Contract Administration for Construction & Engineering Contracts

IEM TRAINING CENTRE SDN. BHD.

TWO DAY INTENSIVE COURSE ON

CONTRACT ADMINISTRATION FOR

CONSTRUCTION & ENGINEERING

CONTRACTS

Presented by: IR. HARBANS SINGH K.S.

B.E. (Mech) S’PORE, LLB (Hons) London

CLP, DipICArb, C. Eng, PE.

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ABOUT THE COURSE PRESENTER

Ir. Harbans Singh K.S.

B.E. (Mech) S’pore, LLB (Hons) London,

CLP, DipICArb, P.E.,

C. Eng., MIEM, MIMechE,

MIHEEM, MASHRAE, MCIArb, MMIArb.

Ir. Harbans Singh K.S. is a Professional and Chartered Engineer, Arbitrator,

Adjudicator, Mediator, Advocate & Solicitor (non-practising). He commenced his

career in Malaysia before working in Germany and then locally in various professional

capacities. He is presently domiciled in Malaysia where he is active in construction

law and dispute resolution. Ir. Harbans is the recipient of IEM’s Tan Sri Hj. Yusoff

Prize (2001), the Cedric Barclay and the Chartered Institute of Arbitrator’s Awards for

the Diploma in International Commercial Arbitration Examination (Oxford 2003). He

is also the author of a series of four books entitled ‘Engineering & Construction

Contracts Management’, coauthor of the book ‘The PAM 2006 Standard Form of

Building Contract’, contributor to the ‘Malaysian Standard Forms & Precedents:

Construction & Engineering Contracts’, ‘The Ingenieur’ and the ‘Malayan Law

Journal’.

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CONTRACT ADMINISTRATION FOR CONSTRUCTION/ ENGINEERING CONTRACTS

DAY 1 - PROGRAMME

8.30 a.m. - 9.00 a.m. : Registration

9.00 a.m. - 10.30 a.m. : Session 1

10.30a.m. - 10.45a.m. : Tea/Coffee Break

10.45 a.m. - 12.30 noon : Session 2

12.30 noon - 1.00 p.m. : Q & A Session

1.00 p.m. - 2.00 p.m. : Lunch Break

2.00 p.m. - 3.15 p.m. : Session 3

3.15 p.m. - 3.30 p.m. : Tea/Coffee Break

3.30 p.m. - 4.45 p.m. : Session 4

4.45 p.m. - 5.00 p.m. : Q & A Session

5.00 p.m. : End of Day 1

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CONTRACT ADMINISTRATION FOR CONSTRUCTION/ ENGINEERING CONTRACTS

DAY 2 - PROGRAMME

9.00 a.m. - 10.30 a.m. : Session 1

10.30a.m. - 10.45a.m. : Tea/Coffee Break

10.45 a.m. - 12.30 noon : Session 2

12.30 noon - 1.00 p.m. : Q & A Session

1.00 p.m. - 2.00 p.m. : Lunch Break

2.00 p.m. - 3.15 p.m. : Session 3

3.15 p.m. - 3.30 p.m. : Tea/Coffee Break

3.30 p.m. - 4.45 p.m. : Session 4

4.45 p.m. - 5.00 p.m. : Q & A Session

5.00 p.m. : End of Course

CONTENTS

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1.0 CONSTRUCTION/ENGINEERING CONTRACTS: INTRODUCTION

2.0 COMMENCEMENT OF CONTRACT AT SITE

3.0 MONITORING OF WORK PROGRESS

4.0 SUPERVISION OF WORKS/CONTRACT ADMINISTRATION

5.0 PAYMENTS/COMMERCIAL MATTERS

6.0 VARIATIONS/CHANGES

7.0 DELAY AND EXTENSION OF TIME

8.0 NON-COMPLETION AND DAMAGES

9.0 COMPLETION AND HANDING OVER

10.0 DEFECTS

11.0 POST COMPLETION AND FINAL ACCOUNT

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CONSTRUCTION/

ENGINEERING CONTRACTS:

INTRODUCTION

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1.0 CONSTRUCTION/ENGINEERING CONTRACTS: INTRODUCTION

•••• TYPES OF CONTRACTSTYPES OF CONTRACTSTYPES OF CONTRACTSTYPES OF CONTRACTS

1. GENERAL CONTRACTS

2. ENGINEERING/CONSTRUCTION CONTRACTS

•••• TYPES OF BUILDING CONTRACTSTYPES OF BUILDING CONTRACTSTYPES OF BUILDING CONTRACTSTYPES OF BUILDING CONTRACTS

•••• COMMON CONTRACT PROCUREMENT METHODSCOMMON CONTRACT PROCUREMENT METHODSCOMMON CONTRACT PROCUREMENT METHODSCOMMON CONTRACT PROCUREMENT METHODS

1. TRADITIONAL GENERAL CONTRACTS

2. MANAGEMENT TYPES

3. ‘PACKAGE DEAL’ TYPES

4. MISCELLANEOUS METHODS

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•••• BASIC CONTRACT PRINCIPLESBASIC CONTRACT PRINCIPLESBASIC CONTRACT PRINCIPLESBASIC CONTRACT PRINCIPLES

1. CONTRACT DEFINITIONS

2. ELEMENTS OF CONTRACT

3. STANDARD FORMS OF CONTRACT

4. BREACH OF CONTRACT: REMEDIES

•••• MISCELLANEOUS ISSUESMISCELLANEOUS ISSUESMISCELLANEOUS ISSUESMISCELLANEOUS ISSUES

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FIG. 1-1: GENERAL CONTRACTS - TYPES

SIMPLE CONTRACTS

SPECIALITY CONTRACTS

(DEED)

MATERIAL & LABOUR

CONTRACTS

SUB-SUB CONTRACTS

INDEPENDENT CONTRACTS

MATERIAL SUPPLY CONTRACT

LABOUR CONTRACT

COLLATERAL CONTRACTS

ORALCONTRACTS

EXPRESS CONTRACTS

EMPLOYMENT CONTRACTS

MAIN CONTRACTS

SUB-CONTRACTS

GENERAL

CONTRACTS:

TYPES

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ENGINEERING/ CONSTRUCTION

CONTRACTS: TYPES’

FIG. 1-2 : ENGINEERING/CONSTRUCTION CONTRACTS - TYPES

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FIG. 1-3 : TYPES OF CONTRACTS BASED ON PRICING MECHANISM

TYPE OF CONTRACT

LUMP SUM CONTRACTS

LUMP SUM CONTRACTS

COST REIMBURSEMENT

CONTRACTS

COST REIMBURSEMENT

CONTRACTS

LUMP SUM WITH PLAN AND

SPECIFICATION

LUMP SUM WITH PLAN AND

SPECIFICATION

LUMP SUM WITH BILLS

OF QUANTITIES

LUMP SUM WITH BILLS

OF QUANTITIES

COST PLUS FIXED FEE

COST PLUS FIXED FEE

COST PLUS PERCENTAGE

COST PLUS PERCENTAGE

COST PLUS FLUCTUATING FEE

COST PLUS FLUCTUATING FEE

TARGET COSTTARGET COST VALUE COSTVALUE COST

MESUREMENT CONTRACTS

MESUREMENT CONTRACTS

BASED ON APPROXIMATE QUANTITIES

BASED ON APPROXIMATE QUANTITIES

BASED ON A SCHEDULE

BASED ON A SCHEDULE

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TRADITIONALTRADITIONALTRADITIONALTRADITIONALGENERAL GENERAL GENERAL GENERAL

CONTRACTTINGCONTRACTTINGCONTRACTTINGCONTRACTTING

TRADITIONALTRADITIONALTRADITIONALTRADITIONALGENERAL GENERAL GENERAL GENERAL

CONTRACTTINGCONTRACTTINGCONTRACTTINGCONTRACTTING

MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT TYPETYPETYPETYPE

MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT TYPETYPETYPETYPE

‘‘‘‘TURNKEYTURNKEYTURNKEYTURNKEY’’’’‘‘‘‘TURNKEYTURNKEYTURNKEYTURNKEY’’’’ENGINEERING, PROCUREMENT,ENGINEERING, PROCUREMENT,ENGINEERING, PROCUREMENT,ENGINEERING, PROCUREMENT,CONSTRUCTION & COMMISSIONINGCONSTRUCTION & COMMISSIONINGCONSTRUCTION & COMMISSIONINGCONSTRUCTION & COMMISSIONING

ENGINEERING, PROCUREMENT,ENGINEERING, PROCUREMENT,ENGINEERING, PROCUREMENT,ENGINEERING, PROCUREMENT,CONSTRUCTION & COMMISSIONINGCONSTRUCTION & COMMISSIONINGCONSTRUCTION & COMMISSIONINGCONSTRUCTION & COMMISSIONING

DESIGN & BUILD/DESIGN & BUILD/DESIGN & BUILD/DESIGN & BUILD/DESIGN & CONSTRUCTDESIGN & CONSTRUCTDESIGN & CONSTRUCTDESIGN & CONSTRUCTDESIGN & BUILD/DESIGN & BUILD/DESIGN & BUILD/DESIGN & BUILD/

DESIGN & CONSTRUCTDESIGN & CONSTRUCTDESIGN & CONSTRUCTDESIGN & CONSTRUCT

FASTFASTFASTFASTTRACKINGTRACKINGTRACKINGTRACKINGFASTFASTFASTFAST

TRACKINGTRACKINGTRACKINGTRACKING

CONSTRUCTIONCONSTRUCTIONCONSTRUCTIONCONSTRUCTIONMANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT

CONSTRUCTIONCONSTRUCTIONCONSTRUCTIONCONSTRUCTIONMANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT

MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENTCONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENTCONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

MISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMETHODSMETHODSMETHODSMETHODS

MISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMETHODSMETHODSMETHODSMETHODS

PACKAGE PACKAGE PACKAGE PACKAGE DEAL TYPEDEAL TYPEDEAL TYPEDEAL TYPE

PACKAGE PACKAGE PACKAGE PACKAGE DEAL TYPEDEAL TYPEDEAL TYPEDEAL TYPE

BUILD, OPERATEBUILD, OPERATEBUILD, OPERATEBUILD, OPERATE& TRANSFER& TRANSFER& TRANSFER& TRANSFER

BUILD, OPERATEBUILD, OPERATEBUILD, OPERATEBUILD, OPERATE& TRANSFER& TRANSFER& TRANSFER& TRANSFER PARTNERINGPARTNERINGPARTNERINGPARTNERINGPARTNERINGPARTNERINGPARTNERINGPARTNERING

COMMON CONTRACT PROCUREMENT METHODS

FIG. 1-4 : COMMON CONTRACT PROCUREMENT METHODS IN USE

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1985198519851985 1990199019901990 1995199519951995 2000200020002000

1.0 TRADITIONAL GENERAL 95% 76% 31% 20%CONTRACTING

2.0 MANAGEMENT 2% 3% 2% 1%CONTRACTING

3.0 CONSTRUCTION 1% 3% 9% 10%MANAGEMENT

4.0 PACKAGE DEAL TYPE’ 2% 15% 52% 60%

5.0 BUILD, OPERATE AND - 2% 5% 8%TRANSFER

6.0 OTHER - 1% 1% 1%MISCELLANEOUS

FIG. 1-5 : COMPARISON OF COMMON CONTRACT PROCUREMENT METHODS

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EMPLOYEREMPLOYEREMPLOYEREMPLOYER

PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL TEAM TEAM TEAM TEAM ---- DESIGN AND DESIGN AND DESIGN AND DESIGN AND CONTRACT ADMINISTRATIONCONTRACT ADMINISTRATIONCONTRACT ADMINISTRATIONCONTRACT ADMINISTRATION

PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL TEAM TEAM TEAM TEAM ---- DESIGN AND DESIGN AND DESIGN AND DESIGN AND CONTRACT ADMINISTRATIONCONTRACT ADMINISTRATIONCONTRACT ADMINISTRATIONCONTRACT ADMINISTRATION

SUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERS

MAIN CONTRACTORMAIN CONTRACTORMAIN CONTRACTORMAIN CONTRACTOR(MC)(MC)(MC)(MC)

MAIN CONTRACTORMAIN CONTRACTORMAIN CONTRACTORMAIN CONTRACTOR(MC)(MC)(MC)(MC)

SUBSUBSUBSUB----SUBSUBSUBSUBCONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORSSUBSUBSUBSUB----SUBSUBSUBSUB

CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS

1. Architect2. Engineers - C&S, M&E3. Quantity Surveyor4. Other Specialist

SUBSUBSUBSUB----SUB SUB SUB SUB CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORSSUBSUBSUBSUB----SUB SUB SUB SUB

CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS SUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERS

NOMINATED SUPLLIER NOMINATED SUPLLIER NOMINATED SUPLLIER NOMINATED SUPLLIER (NS)(NS)(NS)(NS)

NOMINATED SUPLLIER NOMINATED SUPLLIER NOMINATED SUPLLIER NOMINATED SUPLLIER (NS)(NS)(NS)(NS)

DOMESTIC SUPPLIER DOMESTIC SUPPLIER DOMESTIC SUPPLIER DOMESTIC SUPPLIER (DS)(DS)(DS)(DS)

DOMESTIC SUPPLIER DOMESTIC SUPPLIER DOMESTIC SUPPLIER DOMESTIC SUPPLIER (DS)(DS)(DS)(DS)

Key_______ : Contractual Link_ _ _ _ _ : Responsibility

FIG. 1-6: TRADITIONAL GENERAL CONTRACTING (TGC) – CONTRACTUAL RELATIONSHIPS

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EMPLOYEREMPLOYEREMPLOYEREMPLOYER PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL ADVISORSADVISORSADVISORSADVISORS

PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL ADVISORSADVISORSADVISORSADVISORS

SUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERS

D & C CONTRACTORD & C CONTRACTORD & C CONTRACTORD & C CONTRACTORD & C CONTRACTORD & C CONTRACTORD & C CONTRACTORD & C CONTRACTOR





CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS SUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERS

SUBSUBSUBSUB----SUPPLIERSUPPLIERSUPPLIERSUPPLIER

SUBSUBSUBSUB----SUPPLIERSUPPLIERSUPPLIERSUPPLIER

SUBSUBSUBSUB----CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

SUBSUBSUBSUB----CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

PROFESSIONALPROFESSIONALPROFESSIONALPROFESSIONALTEAMTEAMTEAMTEAM

PROFESSIONALPROFESSIONALPROFESSIONALPROFESSIONALTEAMTEAMTEAMTEAM


1. Setting up Employers Requirements

2. Auditing role during construction

1. Detailed Design2. Construction supervision

Key_______ : Contractual Link_ _ _ _ _ : Responsibility

FIG. 1-7: ‘TURNKEY’ CONTRACTS/DESIGN & CONSTRUCT (D&C) - CONTRACTUAL

RELATIONSHIPS

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PROFESSIONAL TEAMPROFESSIONAL TEAMPROFESSIONAL TEAMPROFESSIONAL TEAMPROFESSIONAL TEAMPROFESSIONAL TEAMPROFESSIONAL TEAMPROFESSIONAL TEAM

TRADE TRADE TRADE TRADE CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

TRADE TRADE TRADE TRADE CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

(MC)(MC)(MC)(MC)

MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

(MC)(MC)(MC)(MC)

TRADETRADETRADETRADECONTRACTORCONTRACTORCONTRACTORCONTRACTOR





Key

_______ : Contractual Link_ _ _ _ _ : Responsibility

FIG. 1-8: MANAGEMENT CONTRACTING (MC) - CONTRACTUAL RELATIONSHIPS

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PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL TEAMTEAMTEAMTEAM

PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL TEAMTEAMTEAMTEAM

TRADE TRADE TRADE TRADE CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS

TRADE TRADE TRADE TRADE CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS

CONSTRUCTION CONSTRUCTION CONSTRUCTION CONSTRUCTION MANAGER (CM)MANAGER (CM)MANAGER (CM)MANAGER (CM)

CONSTRUCTION CONSTRUCTION CONSTRUCTION CONSTRUCTION MANAGER (CM)MANAGER (CM)MANAGER (CM)MANAGER (CM)

TRADETRADETRADETRADECONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS

TRADETRADETRADETRADECONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS


Key

_______ : Contractual Link_ _ _ _ _ : Responsibility

FIG. 1-9: CONSTRUCTION MANAGEMENT (CM) - CONTRACTUAL RELATIONSHIPS

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* CONTRACT - DEFINATIONS

1.01.01.01.0 PER ANSONPER ANSONPER ANSONPER ANSON

* Legally binding agreement

* Between two or more parties

* By which rights are acquired by one or more

* To acts or forbearances on the part of the other or others

2.02.02.02.0 PER SECTION 2(h) MALAYSIAN CONTRACTS ACT 1950 (REV. 1974)PER SECTION 2(h) MALAYSIAN CONTRACTS ACT 1950 (REV. 1974)PER SECTION 2(h) MALAYSIAN CONTRACTS ACT 1950 (REV. 1974)PER SECTION 2(h) MALAYSIAN CONTRACTS ACT 1950 (REV. 1974)

* An agreement* Enforceable by Law

** CONTRACT - BASIC ELEMENTS

CLEAR + UNQUALIFIED + CONSIDERATION = CONTRACCLEAR + UNQUALIFIED + CONSIDERATION = CONTRACCLEAR + UNQUALIFIED + CONSIDERATION = CONTRACCLEAR + UNQUALIFIED + CONSIDERATION = CONTRACTTTTOFFEROFFEROFFEROFFER ACCEPTANCEACCEPTANCEACCEPTANCEACCEPTANCE (LEGAL(LEGAL(LEGAL(LEGAL

AGREEMENT)AGREEMENT)AGREEMENT)AGREEMENT)

FIG. 1-10: CONTRACT DEFINITIONS

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FIRM OFFER/PROPOSAL

FIRM OFFER/PROPOSAL

UNQUALIFIED ACCEPTANCE

UNQUALIFIED ACCEPTANCE

CONSIDERATIONCONSIDERATION

INTENTION TO CREATE LEGAL RELATIONS

CERTAINTY OF TERMS

LEGAL CAPACITY TO CONTRACT

FREE CONSENT

LAWFUL OBJECT AND CONSIDERATION

PHYSICAL/LEGAL POSSIBILITY

FIG. 1-11: ELEMENTS OF A VALID/ENFORCEABLE AGREEMENT

+

+

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FIG. 1-12 : STANDARD FORMS OF CONTRACT (PART I)

STANDARD

FORMS OF

CONTRACTDISADVANTAGES

DEFINITION/ MEANING

MAIN TYPES

ADVANTAGES

CHARACTERISTICS

PURPOSE

TYPES

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GOVERNMENT/ GOVERNMENT/ GOVERNMENT/ GOVERNMENT/ PUBLIC SECTORPUBLIC SECTORPUBLIC SECTORPUBLIC SECTOR

GOVERNMENT/ GOVERNMENT/ GOVERNMENT/ GOVERNMENT/ PUBLIC SECTORPUBLIC SECTORPUBLIC SECTORPUBLIC SECTOR

STANDARD FORMS OF CONTRACT

PRIVATE SECTORPRIVATE SECTORPRIVATE SECTORPRIVATE SECTORPRIVATE SECTORPRIVATE SECTORPRIVATE SECTORPRIVATE SECTORINTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL CONTRACTSCONTRACTSCONTRACTSCONTRACTS

INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL CONTRACTSCONTRACTSCONTRACTSCONTRACTS

BUILDING WORKSBUILDING WORKS

JKR / PWDJKR / PWD MISCELLANEOUSMISCELLANEOUS

1. FIDIC Conditions

2. ICE Conditions

3. IEEE Conditions

4. IMechE Conditions

5. JCT Conditions

CIVIL ENGINEERING WORKS

CIVIL ENGINEERING WORKS

M & E WORKSM & E WORKS

FIG. 1-13: STANDARD FORMS OF CONTRACT (PART II)

• 203 (Rev. 1/2010) - without quantities

• 203A (Rev. 1/2010) - with quantities

• 203N (Rev. 1/2010) - For NSC

• 203P (Rev. 1/2010) - For Nominated Suppliers

• PWD Form DB (2007 Edn.) For Design & Build Contracts

• CIDB Form for:

- Building Contracts 2000 Edn.- Form CIDB.B (NSC/2002)

• Modified JKR/PWD Forms e.g. LPK, MHA, etc.

• IEM Conditions

- IEM.CE 2011- IEM.CES 1/90

• PAM Contract 2006 (with quantities)

• PAM Contract 2006 (without quantities)

• PAM Sub-Contract 2006

• IEM Conditions

- IEM.ME 1/94

• TNB Conditions, etc.

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COMMENCEMENT OF

CONTRACT AT SITE

2.0 COMMENCEMENT OF CONTRACT AT SITE

•••• APPROACHES IN:APPROACHES IN:APPROACHES IN:APPROACHES IN:

1. TRADITIONAL GENERAL CONTRACTS2. DESIGN & BUILD / TURNKEY CONTRACTS

•••• FORMALITIES:FORMALITIES:FORMALITIES:FORMALITIES:

1. CONDITIONS PRECEDENT2. INSURANCES, PERFORMANCE BONDS, ETC.

•••• SITE POSSESSION : MEANING AND EFFECTSITE POSSESSION : MEANING AND EFFECTSITE POSSESSION : MEANING AND EFFECTSITE POSSESSION : MEANING AND EFFECT

•••• SUBMITTALS :SUBMITTALS :SUBMITTALS :SUBMITTALS :

1. CONSTRUCTION DRAWINGS2. SHOP DRAWINGS3. SAMPLES4. QA AND QC DOCUMENTS5. HEALTH AND SAFETY DOCUMENTS6. METHOD STATEMENTS

•••• TEMPORARY WORKSTEMPORARY WORKSTEMPORARY WORKSTEMPORARY WORKS

•••• ISSUES FOR ATTENDANCE OF NOMINATED SUBISSUES FOR ATTENDANCE OF NOMINATED SUBISSUES FOR ATTENDANCE OF NOMINATED SUBISSUES FOR ATTENDANCE OF NOMINATED SUB----CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS


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•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES

1. THE RADIO & GENERAL TRADING CO. SDN. BHD. V WYASS & FREYTAG (M) SDN. BHD. [1998] 1 MLJ 346

2. LEC CONTRACTORS (M) SDN. BHD. V CASTLE INN SDN. BHD. & ANOR [2000] 3 MLJ 339

3. KLEINWORT BENSON LTD. V MALAYSIA MINING CORP. BHD [1989] 1 WLR 379

4. NANYANG INSURANCE CO. LTD. V SALBIAH & ANOR [1967] 1 MLJ 94

5. SURREY HEALTH BOROUGH COUNCIL V LOVELL CONSTRUCTION [1988] 42 BLR 25

6. FREEMAN V HENSLER [1981] 20 BLR 78

7. TAN HOCK CHAN V KHO TECK SENG [1980] 1 MLJ 308

8. PUTRA PERDANA CONSTRUCTION SDN. BHD. V AMI INSURANCE BHD & ORS [2005] 2 MLJ 123 HC

9. YIP SHOU SHAN V SIN HEAP LEE – MARUBENI SDN. BHD. [2002] 5 MLJ 43, HC`

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FIG. 2-1 : COMMENCEMENT - COMMON LABELS

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COMMENCEMENT OF CONTRACT

PERIOD

COMMENCEMENT OF CONTRACT

TAKING OVER OF THE SITE

SITE POSSESSION

COMMENCEMENT OF WORKS

COMMENCEMENT OF OPERATIONS

ON SITE

COMMENCEMENT:

COMMON LABELS

FIG. 2-2: PROTECTION AGAINST CONTRACTOR’S FAILURES – COMMON MECHANISMS

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PARENT COMPANY GUARANTEE

LETTER OF AWARENESS

INSURANCE PERFORMANCE BOND

STANDBY LETTER OF CREDIT

LETTER OF COMFORT

PROTECTION AGAINST CONTRACTOR’S FAILURES:

COMMON MECHANISMS

FIG. 2-3 : PROTECTION AGAINST CONTRACTOR’S FAILURES – AN OVERVIEW (PART I)

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PURPOSE

PROTECTION AGAINST CONTRACTOR’S FAILURES: AN OVERVIEW (PART I)

COMMON MECHANISMS/ INSTRUMENTS: TYPES

PARENT COMPANY GUARANTEES

USENATUREPROCEDURAL

REQUIREMENTS

• Preliminary review

• Check for legal compliance

• Check for compliance with formalities

•••• Contractual performance of ‘Company within a corporate group is underwritten by other members of group

•••• E.g. Subsidiary and Holding Company

•••• For commercial and administrative convenience

•••• Owing to requirements of applicable law e.g. company law, etc.

