome continuously to bring about advancement of the system.Eventually all the other industry will be able to benefit from the achievement. 4. 0 Recommendation In view of the current situ ation in Singapore construction Industry, only the government is using e-tendering in a wide spread scale. I would like to recommend the government to initiate and set up an e-tendering system similar to the current GeBIZ system to serve the Singapore private Construction sector. The Singapore government has more than 10 years experience in the e-tendering system, they should have no problem in setting up an equal if not better e-tendering server than the Government e-tendering GeBIZ.Since setting up an e-tendering need a large initial capital investment, as a financially strong Singapore Government this should not pose any problem, moreover it will eventually benefit the economy of Singapore. In order to fully harness the benefits of e-tendering system, the main contractors must adjust and make changes to their company itself to equip with the necessary skills and resources for the e-tendering system. Contractors are recommended to train their staff to be competent in the use of e- tendering system. Companies may also engage professional consultants or experts to set up e-tendering in their company.As e-tendering has proven to be an advantage for the Main contractor to be the better competitor and increase their productivity and profits, I strongly believe that in the years to come, e-tendering will be used both by the private and government construction tendering in Singapore. 5. 0 References Bett. D. Black. P. Christensen. S. Dawson, E, Du, R. , Duncan. W. , et al. (2006). Towards secure and legal e-tendering. Journal of Information and Technology in Construction, XI. 89-102 Bourn J. (2002). Better Public Services Through e-Government. 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Internatinal Conference on Technology and Business Management. 3. 201-207. Singapore government's one-stop e-procurement portal http://www. gebiz. gov. sg/. Central Government Autumn 2001 – Paper free-tendering – a 21st Century alternative – Public Service. Website http://ww. publicservice. co. uk/article. asp? publication=Central%20Go vernment (Accessed 25/06/2012) Building and Construction Authority Singapore http://www. bca. ov. sg/ ———————– 12. Tender Audit & Storage 11. Vender Registration & Rating 1. Tender Notice 10. Tender Award 2. Tender Promotion E-Tendering Cycle 9. Negotiation 3. Tender Document 8. Tender Evaluation 4. Pre Bid Meeting 5. Bid Submission 7. Tender storage & Opening 6. Payment Gateway Cloud Clients Web browser, mobile app, thin client, terminal emulator, SaaS CRM, Email, virtual desktop, communication, games, †¦ PaaS Execution runtime, database, web server, development tools, †¦ IaaS Virtual machines, servers, storage, load balancers, network, †¦ Figure 9. – The cloud computer models (Source from Google cloud computing image)