•••• Risk transferring contracts

•••• Enable recovery of compensation upon contractor’s default/failure under the contract

•••• Parent Company Guarantees

• Performance Bonds

• Miscellaneous Types:

1. Letters of Comfort2. Standby Letters of Credit3. Insurances

Cont’d….

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FIG. 2-4 : PROTECTION AGAINST CONTRACTOR’S FAILURES – AN OVERVIEW (PART II)

PERFORMANCE BONDSPERFORMANCE BONDSPERFORMANCE BONDSPERFORMANCE BONDS

PROTECTION AGAINST CONTRACTOR’S FAILURES: AN OVERVIEW (PART II)

MISCELLANEOUS MECHANISMS/ MISCELLANEOUS MECHANISMS/ MISCELLANEOUS MECHANISMS/ MISCELLANEOUS MECHANISMS/ INSTRUMENTSINSTRUMENTSINSTRUMENTSINSTRUMENTS

TYPESTYPESTYPESTYPESTYPESTYPESTYPESTYPES

•••• Two main types:

1. ‘Conditional/ Default’ Bond

2. ‘Unconditional/ On-Demand’Bond

•••• Features of local practice

•••• Rules of construction and enforcement

DURATION OF DURATION OF DURATION OF DURATION OF LIABILITYLIABILITYLIABILITYLIABILITY

DURATION OF DURATION OF DURATION OF DURATION OF LIABILITYLIABILITYLIABILITYLIABILITY

•••• Normally stipulated in bond. Types include:

1. Entire duration of contract

2 Up to CPC -‘Construction’Bond

3 CPC to Final Certificate –‘Maintenance’Bond

4 Up to date of release stipulated by guarantor

DEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITION

•••• See Robinson and Laver’s definition

•••• Means of guaranteeing to the employer:

1. The contractor’s financial viability and

2. Contractor’s ability to perform obligations under the contract

FINANCIAL LIMITS FINANCIAL LIMITS FINANCIAL LIMITS FINANCIAL LIMITS OF LIABILITYOF LIABILITYOF LIABILITYOF LIABILITY


•••• Normally stipulated in Bond itself.

•••• Normally 5-10%

•••• Sometimes higher

•••• See use of ‘Indexed Performance Bonds’

PROCEDURAL PROCEDURAL PROCEDURAL PROCEDURAL REQUIREMENTS REQUIREMENTS REQUIREMENTS REQUIREMENTS


• Preliminary review

• Checks for authenticity

• Check for compliance with formalities

NONNONNONNON----PROVISION OF PROVISION OF PROVISION OF PROVISION OF BOND/GUARANTEEBOND/GUARANTEEBOND/GUARANTEEBOND/GUARANTEE

NONNONNONNON----PROVISION OF PROVISION OF PROVISION OF PROVISION OF BOND/GUARANTEEBOND/GUARANTEEBOND/GUARANTEEBOND/GUARANTEE

•••• Timing for submission

•••• Consequences of failure to submit:

1. Contract provisions

2. Common law rules

RELEASE OF BOND RELEASE OF BOND RELEASE OF BOND RELEASE OF BOND /GUARANTEE/GUARANTEE/GUARANTEE/GUARANTEE

RELEASE OF BOND RELEASE OF BOND RELEASE OF BOND RELEASE OF BOND /GUARANTEE/GUARANTEE/GUARANTEE/GUARANTEE

•••• Seven main circumstances

•••• Effect of breaches of terms and conditions

LETTER OF AWARENESSLETTER OF AWARENESSLETTER OF AWARENESSLETTER OF AWARENESSLETTER OF AWARENESSLETTER OF AWARENESSLETTER OF AWARENESSLETTER OF AWARENESS

•••• Reasons for•••• Comparison with letters of

comfort •••• Typical contents•••• Legal effect of letter

INSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCE

•••• Reasons for: •••• Legal effect of Insurance •••• Comparison with the other

mechanisms/instruments

STANDBY LETTER STANDBY LETTER STANDBY LETTER STANDBY LETTER OF CREDITOF CREDITOF CREDITOF CREDIT

STANDBY LETTER STANDBY LETTER STANDBY LETTER STANDBY LETTER OF CREDITOF CREDITOF CREDITOF CREDIT

•••• Reasons for •••• Comparison with

‘Unconditional/On-Demand’ Bond •••• Obligations under•••• Legal effect of letter

LETTER OF COMFORTLETTER OF COMFORTLETTER OF COMFORTLETTER OF COMFORTLETTER OF COMFORTLETTER OF COMFORTLETTER OF COMFORTLETTER OF COMFORT

•••• Reasons for •••• Typical contents•••• Legal effect of letter

Cont’n.

FIG. 2-5 : CONTRACTOR’S INSURANCE POLICIES – COMMON TYPES

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FIG. 2-6 : INSURANCES – AN OVERVIEW (PART I)

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PURPOSES

INSURANCES: AN OVERVIEW (PART I)

DEFINITION TYPES

CATEGORY IICATEGORISATION PRINICPAL TYPES

• Contractor: Common Types

• Employer: Common Types

• Occupier: Common Types

• Management Corporation: Common Types

• Two Main Categorization:

1. Liability based2. Loss based

•••• Difference: basis of compensation

•••• Risk allocation mechanisms

•••• Means of seeking compensation following default/failure

•••• Per Robinson and Lavers

• Voluntary assumption of specified risk in return for an agreed payment

CATEGORY I

• Liability based

• Indemnification of insured against damages payable to 3rd party

•••• Examples:

1. 3rd Party Liability Insurance

2. Workmen’s Compensation

3. Professional Indemnity Insurance

• Loss based

• Compensate insured for loss/damage directly incurred by insured

•••• Examples:

1. Contractor’s All Risk Policy

2. Erection All Risk Policy

Cont’d…….

FIG. 2-7 : INSURANCES – AN OVERVIEW (PART II)

© HSKS

FEATURES AND FEATURES AND FEATURES AND FEATURES AND CONDITIONSCONDITIONSCONDITIONSCONDITIONS

FEATURES AND FEATURES AND FEATURES AND FEATURES AND CONDITIONSCONDITIONSCONDITIONSCONDITIONS

INSURANCES: AN OVERVIEW (PART II)


PROCEDURAL PROCEDURAL PROCEDURAL PROCEDURAL REQUIREMENTS REQUIREMENTS REQUIREMENTS REQUIREMENTS FAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSURE

IMPORTANT IMPORTANT IMPORTANT IMPORTANT STANDARD STANDARD STANDARD STANDARD CONDITIONSCONDITIONSCONDITIONSCONDITIONS

IMPORTANT IMPORTANT IMPORTANT IMPORTANT STANDARD STANDARD STANDARD STANDARD CONDITIONSCONDITIONSCONDITIONSCONDITIONS

•••• Six main ones i.e.

1. Condition precedent to liability

2. During work/construction

3. As to risk

4. Following a loss event

5. As to subrogation

6. On contribution

PARTIES PARTIES PARTIES PARTIES EFFECTING POLICYEFFECTING POLICYEFFECTING POLICYEFFECTING POLICY

PARTIES PARTIES PARTIES PARTIES EFFECTING POLICYEFFECTING POLICYEFFECTING POLICYEFFECTING POLICY

•••• Necessity for checking authenticity of: 1. Cover notes 2. Policy

•••• Necessity to check for compliance with: 1. Contract requirements2. Formalities

BASIS OF BASIS OF BASIS OF BASIS OF CONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

BASIS OF BASIS OF BASIS OF BASIS OF CONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

•••• Submission of proposal

•••• Issue of policy

•••• Effect of :

1. Contracts of ‘uberrimae fidei’

2. Cover notes, etc.

COMMENCEMENT COMMENCEMENT COMMENCEMENT COMMENCEMENT OF POLICYOF POLICYOF POLICYOF POLICY

COMMENCEMENT COMMENCEMENT COMMENCEMENT COMMENCEMENT OF POLICYOF POLICYOF POLICYOF POLICY

•••• Various possibilities:

1. Date of commencement of contract; or

2. Date of commencement of work on site; or

3. Date of delivery of material, etc.

•••• Function of the nature of contract works

DURATION DURATION DURATION DURATION OF POLICY OF POLICY OF POLICY OF POLICY

DURATION DURATION DURATION DURATION OF POLICY OF POLICY OF POLICY OF POLICY

•••• Different formulae:

1. Up to issue of CPC

2. Up to issue of CMGD

3. Up to issue of Final Certificate

4. Up to Final Certificate plus fixed period

•••• Requirements pertaining to extension of period



• Normally stipulated by employer in tender/contract

•••• Guidelines for estimating limits.

•••• General rule on deductibles/excess clauses

TERMINATION TERMINATION TERMINATION TERMINATION OF POLICYOF POLICYOF POLICYOF POLICY

TERMINATION TERMINATION TERMINATION TERMINATION OF POLICYOF POLICYOF POLICYOF POLICY

••••Three main methods:

1. Satisfaction of conditions precedent in contract e.g. issue of CPC, etc.

2. Termination of policy by breach/mutual agreement

3. Lapse of insurance period and/or extension

TIMING FOR SUBMISSIONTIMING FOR SUBMISSIONTIMING FOR SUBMISSIONTIMING FOR SUBMISSIONTIMING FOR SUBMISSIONTIMING FOR SUBMISSIONTIMING FOR SUBMISSIONTIMING FOR SUBMISSION

•••• Normally stipulated in contract

•••• 2 Common alternatives:

1. Before commencement of work/contract; or

2. Within stipulated period of award of contract

FAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSUREFAILURE TO INSURE

•••• Effects dictated by:

1. Governing contractual provisions

2. Common law rules

•••• Possible options: Employer insures and charges premiums to contractor

•••• Apparently not a serious ground to effect determination

• General rule:

1. Named party2. With insurable

interest

• Typical parties:

1. Employer2. Contractor 3. Sub-contractors4. Selected 3rd parties

• Effect of ‘cross liability’ provisions

© HSKS

FIG. 2-8 : SITE POSSESSION – AN OVERVIEW

PROVISIONS PROVISIONS PROVISIONS PROVISIONS FORFORFORFOR

SITE POSSESSION: AN OVERVIEW

EXCEPTIONS EXCEPTIONS EXCEPTIONS EXCEPTIONS TO GENERAL TO GENERAL TO GENERAL TO GENERAL PRINCIPLEPRINCIPLEPRINCIPLEPRINCIPLE

MEANINGMEANINGMEANINGMEANING DEGREEDEGREEDEGREEDEGREE POSTPONEMENTPOSTPONEMENTPOSTPONEMENTPOSTPONEMENTFAILURE TO GIVE FAILURE TO GIVE FAILURE TO GIVE FAILURE TO GIVE POSSESSIONPOSSESSIONPOSSESSIONPOSSESSION

•••• In Letter of Acceptance

•••• Or in Contract

LATEST LEGAL LATEST LEGAL LATEST LEGAL LATEST LEGAL POSITIONPOSITIONPOSITIONPOSITION

POSSESSION POSSESSION POSSESSION POSSESSION ON PIECEMEAL ON PIECEMEAL ON PIECEMEAL ON PIECEMEAL

BASIS?BASIS?BASIS?BASIS?

•••• No

GENERAL GENERAL GENERAL GENERAL PRINCIPLEPRINCIPLEPRINCIPLEPRINCIPLE

EXPRESSEXPRESSEXPRESSEXPRESS IMPLIEDIMPLIEDIMPLIEDIMPLIED

•••• If not expressed, by Law

•••• Freeman & Son v Hensler

•••• Licence revocable by Employer at any time

•••• Licence to be free from any encumbrances

•••• Contractor entitled to Sole/exclusive possession

•••• Express Stipulations

•••• Case Law

•••• Sufficient degree of possession/ access

•••• To execute work unimpeded

•••• To be able to perform work

•••• Express contract stipulations permitting postponement

GENERAL GENERAL GENERAL GENERAL LEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITION

EXCEPTIONSEXCEPTIONSEXCEPTIONSEXCEPTIONS

GENERAL GENERAL GENERAL GENERAL LEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITION

EFFECTEFFECTEFFECTEFFECT

•••• Breach of Contract

•••• Entitles Contractor to rescind Contract.

•••• Contractor entitled to loss occasioned

•••• Contractor entitled to EOT if expressly permitted contractually

•••• Otherwise, LAD cannot be imposed

• General Position: No

• Exceptions:

a) Express stipulations to contrary

b) Where Common Law applies

TIMING

SITE POSSESSION MEETINGS

EXPLANATION OF CONTRACT

REQUIREMENTS

PURPOSEMATTERS DEALT MINUTES PARTICIPANTS

· On Date of Commencement of Contract /

· Date of Site Possession

INTRODUCTION OF PROJECT MEMBERS

HANDOVER OF VARIOUS DOCUMENTS

1. All Project Team Member

LETTER OF DELEGATION OF POWERS

SET OUT PROCEDURES

COVERING

COPY OF CONTRACT

DOCUMENTS

PRICED COPY OF B.Q.

SET OF CONSTRUCTION

DRAWINGS

· To officially handover Possession of Site to the Contractor

DISTRIBUTION/ CIRCULATION

WHO PREPARES ?

· Document Submittals and Approvals

·

Sample Submittals and Approvals

· Inspection of Work

·

Interim Valuations

·

Claim Procedures

· Contract Administrator · To all parties

FIG. 2-9 : SITE POSSESSION MEETINGS

© HSKS

© HSKS

WORK PROGRAMME

WORKS UNDER CONTRACT: TYPICAL SUBMITTALS BY

CONTRACTOR

HEALTH AND SAFETY DOCUMENTS

DESIGN AND CALCULATIONS FOR WORKS UNDER P.C.

SUM, ‘PACKAGE DEAL’ TYPE CONTRACTS, ETC.

DRAWINGS I.E. SHOP, FABRICATION, SETTING

OUT, ETC.

MISCELLANOUES REPORTS

AND DOCUMENTS METHOD STATEMENTS

DESIGN AND CALCULATIONS FOR TEMPORARY WORKS

QA/QC DOCUMENTS

FIG. 2-10: WORKS UNDER CONTRACT – TYPICAL SUBMITTALS BY CONTRACTOR

© HSKS

MONITORING OF

WORK PROGRESS

3.0 MONITORING OF WORK PROGRESS

•••• PROGRAMMING OF WORKS PROGRAMMING OF WORKS PROGRAMMING OF WORKS PROGRAMMING OF WORKS

•••• PARTIES RESPONSIBLE:PARTIES RESPONSIBLE:PARTIES RESPONSIBLE:PARTIES RESPONSIBLE:

1. EMPLOYER 2. MAIN CONTRACTOR 3. CONTRACT ADMINISTRATOR

•••• PROGRESS REPORTSPROGRESS REPORTSPROGRESS REPORTSPROGRESS REPORTS

•••• SITE RECORDSSITE RECORDSSITE RECORDSSITE RECORDS

•••• MEETINGS:MEETINGS:MEETINGS:MEETINGS:

1. SITE POSSESSION2. PROGRESS/SITE3. NSC COORDINATION4. AD-HOC


© HSKS


1. GLENLION CONSTRUCTION LTD. V THE GUINESS TRUST [1987] 39 BLR 89

2. YORKSHIRE WATER AUTHORITY V SIR ALFRED MCALPINE & SON (NORTHERN) LTD. [1986] 32 BLR 114

3. GREATER LONDON COUNCIL V CLEVELAND BRIDGE & ENGINEERING CO. LTD. [1986] 8 Con LR 30

4. KITSONS SHEET METAL LTD. V MATTHEW HALL MECHANICAL & ELECTRICAL ENGINEERS LTD. [1989] 47 BLR 82

5. WEST FAULKNER ASSOCIATES V LONDON BOROUGH OF NEWHAM [1994] 71 BLR 1

6. EQUITABLE DEBENTURES ASSETS CORP. LTD. V MORGAN BRANCH ROBERTS & ORS [1984] 2-CLD-10-01

© HSKS

FIG. 3-1 : WORK PROGRAMME - TYPICAL FORMS

© HSKS

© HSKS

PRINCIPAL ACTIVITIES

IDENTIFICATION OF CRITICAL ACTIVITIES AND CRITICAL PATH

IMPORTANT MILESTONES FOR

EMPLOYER TO MEET SEQUENCE OF ACTIVITIES

IMPORTANT MILESTONES FOR

CONTRACTOR TO MEET

TIMING OF ACTIVITIES

WORK PROGRAMME: PRINCIPAL CONTENTS

FIG. 3-2 : WORK PROGRAMME – PRINCIPAL CONTENTS

© HSKS

FIG. 3-3 : WORK PROGRAMME – AN OVERVIEW

RESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITY

WORK PROGRAMME: AN OVERVIEW

OPTIONS ON OPTIONS ON OPTIONS ON OPTIONS ON SUBMISSIONSUBMISSIONSUBMISSIONSUBMISSION

METHOD OF METHOD OF METHOD OF METHOD OF WORKINGWORKINGWORKINGWORKING

SEQUENCE OF SEQUENCE OF SEQUENCE OF SEQUENCE OF WORKINGWORKINGWORKINGWORKING

MEANINGMEANINGMEANINGMEANING FORMFORMFORMFORM CONTENTSCONTENTSCONTENTSCONTENTS PURPOSEPURPOSEPURPOSEPURPOSE PART OF PART OF PART OF PART OF CONTRACT?CONTRACT?CONTRACT?CONTRACT?

ALTERATION/ ALTERATION/ ALTERATION/ ALTERATION/ REVISIONREVISIONREVISIONREVISION

•••• Express Provisions

•••• By Implication

•••• Sequence and Timing of Activities

•••• Critical Milestones

FOR CONTRACT FOR CONTRACT FOR CONTRACT FOR CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR

FOR FOR FOR FOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR

•••• Approval •••• Rejection•••• Withholding of

Approval

SUBMITTED AFTER SUBMITTED AFTER SUBMITTED AFTER SUBMITTED AFTER TENDER AWARDTENDER AWARDTENDER AWARDTENDER AWARD

PART OF TENDER PART OF TENDER PART OF TENDER PART OF TENDER SUBMISSION?SUBMISSION?SUBMISSION?SUBMISSION?

•••• General Policies

•••• Mode of Alternatives / Revision

•••• Effect of Alternatives/ Revision

BAR BAR BAR BAR CHARTSCHARTSCHARTSCHARTS

CRITICAL PATH CRITICAL PATH CRITICAL PATH CRITICAL PATH ANALYSISANALYSISANALYSISANALYSIS

PERTPERTPERTPERT

PRIMIVERA/PRIMIVERA/PRIMIVERA/PRIMIVERA/MICROSOFT MICROSOFT MICROSOFT MICROSOFT ‘‘‘‘PROJECTPROJECTPROJECTPROJECT’’’’

MISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMISCELLANEOUS

FIG. 3-4 : PROGRESS MONITORING – EMPLOYER’S PURPOSES

© HSKS

TO LEVY CONTROL OVER PROGRESS OF THE WORKS

TO TAKE NECESSARY REMEDIAL MEASURES IF DELAY OCCURS OR IF

EMPLOYER IS AT FAULT

MISCELLANEOUS PURPOSES

TO ENSURE CONTRACT IS COMPLETED ACCORDING TO

SCHEDULE

TO PLAN AND STREAMLINE FINANCIAL

ARRANGEMENTS TO OBVIATE DEFAULT

TO WARN CONTRACTOR TO TAKE REMEDIAL MEASURES IN CASE

DELAY OCCURS

PROGRESS MONITORING: EMPLOYER’S PURPOSES

© HSKS

FIG. 3-5 : PROGRESS MONITORING – AN OVERVIEW

DURATIONDURATIONDURATIONDURATION

PROGRESS MONITORING: AN OVERVIEW

SITE PROGRESS SITE PROGRESS SITE PROGRESS SITE PROGRESS MEETINGSMEETINGSMEETINGSMEETINGS

PURPOSEPURPOSEPURPOSEPURPOSE METHODSMETHODSMETHODSMETHODS BASISBASISBASISBASIS

FREQUENCY/ FREQUENCY/ FREQUENCY/ FREQUENCY/ NATURE OF NATURE OF NATURE OF NATURE OF CHECKSCHECKSCHECKSCHECKS

SUBSUBSUBSUB----CONTRACTORS CONTRACTORS CONTRACTORS CONTRACTORS

MEETINGMEETINGMEETINGMEETING

COORDINATION/ COORDINATION/ COORDINATION/ COORDINATION/ PROJECT PROJECT PROJECT PROJECT

MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MEETINGSMEETINGSMEETINGSMEETINGS


SITE SITE SITE SITE DIARYDIARYDIARYDIARY

OFFICIAL WORK OFFICIAL WORK OFFICIAL WORK OFFICIAL WORK RECORDSRECORDSRECORDSRECORDS

OFFICIAL OFFICIAL OFFICIAL OFFICIAL PROGRESS PROGRESS PROGRESS PROGRESS REPORTSREPORTSREPORTSREPORTS

PROGRESS PROGRESS PROGRESS PROGRESS MEETINGSMEETINGSMEETINGSMEETINGS

SITE SITE SITE SITE RECORDSRECORDSRECORDSRECORDS

SITE SITE SITE SITE POSSESSION POSSESSION POSSESSION POSSESSION MEETINGSMEETINGSMEETINGSMEETINGS

‘‘‘‘ADADADAD----HOCHOCHOCHOC’’’’MEETINGSMEETINGSMEETINGSMEETINGS

PURPOSEPURPOSEPURPOSEPURPOSE METHODSMETHODSMETHODSMETHODS EVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUE

PARTIES PARTIES PARTIES PARTIES RESPONSIBLERESPONSIBLERESPONSIBLERESPONSIBLE

•••• From Site Possession

•••• To Issue of Final Certificate

•••• Normally up to Practical Completion only

•••• Use of Contractor’s Work Programme

•••• Primary Purposes

•••• Secondary Purposes

•••• Employer/ contract administrator

•••• Contractor

•••• On regular basis

• Normally ‘monthly’

•••• Maybe

i. Weeklyii. Fortnightlyiii. Quarterly, etc.

FIG. 3-6 : POST CONTRACT AWARD STAGE – PRINCIPAL TYPES OF MEETINGS

© HSKS

POST CONTRACT AWARD STAGE:

PRINCIPAL TYPES OF MEETINGS

SITE POSSESSION MEETINGS

MISCELLANEOUS MEETINGS

SUB-CONTRACTOR’S MEETINGS

COORDINATION/ PROJECT

MANAGEMENT MEETINGS

SITE PROGRESS MEETINGS

AD-HOC MEETINGS

FIG. 3-7 : SITE PROGRESS MEETINGS – AN OVERVIEW

© HSKS

TIMING

SITE PROGRESS MEETINGS: AN OVERVIEW

ENABLE ENABLE ENABLE ENABLE CONTRACTOR TOCONTRACTOR TOCONTRACTOR TOCONTRACTOR TO

PURPOSE ISSUES/ MATTERS DEALT

MINUTES PARTICIPANTS

PERMIT WORK PERMIT WORK PERMIT WORK PERMIT WORK PROGRESS TOPROGRESS TOPROGRESS TOPROGRESS TO

MISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMISCELLANEOUS

•••• S.O./ Contract Administrator

DISTRIBUTION/ DISTRIBUTION/ DISTRIBUTION/ DISTRIBUTION/ CIRCULATIONCIRCULATIONCIRCULATIONCIRCULATION

WHO WHO WHO WHO PREPARES?PREPARES?PREPARES?PREPARES?

•••• Officially present progress report

•••• Present problems encountered

•••• Be reviewed on regular basis

•••• Identify areas and causes of delay

•••• Enable Employer/ C.A. to redress delay caused by him/them

•••• Keep track of financial progress/allocation

CONTRACT CONTRACT CONTRACT CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR

MAIN MAIN MAIN MAIN CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR

CONSULTANTSCONSULTANTSCONSULTANTSCONSULTANTS NSCsNSCsNSCsNSCs EMPLOYER EMPLOYER EMPLOYER EMPLOYER

•••• Chairs Meeting

•••• Main participant

•••• Observers Only

•••• Participants if contract administrator's assistants/representatives

•••• By invitation only •••• Observer only

•••• To all parties/ attendees

•••• Main participant

ONLY SITE ISSUESONLY SITE ISSUESONLY SITE ISSUESONLY SITE ISSUES FINANCIAL ISSUESFINANCIAL ISSUESFINANCIAL ISSUESFINANCIAL ISSUES3333RDRDRDRD PARTY PARTY PARTY PARTY

ISSUES AFFECTING ISSUES AFFECTING ISSUES AFFECTING ISSUES AFFECTING CONTRACTCONTRACTCONTRACTCONTRACT

MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS ISSUESISSUESISSUESISSUES

FIG. 3-8 : SUB-CONTRACTORS MEETINGS – AN OVERVIEW

© HSKS

TIMING

SUB-CONTRACTORS MEETINGS: AN OVERVIEW

TO ENABLE SUBTO ENABLE SUBTO ENABLE SUBTO ENABLE SUB----CONTRACTOR TOCONTRACTOR TOCONTRACTOR TOCONTRACTOR TO

PURPOSE ISSUES/ MATTERS DEALT

MINUTES

TO PERMIT TO PERMIT TO PERMIT TO PERMIT CONTRACTOR TOCONTRACTOR TOCONTRACTOR TOCONTRACTOR TO

•••• Main Contractor

DISTRIBUTION/ DISTRIBUTION/ DISTRIBUTION/ DISTRIBUTION/ CIRCULATIONCIRCULATIONCIRCULATIONCIRCULATION

WHO WHO WHO WHO PREPARES?PREPARES?PREPARES?PREPARES?

•••• Officially present progress report to Contractor

•••• Present problems encountered

• Review NSC’s progress, areas of delay, etc.

• Identify and sort coordination problems

CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR (MAIN)(MAIN)(MAIN)(MAIN)

NOMINATED NOMINATED NOMINATED NOMINATED SUBSUBSUBSUB----


DOMESTIC DOMESTIC DOMESTIC DOMESTIC SUBSUBSUBSUB----


OTHERSOTHERSOTHERSOTHERS(BY (BY (BY (BY

INVITATIONINVITATIONINVITATIONINVITATION) ) ) )

•••• Chairs Meeting• Employer

• Third Parties

• Contract Administrator

•••• To all parties/ attendees

PARTICIPANTS

•••• Usually monthly prior to site meetings

•••• If necessary more frequently

COORDINATION COORDINATION COORDINATION COORDINATION MATTERSMATTERSMATTERSMATTERS

SITE PROBLEMSSITE PROBLEMSSITE PROBLEMSSITE PROBLEMS FINANCIAL ISSUESFINANCIAL ISSUESFINANCIAL ISSUESFINANCIAL ISSUES 3333RDRDRDRD PARTY ISSUESPARTY ISSUESPARTY ISSUESPARTY ISSUES MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS ISSUESISSUESISSUESISSUES

• Design

• Site Work

• Possession

• Access

• Security

• Payments

• V.O.s

• Claims

• Authorities

• Utilities Providers

• Others

FIG. 3-9 : ‘AD-HOC’ MEETINGS – AN OVERVIEW

© HSKS

‘AD-HOC’ MEETINGS: AN OVERVIEW

AS AND WHEN AS AND WHEN AS AND WHEN AS AND WHEN NECESSARY FROM NECESSARY FROM NECESSARY FROM NECESSARY FROM TIME TO TIMETIME TO TIMETIME TO TIMETIME TO TIME

TIMINGTIMINGTIMINGTIMING PURPOSEPURPOSEPURPOSEPURPOSE

USUALLY USUALLY USUALLY USUALLY DICTATED BYDICTATED BYDICTATED BYDICTATED BY

CIRCUMSTANCESCIRCUMSTANCESCIRCUMSTANCESCIRCUMSTANCES

TO DISCUSS TO DISCUSS TO DISCUSS TO DISCUSS SPECIFIC ISSUES / SPECIFIC ISSUES / SPECIFIC ISSUES / SPECIFIC ISSUES /

MATTERSMATTERSMATTERSMATTERS

EMERGENCY EMERGENCY EMERGENCY EMERGENCY ISSUES ISSUES ISSUES ISSUES

FINANCIAL FINANCIAL FINANCIAL FINANCIAL ISSUESISSUESISSUESISSUES

TECHNICAL TECHNICAL TECHNICAL TECHNICAL ISSUESISSUESISSUESISSUES

ADMINISTRATIVE ADMINISTRATIVE ADMINISTRATIVE ADMINISTRATIVE MATTERS MATTERS MATTERS MATTERS

•••• Site Issues

•••• Design/ Work Issues

•••• 3rd Party Issues

•••• Training

•••• Maintenance

•••• ‘As-Built’ Records

•••• Payments

• V.O.s

• Claims

•••• Design

•••• Construction/Installation

• Testing and Commissioning

• Defects

CONVENORS CONVENORS CONVENORS CONVENORS (AS APPLICABLE)(AS APPLICABLE)(AS APPLICABLE)(AS APPLICABLE)

•••• The Employer

•••• The Contract Administrator

• The Contractor

• The Sub-Contractors

MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS ISSUES ISSUES ISSUES ISSUES

FIG. 3-10 : SITE RECORDS – AN OVERVIEW

© HSKS


SITE RECORDS: AN OVERVIEW

PURPOSEPURPOSEPURPOSEPURPOSE METHODSMETHODSMETHODSMETHODS EVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUE

•••• From Date of Commencement / Site Possession to

•••• Completion of works

•••• Normally up to Practical Completion only

OFFICIAL OFFICIAL OFFICIAL OFFICIAL PROGRESS PROGRESS PROGRESS PROGRESS REPORTREPORTREPORTREPORT

OFFICIAL WORK OFFICIAL WORK OFFICIAL WORK OFFICIAL WORK RECORDSRECORDSRECORDSRECORDS

•••• Contractor’s Scope

•••• NSC’s/DSC’s Scope

•••• Extension of Time

•••• Additional Work

•••• Direct loss and/or expense

•••• Miscellaneous matters

REVIEW WORK REVIEW WORK REVIEW WORK REVIEW WORK PROGRESSPROGRESSPROGRESSPROGRESS

EVALUATE EVALUATE EVALUATE EVALUATE CONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S CLAIMS TO CLAIMS TO CLAIMS TO CLAIMS TO

PERMIT PERMIT PERMIT PERMIT DECISION MAKINGDECISION MAKINGDECISION MAKINGDECISION MAKING

PROVIDE NECESSARY PROVIDE NECESSARY PROVIDE NECESSARY PROVIDE NECESSARY INFORMATION/ EVIDENCE INFORMATION/ EVIDENCE INFORMATION/ EVIDENCE INFORMATION/ EVIDENCE

TOTOTOTOSITE DIARYSITE DIARYSITE DIARYSITE DIARY

DULY SIGNED/ DULY SIGNED/ DULY SIGNED/ DULY SIGNED/ ENDORSED RECORDSENDORSED RECORDSENDORSED RECORDSENDORSED RECORDS

ACKNOWLEDGEMENT ACKNOWLEDGEMENT ACKNOWLEDGEMENT ACKNOWLEDGEMENT OF RECEIPT RECORDS OF RECEIPT RECORDS OF RECEIPT RECORDS OF RECEIPT RECORDS

•••• Best evidential value •••• Some evidential value

FIG. 3-11 : OFFICIAL WORK RECORDS – AN OVERVIEW

© HSKS

TIMING OF TIMING OF TIMING OF TIMING OF SUBMISSIONSUBMISSIONSUBMISSIONSUBMISSION

OFFICIAL WORK RECORDS: AN OVERVIEW

RECORD OF RECORD OF RECORD OF RECORD OF SITE INFORMATION SITE INFORMATION SITE INFORMATION SITE INFORMATION

PURPOSEPURPOSEPURPOSEPURPOSE CONTENTSCONTENTSCONTENTSCONTENTS PROCEDURAL PROCEDURAL PROCEDURAL PROCEDURAL MATTERSMATTERSMATTERSMATTERS

FOR CONTRACT FOR CONTRACT FOR CONTRACT FOR CONTRACT ADMINISTRATION ADMINISTRATION ADMINISTRATION ADMINISTRATION

SIGNING OR SIGNING OR SIGNING OR SIGNING OR ENDORSEMENTENDORSEMENTENDORSEMENTENDORSEMENT

TIME OF TIME OF TIME OF TIME OF ENTRYENTRYENTRYENTRY

FOR BASIS FOR BASIS FOR BASIS FOR BASIS OF OFFICIAL OF OFFICIAL OF OFFICIAL OF OFFICIAL

PROGRESS REPORTPROGRESS REPORTPROGRESS REPORTPROGRESS REPORT

• Planned

• Undertaken

SAFE SAFE SAFE SAFE KEEPINGKEEPINGKEEPINGKEEPING

DAILYDAILYDAILYDAILY WEEKLYWEEKLYWEEKLYWEEKLY FORTNIGHTLYFORTNIGHTLYFORTNIGHTLYFORTNIGHTLYUSE OF USE OF USE OF USE OF

DESIGNATED DESIGNATED DESIGNATED DESIGNATED STAFF FORSTAFF FORSTAFF FORSTAFF FOR

SITE WORK/ SITE WORK/ SITE WORK/ SITE WORK/ ACTIVITIESACTIVITIESACTIVITIESACTIVITIES

RECORD RECORD RECORD RECORD OF WORKERSOF WORKERSOF WORKERSOF WORKERS

RECORD OF RECORD OF RECORD OF RECORD OF PLANT/MACHINERPLANT/MACHINERPLANT/MACHINERPLANT/MACHINER

YYYY

WEATHER WEATHER WEATHER WEATHER CONDITIONSCONDITIONSCONDITIONSCONDITIONS

PROBLEMS PROBLEMS PROBLEMS PROBLEMS ENCOUNTEREDENCOUNTEREDENCOUNTEREDENCOUNTERED

INSTRUCTIONSINSTRUCTIONSINSTRUCTIONSINSTRUCTIONS MISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMISCELLANEOUS

• Skilled

• Unskilled

• Design

• Site

• Coordination

• Due to 3rd Parties

• Received

• Carried Out

• Outstanding

• Site/ Factory Visits

• Inspections

• Preparing

• Maintaining

• Submitting• Daily

• By authorized Person(s)

• S.O/ Contract Administrator

• On site

• By S.O./Contract administrator

• Up to lapse of period of limitation

• Affecting work

• Delaying site operations

FIG. 3-12 : SITE DIARY – AN OVERVIEW

© HSKS

NATURENATURENATURENATURE

SITE DIARY: AN OVERVIEW

CONTENTSCONTENTSCONTENTSCONTENTS PROCEDURAL PROCEDURAL PROCEDURAL PROCEDURAL MATTERSMATTERSMATTERSMATTERS

•••• Undertaken

PRESENTATION PRESENTATION PRESENTATION PRESENTATION ON REQUEST/ ON REQUEST/ ON REQUEST/ ON REQUEST/ DEMANDDEMANDDEMANDDEMAND

CHECKING / CHECKING / CHECKING / CHECKING / ENDORSEMENTENDORSEMENTENDORSEMENTENDORSEMENT

SAFE KEEPING/ SAFE KEEPING/ SAFE KEEPING/ SAFE KEEPING/ CUSTODYCUSTODYCUSTODYCUSTODY

ENTRIES ON ENTRIES ON ENTRIES ON ENTRIES ON DAILY BASISDAILY BASISDAILY BASISDAILY BASIS

SITE WORK/ SITE WORK/ SITE WORK/ SITE WORK/ ACTIVITIESACTIVITIESACTIVITIESACTIVITIES

PROBLEMS PROBLEMS PROBLEMS PROBLEMS ENCOUNTEREDENCOUNTEREDENCOUNTEREDENCOUNTERED INSTRUCTIONSINSTRUCTIONSINSTRUCTIONSINSTRUCTIONS RECORD OFRECORD OFRECORD OFRECORD OF MISCELLANEOUSMISCELLANEOUSMISCELLANEOUSMISCELLANEOUS ATTACHMENTSATTACHMENTSATTACHMENTSATTACHMENTS

• As to Site Work

• Coordination

•••• Site/ factory visits

•••• Weather conditions

•••• Disruption to site activities

•••• ‘As-Built’ sketches, drawings, diagrams, etc.

•••• ‘As-erected’/ ‘As-Installed’ Work/ plant, etc.

•••• By Employer’s Representative/ Designated person

•••• Accuracy of entries

•••• By S.O./ contract administrator

•••• Up to lapse of period of limitation

•••• Preferably kept by each and every site personnel

•••• Personal record of site activities

•••• Otherwise by designated site supervision team member

•••• Issued to Contractors

•••• Carried out by Contractor

•••• Contractor’s defaults /omissions


•••• From commencement of work on site until completion

•••• If necessary until the end of the contract

•••• By designated person

•••• By Employer/ S.O./ any interested party

© HSKS

SUPERVISION OF WORKS/

CONTRACT ADMINISTRATION

© HSKS

4.0 SUPERVISION OF WORKS/CONTRACT ADMINISTRATION

1.01.01.01.0 CONTRACT ADMINISTRATIONCONTRACT ADMINISTRATIONCONTRACT ADMINISTRATIONCONTRACT ADMINISTRATION

� PURPOSE

� DESIGNATION

� ROLES

� SOURCES OF DUTIES AND POWERS

� REPRESENTATIVE/ASSISTANTS

� PRINCIPAL DUTIES

� LIABILITY

2.02.02.02.0 SUPERVISIONSUPERVISIONSUPERVISIONSUPERVISION

� FORMS

� DURATION

� LEVEL

� LIABILITIES

3.03.03.03.0 DISCUSSION OF CASE LAWDISCUSSION OF CASE LAWDISCUSSION OF CASE LAWDISCUSSION OF CASE LAW

© HSKS

CONTRACT ADMINISTRATION:

PRIMARY PURPOSES

FIG. 4-1 : CONTRACT ADMINISTRATION – PRIMARY PURPOSES

ENSURE THAT CONTRACTOR FULFILLS HIS OBLIGATIONS

UNDER THE CONTRACT

ENSURE THAT EMPLOYER’S POSITION ADEQUATELY

PROTECTED AGAINST VARIOUS CLAIMS

ENSURE WORKS SATISFACTORILY

COMPLETED WITHIN ORIGINAL CONTRACT PERIOD

AND PRICE

ENSURE THAT EMPLOYER FULFILLS HIS OBLIGATIONS

UNDER THE CONTRACT

ENSURE THAT NEEDS/ OBLIGATIONS OF CONTRACT

ADMINISTRATOR UNDER CONTRACT/STATUTE

ADEQUATELY FULFILLED

ENSURE THAT EMPLOYER FULFILS HIS

STATUTORY/LOCAL AUTHORITY REQUIREMENTS

FIG. 4-2 : CONTRACT ADMINISTRATORS – COMMON DESIGNATIONS

© HSKS

CONTRACT

ADMINISTRATORS:

COMMON

DESIGNATIONS

SUPERINTENDING OFFICER/ S.O.

CONSTRUCTION MANAGER

EMPLOYER’S REPRESENTATIVE ENGINEER

ARCHITECT PROJECT DIRECTOR

© HSKS

CONTRACT ADMINISTRATOR: RANGE OF ROLES

PERFORMED

WITH EXPRESSAUTHORITY

AS AN AGENT OF THE EMPLOYER

AS AN ADVISORTO THE EMPLOYER

AS AN INDEPENDENT CONTRACTOR

AS AN INDEPENDENT/ IMPARTIAL

ADJUDICATOR

WITH IMPLIED/OSTENSIBLEAUTHORITY

WHERE SUCH WORK

IS REQUIRED POST-

CONTRACT

FOR MAINLY DESIGN/

DETAILING WORK

AS TO MATTERS OF COST

AS TO OTHER MATTERS

AS TO RIGHTS/ DUTIES UNDER

THE CONTRACT

AS TO DISPUTE RESOLUTION

AS TO CERTIFICATION

FIG. 4-3 : CONTRACT ADMINISTRATOR – RANGE OF ROLES PERFORMED

© HSKS

CONTRACT ADMINISTRATOR: SOURCES OF DUTIES AND POWERS

TERMS OF REFERENCE OF APPOINTMENT

‘IN-HOUSE’ EMPLOYEE EXTERNAL BODY/PERSON

CONDITIONS OF CONTRACT

BEING ADMINISTERED

CONDITIONS OF

ENGAGEMENT/ SERVICES

AGREEMENT

CONDITIONS OF CONTRACT

BEING ADMINISTERED

FIG. 4-4 : CONTRACT ADMINISTRATOR – SOURCES OF DUTIES AND POWERS

© HSKS

FIG. 4-5 : CONTRACT ADMINISTRATOR’S REPRESENTATIVES/ASSISTANTS - TYPICAL

EXAMPLES

CONTRACT ADMINISTRATOR’S REPRESENTATIVES/ ASSISTANTS:

TYPICAL EXAMPLES

ARCHITECT

ELECTRICAL ENGINEER

PROJECT MANAGER STRUCTURAL ENGINEER

SPECIALIST CONSULTANT CIVIL ENGINEER

QUANTITY SURVEYOR MECHANICAL ENGINEER

© HSKS

FIG. 4-6: CONTRACT ADMINISTRATOR’S PRINCIPAL DUTIES FOR TRADITIONAL GENERAL

CONTRACTS

CONTRACT ADMINISTRATOR’S PRINCIPAL DUTIES FOR TRADITIONAL GENERAL CONTRACTS

OVERSEEING TRAINING OF EMPLOYER’S O & M PERSONNEL

PROGRESS MONITORING

ADVISING EMPLOYER

ORDERING VARIATIONS

PARTICIPATING IN PREPARATION OF MIGRATION/ FACILITIES MANAGEMENT PLANS ‘CLOSING-OFF’ CONTRACT

PARTICIPATING IN TESTING AND COMMISSIONING

ISSUING INFORMATION, DRAWINGS, DETAILS, ETC.

ADMINISTRATION OF PAYMENTS

OVERALL SUPERVISION

GRANTING APPROVALS, CONSENTS, ETC.

NOMINATING SUB-CONTRACTORS, ETC.

ISSUING RELEVANT INSTRUCTIONS

INSPECTIONS OF WORKS

MONITORING RECTIFICATION OF DEFECTS

OVERSEEING COMPLETION & HANDING OVER OF WORKS

PREPARING ‘FINAL ACCOUNT’

CHECKING AND APPROVING O & M MANUALS & ‘AS-BUILT’ DRAWINGS

ISSUING NECESSARY REPORTS

MONITORING SERVICING AND MAINTENANCE

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FIG. 4-7 : FORMS OF SUPERVISION – COMMON LABELS

FORMS OF SUPERVISION: COMMON LABELS

FULL-TIME SUPERVISION

PART-TIME SUPERVISION

NOMINAL SUPERVISION STANDING SUPERVISION

PERIODIC SUPERVISION CONSTANT SUPERVISION

FIG. 4-8 : SUPERVISION/INSPECTIONS – OVERVIEW (PART I)

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TYPICAL TYPICAL TYPICAL TYPICAL CLAUSES IN CLAUSES IN CLAUSES IN CLAUSES IN AGREEMENTSAGREEMENTSAGREEMENTSAGREEMENTS

TYPICAL TYPICAL TYPICAL TYPICAL CLAUSES IN CLAUSES IN CLAUSES IN CLAUSES IN AGREEMENTSAGREEMENTSAGREEMENTSAGREEMENTS

SUPERVISION/INSPECTIONS: OVERVIEW (PART I)

NATURE NATURE NATURE NATURE AND MEANINGAND MEANINGAND MEANINGAND MEANING

NATURE NATURE NATURE NATURE AND MEANINGAND MEANINGAND MEANINGAND MEANING

PURPOSESPURPOSESPURPOSESPURPOSESPURPOSESPURPOSESPURPOSESPURPOSESTYPICAL TYPICAL TYPICAL TYPICAL

PROVISIONS IN PROVISIONS IN PROVISIONS IN PROVISIONS IN BYBYBYBY----LAWSLAWSLAWSLAWS

TYPICAL TYPICAL TYPICAL TYPICAL PROVISIONS IN PROVISIONS IN PROVISIONS IN PROVISIONS IN

BYBYBYBY----LAWSLAWSLAWSLAWS

•••• Terms used synonymously

•••• See Newey J’s definition

•••• Distinction: Inspection imposes a lesser duty: William Tompkinson

v St. Michael in the Hamlet.

•••• In absence of express provisions to contrary courts imply a duty of supervision: Alexander Corfield v David Grant.

•••• Malaysia: Statutory provisions necessitate ‘supervision’

•••• Building (Federal Territory of Kuala Lumpur) By-Laws 1985:

1. By-Law 6: Supervision of Works

2. By-Law 23(1): Certificate For Occupation

•••• By-Law 5(1) City of Kuala Lumpur (Earthworks) By-Laws 1975

•••• Engineer’s Agreement:

1. Clause 8.1 and 8.7 BEM Form (1999)

•••• Architect’s Agreement

1. Clause 5(4)(iv) Part II: Architects (Scale of Minimum Fees) (Amendment) Rules 1992

2. Clause 9 Conditions of Engagement of Architect

•••• See Keating’s definition in ‘Building Contracts’

•••• Three fold purpose:

1. To ensure contractor carries out work in accordance with contract.

2. To enable contract administrator to discharge his obligations to employer.

3. To enable contract administrator to meet his statutory obligations

FIG. 4-9 : SUPERVISION/INSPECTIONS – OVERVIEW (PART II)

© HSKS

DURATIONDURATIONDURATIONDURATIONDURATIONDURATIONDURATIONDURATION

SUPERVISION/INSPECTIONS: OVERVIEW (PART II)

RESIDENT RESIDENT RESIDENT RESIDENT SITE STAFFSITE STAFFSITE STAFFSITE STAFFRESIDENT RESIDENT RESIDENT RESIDENT SITE STAFFSITE STAFFSITE STAFFSITE STAFF LIABILITIESLIABILITIESLIABILITIESLIABILITIESLIABILITIESLIABILITIESLIABILITIESLIABILITIES

LEVEL OF LEVEL OF LEVEL OF LEVEL OF SUPERVISION SUPERVISION SUPERVISION SUPERVISION REQUIREDREQUIREDREQUIREDREQUIRED

LEVEL OF LEVEL OF LEVEL OF LEVEL OF SUPERVISION SUPERVISION SUPERVISION SUPERVISION REQUIREDREQUIREDREQUIREDREQUIRED

•••• Necessity for Resident Site Staff (RSS)

•••• Typical examples:

1. Resident architect/engineer 2. Clerk-of-works.3. Other relevant staff

•••• Engagement:

1. By employer; or 2. By contract administrator

•••• Powers and duties determined by engineering/construction contract being administered and/or letter of delegation of power.

•••• Responsibilities of:

1. RSS2. Contract Administrator

•••• Determined by:

1. Conditions of engagement

2. Applicable statutory provisions e.g. By-Laws

•••• Prevailing Forms:

1. Category I: Full-time/Standing/ Constant supervision

2. Category II: Part-Time/Periodic Supervision

3. Category III: ‘Nominal’Supervision

•••• Legal Position:

1. Must be reasonable for works involved

2. Must be sufficient to check the important elements

3. Adequate to meet statutory requirements

4. Sufficient to meet obligations of engagement

•••• Determining factors:

1. Nature of works under contract

2. Conditions of engagement

•••• Normal periods:

1. Up to issue of Practical Completion; or

2. Up to application of certificate for occupation; or

3. Up to issue of Certificate of Making Good Defects

•••• Common practice is up to issue of Certificate of Making Good Defects

•••• Primary responsibility for supervision: contractor’s. See East Ham Corp. v Bernard Sunley.

•••• Heads of liabilities of contract administrator for defaults/ breaches:

1. Contractual2. In tort3. Statutory

•••• Position of contract administrators who are professional engineers, architects, etc.

FIG. 4-10 : CONTRACT ADMINISTRATOR’S LIABILITIES – AN OVERVIEW (PART I)

© HSKS

HEADS OF LIABILITIESHEADS OF LIABILITIESHEADS OF LIABILITIESHEADS OF LIABILITIESHEADS OF LIABILITIESHEADS OF LIABILITIESHEADS OF LIABILITIESHEADS OF LIABILITIES

CONTRACT ADMINISTRATOR’S LIABILITIES: AN OVERVIEW (PART I)

LEGAL KNOWLEDGE LEGAL KNOWLEDGE LEGAL KNOWLEDGE LEGAL KNOWLEDGE AND PERSONAL DUTYAND PERSONAL DUTYAND PERSONAL DUTYAND PERSONAL DUTYLEGAL KNOWLEDGE LEGAL KNOWLEDGE LEGAL KNOWLEDGE LEGAL KNOWLEDGE AND PERSONAL DUTYAND PERSONAL DUTYAND PERSONAL DUTYAND PERSONAL DUTY

STANDARD OF CARESTANDARD OF CARESTANDARD OF CARESTANDARD OF CARESTANDARD OF CARESTANDARD OF CARESTANDARD OF CARESTANDARD OF CAREGENERAL POSITIONGENERAL POSITIONGENERAL POSITIONGENERAL POSITIONGENERAL POSITIONGENERAL POSITIONGENERAL POSITIONGENERAL POSITION

•••• General position: Required to have knowledge of all legal matters relating to work being undertaken

•••• Nature of matters.

•••• Consequences of failure

•••• Duty is personal and non-delegable

•••• Action by employer under terms of contract of engagement

• If no express terms, implied by law

• Contract of engagement:

1. Standard forms, or2. ‘Bespoke’ Forms

•••• Three main categories:

1. Contractual 2. Tortious 3. Statutory

•••• Characteristics:

1. Not distinct/mutually exclusive

2. Concurrent/complementary

3. Choice of option on aggrieved part

CONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL LIABILITY LIABILITY LIABILITY LIABILITY

CONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL LIABILITY LIABILITY LIABILITY LIABILITY

• Prove no valid express/implied contract of engagement

• If there is such valid contract prove:

1. Contract didn’t impose particular duty breach of which claimed, or

2. Service actually rendered was of the standard reasonably expected under the circumstances

EFFECT OF BREACHEFFECT OF BREACHEFFECT OF BREACHEFFECT OF BREACHEFFECT OF BREACHEFFECT OF BREACHEFFECT OF BREACHEFFECT OF BREACH

•••• Two options available to employer:

1. Rescind contract and sue for damages; or

2. Affirm contract and sue for damages

•••• Right of election of option belongs to employer

•••• Duty of care owed to employer

• Usually to use ‘reasonable skill and care’

• Duty and standard of care either:

1. Expressed in contract of engagement, or

2. Implied by law

DEFENCESDEFENCESDEFENCESDEFENCESDEFENCESDEFENCESDEFENCESDEFENCES

FIG. 4-11 : CONTRACT ADMINISTRATOR’S LIABILITIES – AN OVERVIEW (PART II)

© HSKS

TORTIOUS LIABILITYTORTIOUS LIABILITYTORTIOUS LIABILITYTORTIOUS LIABILITY

REASONABLE REASONABLE REASONABLE REASONABLE SKILL & CARE SKILL & CARE SKILL & CARE SKILL & CARE DEFINITIONDEFINITIONDEFINITIONDEFINITION

BASIC BASIC BASIC BASIC ELEMENTSELEMENTSELEMENTSELEMENTS

STANDARD STANDARD STANDARD STANDARD

OF CAREOF CAREOF CAREOF CARE

ESTABLISHING ESTABLISHING ESTABLISHING ESTABLISHING LIABILITY LIABILITY LIABILITY LIABILITY DEFENCES DEFENCES DEFENCES DEFENCES

LIABILITY TO LIABILITY TO LIABILITY TO LIABILITY TO 3333RDRDRDRD PARTIESPARTIESPARTIESPARTIES

•••• Laid down in Donoghue v Stevenson

•••• ‘Neighbourhood’principle

•••• Important elements:

1. Causation2. Forseeability

•••• D owed P duty of care

•••• D breached this duty

•••• Consequence: P suffered loss/damage

•••• Loss/damage suffered not remote

CONTRACT ADMINISTRATOR’S LIABILITIES: AN OVERVIEW (PART II)

•••• Duty of care in tort of negligence concurrent with contractual duty: Brown v Boorman

•••• Common Forms:

1. Acts/omissions2. Mis-statements

GENERAL POSITION GENERAL POSITION GENERAL POSITION GENERAL POSITION NEGLIGENCE NEGLIGENCE NEGLIGENCE NEGLIGENCE

•••• Application of the ‘Bolam Test’

•••• Use of ‘Reasonable Man’ test

•••• Use by Malaysian Courts

•••• 2 Categories:

1. Reasonable skill & care

2. Fitness for purpose

•••• Criterion: Objective

•••• Less onerous

•••• Use of standards prevailing at time of default

•••• Proscribe use of hindsight

•••• See Eckersly v Binnie & Partners

•••• Per Hunter v Henley

1. There is a usual and normal practice

2. D did not adopt the practice

3. Practice adopted by D would not be adopted by another reasonable D

•••• Need to satisfy all 3 element on balance of probabilities

•••• Only 3 types:

1. Deny existence of duty of care

2. Prove claim made not of type currently recognized

3. Show service rendered meets ‘Bolam Test’

•••• No immunity to suit: Sutcliffe v Thackrah

•••• Situation per ‘Pure Economic Loss’

•••• No liability to contractor

•••• Possible exceptions: See Para 5.9B5.

FIG. 4-12 : CONTRACT ADMINISTRATOR’S LIABILITIES – AN OVERVIEW (PART III)

© HSKS

STATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITY

•••• For professional contract administrator

•••• Under specific Acts of Parliament

•••• Possible sanctions:1. Fine2. Suspension3. Cancellation of

registration

•••• Liability under various By-Laws e.g. UBBL, etc.

•••• Penalties/sanctions stipulated in the By-Laws

PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL LIABILITYLIABILITYLIABILITYLIABILITY

PROFESSIONAL PROFESSIONAL PROFESSIONAL PROFESSIONAL LIABILITYLIABILITYLIABILITYLIABILITY

CONTRACT ADMINISTRATOR’S LIABILITIES: AN OVERVIEW (PART III)

•••• Various Acts of Parliament applicable

•••• Principal example: S71 Street, Drainage & Building Act 1974

•••• Penalty for mis-supervision, etc.

GENERAL POSITION GENERAL POSITION GENERAL POSITION GENERAL POSITION GENERAL POSITION GENERAL POSITION GENERAL POSITION GENERAL POSITION DIRECT DIRECT DIRECT DIRECT STATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITY

DIRECT DIRECT DIRECT DIRECT STATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITYSTATUTORY LIABILITY

•••• In addition to Contractual and Tortious Liability

•••• Various sub-heads:

1. Direct statutory liability2. Under delegated legislation3. Professional liability

LIABILITIES UNDER LIABILITIES UNDER LIABILITIES UNDER LIABILITIES UNDER DELEGATED DELEGATED DELEGATED DELEGATED LEGISLATIONLEGISLATIONLEGISLATIONLEGISLATION

LIABILITIES UNDER LIABILITIES UNDER LIABILITIES UNDER LIABILITIES UNDER DELEGATED DELEGATED DELEGATED DELEGATED LEGISLATIONLEGISLATIONLEGISLATIONLEGISLATION

© HSKS

PAYMENTS/

COMMERCIAL MATTERS

5.0 PAYMENTS/COMMERCIAL MATTERS

•••• LEGAL OBLIGATION OF EMPLOYER LEGAL OBLIGATION OF EMPLOYER LEGAL OBLIGATION OF EMPLOYER LEGAL OBLIGATION OF EMPLOYER

•••• PAYMENT TO MAIN CONTRACTOR/TURNKEY CONTRACTOR PAYMENT TO MAIN CONTRACTOR/TURNKEY CONTRACTOR PAYMENT TO MAIN CONTRACTOR/TURNKEY CONTRACTOR PAYMENT TO MAIN CONTRACTOR/TURNKEY CONTRACTOR

•••• PAYMENT TO SUBPAYMENT TO SUBPAYMENT TO SUBPAYMENT TO SUB----CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS

•••• ‘‘‘‘BACK TO BACKBACK TO BACKBACK TO BACKBACK TO BACK’’’’ PAYMENTSPAYMENTSPAYMENTSPAYMENTS

•••• BREACHES IN PAYMENT OBLIGATIONSBREACHES IN PAYMENT OBLIGATIONSBREACHES IN PAYMENT OBLIGATIONSBREACHES IN PAYMENT OBLIGATIONS


• SUTCLIFFE V THACKRAH [1974] 1 ALL ER 319

* CROUDACE LTD. V THE LONDON BOROUGH OF LAMBETH [1986] 33 BLR 20

* GUNUNG BAYU SDN. BHD. V SYARIKAT PEMBINAAN PERLIS SDN. BHD. [1987] 2 MLJ 332

* HAJI ABU KASSIM V TEGAP CONSTRUCTION SDN. BHD. [1981] 2 MLJ 149

* KAH SENG CONSTRUCTION SDN. BHD. V SELSIN DEVELOPMENT SDN. BHD. [1997] 1 CLJ SUPP 448

* YONG MOK HIN V UNITED MALAY STATES SUGAR INDUSTRIES LTD. [1966] 2 MLJ 286

* JALLCON (M) SDN. BHD. V NIKKON METAL (M) SDN. BHD. (No. 2) [2001] 5 MLJ 716, HC.

© HSKS

© HSKS

PAYMENT: ASPECTS OF CONTRACTOR’S

ENTITLEMENTS/EMPLOYER’S OBLIGATIONS

TIMING ENFORCEMENT/HONOURING

PROCEDURES AND CONDITIONS PRECEDENT

QUANTUM/AMOUNT SET-OFF/DEDUCTIONS

FIG. 5-1: PAYMENTS – ASPECTS OF CONTRACTOR’S ENTITLEMENT/EMPLOYER’S OLIGATIONS

© HSKS

FIG. 5-2 : TIMING OF PAYMENT TO CONTRACTOR – PRINCIPAL SCHEMES/SCHEDULES

PERIODIC SCHEDULE PERIODIC SCHEDULE PERIODIC SCHEDULE PERIODIC SCHEDULE DURING CURRENCY DURING CURRENCY DURING CURRENCY DURING CURRENCY OF THE CONTRACTOF THE CONTRACTOF THE CONTRACTOF THE CONTRACT

TIMING OF PAYMENT TO CONTRACTOR: PRINCIPAL SCHEMES/SCHEDULES

STAGES/MILESTONE STAGES/MILESTONE STAGES/MILESTONE STAGES/MILESTONE PAYMENTPAYMENTPAYMENTPAYMENT

ADVANCE PAYMENTADVANCE PAYMENTADVANCE PAYMENTADVANCE PAYMENT

PERIODIC SCHEDULE PERIODIC SCHEDULE PERIODIC SCHEDULE PERIODIC SCHEDULE AFTER COMPLETION/ AFTER COMPLETION/ AFTER COMPLETION/ AFTER COMPLETION/ END OF CONTRACT END OF CONTRACT END OF CONTRACT END OF CONTRACT

AFTER COMPLETION/ AFTER COMPLETION/ AFTER COMPLETION/ AFTER COMPLETION/ END OF CONTRACT END OF CONTRACT END OF CONTRACT END OF CONTRACT

AFTER ISSUE OF AFTER ISSUE OF AFTER ISSUE OF AFTER ISSUE OF FINAL CERTIFICATE FINAL CERTIFICATE FINAL CERTIFICATE FINAL CERTIFICATE

AFTER AFTER AFTER AFTER ISSUE OF CPC ISSUE OF CPC ISSUE OF CPC ISSUE OF CPC

FINANCIALFINANCIALFINANCIALFINANCIALPHYSICAL WORKS PHYSICAL WORKS PHYSICAL WORKS PHYSICAL WORKS

OF WHOLE OF WHOLE OF WHOLE OF WHOLE CONTRACT SUMCONTRACT SUMCONTRACT SUMCONTRACT SUM

OF PART OF OF PART OF OF PART OF OF PART OF CONTRACT SUMCONTRACT SUMCONTRACT SUMCONTRACT SUM

AFTER ISSUE AFTER ISSUE AFTER ISSUE AFTER ISSUE OF CPCOF CPCOF CPCOF CPC

AFTER ISSUE OF AFTER ISSUE OF AFTER ISSUE OF AFTER ISSUE OF FINAL CERTIFICATE FINAL CERTIFICATE FINAL CERTIFICATE FINAL CERTIFICATE

MISCELLANEOUS/ MISCELLANEOUS/ MISCELLANEOUS/ MISCELLANEOUS/ METHODS METHODS METHODS METHODS

Are they included in the Project Procedures

Manual?

No

START

Contract administrator to issue formal record of issues agreed

upon by all relevant parties

A

Yes

Contract administrator to resolve all preliminary issues

Have these been sorted- out following award of

contract?

Yes

Yes

Have these been formalized by all the

parties?

No

No

Are the preliminary matters expressly stipulated

in the contract?

Yes

No

All relevant parties to take necessary steps to

implement issues

Contract administratorto take necessaryaction forthwith

FIG. 5-3: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART I)

© HSKS

Has he executed any physical

work?

Yes

C

No

Establish if the contractorhas fulfilled his first

pre-condition to payment

Contract administrator not obliged to initiate the progress payment

Has he delivered materials to

site?

Yes

Yes

Does the contract contain an express term

thereto?

No

Has the contractor commenced with the work

under the contract? No

Yes

Prima facie, contractor may be entitled to payment

Establish if it is necessary for the contractor to apply for

the required payment

A

Contractor not entitled to any

payment

D

No

B

FIG. 5-4: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART II)

© HSKS

DCB

GE F

Has the method for valuation been

confirmed?

Yes

Have the parties involved been

identified?

Yes

Yes

Have the relevant pre-conditions been

fulfilled?

Yes

Contract administrator to proceed with the next stage i.e. valuation

Has the date of valuation been

reached?

Yes

Is it mandatory?

No Contractor may not be entitled to

payment until he satisfies

pre -conditions

Has contractor complied with

requirements?

Yes

NoContractor not obliged to apply

NoDeficiencies/omissions to be addressed

forthwith to enable process to continue

Contract administrator obliged to initiate

process on his own volition

No

No Prima facie, valuation may not be initiated until achievement

of necessary requirements

No

FIG. 5-5: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART III)

© HSKS

F G

IH K

E

J

Valuation of works to be carried out jointly by the relevant parties

Valuers to prepare a valuation report

Does the contractor agree with the valuation?

Does he officially register his protest with

valuers?

Do the valuers consider the objections

protest?

Do they agree with the objections?

Valuers may revise/amend the valuation as necessary

Valuers to endorse/sign off the valuation report prepared

Does he sign off the

valuation report?

Valuation deemed to have been accepted by the

contractor

Contractor may protest to the certifier if necessary

Does the Contractor

protest to the certifier?

Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

No

FIG. 5-6: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART IV)

© HSKS

M

K

O

JH I

N

L

Valuation report together with all other necessary documents to

be submitted to the certifier

Certifier to carry out preliminary reviews

Is the valuation report complete, sufficient and

accurate?

Has the contractor any valid grounds

for objecting?

Certifier not to consider objections any further

Is the date for certification

imminent?

Has the stipulated minimum value of work been exceeded?

Certifier to proceed with the necessary certification procedures

Certifier to take objections into

consideration before undertaking certification

Certifier may exercise his discretion in

undertaking certification

Should in his discretion a certificate be

issued?

Certifier to clarify/ discuss deficiencies/ omissions with the

valuers

Deficiencies/ omissions may compromise the

certification

Certifier has no discretion to carry out certification

Yes

Yes

Yes

Yes

Yes

No

No

NoNo

No

FIG. 5-7: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS

(PART V)

© HSKS

O

SP TQ

M L N

-

R

Is the 1st Interim Certificate due?

Have all the stipulated pre-conditions been met?

Is the subsequent Interim Certificate

due?

Have all the relevant pre-conditions been met?

Certifier to proceed with preparation of Interim Certificate

Is there a standard form of certificate prescribed?

Has a ‘bespoke’ form been generated?

Certifier to develop an ‘ad hoc’ form meeting the necessary criteria/contents

requirements

Utilize the form unless found not suitable

Prima facie, certificate cannot

be issued

Use the standard form as prescribed

No

No

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Yes

FIG. 5-8: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART VI)

© HSKS

X

T

U V

RP SQ

W

Certifier to fill in all details completely, sufficiently and

correctly in certificate

Are there any NSCs/Nominated

Suppliers?

Are there any official

assignees?

Are all procedural requirements met?

Are all formal requirements

met?

Is the signatory anauthorized person under the

contract?

Have all the relevant checks for errors,

etc. been undertaken?

Certificate may be challenged as invalid and

unenforceable, if and when issued

Amount certified for such parties to be indicated

separately in certificate

Deficiencies/ errors may compromise validity of

certificate

Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

No

FIG. 5-9: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART VII)

© HSKS

AB

X

Y AA

VU

Z

W

Contract administrator to issue relevant certificate

Is there a certification period stipulated

in the contract?

Is certificate issued within the said

period?

Is the recipient of the original copy

stipulated?

Is the certificate issued to the stipulated

person?

Are copies issued to the relevant

parties?

Is the service of certificate formally

evidenced?

Prima facie, employer may be in breach of contract.

Contractor may take appropriate action for employer’s breach

Contractor to be furnished with

original copy

CA to rectify deficiencies/errors as soon as possible

Certificate to be issued within a reasonable time of application/ valuation

Default in service may constitute a breach of

contract on employer’s part. To be corrected/ rectified

forthwith

Relevant parties have a right to demand the

necessary copies from contract administrator

No

No

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Yes

FIG. 5-10: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART VIII)

© HSKS

AB

-

AAY

AFAC AEAD

Z

Establish the specific post-certification requirements

Do the recipients formally

acknowledge receipt of document?

Is presentation of certificate stipulated in the

contract?

Is there a period stipulated for the

presentation?

Is presentation formally effected within this

period?

Does employer formally acknowledges receipt

of the certificate from contractor?

Employer to review certificate for validity

Contractor may present

certificate within a reasonable

period of receipt

Omission to acknowledge may

lead to future evidential problems

Contract administrator to procure said

acknowledgements as soon as possible

Delay may postpone employer’s obligation to

honour certificate

Omission to acknowledge may lead to future evidential

problems and may affect the honouring of certificate

Contractor to procure said acknowledgement as soon as possible

No

No

No

No

No

Yes

Yes

Yes

Yes

Yes

FIG. 5-11: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART IX)

© HSKS

AF

-

AE

-

AC AD

Are there grounds for

challenging validity of certificate?

Employer to proceed with honouring certificate issued/ presented (as

applicable)

Are there any set-offs/deductions to be

made?

Are these expressly permitted by the

contract?

Has the amount certified less the set-

offs/ deduction been established?

Has the final sum due been paid to the

contractor?

Has this been done in the stipulated honouring

period?

STOP

Employer must pay amount as certified

to the contractor

Employer to determine amount due before the stipulated honouring period lapses

Employer may challenge certificate and refuse to

honour it citing the relevant grounds

Employer culpable of breach of contract.

Contractor to take appropriate action.

No

No

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Yes

FIG. 5-12: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART X)

© HSKS

© HSKS

DEFAULT IN PAYMENT: TYPICAL CONTRACTUAL

REMEDIES

FIG. 5-13 : DEFAULT IN PAYMENT - TYPICAL CONTRACTUAL REMEDIES

RECOVERY OF THE UNPAID AMOUNT

RIGHT TO SUSPEND WORK

MISCELLANEOUS REMEDIES

INTEREST ON THE UNPAID AMOUNT

RIGHT TO DETERMINE EMPLOYMENT UNDER

CONTRACT

RIGHT TO REDUCE RATE OF EXECUTING WORK

INTERIM CERTIFICATES: TYPICAL CHALLENGES

CERTIFICATE WRONG ON ITS’ FACE

CERTIFICATE FUNDAMENTALLY INACCURATE

CERTIFICATE NOT IN CORRECT FORM

CERTIFICATE ISSUED BY UNAUTHORISED PERSON

CERTIFICATE ISSUED IN UNAUTHORISED MANNER

CERTIFICATE ISSUED OUT OF TIME

CERTIFIER ACTING ‘ULTRA VIRES’

CERTIFIER IMPROPERLY PRESSURIZED/INFLUENCED

CERTIFICATE SUBJECT TO FRAUD/COLLUSION

FRAUD, DISHONESTY/FRAUDULENT CONCEALMENT BY CONTRACTOR

MISCELLANEOUS CHALLENGES

FIG. 5-14: INTERIM CERTIFICATES – TYPICAL CHALLENGES

© HSKS

© HSKS

PAYMENT TO SUB-CONTRACTORS:

PRINCIPAL METHODS

DIRECT PAYMENT BY THE EMPLOYER

PAYMENT UPON CERTIFICATION CONTINGENT PAYMENT

FIG. 5-15 : PAYMENT TO SUB-CONTRACTORS – PRINICPAL METHODS

-

A

-

START

Sub-Contractor (SC) forwards details of amountclaimed to Main Contractor (MC) officially

Is it within the prescribed time

limits?

MC to include SC’s details in his claim

MC to submit consolidated claim to the Contract Administrator (CA)

CA to carry out the necessary valuation

CA to issue interim payment certificate to MC

Employer to pay certified amount to MC within the Honouring Period

Establish if there is a Contingent Payment Type II clause in the sub-contract

SC to make fresh submission in the next application

Does theMC accept the submission?

Yes Yes

No

No

FIG. 5-16: FLOWCHART ON GENERAL PROCEDURE FOR TYPE II ‘CONTINGENT PAYMENT’ (PART I)

© HSKS

A

STOP

Is there such a clause in the

contract?

Is the period for payment

stated?

Does the MC pay the SC within the

said period?

SC to pursue the remedies available under the contract

Are there any contractual remedies

available?

Is there an arbitration agreement?

SC to pursue his common law remedies if necessary

MC may pay SC within a reasonable time of receipt of

monies from the Employer

SC to initiate the contractual remedies as applicable

SC to initiate the Arbitration process if necessary

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

FIG. 5-17: FLOWCHART ON GENERAL PROCEDURE FOR TYPE II ‘CONTINGENT PAYMENTS’

(PART II)

© HSKS

© HSKS

CONTRACT SUM ANALYSIS

CONTRACT SUM ANALYSIS

PAYMENT IN ‘PACKAGE DEAL’ TYPES OF CONTRACTS: AN OVERVIEW

QUANTITIESQUANTITIES MEASUREMENTMEASUREMENT

•••• For Tender Analysis

•••• For Interim Payment

•••• Valuation of Changes/ Provisional Sums

•••• For any Price Adjustment

SITUATIONS WHERE USED

SITUATIONS WHERE USED ACCURACYACCURACYPURPOSEPURPOSE DRAFTINGDRAFTING

•••• Normally by Contractor

•••• Samples may be given by Employer in Employer’s Requirements

ERRORS/ OMISSIONS

ERRORS/ OMISSIONS PREPARATIONPREPARATION

•••• Contractor responsible

•••• If Employer prepares, risk for errors/omissions normally passed on to Contractor

EXPRESS PROVISIONS

EXPRESS PROVISIONS

STRUCTURESTRUCTURE

•••• Given in some Forms e.g. JCT 98, PWD Form DB/T, etc.

•••• Required for:

1. Overall Works 2. Sections or

Phases

GENERAL POSITION

GENERAL POSITION

•••• Effect of measurement expressly stipulated in some forms

•••• Mostly deals with patent errors

•••• As based on Lump Sum and due to nature of contract

•••• No requirement for measurement

•••• Changes/V.O.s

•••• Unforeseen Conditions

•••• Included in most Standard Forms

•••• E.g. Clause 55(1) ICE, Clause 13.1(d) FIDIC, etc.

•••• Risk on Contractor

•••• E.g. Clause 55(2) ICE Form

GENERAL POSITION

GENERAL POSITION

•••• Whenever used, effect not similar to TGC

•••• Are deemed to be only estimates

FIG. 5-18 : PAYMENT IN ‘PACKAGE DEAL’ TYPES OF CONTRACTS: AN OVERVIEW

© HSKS

FINAL ACCOUNT: PRINCIPAL CONTENTS

FINAL AMOUNT TO WHICH CONTRACTOR ENTITLED TO UNDER

THE CONTRACT

FINAL ADJUSTMENTS TO THE CONTRACT SUM

FINAL AMOUNT (SET OFFS/ DEDUCTIONS) TO WHICH

EMPLOYER ENTITLED TO UNDER THE CONTRACT

FIG. 5-19 : FINAL ACCOUNT – PRINCIPAL CONTENTS

© HSKS

APPROVED VARIATIONS TO THE CONTRACT

ADJUSTMENT TO THE CONTRACT SUM: TYPICAL

HEADS/ITEMS

REMEASUREMENT OF ‘PROVISIONAL’ITEMS/WORK

ADJUSTMENT FOR PRICE FLUCTUATION, ETC.

PERMITTED COSTS FOR TESTING, OPENING UP OF

WORK, ETC.

MISCELLANEOUS ADJUSTMENTS APPROVED

CONTRACTOR’S CLAIMS

ADJUSTMENT FOR P.C. SUMS/ PROVISIONAL

SUMS

FEES AND CHARGES FOR PERMANENT

CONNECTIONS

FIG. 5-20 : ADJUSTMENT TO THE CONTRACT SUM – TYPICAL HEADS/ITEMS

© HSKS

VARIATIONS/CHANGES

6.0 VARIATIONS/CHANGES

•••• WHAT CONSTITUTES WHAT CONSTITUTES WHAT CONSTITUTES WHAT CONSTITUTES ‘‘‘‘VARIATIONS/CHANGESVARIATIONS/CHANGESVARIATIONS/CHANGESVARIATIONS/CHANGES’’’’

•••• ISSUES AS TO VALIDITY ISSUES AS TO VALIDITY ISSUES AS TO VALIDITY ISSUES AS TO VALIDITY

•••• PROBLEMS WITH VARIATIONSPROBLEMS WITH VARIATIONSPROBLEMS WITH VARIATIONSPROBLEMS WITH VARIATIONS

•••• INVALID VARIATION ORDERS AND EFFECTSINVALID VARIATION ORDERS AND EFFECTSINVALID VARIATION ORDERS AND EFFECTSINVALID VARIATION ORDERS AND EFFECTS

•••• LIMITATIONS OF VARIATIONS LIMITATIONS OF VARIATIONS LIMITATIONS OF VARIATIONS LIMITATIONS OF VARIATIONS


* SHARPE V SAN PAULO RAILWAY [1873] L.R. 8 CH. APP. 597

* RE CHITTICK & TAYLOR [1954] 12 WWR 653

* MITSUI CONSTRUCTION CO. LTD. V A.G. OF HONG KONG [1986] 33 BLR 1

* CARR V JA BERRIMAN PTY LTD. [1953] 27 A.L.J.R. 273

* COMMISSIONER FOR MAIN ROADS V REED & STUART PTY LTD. & ANOR [1974] A.L.J.R. 461

* SIR LINDSAY PARKINSON & CO. LTD. V COMMISSIONERS OF HIS MAJESTY’S WORKS AND PUBLIC BUILDINGS [1950] 1 ALL ER 2008

* ANTARA ELEKTRIK SDN. BHD. V BELL & ORDER BHD [2002] 3 MLJ 321, HC.

© HSKS

© HSKS

FIG. 6-1: VARIATIONS: OVERVIEW

VARIATIONS

TYPESFACTORS DETERMINING

A VALID V.O.

OMISSIONADDITION

FORMALITIES

ISSUE BY DESIGNATED

OFFICER

PROCEDURAL REQUIREMENTS

EXPRESS CONTRACT CONDITIONS APPLICABLE

HYBRID

LEGAL NATURE OF PROPOSED CHANGE

APPLICABLE COMMON

LAW RULES

© HSKS

CHANGES/VARIATIONS: BASIC ELEMENTS

CHANGE TO BE IN RELATION TO SCOPE OF THE WORK

A CHANGE BEING EFFECTED

SCOPE OF WORK BEING CHANGED MUST BE AS

EXPRESSLY OR IMPLIEDLY CONTAINED IN CONTRACT

DOCUMENTS

FIG. 6-2 : CHANGES/VARIATIONS – BASIC ELEMENTS

FIG. 6-3: VARIATIONS - TYPICAL EXAMPLES

© HSKS

INCREASE/DECREASE

QUANTITY OF WORK

OMIT WORK

CHANGE DIMENSIONS OF

WORK

CHANGE SEQUENCE OF

WORK

CHANGE CHARACTER OF

WORK

CHANGE KIND OF WORK

CHANGE POSITION OF WORK

CHANGE TIMING OF WORK ACTIVITIES

EXECUTE ADDITIONAL WORK

OF ANY KIND

VARIATIONS: VARIATIONS: VARIATIONS: VARIATIONS: TYPICAL TYPICAL TYPICAL TYPICAL EXAMPLESEXAMPLESEXAMPLESEXAMPLES

CHANGE QUALITY OF WORK

CHANGE LEVELS OF WORK

ACCORDING TO IDENTITY OF INITIATOR OF CHANGE

ACCORDING TO CONSEQUENCES/EFFECT

OF THE CHANGE

ACCORDING TO NATUREOF THE CHANGE

EMPLOYER CONTRACT

ADMINISTRATOR FINANCIAL

CONSIDERATIONSCOMBINATION

OF BOTH

TIME IMPLICATIONS

ADDITIONS HYBRID

OMISSIONS

CONTRACTOR NSC

FIG. 6-4: TYPES OF VARIATIONS – MAIN METHODS OF CLASSIFICATION

© HSKS

TYPES OF VARIATIONS:

MAIN METHODS OF CLASSIFICATION

© HSKS

CHANGES IN EMPLOYER’S

REQUIREMENTS

DEFECTIVE DRAWINGS

WRONG/NEGLIGENT ADVICE FROM CONTRACT ADMINISTRATOR

MAL-ADMINISTRATION OF CONTRACT

DEFECTIVE SPECIFICATIONS

CHANGES DUE TO STATUTORY/ LEGISLATIVE

CHANGES

INTEFERENCE BY EMPLOYER

ITEMS

CONSTITUTING

VARIATIONS

DEFECTIVE CONTRACT

DOCUMENTS

DIFFERENCES BETWEEN BILLED

AND ACTUAL QUANTITIES

FIG. 6-5: ITEMS CONSTITUTING VARIATIONS

© HSKS

LEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITION

WHAT CONSTITUTES VARIATION WORKS

CONTRACTS BASED ON CONTRACTS BASED ON CONTRACTS BASED ON CONTRACTS BASED ON DRAWINGS DRAWINGS DRAWINGS DRAWINGS

AND SPECIFICATIONSAND SPECIFICATIONSAND SPECIFICATIONSAND SPECIFICATIONS

CONTRACTS BASED ON CONTRACTS BASED ON CONTRACTS BASED ON CONTRACTS BASED ON DRAWINGS DRAWINGS DRAWINGS DRAWINGS

AND SPECIFICATIONSAND SPECIFICATIONSAND SPECIFICATIONSAND SPECIFICATIONS

VARIATION TEST VARIATION TEST VARIATION TEST VARIATION TEST PER RE: PER RE: PER RE: PER RE:

CHITTICK & TAYLOR

VARIATION TEST VARIATION TEST VARIATION TEST VARIATION TEST PER RE: PER RE: PER RE: PER RE:

CHITTICK & TAYLOR

CONTRACTS CONTRACTS CONTRACTS CONTRACTS BASED ON BASED ON BASED ON BASED ON

BILL OF QUANTITIESBILL OF QUANTITIESBILL OF QUANTITIESBILL OF QUANTITIES

CONTRACTS CONTRACTS CONTRACTS CONTRACTS BASED ON BASED ON BASED ON BASED ON

BILL OF QUANTITIESBILL OF QUANTITIESBILL OF QUANTITIESBILL OF QUANTITIES

1. Rule: Contract requires:

a) Not only work set out in drawings and/or specifications

b) But also all work incidental or necessarily required whether set out in the drawings and/or described in specifications or not

2. Effect: Difficult to claim extra work [Re: Sharpe v Sao Paulo Railway]

1. Rule: All items intended to be executed by Contractor must be provided for in the Contract.

2. All items not provided for in Contract are extras.

3. Literal interpretation/ strict construction.

1. Test: What is the intention of the parties at time of contracting

2. Extras: Work not contemplated by parties when contracting and not provided in Contract.

3. Works which are indispensably necessary to give effect to parties intentions: Not extra

1. Item specifically provided for in Contract: ‘Not Extra’

2. If Contractor varies, contract without an instruction: Cannot Claim for ‘Extra’

3. If Contractor instructed by C.A. to change contract: has basis for claim for ‘Extra’

FIG. 6-6 : WHAT CONSTITUTES VARIATION WORKS

© HSKS

VALID VARIATION ORDER: PRINCIPAL ELEMENTS

WORKS CHANGED MUST BE DEFINED IN CONTRACT

DOCUMENTSTHERE MUST BE AN

‘INSTRUCTION’

FIG. 6-7 : VALID VARIATION ORDER – PRINCIPAL ELEMENTS

INSTRUCTION MUST EFFECT A CHANGE TO THE WORKS

‘INSTRUCTION’ TO BE ISSUED BY CONTRACT ADMINISTRATOR OR

BY AUTHORISED PERSON

© HSKS

VALIDITY OF VARIATION ORDERS:

PRINCIPAL FACTORS DETERMINING

COMPLIANCE WITH THE RELEVANT EXPRESS CONTRACT

PROCEDURES

EXISTENCE OF EXPRESS CONTRACTUAL PROVISION

PERMITING VARIATION OF WORK UNDER THE CONTRACT

FIG. 6-8 : VALIDITY OF VARIATION ORDERS – PRINCIPAL FACTORS DETERMINING

ISSUE OF VARIATION ORDER BY DESIGNATED PERSON

COMPLIANCE WITH THE APPLICABLE COMMON LAW

RULES IN RELATION TO VARIATIONS WORKS

© HSKS

FIG. 6-9 : LIMITATIONS TO VARIATIONS

LEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITIONLEGAL POSITION

LIMITATIONS TO VARIATIONS

CARDINAL CHANGESCARDINAL CHANGESCARDINAL CHANGESCARDINAL CHANGESCARDINAL CHANGESCARDINAL CHANGESCARDINAL CHANGESCARDINAL CHANGES

1. Power to vary work confined to genuine omissions

2. If effect of omission is to give omitted work to 3rd Parties: Invalid Omission

1. Changes which render the works substantially different from that contracted for by the parties

2. Constitutes a fundamental change in the scope of the Contract

EXERCISE OF POWER EXERCISE OF POWER EXERCISE OF POWER EXERCISE OF POWER BY CONTRACTBY CONTRACTBY CONTRACTBY CONTRACTADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR

EXERCISE OF POWER EXERCISE OF POWER EXERCISE OF POWER EXERCISE OF POWER BY CONTRACTBY CONTRACTBY CONTRACTBY CONTRACTADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR

SCOPE OF WORKSCOPE OF WORKSCOPE OF WORKSCOPE OF WORKSCOPE OF WORKSCOPE OF WORKSCOPE OF WORKSCOPE OF WORK

1. Power to vary confined to scope of works contemplated by parties at time of contracting.

2. If effect of variation is to substantially change scope of work (‘Cardinal Change’): Invalid Variation

DEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITIONDEFINITION TYPESTYPESTYPESTYPESTYPESTYPESTYPESTYPES

1. A Single change

2. A large number of otherwise small permissible changes.

NATURENATURENATURENATURENATURENATURENATURENATURE TESTSTESTSTESTSTESTSTESTSTESTSTESTSTESTS EFFECTSEFFECTSEFFECTSEFFECTSEFFECTSEFFECTSEFFECTSEFFECTS

1. Was it in the reasonable contemplation of the parties when contracting?

2. Although not included, can it be considered an indispensable part of the Contract?

3. Functionally is it similar to the intended work or some other work required by the Contract?

1. General Rule: Invalid

2. Contractor cannot be compelled to carry it out

3. If compelled, breach of contract

4. If Contractor carries out work, Contract rates not applicable

FORMFORMFORMFORMFORMFORMFORMFORM

1. Physical work changes

2. Financial Changes

© HSKS

FIG. 6-10 : PAYMENT FOR VARIED WORK – GENERAL PRINCIPLES/METHODS

VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT VARIED WORK WITHIN CONTRACT

PAYMENT FOR VARIED WORK:

GENERAL PRINCIPLES/METHODS

FORMULA VALID FORMULA VALID FORMULA VALID FORMULA VALID AND APPLICABLEAND APPLICABLEAND APPLICABLEAND APPLICABLE

FORMULA VALID FORMULA VALID FORMULA VALID FORMULA VALID AND APPLICABLEAND APPLICABLEAND APPLICABLEAND APPLICABLE

FORMULA INVALID AND/OR FORMULA INVALID AND/OR FORMULA INVALID AND/OR FORMULA INVALID AND/OR INAPPLICABLEINAPPLICABLEINAPPLICABLEINAPPLICABLE

FORMULA INVALID AND/OR FORMULA INVALID AND/OR FORMULA INVALID AND/OR FORMULA INVALID AND/OR INAPPLICABLEINAPPLICABLEINAPPLICABLEINAPPLICABLE

VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT VARIED WORK OUTSIDE CONTRACT

ABSENCE OF EXPRESS ABSENCE OF EXPRESS ABSENCE OF EXPRESS ABSENCE OF EXPRESS FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT

ABSENCE OF EXPRESS ABSENCE OF EXPRESS ABSENCE OF EXPRESS ABSENCE OF EXPRESS FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT

EXISTENCE OF EXPRESS EXISTENCE OF EXPRESS EXISTENCE OF EXPRESS EXISTENCE OF EXPRESS FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT

EXISTENCE OF EXPRESS EXISTENCE OF EXPRESS EXISTENCE OF EXPRESS EXISTENCE OF EXPRESS FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT FORMULA IN CONTRACT

•••• Use the formula for valuation and payment

•••• No right of election

•••• Mutually agree upon a formula/rate; or

•••• Be paid a reasonable sum i.e. on ‘quantum meruit’ basis, etc.

NOT A NOT A NOT A NOT A ‘‘‘‘CARDINALCARDINALCARDINALCARDINAL’’’’ CHANGE i.e. CHANGE i.e. CHANGE i.e. CHANGE i.e. DOES NOT FUNDAMENTALLY DOES NOT FUNDAMENTALLY DOES NOT FUNDAMENTALLY DOES NOT FUNDAMENTALLY

ALTER CONTRACT ALTER CONTRACT ALTER CONTRACT ALTER CONTRACT

NOT A NOT A NOT A NOT A ‘‘‘‘CARDINALCARDINALCARDINALCARDINAL’’’’ CHANGE i.e. CHANGE i.e. CHANGE i.e. CHANGE i.e. DOES NOT FUNDAMENTALLY DOES NOT FUNDAMENTALLY DOES NOT FUNDAMENTALLY DOES NOT FUNDAMENTALLY

ALTER CONTRACT ALTER CONTRACT ALTER CONTRACT ALTER CONTRACT

A A A A ‘‘‘‘CARDINALCARDINALCARDINALCARDINAL’’’’ CHANGE CHANGE CHANGE CHANGE i.e. FUNDAMENTALLY i.e. FUNDAMENTALLY i.e. FUNDAMENTALLY i.e. FUNDAMENTALLY ALTERS CONTRACT ALTERS CONTRACT ALTERS CONTRACT ALTERS CONTRACT

A A A A ‘‘‘‘CARDINALCARDINALCARDINALCARDINAL’’’’ CHANGE CHANGE CHANGE CHANGE i.e. FUNDAMENTALLY i.e. FUNDAMENTALLY i.e. FUNDAMENTALLY i.e. FUNDAMENTALLY ALTERS CONTRACT ALTERS CONTRACT ALTERS CONTRACT ALTERS CONTRACT

•••• Any contractual formula rendered invalid /inapplicable

•••• Whole works to be paid on ‘measure and value’ basis and on ‘altered’ or ‘adjusted’ rates

•••• Portion of works within scope of contract to be paid according to the contract formula (if applicable)

•••• Remaining works falling outside scope of contract to be paid at a reasonable rate

•••• Mutually agree upon a formula/rate; or

•••• Be paid a reasonable sum i.e. on a ‘quantum meruit’ basis, etc.

© HSKS

PRINCIPAL CONTRACTUAL CONSEQUENCES

OF VARIATION OF WORK UNDER CONTRACT

COST OF VARIED WORK e.g.

•••• Additions

•••• Omissions

DELAY AND DISRUPTION TO CONTRACT

•••• Extension of time to Contract Period, etc.

COST OF DELAY AND DISRUPTION

•••• Direct loss and/or expense

•••• Extended Preliminaries

FINANCIAL EFFECTS TIME EFFECTS

FIG. 6-11 : PRINCIPAL CONTRACTUAL CONSEQUENCES OF VARIATION OF WORK

UNDER THE CONTRACT

© HSKS

WHERE THERE ARE WHERE THERE ARE WHERE THERE ARE WHERE THERE ARE RATES/ PRICES IN THE RATES/ PRICES IN THE RATES/ PRICES IN THE RATES/ PRICES IN THE

CONTRACTCONTRACTCONTRACTCONTRACT

WHERE THERE ARE WHERE THERE ARE WHERE THERE ARE WHERE THERE ARE RATES/ PRICES IN THE RATES/ PRICES IN THE RATES/ PRICES IN THE RATES/ PRICES IN THE

CONTRACTCONTRACTCONTRACTCONTRACT

VALUATION OF VARIATIONS:

COMMON COMPUTATIONAL METHODS

MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS METHODSMETHODSMETHODSMETHODS

MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS METHODSMETHODSMETHODSMETHODS

WHERE WORK CANNOT WHERE WORK CANNOT WHERE WORK CANNOT WHERE WORK CANNOT BE MEASURED BE MEASURED BE MEASURED BE MEASURED

WHERE WORK CANNOT WHERE WORK CANNOT WHERE WORK CANNOT WHERE WORK CANNOT BE MEASURED BE MEASURED BE MEASURED BE MEASURED

WHERE NO RATES/WHERE NO RATES/WHERE NO RATES/WHERE NO RATES/PRICES IN CONTRACT PRICES IN CONTRACT PRICES IN CONTRACT PRICES IN CONTRACT WHERE NO RATES/WHERE NO RATES/WHERE NO RATES/WHERE NO RATES/

PRICES IN CONTRACT PRICES IN CONTRACT PRICES IN CONTRACT PRICES IN CONTRACT

•••• Use of ‘Quotation’ Method

•••• Use of ‘Negotiated’/’Agreed’Rates

•••• Payment on ‘quantum meruit’basis or a reasonable sum

•••• Use of B.Q. rates

•••• Use of Schedule of Unit Rates

•••• Use of Adjusted Contract Rates

•••• Use of Contract Prices in:

a) Contract Bills; orb) Summary of Prices; orc) Contract Sum Analysis

•••• Use of ‘Fair Valuation’ principles

• Use of ‘Negotiated’/’Agreed’Rates

• Use of ‘Quotation’ Method

• Payment of a reasonable sum

•••• Use of Daywork Rates in Contract

•••• On a cost-reimbursible basis

FIG. 6-12 : VALUATION OF VARIATIONS – COMMON COMPUTATIONAL METHODS

Has the valuation stage been satisfactorily

completed?

Is there a contract provision prescribing

the same?

Yes

Yes

No

START

Contract administrator to prepare certificate of variation of works

Are its requirements clear and

complete?

Have the requirements been agreed to by

the parties?

Yes

B C

No

No

Establish if the conditions precedent have been satisfied

Prima facie, premature to prepare and issue certificate concerned

No

Yes

Has measurement stage been satisfactorily

completed?

D

No

Yes

A

FIG. 6-13: FLOWCHART ON THE GENERAL PROCEDURE FOR THE CERTIFICATION OF

VALUATION (PART I)

© HSKS


VALUATION (PART II)

F

Has it been signed by the authorized

person?No

Yes

E G

Is the V.O./instruction

attached?

Have the requirements been complied

with?

Yes

Yes

Have the particulars been completely and

properly filled in?

Are the measurement and valuation

details endorsed?

No

Yes

Yes

No

No

B C D

Contract administrator to address omissions /deficiencies forthwith

Omissions/deficiencies may render certificate

invalid

Has the certificate been checked for sufficiency and

accuracy?

A

Yes

No

No

© HSKS

I

Does it comply with any prescribed

requirements?No

Yes

JH

Has it been prepared within a

reasonable/ prescribed period ofcompletion of measurement

and valuation?

Yes

Is the certificate sufficient and

accurate?

No

F G

Prima facie,certificate is invalid

Yes

Has it been signed by the authorized

person?

E

Contract administrator to issue certificate to the contractor

Contractor to check and undertake necessary action

Yes

No

No


VALUATION (PART III)

© HSKS

Contract administrator to review contractor’s notice

and make decision

M

Does the contractor agree with the

content?

No

Does he notify the contract administrator officially

of his dissent?

Yes

Yes

No

IH

K

No

No

L

Has the contractor met the time

requirements?

Yes

Are the full particulars/details

given?

Yes

Is there aperiod stipulated for the giving of

the notice?

Yes

Contractor obligedto give notice

within reasonable period only

No

J

Contractor deemed to have accepted the measurement

and valuation

Contractor to formally signify

acceptance

FIG. 6-16: FLOWCHART ON THE GENERAL PROCEDURE FOR THE CERTIFICATION OF VALUATION (PART IV)

© HSKS

Has the contractor been asked to furnish further

details?

Has he complied with the request?

Yes

Yes

Yes

Yes

Yes

LK

No

Does the contractor wish to proceed with

dispute resolution?

No

Reject the contractor’s application/notice

Communicate decision to the contractor

Is the notice sufficient and

accurate?

No

No

Is the contractor’s stand reasonable?

Is there any reason not to reject the contractor’s

application?

No

No

Yes

M

Contract administrator to

undertake necessary amendments/

revisions

N

N

STOP

Contractor to give necessary notice. Contract

administrator to use valuation set out in the interim period

FIG. 6-17: FLOWCHART ON THE GENERAL PROCEDURE FOR CERTIFICATION OF VALUATION (PART V)

© HSKS

© HSKS

EXPRESS EXPRESS EXPRESS EXPRESS STIPULATIONSSTIPULATIONSSTIPULATIONSSTIPULATIONSEXPRESS EXPRESS EXPRESS EXPRESS

STIPULATIONSSTIPULATIONSSTIPULATIONSSTIPULATIONS

VARIATIONS: PRINCIPAL REQUIREMENTS FOR ‘PACKAGE DEAL’TYPE OF CONTRACTS

VARIATIONS VARIATIONS VARIATIONS VARIATIONS IN WRITINGIN WRITINGIN WRITINGIN WRITINGVARIATIONS VARIATIONS VARIATIONS VARIATIONS IN WRITINGIN WRITINGIN WRITINGIN WRITING

•••• In most Standard Forms

•••• Stipulate – Extent, Procedure, etc.

•••• Enshrined in all Standard Forms

EXPRESS EXPRESS EXPRESS EXPRESS PROVISIONSPROVISIONSPROVISIONSPROVISIONSEXPRESS EXPRESS EXPRESS EXPRESS

PROVISIONSPROVISIONSPROVISIONSPROVISIONS

•••• Prior to ordering V.O.

•••• Get Contractor’s view on effect of V.O. on programme

CONTRACT CONTRACT CONTRACT CONTRACT PROVISIONSPROVISIONSPROVISIONSPROVISIONSCONTRACT CONTRACT CONTRACT CONTRACT PROVISIONSPROVISIONSPROVISIONSPROVISIONS

NECESSITY FOR NECESSITY FOR NECESSITY FOR NECESSITY FOR ‘‘‘‘WRITTENWRITTENWRITTENWRITTEN’’’’

INSTRUCTIONSINSTRUCTIONSINSTRUCTIONSINSTRUCTIONS

NECESSITY FOR NECESSITY FOR NECESSITY FOR NECESSITY FOR ‘‘‘‘WRITTENWRITTENWRITTENWRITTEN’’’’

INSTRUCTIONSINSTRUCTIONSINSTRUCTIONSINSTRUCTIONSORAL INSTRUCTIONS ORAL INSTRUCTIONS ORAL INSTRUCTIONS ORAL INSTRUCTIONS ORAL INSTRUCTIONS ORAL INSTRUCTIONS ORAL INSTRUCTIONS ORAL INSTRUCTIONS

•••• Most Standard Forms have express clauses

•••• Issued by E.R./ P.D.

RECOVERY WITHOUT RECOVERY WITHOUT RECOVERY WITHOUT RECOVERY WITHOUT INSTRUCTIONSINSTRUCTIONSINSTRUCTIONSINSTRUCTIONS

RECOVERY WITHOUT RECOVERY WITHOUT RECOVERY WITHOUT RECOVERY WITHOUT INSTRUCTIONSINSTRUCTIONSINSTRUCTIONSINSTRUCTIONS

•••• Generally no

•••• Situations where permitted:

1. If contract expressly allows2. Under Waiver/Estoppel3. Under concept of

‘Constructive Change’

•••• Only if contract expressly allows

•••• Need for written confirmation

•••• Duty of confirmation either on:

1.Contractor or2.Employer

•••• Requirement for ‘Writing’

•••• Includes:

1. Letters2. Minutes of Meetings3. Drawings

EFFECT OF EFFECT OF EFFECT OF EFFECT OF PROCEDUREPROCEDUREPROCEDUREPROCEDUREEFFECT OF EFFECT OF EFFECT OF EFFECT OF PROCEDUREPROCEDUREPROCEDUREPROCEDURE

•••• Permissible if only expressly allowed by contract

•••• Some Standard Forms do allow e.g. ICE, FIDIC, etc.

•••• Others are silent e.g. JKR, etc.

•••• Formal V.O. Instruction from E.R./P.D. condition precedent to recovery of payment

•••• Failure of Contractor to observe procedure/ formalities – may compromise recovery

•••• Be pro-active

•••• Not to unreasonably withhold consent, etc.

VARIATIONS VARIATIONS VARIATIONS VARIATIONS IN DLP/DCPIN DLP/DCPIN DLP/DCPIN DLP/DCPVARIATIONS VARIATIONS VARIATIONS VARIATIONS IN DLP/DCPIN DLP/DCPIN DLP/DCPIN DLP/DCP

CONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S RIGHT TO VARYRIGHT TO VARYRIGHT TO VARYRIGHT TO VARYCONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S RIGHT TO VARYRIGHT TO VARYRIGHT TO VARYRIGHT TO VARY

EMPLOYEREMPLOYEREMPLOYEREMPLOYER’’’’S S S S RIGHT TO VARYRIGHT TO VARYRIGHT TO VARYRIGHT TO VARYEMPLOYEREMPLOYEREMPLOYEREMPLOYER’’’’S S S S RIGHT TO VARYRIGHT TO VARYRIGHT TO VARYRIGHT TO VARY

CONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S RESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITYCONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S RESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITY

NEED FOR NEED FOR NEED FOR NEED FOR CONSULTATIONCONSULTATIONCONSULTATIONCONSULTATIONNEED FOR NEED FOR NEED FOR NEED FOR

CONSULTATIONCONSULTATIONCONSULTATIONCONSULTATION

•••• Permitted expressly in most Standard Forms

• Due to:

1. Value engineering

2. Buidability3. Safety4. Legal/Physical

impossibility

FIG. 6-18: VARIATIONS – PRINCIPAL REQUIREMENTS FOR ‘PACKAGE DEAL’ TYPE OF CONTRACT

© HSKS

DELAY AND

EXTENSION OF TIME

7.0 DELAY AND EXTENSION OF TIME

•••• OPTIONS AVAILABLE TO EMPLOYER OPTIONS AVAILABLE TO EMPLOYER OPTIONS AVAILABLE TO EMPLOYER OPTIONS AVAILABLE TO EMPLOYER

•••• EXTENSION OF TIME ISSUES EXTENSION OF TIME ISSUES EXTENSION OF TIME ISSUES EXTENSION OF TIME ISSUES

•••• ACCELERATION OF WORKSACCELERATION OF WORKSACCELERATION OF WORKSACCELERATION OF WORKS

•••• DRAFTING OF DELAY AND DISRUPTION CLAIMSDRAFTING OF DELAY AND DISRUPTION CLAIMSDRAFTING OF DELAY AND DISRUPTION CLAIMSDRAFTING OF DELAY AND DISRUPTION CLAIMS

•••• MISCELLANEOUS ISSUES MISCELLANEOUS ISSUES MISCELLANEOUS ISSUES MISCELLANEOUS ISSUES


* PEAK CONSTRUCTION (LIVERPOOL) LTD. V MCKINNEY FOUNDATION LTD. [1970] 1 BLR 114

* MILLER V L.C.C. [1934] 50 T.L.R. 479, 482

* MERTON LONDON BOROUGH V STANLEY HUGH LEACH [1985] 32 BLR 55

* WESTMINSTER CITY COUNCIL V JARVIS & SONS LTD. [1970] 7 BLR 64

• SYARIKAT TAN KIM BENG DAN RAKAN-RAKAN V PULAI JAYA SDN. BHD. [1992] 1 MLJ 42

© HSKS

© HSKS

FIG. 7-1 : CONSEQUENCES OF DELAY – AN OVERVIEW

BY EMPLOYER BY EMPLOYER BY EMPLOYER BY EMPLOYER (ACTS OF PREVENTION)(ACTS OF PREVENTION)(ACTS OF PREVENTION)(ACTS OF PREVENTION)

CONSEQUENCES OF DELAY: AN OVERVIEW

BY CONTRACTORBY CONTRACTORBY CONTRACTORBY CONTRACTOR

GRANT OF GRANT OF GRANT OF GRANT OF EXTENSION OF TIME EXTENSION OF TIME EXTENSION OF TIME EXTENSION OF TIME

INSTRUCT CONTRACTOR INSTRUCT CONTRACTOR INSTRUCT CONTRACTOR INSTRUCT CONTRACTOR TO ACCELERATE WORKSTO ACCELERATE WORKSTO ACCELERATE WORKSTO ACCELERATE WORKS

•••• Only if contract expressly permits

•••• To meet original contract deadline

•••• Contractor to be compensated for reasonable expenses incurred

DUE TO DUE TO DUE TO DUE TO NEUTRAL EVENTSNEUTRAL EVENTSNEUTRAL EVENTSNEUTRAL EVENTS

DUE TO CONTRACTORDUE TO CONTRACTORDUE TO CONTRACTORDUE TO CONTRACTOR’’’’S S S S OWN ACTS AND/OR OR OWN ACTS AND/OR OR OWN ACTS AND/OR OR OWN ACTS AND/OR OR

OMISSIONSOMISSIONSOMISSIONSOMISSIONS

•••• Contractor entitled to E.O.T. but not to extended preliminaries or other claims

•••• If asked to accelerate works, entitled to reasonable expenses incurred therefrom

DUE TO CONTRACTORDUE TO CONTRACTORDUE TO CONTRACTORDUE TO CONTRACTOR’’’’S S S S SUBSUBSUBSUB----CONTRACTORS/ CONTRACTORS/ CONTRACTORS/ CONTRACTORS/

SUPPLIERSSUPPLIERSSUPPLIERSSUPPLIERS

•••• Contractor vicariously liable to Employer

•••• May seek indemnity from the culpable party e.g. Sub-contractor, Supplier, etc.

•••• Only if contract expressly permits

•••• Contractor may be entitled to:

1. Extended Preliminaries

2. Direct Loss and/or Expense

•••• Contractor culpable

•••• May be liable for:

1. Liquidated Damages, or

2. Unliquidated Damages caused to Employer

© HSKS

EXTENSION OF TIME: COMMON

‘RELEVANT EVENTS’

‘FORCE MAJEURE’

CONTRACTOR’S INABILITY TO SECURE LABOUR, GOODS, MATERIALS, ETC.

LOSS OR DAMAGE TO THE WORKS OCCASIONED BY SPECIFIED PERILS

EXCEPTIONALLY INCLEMENT WEATHER

CIVIL COMMOTION, STRIKES, LOCK-OUT, ETC.

VARIATIONS AND EXTRA WORKS

EXECUTION OF WORK NOT FORMING PART OF THE CONTRACT

LATE SUPPLY OF MATERIALS BY THE EMPLOYER

OTHER SPECIAL CIRCUMSTANCES

DELAY ON PART OF NOMINATED SUB-CONTRACTORS/SUPPLIERS

DELAY IN THE SUPPLY OF INFORMATION/INSTRUCTIONS

FIG. 7-2 : EXTENSION OF TIME – COMMON ‘RELEVANT EVENTS’

COMPLIANCE WITH CONTRACT ADMINISTRATOR’S INSTRUCTIONS

FAILURE OF EMPLOYER TO GIVE POSSESSION/ACCESS IN TIME

CARRYING OUT OF WORK BY STATUTORY UNDERTAKERS

EXERCISE BY GOVERNMENT OF ANY POWER WHICH DIRECTLY AFFECTS THE WORKS

© HSKS

‘ACTS OF PREVENTION’:

TYPICAL EXAMPLES

FIG. 7-3 : ‘ACTS OF PREVENTION’ – TYPICAL EXAMPLES

DEFERMENT/POSTPONEMENTIN GIVING SITE POSSESSION

EXECUTION OF WORK NOT FORMING PART OF THE

CONTRACT

OTHER ACTS OF PREVENTION EXPRESSLY PERMITTED BY

THE CONDITIONS OF CONTRACT

LATE SUPPLY OF INFORMATION, DRAWINGS,

INSTRUCTIONS, ETC.

LATE SUPPLY OF MATERIALS BY THE EMPLOYER

COMPLIANCE WITH CONTRACT

ADMINISTRATOR’S INSTRUCTIONS, DIRECTIONS,

ETC.

© HSKS

‘NEUTRAL EVENTS’:

TYPICAL EXAMPLES

FIG. 7-4 : ‘NEUTRAL EVENTS’ – TYPICAL EXAMPLES

‘FORCE MAJEURE’

LOSS/DAMAGE TO THE WORKS OCCASIONED BY SPECIFIED

PERILS OR CONTINGENCIES

DELAYS BY NOMINATED SUB-CONTRACTORS/SUPPLIERS FOR THE SAID ‘NEUTRAL

EVENTS’EXCEPTIONALLY INCLEMENT/

ADVERSE WEATHER

CONTRACTOR’S IN ABILITY TO SECURE LABOUR, GOOD, MATERIALS AND/OR OTHER

RESOURCES

CIVIL COMMOTION, STRIKES, LOCK OUTS INDUSTRIAL

ACTION, EMBARGOES, ETC.

© HSKS

CAUSE OF THE DELAY

APPLICATION FOR EXTENSION OF TIME: TYPICAL CONTENTS

STEPS TAKEN/PROPOSED TO MINIMIZE/AVOID DELAY

SCHEDULING DOCUMENTATION

DETAILS OF EFFECT OF DELAY ON WORK

PROGRAMME

ALL OTHER SUPPORTING RECORDS, DETAILS, ETC.

APPROPRIATE CONTRACT

REFERENCES TO SUCH EVENT OF DELAY

ESTIMATE OF THE EXTENSION OF TIME

REQUIRED

ESTIMATED LENGTH OF THE DELAY

FIG. 7-5 : APPLICATION FOR EXTENSION OF TIME – TYPICAL CONTENTS

© HSKS

EXTENSION OF TIME

APPLICATION: TYPICAL

SOURCES OF INFORMATION

OFFICIAL WORK RECORDS

MEMORANDA

LETTERS, INSTRUCTIONS, ETC.

OFFICIAL PROGRESS REPORTS

SITE DIARIES

WORK PROGRAMMES, ETC.

PROCUREMENT RECORDS, INVOICES, ETC.

DELIVERY ORDERS

OTHER MISCELLANEOUS RECORDS, DOCUMENTS, ETC.

SHIPPING/AIRFREIGHT RECORDS, ETC.

OFFICIAL MINUTES OF MEETING

FIG. 7-6 : EXTENSION OF TIME APPLICATION – TYPICAL SOURCES OF INFORMATION

RECORDS/REPORTS FROM AUTHORITIES/INDEPENDENT BODIES, ETC.

FACSIMILE TRANSMISSIONS, ETC.

DRAWINGS, ETC.

Yes

B

Initiate notification of the delay procedure

NoIs progress delayed or is likely to be

delayed?

Does the delaying event constitute

one of the ‘relevant events’ /grounds under the provisions of the

contract?

Is the notice given in writing?

Yes

Proceed with theapplication of the extension

of time process

Is the notice given within the period expressly

stipulated?

Yes

A

No

Yes

START

Is the notice a condition

precedent?

Has an extension been

granted by the contract administrator?

No

No

No Yes

Yes

No

FIG. 7-7: FLOWCHART ON THE GENERAL PROCEDURE FOR CLAIMING EXTENSION OF TIME (PART I)

© HSKS

Yes

A

Establish whether contractor has done all that is reasonably

required of him

Yes

No

Is the application made within

the period expressly stipulated?

Has the contractor used his ‘best endeavours’ to

minimize the delay?

Is the application complete/sufficient and

accurate?

Return to contractor for resubmission

or reject application as appropriate

Yes

Contract Administrator to check application made

STOP

Contract Administrator to proceed with further assessment

for the possible grant of extension of time

Prima facie no extension of time can be granted

B

Is the application given in

writing?

Is the application a condition

precedent?

Has an extension been

granted by the contract administrator?

No

No Yes

Yes

No

Is the requirement as to

sufficiency, etc. a condition precedent?

Has the contract administrator

requested for information, details, etc.?

No Yes

Yes

No

No

No

Yes

FIG. 7-8: FLOWCHART ON THE GENERAL PROCEDURE FOR CLAIMING EXTENSION OF TIME (PART II)

© HSKS

© HSKS

FIG. 7-9 : PROCEDURES FOR CLAIMING EXTENSION OF TIME – AN OVERVIEW (PART I)

EXPRESS CONTRACT EXPRESS CONTRACT EXPRESS CONTRACT EXPRESS CONTRACT PROVISIONSPROVISIONSPROVISIONSPROVISIONS

EXPRESS CONTRACT EXPRESS CONTRACT EXPRESS CONTRACT EXPRESS CONTRACT PROVISIONSPROVISIONSPROVISIONSPROVISIONS

PROCEDURES FOR CLAIMING EXTENSION OF TIME: AN OVERVIEW (PART I)

VARIATIONSVARIATIONSVARIATIONSVARIATIONSVARIATIONSVARIATIONSVARIATIONSVARIATIONS

NATURE OF NATURE OF NATURE OF NATURE OF APPLICATION APPLICATION APPLICATION APPLICATION

NATURE OF NATURE OF NATURE OF NATURE OF APPLICATION APPLICATION APPLICATION APPLICATION

TIMING OF TIMING OF TIMING OF TIMING OF NOTIFICATIONNOTIFICATIONNOTIFICATIONNOTIFICATION

TIMING OF TIMING OF TIMING OF TIMING OF NOTIFICATIONNOTIFICATIONNOTIFICATIONNOTIFICATION

CONTENTS OF CONTENTS OF CONTENTS OF CONTENTS OF THE NOTICETHE NOTICETHE NOTICETHE NOTICE

CONTENTS OF CONTENTS OF CONTENTS OF CONTENTS OF THE NOTICETHE NOTICETHE NOTICETHE NOTICE

CATEGORIZATIONCATEGORIZATIONCATEGORIZATIONCATEGORIZATIONCATEGORIZATIONCATEGORIZATIONCATEGORIZATIONCATEGORIZATION

•••• Included in most standard forms of contract

FORM OF FORM OF FORM OF FORM OF THE NOTICETHE NOTICETHE NOTICETHE NOTICE

FORM OF FORM OF FORM OF FORM OF THE NOTICETHE NOTICETHE NOTICETHE NOTICE

•••• 2 broad steps:

1. Notification of the delay; and

2. Making the application

REQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENT

•••• Expressly stipulated in conditions of contract of contract; or

•••• Implied by law

•••• Either a:

1. Single exercise, or

2. Two separate processes

•••• Depends upon express/ implied requirements

•••• Various formulae used e.g.:

1. Use of specific phrases

2. Stipulation of express time periods

•••• Legal effect of provisions on time:

1. Whether notification/application is a condition precedent to entitlement

2. If affirmative, the effect of the breach of the condition precedent

3. Application to acts of prevention/neutral events

•••• Review of applicable case-law

•••• Usually stipulated in the conditions of contract.

•••• Important to comply with the express requirements

•••• As a minimum must inform the contract administrator of the occurrence of the delay which is likely to affect the progress or has delayed progress

•••• Otherwise must include:

1. Occurrence of the delay

2. Cause of the delay

3. Relevant events causing the delay; and

4. Contractor’s intention to make a claim

TYPES OF WRITTEN NOTICES TYPES OF WRITTEN NOTICES TYPES OF WRITTEN NOTICES TYPES OF WRITTEN NOTICES /NOTICES IN WRITING/NOTICES IN WRITING/NOTICES IN WRITING/NOTICES IN WRITING

TYPES OF WRITTEN NOTICES TYPES OF WRITTEN NOTICES TYPES OF WRITTEN NOTICES TYPES OF WRITTEN NOTICES /NOTICES IN WRITING/NOTICES IN WRITING/NOTICES IN WRITING/NOTICES IN WRITINGEXPRESS REQUIREMENTSEXPRESS REQUIREMENTSEXPRESS REQUIREMENTSEXPRESS REQUIREMENTSEXPRESS REQUIREMENTSEXPRESS REQUIREMENTSEXPRESS REQUIREMENTSEXPRESS REQUIREMENTS GENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULE EVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUEEVIDENTIAL VALUE

•••• Included in most standard forms

•••• Usually stipulated as:

1. ‘Written notice’ or

2. ‘Notice in writing’

•••• Correspondence

•••• Facsimile transmissions

•••• Entries in official records

•••• Entries in site diaries

•••• Official Progress reports

•••• Where the form is expressly stipulated, it must be complied with

•••• Where not expressly stipulated, may be implied

•••• A written notice/notice in writing is of immense evidential value

•••• Therefore, even if not expressly required, must try to give written notice

© HSKS

FIG. 7-10 : PROCEDURES FOR CLAIMING EXTENSION OF TIME – AN OVERVIEW (PART II)

TIMING OF TIMING OF TIMING OF TIMING OF THE APPLICATIONTHE APPLICATIONTHE APPLICATIONTHE APPLICATION

TIMING OF TIMING OF TIMING OF TIMING OF THE APPLICATIONTHE APPLICATIONTHE APPLICATIONTHE APPLICATION

PROCEDURES FOR CLAIMING EXTENSION OF TIME: AN OVERVIEW (PART II)

FORM OF FORM OF FORM OF FORM OF THE APPLICATION THE APPLICATION THE APPLICATION THE APPLICATION

FORM OF FORM OF FORM OF FORM OF THE APPLICATION THE APPLICATION THE APPLICATION THE APPLICATION

CONTENTS OF CONTENTS OF CONTENTS OF CONTENTS OF THE APPLICATION THE APPLICATION THE APPLICATION THE APPLICATION

CONTENTS OF CONTENTS OF CONTENTS OF CONTENTS OF THE APPLICATION THE APPLICATION THE APPLICATION THE APPLICATION

GENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULEGENERAL RULE

•••• Similar to ‘Form of the Notice’

•••• Preferably to be in writing

•••• Compliance to any express requirements

•••• Where specific time periods have been specified these should be adhered to

•••• If not practicable, requirement for express consent for deferment

•••• Otherwise within a reasonable period of notification/delay

EXPRESS EXPRESS EXPRESS EXPRESS REQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENT

EXPRESS EXPRESS EXPRESS EXPRESS REQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENT

•••• Included in most standard forms

•••• Formulae include:

1. Specific time periods

2. Within a reasonable period

•••• Dictated by express stipulations in contract

•••• Otherwise by necessary implication.

•••• Typical list includes:

1. Cause of delay

2. Appropriate contract reference

3. Details of effect of delay on programme/progress

4. Estimated length of delay

5. Steps taken to mitigate/prevent delay

6. Scheduling documentation

7. Miscellaneous details, records, documents, etc.

© HSKS

FIG. 7-11 : PROCEDURES FOR CLAIMING EXTENSION OF TIME – AN OVERVIEW (PART III)

PROCEDURES FOR CLAIMING EXTENSION OF TIME: AN OVERVIEW (PART III)

NATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDNATURE OF INFORMATION REQUIREDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIEDADEQUACY OF INFORMATION SUPPLIED

•••• Official work records

•••• Official progress reports

•••• Site diaries

•••• Correspondence

•••• Instructions

•••• Drawings, etc.

• Official minutes of meetings, discussions, etc.

• Work programmes

•••• 3rd party reports/records

•••• Procurement records, etc.

•••• Delivery orders

•••• Shipping/airfreight records

•••• Miscellaneous records/documents

CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE PROVISION IS A CONDITION PROVISION IS A CONDITION PROVISION IS A CONDITION PROVISION IS A CONDITION

PRECEDENTPRECEDENTPRECEDENTPRECEDENT

CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE PROVISION IS A CONDITION PROVISION IS A CONDITION PROVISION IS A CONDITION PROVISION IS A CONDITION

PRECEDENTPRECEDENTPRECEDENTPRECEDENT

BASIS OF BASIS OF BASIS OF BASIS OF REQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENT

BASIS OF BASIS OF BASIS OF BASIS OF REQUIREMENTREQUIREMENTREQUIREMENTREQUIREMENT

CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE PROVISION IS NOT A PROVISION IS NOT A PROVISION IS NOT A PROVISION IS NOT A

CONDITION PRECEDENTCONDITION PRECEDENTCONDITION PRECEDENTCONDITION PRECEDENT

CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE CONSEQUENCES WHERE PROVISION IS NOT A PROVISION IS NOT A PROVISION IS NOT A PROVISION IS NOT A

CONDITION PRECEDENTCONDITION PRECEDENTCONDITION PRECEDENTCONDITION PRECEDENT

FAILURE TO RESPOND FAILURE TO RESPOND FAILURE TO RESPOND FAILURE TO RESPOND AFTER EXTENSIONAFTER EXTENSIONAFTER EXTENSIONAFTER EXTENSION

FAILURE TO RESPOND FAILURE TO RESPOND FAILURE TO RESPOND FAILURE TO RESPOND AFTER EXTENSIONAFTER EXTENSIONAFTER EXTENSIONAFTER EXTENSION

•••• Contractor must furnish enough information to enable contract administrator to undertake assessment satisfactorily

•••• Information to be:

1. Sufficient/ complete2. Accurate3. Relevant

•••• Breach of condition may be fatal to claim depending on its nature and seriousness

•••• Contract administrator can:

1. Request for further information

2. Set a new deadline for contractor to respond

•••• Should contractor fail to respond by:

1. Deadline set, or

2. Within reasonable period of request

Contract administrator may not proceed further with assessment

PRINCIPAL SOURCESPRINCIPAL SOURCESPRINCIPAL SOURCESPRINCIPAL SOURCESPRINCIPAL SOURCESPRINCIPAL SOURCESPRINCIPAL SOURCESPRINCIPAL SOURCESDETERMINING FACTORSDETERMINING FACTORSDETERMINING FACTORSDETERMINING FACTORSDETERMINING FACTORSDETERMINING FACTORSDETERMINING FACTORSDETERMINING FACTORS

•••• Type of relevant event

•••• Nature of relevant event

•••• Particular requirements of applicable express provisions

•••• Evidential value of information

FIG. 7-12: ASSESSMENT OF THE APPLICATION – AN OVERVIEW (PART I)

© HSKS

GENERALGENERALGENERALGENERALGENERALGENERALGENERALGENERAL

ASSESSMENT OF THE APPLICATION: AN OVERVIEW (PART I)

DERELICTION DERELICTION DERELICTION DERELICTION OF DUTY: OF DUTY: OF DUTY: OF DUTY:

CONSEQUENCESCONSEQUENCESCONSEQUENCESCONSEQUENCES

DERELICTION DERELICTION DERELICTION DERELICTION OF DUTY: OF DUTY: OF DUTY: OF DUTY:

CONSEQUENCESCONSEQUENCESCONSEQUENCESCONSEQUENCES

EXPRESS EXPRESS EXPRESS EXPRESS CONTRACT CONTRACT CONTRACT CONTRACT PROVISIONS PROVISIONS PROVISIONS PROVISIONS

EXPRESS EXPRESS EXPRESS EXPRESS CONTRACT CONTRACT CONTRACT CONTRACT PROVISIONS PROVISIONS PROVISIONS PROVISIONS

THE CONTRACT THE CONTRACT THE CONTRACT THE CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR’’’’S DUTY S DUTY S DUTY S DUTY

OF CAREOF CAREOF CAREOF CARE

THE CONTRACT THE CONTRACT THE CONTRACT THE CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR’’’’S DUTY S DUTY S DUTY S DUTY

OF CAREOF CAREOF CAREOF CAREPOST APPLICATION POST APPLICATION POST APPLICATION POST APPLICATION PROCEDURESPROCEDURESPROCEDURESPROCEDURES

POST APPLICATION POST APPLICATION POST APPLICATION POST APPLICATION PROCEDURESPROCEDURESPROCEDURESPROCEDURES

DUTY TO DUTY TO DUTY TO DUTY TO EMPLOYER EMPLOYER EMPLOYER EMPLOYER DUTY TO DUTY TO DUTY TO DUTY TO EMPLOYER EMPLOYER EMPLOYER EMPLOYER

•••• Included in most standard forms of conditions of contract

PRELIMINARY PRELIMINARY PRELIMINARY PRELIMINARY PROCEDURESPROCEDURESPROCEDURESPROCEDURESPRELIMINARY PRELIMINARY PRELIMINARY PRELIMINARY PROCEDURESPROCEDURESPROCEDURESPROCEDURES

•••• Positive duty vis-à-vis ‘acts of prevention’

•••• Satisfaction of:

1. ‘Reasonableness’Test and

2. ‘Fairness’ Test

•••• Help employer:

1. Preserve right to LAD2. Stave off claims from

contractor

TO WHOM TO WHOM TO WHOM TO WHOM OWEDOWEDOWEDOWED

TO WHOM TO WHOM TO WHOM TO WHOM OWEDOWEDOWEDOWED

•••• To Employer

•••• To Contractor

•••• To Nominated Sub-contractors/Suppliers

•••• May compromise employer’s position

•••• Contract administrator liable to actions in:

1. Breach of contract 2. Tort of negligence

•••• Upon occurrence of delaying event, independently undertake own assessment especially for acts of prevention

•••• Must take an active role

•••• Issue an interim extension to contractor if one due on facts

•••• Contractor can later apply for reassessment based on additional information

NATURE OF ROLENATURE OF ROLENATURE OF ROLENATURE OF ROLENATURE OF ROLENATURE OF ROLENATURE OF ROLENATURE OF ROLEWHO UNDERTAKESWHO UNDERTAKESWHO UNDERTAKESWHO UNDERTAKESWHO UNDERTAKESWHO UNDERTAKESWHO UNDERTAKESWHO UNDERTAKES ADDITIONAL DUTYADDITIONAL DUTYADDITIONAL DUTYADDITIONAL DUTYADDITIONAL DUTYADDITIONAL DUTYADDITIONAL DUTYADDITIONAL DUTY

•••• Delegated by the employer to authorized person

•••• Usually it is the contract administrator

•••• As an independent adjudicator

•••• Decision making function

•••• Must act fairly, reasonably and impartially

•••• Per John Baker Construction v London Protman Hotel Ltd.

•••• Must adhere to governing express contractual procedures in addition

PRELIMINARY CHECKS PRELIMINARY CHECKS PRELIMINARY CHECKS PRELIMINARY CHECKS TO ESTABLISH TO ESTABLISH TO ESTABLISH TO ESTABLISH

MATTERS SUCH ASMATTERS SUCH ASMATTERS SUCH ASMATTERS SUCH AS

PRELIMINARY CHECKS PRELIMINARY CHECKS PRELIMINARY CHECKS PRELIMINARY CHECKS TO ESTABLISH TO ESTABLISH TO ESTABLISH TO ESTABLISH

MATTERS SUCH ASMATTERS SUCH ASMATTERS SUCH ASMATTERS SUCH AS

INSUFFICIENT INSUFFICIENT INSUFFICIENT INSUFFICIENT INFORMATION: OPTIONS INFORMATION: OPTIONS INFORMATION: OPTIONS INFORMATION: OPTIONS AVAILABLE TO CONTRACT AVAILABLE TO CONTRACT AVAILABLE TO CONTRACT AVAILABLE TO CONTRACT

ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR

INSUFFICIENT INSUFFICIENT INSUFFICIENT INSUFFICIENT INFORMATION: OPTIONS INFORMATION: OPTIONS INFORMATION: OPTIONS INFORMATION: OPTIONS AVAILABLE TO CONTRACT AVAILABLE TO CONTRACT AVAILABLE TO CONTRACT AVAILABLE TO CONTRACT


•••• Verification of occurrence of delay

•••• Sufficiency, accuracy, relevancy, etc.

•••• Compliance with pre-conditions, procedural requirements, etc.

•••• Assessment of evidential value

•••• Assessment whether delay in principle entitles contractor to extension

•••• Request contractor to submit more details, etc. or

•••• If delaying event of a continuing nature:

1. Proceed with interim assessment

2. Grant an interim extension

FIG. 7-13: ASSESSMENT OF THE APPLICATION – AN OVERVIEW (PART II)

© HSKS

BASIS OF ASSESSMENTBASIS OF ASSESSMENTBASIS OF ASSESSMENTBASIS OF ASSESSMENTBASIS OF ASSESSMENTBASIS OF ASSESSMENTBASIS OF ASSESSMENTBASIS OF ASSESSMENT

ASSESSMENT OF THE APPLICATION: AN OVERVIEW (PART II)

THE ASSESSMENT THE ASSESSMENT THE ASSESSMENT THE ASSESSMENT PROCESS PROCESS PROCESS PROCESS

THE ASSESSMENT THE ASSESSMENT THE ASSESSMENT THE ASSESSMENT PROCESS PROCESS PROCESS PROCESS

TIMING FOR TIMING FOR TIMING FOR TIMING FOR GRANTING EXTENSIONGRANTING EXTENSIONGRANTING EXTENSIONGRANTING EXTENSION

TIMING FOR TIMING FOR TIMING FOR TIMING FOR GRANTING EXTENSIONGRANTING EXTENSIONGRANTING EXTENSIONGRANTING EXTENSION



•••• Multiple extensions

•••• Review of prior decisions/ certificates

•••• Concurrent delay: effects

•••• Extensions during culpable delay

•••• Extension of time and omissions

•••• Acceleration in lieu of extension

•••• Extension of time and claims

FACTORS DICTATINGFACTORS DICTATINGFACTORS DICTATINGFACTORS DICTATINGFACTORS DICTATINGFACTORS DICTATINGFACTORS DICTATINGFACTORS DICTATINGPRINCIPAL ISSUESPRINCIPAL ISSUESPRINCIPAL ISSUESPRINCIPAL ISSUESPRINCIPAL ISSUESPRINCIPAL ISSUESPRINCIPAL ISSUESPRINCIPAL ISSUES TIME PERIODTIME PERIODTIME PERIODTIME PERIODTIME PERIODTIME PERIODTIME PERIODTIME PERIOD

•••• Factors dictating the timing of the grant

•••• Express stipulations as to time period for granting

•••• Prospective/Retrospective granting of extension

•••• The need to preserve the LAD provisions for the benefit of the employer

•••• To allow contractor opportunity to reprogramme his works

•••• Various formulae:

1. Use of specific time period stipulations

2. Within reasonable time

•••• Effect of failure to comply

•••• Situation of continuing delay

•••• Basic principles

•••• Overriding requirements: Satisfaction of:

1. ‘Reasonableness’ Test2. ‘Fairness’ Test3. Procedural requirements

•••• Important exceptions

1. Contractor not to be culpable2. Contractor to mitigate/prevent

delay

•••• Definition of ‘best endeavours’

•••• Factors to be taken into consideration:

1. Previous extensions granted 2. Effect of omissions 3. Effect of concurrent delays

•••• Sources and types of information used

•••• Concluding decision:

1. Rejection of claim; or2. Grant of extension of time

PROSPECTIVE/PROSPECTIVE/PROSPECTIVE/PROSPECTIVE/RETROSPECTIVE GRANTING RETROSPECTIVE GRANTING RETROSPECTIVE GRANTING RETROSPECTIVE GRANTING

OF EXTENSIONOF EXTENSIONOF EXTENSIONOF EXTENSION

PROSPECTIVE/PROSPECTIVE/PROSPECTIVE/PROSPECTIVE/RETROSPECTIVE GRANTING RETROSPECTIVE GRANTING RETROSPECTIVE GRANTING RETROSPECTIVE GRANTING

OF EXTENSIONOF EXTENSIONOF EXTENSIONOF EXTENSION

•••• Where expressly permitted

•••• Where implied

•••• Courts approach:

1. Previous strict interpretation 2. Current liberal approach

•••• Circumstances where retrospective granting permitted

FIG. 7-14: CHALLENGING CERTIFICATE OF EXTENSION OF TIME – COMMON GROUNDS

(PER EGGLESTON)

© HSKS

CHALLENGING CERTIFICATE OF EXTENSION OF TIME:

COMMON GROUNDS

CERTIFICATE NOT GIVEN ON TIME

DECISIONS IMPROPERLY DELEGATED

CONTRACTUAL PROCEDURES NOT

FOLLOWED

CERTIFICATE GIVEN BY UNAUTHORIZED

PERSON

OTHER MATERIAL BREACHES

CERTIFICATE NOT IN CORRECT FORM

CERTIFICATE NOT GIVEN FAIRLY

NO NAMED CERTIFIER

FIG. 7-15: DELAY AND EXTENSION OF TIME FOR NOMINATED SUB-CONTRACTORS –

AN OVERVIEW

© HSKS

GENERAL GENERAL GENERAL GENERAL REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

GENERAL GENERAL GENERAL GENERAL REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

DELAY AND EXTENSION OF TIME FOR NOMINATED SUB-CONTRACTORS: AN OVERVIEW

EXPRESS EXPRESS EXPRESS EXPRESS CONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL PROVISIONS PROVISIONS PROVISIONS PROVISIONS

EXPRESS EXPRESS EXPRESS EXPRESS CONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL PROVISIONS PROVISIONS PROVISIONS PROVISIONS

GENERALGENERALGENERALGENERALCONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL POSITION POSITION POSITION POSITION

GENERALGENERALGENERALGENERALCONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL POSITION POSITION POSITION POSITION

GENERAL GENERAL GENERAL GENERAL PROCEDURAL PROCEDURAL PROCEDURAL PROCEDURAL REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

GENERAL GENERAL GENERAL GENERAL PROCEDURAL PROCEDURAL PROCEDURAL PROCEDURAL REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

•••• Main steps involved are:

1. Occurrence of delaying event

2. Notification of the delay

3. Review by the contractor

4. Contractor forwards application to contract administrator

5. Contract administrator assesses application

6. Contract administrator communicates decision to contractor

7. Contractor informs sub-contractor

8. Receipt and acknowledgement

•••• The rules in the preparation and issuance of the certificate of extension of time similar to that of Main Contract

•••• The principles and general requirements similar to that of Main Contract

•••• Principal difference only in some procedural requirements

•••• Applicable only to:

1. Nominated Sub-Contractors and2. Nominated Suppliers

•••• Does not encompass:

1. Domestic Sub-Contractors and 2. Domestic Suppliers

•••• Extension of time under contract can only be validly granted if:

1. Delaying event is one of the ‘relevant events’/grounds under the conditions of sub-contract

2. The express formalities or procedures are strictly complied with

•••• The general contractual position similar to Main Contract

PAM 1998 PAM 1998 PAM 1998 PAM 1998 SUBSUBSUBSUB----CONTRACT CONTRACT CONTRACT CONTRACT

FORMFORMFORMFORM

PAM 1998 PAM 1998 PAM 1998 PAM 1998 SUBSUBSUBSUB----CONTRACT CONTRACT CONTRACT CONTRACT

FORMFORMFORMFORMJKR 203N FORM JKR 203N FORM JKR 203N FORM JKR 203N FORM (REV. 10/83)(REV. 10/83)(REV. 10/83)(REV. 10/83)

JKR 203N FORM JKR 203N FORM JKR 203N FORM JKR 203N FORM (REV. 10/83)(REV. 10/83)(REV. 10/83)(REV. 10/83) IEM.CES.1/90 FORMIEM.CES.1/90 FORMIEM.CES.1/90 FORMIEM.CES.1/90 FORMIEM.CES.1/90 FORMIEM.CES.1/90 FORMIEM.CES.1/90 FORMIEM.CES.1/90 FORM

•••• Clause 26: Delay and Extension of Time

(a): Notice of delay

(b): Extension of time

(c): Dispute on failure of S.O. to grant extension of time

PUTRAJAYA PUTRAJAYA PUTRAJAYA PUTRAJAYA CONDITIONS OF CONDITIONS OF CONDITIONS OF CONDITIONS OF NOMINATED SUBNOMINATED SUBNOMINATED SUBNOMINATED SUB----

CONTRACT CONTRACT CONTRACT CONTRACT

PUTRAJAYA PUTRAJAYA PUTRAJAYA PUTRAJAYA CONDITIONS OF CONDITIONS OF CONDITIONS OF CONDITIONS OF NOMINATED SUBNOMINATED SUBNOMINATED SUBNOMINATED SUB----

CONTRACT CONTRACT CONTRACT CONTRACT


(a): Notice of delays

(b): Extension of time

(c): Dispute on failure of Engineer to grant extension of time


•••• Clause 8.0: Extension of Time

8.1:Notifying of events causing delay

8.2:Relevant events causing delay for which extension of time may be given

8.3:A Fair and Reasonable extension of time

8.4:Failure of architect to give written consent for extension of time

© HSKS

8.0 NON COMPLETION AND DAMAGES

•••• COMMON LAW POSITION COMMON LAW POSITION COMMON LAW POSITION COMMON LAW POSITION

•••• CONTRACTUAL FORMULAE CONTRACTUAL FORMULAE CONTRACTUAL FORMULAE CONTRACTUAL FORMULAE

•••• RIGHTS TO IMPOSERIGHTS TO IMPOSERIGHTS TO IMPOSERIGHTS TO IMPOSE

•••• CHALLENGESCHALLENGESCHALLENGESCHALLENGES

•••• MALAYSIAN POSITION MALAYSIAN POSITION MALAYSIAN POSITION MALAYSIAN POSITION


* DUNLOP PNEUMATIC TYRE CO. LTD. V NEW GARAGE & MOTOR COMPANY LTD. [1915] AC 79

* TEMLOC LTD. V ERRIL PROPERTIES LTD.

* GILBERT-ASH (NORTHERN) LTD. V MODERN ENGINEERING (BRISTOL) LTD. [1974] AC 689

* SIM CHIO HUAT V WENG TED FUI [1983] 1 MLJ 151

* LION ENGINEERING SDN. BHD. V PAUCHUAN DEVELOPMENT SDN. BHD. [1997] 4 AMR 3315

* MANIAM V STATE OF PERAK [1957] MLJ 75

* WEARNE BROTHERS (M) LTD. V JACKSON [1966] 2 MLJ 155

* SELVA KUMAR A/L MURUGIAH V THIAGARAJAH A/L RETNASAMY [1995] 1 MLJ 817

* REALVEST PROPERTIES SDN. BHD. V THE COOPERATIVE CENTRAL BANK LTD. (Under Receivership) [1996] 2 AMR 2292, FC.

* SAKINAS SDN. BHD. V SIEW YIK HAU & ANOR [2002] 5 MLJ 497, HC.

* ARAB MALAYSIAN CORP. BUILDERS SDN. BHD. & ANOR V ASM DEVELOPMENT SDN. BHD.[1998] 6 MLJ 136, HC.

© HSKS

© HSKS

LIQUIDATED DAMAGES:

PRINCIPAL CHARACTERISTICS

RECOVERY/PAYMENT TRIGGERED BY OCCURRENCE

OF SPECIFIED DEFAULT/BREACH

SUM OF MONEY AGRRED BY THE PARTIES

FIG. 8-1 : LIQUIDATED DAMAGES – PRINCIPAL CHARACTERISTICS

SUM STIPULATED IN THE CONTRACT

GENUINE PRE-ESTIMATE OF THE LOSS

© HSKS

DEFINITIONDEFINITIONDEFINITIONDEFINITION

LIQUIDATED DAMAGES: AN OVERVIEW

BASIC BASIC BASIC BASIC CHARACTERISTICSCHARACTERISTICSCHARACTERISTICSCHARACTERISTICS ADVANTAGESADVANTAGESADVANTAGESADVANTAGES

LIQUIDATED LIQUIDATED LIQUIDATED LIQUIDATED DAMAGES AND DAMAGES AND DAMAGES AND DAMAGES AND PENALTIES PENALTIES PENALTIES PENALTIES

DISTINGUISHEDDISTINGUISHEDDISTINGUISHEDDISTINGUISHED

•••• Four basic characteristics:

1. Sum of money agreed/fixed in advance by parties

2. Sum is a genuine pre-estimate of likely loss

3. Sum is stipulated in the contract

4. Recovery of sum is triggered by contractor’s breach e.g. non-completion

DISADVANTAGESDISADVANTAGESDISADVANTAGESDISADVANTAGES

EXAMPLES OF EXAMPLES OF EXAMPLES OF EXAMPLES OF PENALTY CLAUSESPENALTY CLAUSESPENALTY CLAUSESPENALTY CLAUSES

LEGAL EFFECTS LEGAL EFFECTS LEGAL EFFECTS LEGAL EFFECTS OF PENALTIESOF PENALTIESOF PENALTIESOF PENALTIES

DISTINGUISHING DISTINGUISHING DISTINGUISHING DISTINGUISHING BETWEEN THE BETWEEN THE BETWEEN THE BETWEEN THE TWO TERMSTWO TERMSTWO TERMSTWO TERMS

•••• Prof. Vincent Powell-Smith’s definition

•••• Per Eggleston

•••• Per Robinson and Lavers

•••• Common view

•••• Reiteration in Philips Hong Kong Ltd. v AG of Hong Kong.

•••• Advantages to:

1. Employer

2. Contractor

3. Sub-contractor

•••• Common view

•••• Disadvantages to:

1. Employer

2. Contractor

3. Sub-contractor

PENALTY: DEFINITIONPENALTY: DEFINITIONPENALTY: DEFINITIONPENALTY: DEFINITIONGENERALGENERALGENERALGENERAL

•••• Use of terms interchangeably

•••• Distinct difference

•••• Position in Malaysia post Selvakumar v Thiagarajah

•••• Per Prof. Vincent Powell-Smith

•••• Per Lord Dunedin in Dunlop Pneumatic Tyre Co. Ltd. v New Garage & Motor Co. Ltd.

•••• Penalty: Invalid and unenforceable

•••• Legal effect per Watts, Watts & Co. Ltd. v Mitsui & Co. Ltd.

•••• See Keating’s view

•••• Mere labeling is inclusive

•••• Depends on construction afforded to term by the courts

•••• Lord Dunedin’s proposed tests.

•••• Elicited from the relevant case-law

FIG. 8-2 : LIQUIDATED DAMAGES – AN OVERVIEW

© HSKS

INCLUSION OF EXPRESS PROVISION IN CONTRACT PERMITTING DEDUCTION

OF THE LIQUIDATED DAMAGES

IMPOSITION OF LIQUIDATED DAMAGES:

TYPICAL PRE-CONDITIONS

DEFINITE DATE FIXED CONTRACTUALLY FROM WHICH

DAMAGES CAN RUN

EMPLOYER HAS NOT WAIVED HIS RIGHT TO DEDUCT LIQUIDATED

DAMAGES

THE EXPRESS LIQUIDATED DAMAGES CLAUSE IS VALID AND

ENFORCEABLE

SPECIFIED CONTRACTUAL

PROCEDURES HAVE BEEN STRICTLY COMPLIED WITH

DETAILS ON LIQUIDATED DAMAGES CLEARLY AND

PROPERLY FILLED IN

FIG. 8-3 : IMPOSITION OF LIQUIDATED DAMAGES – TYPICAL PRE-CONDITIONS

© HSKS

DEDUCTION OF LIQUIDATED DAMAGES: COMMON CONDITIONS

PRECEDENTS USED

FIG. 8-4 : DEDUCTION OF LIQUIDATED DAMAGES – COMMON CONDITIONS PRECEDENTS

USED

CONTRACTOR SHALL FAIL TO COMPLETE ON TIME

THE CONTRACT ADMINISTRATOR SHALL ISSUE A CERTIFICATE OF

NON-COMPLETION

MISCELLANEOUS PRE-CONDITIONS

THE CONTRACT ADMINISTRATOR SHALL DETERMINE AND ISSUE ANY EXTENSIONS OF

TIME DUE TO CONTRACT

THE CONTRACT ADMINISTRATOR SHALL

CERTIFY THAT NO FURTHER EXTENSIONS OF TIME ARE DUE TO

CONTRACTOR

THE EMPLOYER SHALL GIVE WRITTEN NOTICE TO THE CONTRACTOR OF HIS INTENTION TO

DEDUCT LAD

© HSKS

DEFINITIONDEFINITIONDEFINITIONDEFINITION

PROCEDURAL REQUIREMENTS FOR RECOVERY OF LIQUIDATED DAMAGES:

AN OVERVIEW

GENERAL RULE FOR GENERAL RULE FOR GENERAL RULE FOR GENERAL RULE FOR IMPOSITION OF LIQUIDATED DAMAGESIMPOSITION OF LIQUIDATED DAMAGESIMPOSITION OF LIQUIDATED DAMAGESIMPOSITION OF LIQUIDATED DAMAGES

GENERAL PROCEDUREGENERAL PROCEDUREGENERAL PROCEDUREGENERAL PROCEDURE

DETERMINE IF DETERMINE IF DETERMINE IF DETERMINE IF EMPLOYER HAS EMPLOYER HAS EMPLOYER HAS EMPLOYER HAS WAIVED HIS WAIVED HIS WAIVED HIS WAIVED HIS

RIGHTS TO LADRIGHTS TO LADRIGHTS TO LADRIGHTS TO LAD

DETERMINE DETERMINE DETERMINE DETERMINE IF RELEVANT IF RELEVANT IF RELEVANT IF RELEVANT CERTIFICATES/CERTIFICATES/CERTIFICATES/CERTIFICATES/NOTICES HAVE NOTICES HAVE NOTICES HAVE NOTICES HAVE BEEN ISSUEDBEEN ISSUEDBEEN ISSUEDBEEN ISSUED

ESTABLISH ESTABLISH ESTABLISH ESTABLISH EXISTENCE AND EXISTENCE AND EXISTENCE AND EXISTENCE AND VALIDITY OF VALIDITY OF VALIDITY OF VALIDITY OF LAD CLAUSE LAD CLAUSE LAD CLAUSE LAD CLAUSE

•••• Recovery of LAD must be in accordance with the contract

•••• Procedural requirements/conditions precedent must be strictly followed

•••• Effect of the application of the ‘contra proferantum’rule

•••• Need to satisfy general rule

•••• Six principal pre-conditions:

1. Existence of express contractual provision on LAD

2. LAD Clause must be valid

3. LAD details must be clearly filled in

4. Contractual provisions must be strictly complied with

5. Definite date from which LAD can run

6. Non-waiver by employer of his rights to the LAD

ESTABLISH ESTABLISH ESTABLISH ESTABLISH DEFAULT OF DEFAULT OF DEFAULT OF DEFAULT OF

CONTRACTORCONTRACTORCONTRACTORCONTRACTOR

BASIC STEPSBASIC STEPSBASIC STEPSBASIC STEPS

•••• Five basic steps

•••• See Figures 6-11 to 6-13 on the flowcharts

•••• Triggering event: failure of contractor to complete on time

•••• Certificate of Non-Completion (CNC)

•••• Notice of Intention to deduct LAD

•••• Crucial to enforceability of provision and recovery of LAD

•••• 2 forms of waiver:

1. Express 2. Implied

•••• Was there consideration in return?

EMPLOYER EMPLOYER EMPLOYER EMPLOYER RECOVERS THE RECOVERS THE RECOVERS THE RECOVERS THE LIQUIDATED LIQUIDATED LIQUIDATED LIQUIDATED DAMAGES DAMAGES DAMAGES DAMAGES

•••• Conditions precedent

•••• Decision as to recovery

•••• Timing

POST LAD POST LAD POST LAD POST LAD DEDUCTION DEDUCTION DEDUCTION DEDUCTION PROCEDURESPROCEDURESPROCEDURESPROCEDURES

•••• Effect of further E.O.T.

•••• See Fig. 6-14 & 6-15 for flowchart

FIG. 8-5 : PROCEDURAL REQUIREMENTS FOR RECOVERY OF LIQUIDATED DAMAGES – AN

OVERVIEW

© HSKS

GENERAL POSITION GENERAL POSITION

NON-COMPLETION AND DAMAGES IN NOMINATED

SUB-CONTRACTS: AN OVERVIEW

EXPRESS CONTRACTUAL PROVISIONS

EXPRESS CONTRACTUAL PROVISIONS

NSC’S LIABILITY FOR DAMAGESNSC’S LIABILITY FOR DAMAGES

EXPRESS CONTRACTUAL FORMULA

EXPRESS CONTRACTUAL FORMULA

DAMAGES FOR BREACH OF CONTRACT

DAMAGES FOR BREACH OF CONTRACT

•••• Legal principles similar to Main Contractor

•••• Liability for 2 types of damages:

1. Liquidated damages, or2. Unliquidated/general damages

•••• Clause 7.0: PAM ‘98 Sub-Contract Form

•••• Clause 27: JKR 203N (Rev. 10/83)

•••• Clause 27: IEM.CES 1/90 Form

•••• Clause 25: ‘Putrajaya’ Conditions of Nominated Sub-Contract

EFFECT OF NSC’S DEFAULT

EFFECT OF NSC’S DEFAULT

•••• Effect of default in completing works in time: breach of contract

•••• Consequences of the said breach - Employer entitled to damages i.e., either:

1. LAD as stipulated in the sub-contract, or

2. General damages enforceable through arbitration/court action

GENERAL OBSERVATIONS

GENERAL OBSERVATIONS

•••• Necessity for parties to agree upon and arrive at a genuine pre-estimate

•••• Need to clearly stipulate conditions precedent to recovery

.

•••• Prudent to cap maximum limit

•••• If LAD clause ‘stepped down’ into sub-contract, sub-contractor bound irrespective of value of the sub-contract

•••• Governing Provision: S 74 Contracts Act 1950 (Rev. 1974) -‘Compensation for loss or damage caused by breach of contract’

•••• Three main heads of damage per Eggleston:

1. Main Contractor’s liability to pay LAD to employer of NSC’s default

2. Main Contractor’s own loss consequent to NSC’s default

3. Third party claims due to NSC’s default

•••• Called the ‘Financial Contractual Remedy’

•••• Usually an LAD clause

•••• Express stipulations as to:

1. Rate 2. Scope of coverage3. Maximum limit4. Pre-conditions, etc.

•••• Issues pertaining to the ‘stepping down’ of the Main Contractor’s LAD clauses

FIG. 8-6: NON-COMPLETION AND DAMAGES IN NOMINATED SUB-CONTRACTS – AN OVERVIEW

© HSKS

FIG. 8-7: LIQUIDATED DAMAGES – TYPICAL GROUNDS FOR CHALLENGING

LIQUIDATED DAMAGES: TYPICAL GROUNDS FOR

CHALLENGING

CONTRACTUAL PROVISION IS A PENALTY CLAUSE

EXTENSIONS OF TIME GRANTED INSUFFICIENT

NO DATE STIPULATED FOR THE COMMENCEMENT OF THE CONTRACT

MISCELLANEOUS CHALLENGES/DEFENCES

NO CONTRACTUAL PROVISION TO EXTEND TIME FOR ACT OF PROVISION IN QUESTION

PRACTICAL COMPLETION ACHIEVED EARLIER THAN CERTIFIED

CONTRACTUAL PROVISION IS UNCERTAIN/INCONSISTENT

CONTRACT IS AT LARGE

EMPLOYER HAS WAIVED LIQUIDATED DAMAGES

CERTIFICATES OF EXTENSION OF TIME AND/OR PRACTICAL COMPLETION NOT VALID

CONDITIONS PRECEDENT NOT OBSERVED

© HSKS

EFFECT OF S75 CONTRACTS EFFECT OF S75 CONTRACTS EFFECT OF S75 CONTRACTS EFFECT OF S75 CONTRACTS ACT 1950 (REV. 1974)ACT 1950 (REV. 1974)ACT 1950 (REV. 1974)ACT 1950 (REV. 1974)

EFFECT OF S75 CONTRACTS EFFECT OF S75 CONTRACTS EFFECT OF S75 CONTRACTS EFFECT OF S75 CONTRACTS ACT 1950 (REV. 1974)ACT 1950 (REV. 1974)ACT 1950 (REV. 1974)ACT 1950 (REV. 1974)

LAD: MALAYSIAN LEGAL POSITION – AN OVERVIEW

EFFECT OF EFFECT OF EFFECT OF EFFECT OF SELVAKUMAR V V V V THIAGARAJAH [1995][1995][1995][1995]

EFFECT OF EFFECT OF EFFECT OF EFFECT OF SELVAKUMAR V V V V THIAGARAJAH [1995][1995][1995][1995]

CIRCUMVENTING CIRCUMVENTING CIRCUMVENTING CIRCUMVENTING SELVAKUMARV V V V THIAGARAJAH

CIRCUMVENTING CIRCUMVENTING CIRCUMVENTING CIRCUMVENTING SELVAKUMARV V V V THIAGARAJAH

1. Parties of equal bargaining strength.

2. Free to agree on any terms between themselves.

3. Philips HK Ltd. v AG of Hong Kong.

UNDER DOCTRINE UNDER DOCTRINE UNDER DOCTRINE UNDER DOCTRINE OF FREEDOM TO OF FREEDOM TO OF FREEDOM TO OF FREEDOM TO CONTRACT CONTRACT CONTRACT CONTRACT

UNDER DOCTRINE UNDER DOCTRINE UNDER DOCTRINE UNDER DOCTRINE OF FREEDOM TO OF FREEDOM TO OF FREEDOM TO OF FREEDOM TO CONTRACT CONTRACT CONTRACT CONTRACT

MUTUAL MUTUAL MUTUAL MUTUAL AGREEMENT AGREEMENT AGREEMENT AGREEMENT

MUTUAL MUTUAL MUTUAL MUTUAL AGREEMENT AGREEMENT AGREEMENT AGREEMENT

1. By parties on circumventing decision in Selvakumar v Thiagarajah.

2. Can draft appropriate clause

1. No difference between penalty and liquidated damages clauses.

2. All liquidated damages clauses to be treated as penalty clauses under English law.

CLAUSE 22.2: CLAUSE 22.2: CLAUSE 22.2: CLAUSE 22.2: PAM CONTRACT 2006 PAM CONTRACT 2006 PAM CONTRACT 2006 PAM CONTRACT 2006

CLAUSE 22.2: CLAUSE 22.2: CLAUSE 22.2: CLAUSE 22.2: PAM CONTRACT 2006 PAM CONTRACT 2006 PAM CONTRACT 2006 PAM CONTRACT 2006

1. Contractor confirms that by entering into the Contract

2. He agrees to pay such sums

3. Which become due

4. Without Employer having to prove his actual loss/damage

1. Employer cannot recover simpliciter sum fixed in contract, whether as a penalty or liquidated damages.

2. Must prove actual damages/reasonable compensation per Hadley v Baxendale.

3. Figure stipulated in Contract is the ceiling amount recoverable.

FIG. 8-8 : LAD – MALAYSIAN LEGAL POSITION – AN OVERVIEW

Employer can proceed to recover simpliciter the sum fixed in the contract as LAD

Have all the conditions precedents

been fulfilled?

Matter to be resolved through arbitration/litigation

Yes

A B

Is the contractor liable to pay

LAD?

Yes

No

START

No Prima facie, employer cannot recover liquidated

damages (LAD)

Is there an express clause circumventing

rule in SelvakumarThiagarajah?

Does the contractor challenge the

employer’s deduction of the LAD?

Yes Prima facie, employer can deduct the stipulated

LAD amount

Yes

No

No

FIG. 8-9: FLOWCHART ON THE RECOVERY OF LIQUIDATED DAMAGES - THE MALAYSIAN

POSITION POST SELVAKUMAR V THIAGARAJAH (PART I)

© HSKS

A B

STOP

No

Yes

Yes

No

Employer must prove the actual damages or reasonable compensation per rule in Hadley v

Baxendale / S74 Contracts Act

Is employer able to prove damages as

required?

Are the damages more than the sum stipulated in the

contract as LAD?

Employer can recover only his actual damages or reasonable compensation as decided by the arbitral

forum or the court

Employer may not be able to recover any damages at all

Prima facie, employer can deduct the stipulated

LAD amount

FIG. 8-10: FLOWCHART ON THE RECOVERY OF LIQUIDATED DAMAGES - THE MALAYSIAN

POSITION POST SELVAKUMAR V THIAGARAJAH (PART II)

© HSKS

9.0 COMPLETION AND HANDING-OVER

•••• PROBLEMS WITH DEFINITIONS AND TERMINOLOGY PROBLEMS WITH DEFINITIONS AND TERMINOLOGY PROBLEMS WITH DEFINITIONS AND TERMINOLOGY PROBLEMS WITH DEFINITIONS AND TERMINOLOGY

•••• CONDITIONS PRECEDENT CONDITIONS PRECEDENT CONDITIONS PRECEDENT CONDITIONS PRECEDENT

•••• NONNONNONNON----ISSUE BY CONTRACT ADMINISTRATOR ISSUE BY CONTRACT ADMINISTRATOR ISSUE BY CONTRACT ADMINISTRATOR ISSUE BY CONTRACT ADMINISTRATOR

•••• CHALLENGES TO CPCCHALLENGES TO CPCCHALLENGES TO CPCCHALLENGES TO CPC

•••• PROBLEMS ARISING FROM CPC ISSUES PROBLEMS ARISING FROM CPC ISSUES PROBLEMS ARISING FROM CPC ISSUES PROBLEMS ARISING FROM CPC ISSUES

•••• SECTIONAL COMPLETION, PARTIAL POSSESSION AND CONDITIONAL CPC SECTIONAL COMPLETION, PARTIAL POSSESSION AND CONDITIONAL CPC SECTIONAL COMPLETION, PARTIAL POSSESSION AND CONDITIONAL CPC SECTIONAL COMPLETION, PARTIAL POSSESSION AND CONDITIONAL CPC


* WESTMINSTER CITY COUNCIL V JARVIS & SONS LTD. [1970] 7 BLR 64

* H.W. NEVILL (SUNBLEST) LTD. V WILLIAM PRESS & SONS LTD. [1981] 20 BLR 78

* P & M KAYE LTD. V HOSIER DICKINSON LTD. [1972] 1 WLR 64

* EMSON EASTERN (IN RECEIVERSHIP) V EME DEVELOPMENTS LTD. [1991] 55 BLR 114

* BRUNO ZORNOW (BUILDERS LTD.) V BEECHCROFT DEVELOPMENTS LTD. [1990] 51 BLR 16

© HSKS

© HSKS

GUIDELINES TO DETERMINE PRACTICAL

COMPLETION PER KEATING

CONTRACT ADMINISTRATOR HAS DISCRETION TO ISSUE

C.P.C. WHERE MINOR WORKS ARE LEFT TO BE DONE ON A ‘DE

MINIMIS’ BASIS

C.P.C. CAN BE ISSUED NOTWITHSTANDING PRESENCE

OF LATENT DEFECTS

FIG. 9-1 : GUIDELINES TO DETERMINE PRACTICAL COMPLETION PER KEATING

PRACTICAL COMPLETION MEANS COMPLETION OF ALL WORK THAT

HAS TO BE DONE

C.P.C. CANNOT BE ISSUED IF THERE ARE PRESENT PATENT

DEFECTS

© HSKS

FUNCTIONAL TEST

ESTABLISHING PRACTICAL COMPLETION:

PRINICPAL TESTS

INCONVENIENCE TEST

MISCELLANEOUS TESTSCOMPLETENESS TEST

AUTHORITIES TEST SAFETY TEST

FIG. 9-2 : ESTABLISHING PRACTICAL COMPLETION – PRINICPAL TESTS

© HSKS

ISSUE OF THE CERTIFICATE

OF PRACTICAL COMPLETION:

PRINCIPAL EFFECTS

MARKS END OF CONSTRUCTION PERIOD

EMPLOYER TO RELEASE ONE MOIETY OF RETENTION SUM

CERTIFICATION OF INTERIM PAYMENT ENDS

CONTRACTOR’S RIGHT TO POSSESSION OF SITE CEASES

CONTRACTOR’S LIABILITY FOR CARE, SECURITY, ETC., ENDS

FIG. 9-3 : ISSUE OF THE CERTIFICATE OF PRACTICAL COMPLETION – PRINCIPAL EFFECTS

TRIGGERS COMMENCEMENT OF PERIOD OF FINAL MEASUREMENT AND VALUATION OF THE WORKS

CONTRACTOR’S LIABILITY FOR FURTHER LAD ENDS

CONTRACT ADMINISTRATOR’S POWER TO ORDER VARIATIONS CEASES

ENDS RESTRICTION ON OPENING OF ARBITRATION

CONTRACTOR’S LIABILITY TO INSURE WORKS ENDS

FREE SERVICE AND MAINTENANCE PERIOD STARTS

DEFECT LIABILITY PERIOD COMMENCES

© HSKS

SECTIONAL COMPLETION:

PRINICPAL ISSUES/EFFECTS

FIG. 9-4 : SECTIONAL COMPLETION – PRINCIPAL ISSUES/EFFECTS

CERTIFICATE OF PRACTICAL COMPLETION FOR EACH SECTION

SEPARATE DEFECT LIABILITY PERIOD FOR EACH SECTION

OBLIGATION TO INSURE FOR EACH SECTION

ENDS WITH CPC (DEPENDING ON

CONTRACT PROVISION)

SEPARATE EXTENSION OF TIME CERTIFICATION

FOR EACH SECTION

RELEASE OF ONE MOIETY OF RETENTION

SUM FOR EACH SECTION

SEPARATE LIQUIDATED AND ASCERTAINED

DAMAGES FOR EACH SECTION

© HSKS

PARTIAL POSSESION/

OCCUPATION:

PRINICPAL ISSUES/EFFECTS

FIG. 9-5 : PARTIAL POSSESSION/OCCUPATION – PRINCIPAL ISSUES/EFFECTS

ISSUE OF CERTIFICATE OF PARTIAL OCCUPATION OF RELEVANT PART WITHIN

STIPULATED PERIOD

RELEASE OF A PROPORTION OF FIRST HALF OF RETENTION SUM IN

RESPECT OF RELEVANT PART WITHIN STIPULATED PERIOD

RELEASE OF PERFORMANCE BOND AND FINAL PAYMENT

UNAFFECTED

COMMENCEMENT OF DEFECT LIABILITY

PERIOD FOR RELEVANT PART ON DATE OF

POSSESSION/ OCCUPATION

CESSATION/REDUCTION OF INSURANCES

CORRESPONDINGLY (IF EXPRESSLY PERMITTED)

PROPORTIONING DOWN OF LIQUIDATED AND

ASCERTAINED DAMAGES

© HSKS

LITERAL MEANING/ LITERAL MEANING/ LITERAL MEANING/ LITERAL MEANING/ INTERPRETATIONINTERPRETATIONINTERPRETATIONINTERPRETATION

COMPLETION OF WORKS UNDER THE CONTRACT

SECTIONAL SECTIONAL SECTIONAL SECTIONAL COMPLETIONCOMPLETIONCOMPLETIONCOMPLETION

PARTIAL PARTIAL PARTIAL PARTIAL POSSESSIONPOSSESSIONPOSSESSIONPOSSESSION

•••• Situation where Employer takes over/resumes possession of:

a)Whole works, orb) Part of works

before Contract Completion Date

•••• Pre-Conditions:

a)With consent of Contractor b) Consent not to be

unreasonably withheld

•••• Procedural aspects:

a)Issue of Certificate of Partial Occupation (CPO) within 7 days of possession.

b) Certificate to identify:

i) Relevant part possessedii) Its estimated value

c)DLP/DNP starts on date of possession

d) LAD rate reduced pro-rata for unoccupied part/portion

•••• Strict View

•••• Absence of any patent defects; and

•••• Absence of any outstanding works however trifling

•••• Rarely used in practice

•••• Has been abandoned in favour of a more expedient approach

PRACTICAL PRACTICAL PRACTICAL PRACTICAL COMPLETIONCOMPLETIONCOMPLETIONCOMPLETION

•••• Also termed ‘Substantial Completion’ in some cases

•••• Adopts an expedient view

•••• Connotates a state of readiness for use or occupation by Employer

• Formalized by issue of Certificate of Practical Completion (CPC) or Taking Over Certificate (TOC)

• More common in practice

•••• Provided for expressly in many Standard Forms

•••• Envisages completion in sections/ stages/phases

•••• Intention must be agreed/expressed at time of contracting.

•••• Contract Documents must identify/ define:

a) Each Sectionb) The Completion datesc) The Corresponding LAD

•••• Each section has separate:

a) Certificate of Practical Completion (CPC)/TOC or Defect Notification Period (DNP)

b) Defects Liability Period (DLP)

c) Liquidated and Ascertained Damages (LAD)

FIG. 9-6 : COMPLETION OF WORKS UNDER THE CONTRACT – AN OVERVIEW

© HSKS

TYPESTYPESTYPESTYPESTYPESTYPESTYPESTYPES

TEST ON COMPLETION: AN OVERVIEW

RESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITY FAILURESFAILURESFAILURESFAILURESFAILURESFAILURESFAILURESFAILURES

CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR CONTRACT CONTRACT CONTRACT CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATORCONTRACT CONTRACT CONTRACT CONTRACT


•••• Active participant and certifier of Final Testing and Commissioning.

•••• Default/negligence in certification does not relieve Contractor’s obligations.\

•••• Normally undertaken by Contractor on his own.

•••• Prior to Final Tests on Completion.

•••• Is a necessary prelude to the Final Tests

•••• Contractually, responsible for:

a) Preliminary and Final Testing and Commissioning.

b) Satisfactory Completion

PURPOSEPURPOSEPURPOSEPURPOSEPURPOSEPURPOSEPURPOSEPURPOSE

PRELIMINARYPRELIMINARYPRELIMINARYPRELIMINARYPRELIMINARYPRELIMINARYPRELIMINARYPRELIMINARY FINAL FINAL FINAL FINAL FINAL FINAL FINAL FINAL

•••• Normally undertaken by either:

a) Contractor in the presence of Contract Administrator (or)

b) Independent 3rd

Party Specialists

•••• Is usually a pre-condition to issue of CPC.

INDEPENDANT TESTERINDEPENDANT TESTERINDEPENDANT TESTERINDEPENDANT TESTERINDEPENDANT TESTERINDEPENDANT TESTERINDEPENDANT TESTERINDEPENDANT TESTER

•••• Scope as expressly stipulated in Contract.

•••• Eg. SIRIM, DNV, Lloyds, TÜV, Statutory authorities, etc.

•••• May also be required under statute.

•••• To show compliance with the Performance Specification/ Contract Requirements

•••• To meet applicable statutory requirements.

•••• As a pre-condition to issue of CPC

•••• As a pre-condition to certification by Independent 3rd

Party Specialist.

FIG. 9-7 : TEST ON COMPLETION – AN OVERVIEW

© HSKS

FIG. 9-8 : OPERATION AND MAINTENANCE MANUALS – AN OVERVIEW

GENERAL GENERAL GENERAL GENERAL POSITIONPOSITIONPOSITIONPOSITION


OPERATION AND MAINTENANCE MANUALS: AN OVERVIEW

TIMING FOR TIMING FOR TIMING FOR TIMING FOR SUBMISSIONSUBMISSIONSUBMISSIONSUBMISSION

TIMING FOR TIMING FOR TIMING FOR TIMING FOR SUBMISSIONSUBMISSIONSUBMISSIONSUBMISSION

TYPES/ NATURETYPES/ NATURETYPES/ NATURETYPES/ NATURETYPES/ NATURETYPES/ NATURETYPES/ NATURETYPES/ NATURE UPDATINGUPDATINGUPDATINGUPDATINGUPDATINGUPDATINGUPDATINGUPDATING ACCURACYACCURACYACCURACYACCURACYACCURACYACCURACYACCURACYACCURACY

•••• In Contract and Tort

•••• Primary responsibility for errors, omissions, etc.

ASASASAS----BUILT/ BUILT/ BUILT/ BUILT/ ASASASAS----CONSTRUCTED/ CONSTRUCTED/ CONSTRUCTED/ CONSTRUCTED/

ASASASAS----INSTALLED DRAWINGSINSTALLED DRAWINGSINSTALLED DRAWINGSINSTALLED DRAWINGS

ASASASAS----BUILT/ BUILT/ BUILT/ BUILT/ ASASASAS----CONSTRUCTED/ CONSTRUCTED/ CONSTRUCTED/ CONSTRUCTED/

ASASASAS----INSTALLED DRAWINGSINSTALLED DRAWINGSINSTALLED DRAWINGSINSTALLED DRAWINGS

OPERATION & OPERATION & OPERATION & OPERATION & MAINTENANCE MANUALS/ MAINTENANCE MANUALS/ MAINTENANCE MANUALS/ MAINTENANCE MANUALS/

HANDBOOKSHANDBOOKSHANDBOOKSHANDBOOKS

OPERATION & OPERATION & OPERATION & OPERATION & MAINTENANCE MANUALS/ MAINTENANCE MANUALS/ MAINTENANCE MANUALS/ MAINTENANCE MANUALS/

HANDBOOKSHANDBOOKSHANDBOOKSHANDBOOKS

MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS RECORDS/ DOCUMENTS RECORDS/ DOCUMENTS RECORDS/ DOCUMENTS RECORDS/ DOCUMENTS

MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS RECORDS/ DOCUMENTS RECORDS/ DOCUMENTS RECORDS/ DOCUMENTS RECORDS/ DOCUMENTS

PROFESSIONALPROFESSIONALPROFESSIONALPROFESSIONAL’’’’S S S S RESPONSBILITYRESPONSBILITYRESPONSBILITYRESPONSBILITY

PROFESSIONALPROFESSIONALPROFESSIONALPROFESSIONAL’’’’S S S S RESPONSBILITYRESPONSBILITYRESPONSBILITYRESPONSBILITY

CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR ‘‘‘‘S S S S RESPONSBILITYRESPONSBILITYRESPONSBILITYRESPONSBILITY

CONTRACTOR CONTRACTOR CONTRACTOR CONTRACTOR ‘‘‘‘S S S S RESPONSBILITYRESPONSBILITYRESPONSBILITYRESPONSBILITY

•••• Contractor’s responsibility at least during Limitation Period for:

a)O & M manuals due to product improvement.

b)Errors/ inaccuracies

•••• Professionals to update on safety issues and errors detected.

RECORDS OF FINAL RECORDS OF FINAL RECORDS OF FINAL RECORDS OF FINAL MEASUREMENTMEASUREMENTMEASUREMENTMEASUREMENT

RECORDS OF FINAL RECORDS OF FINAL RECORDS OF FINAL RECORDS OF FINAL MEASUREMENTMEASUREMENTMEASUREMENTMEASUREMENT

•••• Permanent record of works

•••• Suitably detailed for future reference.

•••• Contents, etc. to express contract stipulations/industry practice.

•••• To enable Works to be operated and maintained efficiently and safely.


•••• Undertaken by Contract Administrator jointly with Contractor.

•••• To facilitate preparation of Final Account.

•••• In Tort, on joint and several basis

•••• Especially so for signing-off/ endorsing ‘Qualified Person’.

•••• Must comply with express Contract stipulations.

•••• Normal practice is:

a) Before TOCb) After TOCc) Before Performance

Certificate

•••• Usual requirements include draft copies for approval prior to finalization.

•••• Final testing and commissioning records

•••• Servicing and Maintenance records

•••• O & M Training records, etc.

• Must follow express Contract stipulations as to:

a) Type/Natureb) Contentsc) Quantityd) Timing for

Submission

• Most Contracts have incorporated such stipulations

FIG. 9-9: ‘TAKING OVER’ OF COMPLETED WORKS BY EMPLOYER – TYPICAL PRE-CONDITIONS

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IDENTIFICATION OF PATENT DEFECTS

& OUTSTANDING WORKS

ISSUE OF RELEVANT COMPLETION CERTIFICATE

HANDOVER OF APPROVALS/ CLEARANCES FROM

STATUTORY AUTHORITIES

HANDOVER OF ALL NECESSARY TOOLS

HANDOVER OF ALL KEYS

HANDOVER OF ALL ‘AS-BUILT’ DOCUMENTS/

RECORDS

TRAINING OF EMPLOYER’S OPERATION

& MAINTENANCE PERSONNEL

HANDOVER OF ALL NECESSARY SPARES

COMPLETION OF TESTING &

COMMISSIONING

TAKING OVER:

TYPICAL PRE-

CONDITIONS

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IDENTIFICATION OF THE TYPES AND DETAILS OF NECESSARY INSPECTIONS

TAKING OVER OFCOMPLETED WORKS: PROCEDURAL ISSUES

ESTABLISHMENT OF THE RELEVANT DELIVERABLES

IDENTIFICATION OF THE MODE OF FORMALIZING

THE TAKING OVER

IDENTIFICATION OF THE SEQUENCE OF

TAKING-OVER

SETTING UP OF THE PROCEDURES FOR

RECORDING

ESTABLISHMENT OF TAKING-OVER PROGRAMME

FIG. 9-10 : TAKING OVER OF COMPLETED WORKS – PROCEDURAL ISSUES

10.0 DEFECTS

•••• PROBLEMS WITH DEFINITIONS AND TERMINOLOGY

•••• DEFECTS FOR WHICH CONTRACTOR RESPONSIBLE

•••• PROBLEMS WITH DEFECT RECTIFICATION

•••• CERTIFICATION – DELAY, NON-ISSUE, ETC.

•••• LIABILITY UNDER LIMITATION ACT

•••• RECENT DEVELOPMENTS

•••• RELEVANT CASES

* HII SOO CHIONG V BOARD OF MANAGEMENT YEE TING PRIMARY SCHOOL [1973] 2 MLJ 204

* LEO TENG CHOY V BEETILE CONSTRUCTION [1982] 2 MLJ 304

© HSKS

* DANCOM ENGINEERING PTE LTD. V TAKASAGO THERMAL ENGINEERING CO. LTD. [1989] BLD

[MAY] 606

* PIRELLI GENERAL CABLE WORKS LTD. V OSCAR FABER & PARTNERS [1983] 2 AC 1

* PEARCE & HIGH LTD. V JOHN BAXTER & MRS. A.S. BAXTER [1999] BLR 101

* BAGOT V STEVEN SCANLON & CO. [1996] 1 QB 197

* DUTTON V BOGNOR REGIS UNITED BUILDING CO. LTD. & ANOR [1972] 1 QB 373

* STEVEN PHOA CHENG LOON & 72 ORS V HIGHLAND PROPERTIES SDN. BHD. & 9 ORS [2000]

3 AMR 3567

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© HSKS

DEFECTS: PRINCIPAL TYPES AND NATURE

PATENT DEFECT

TYPESTYPES NATURENATURE

LATENT DEFECTQUALITY OF MATERIAL

STANDARD OF DESIGN

STANDARD OF WORKMANSHIP

FIG. 10-1 : DEFECTS – PRINCIPAL TYPES AND NATURE

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FIG. 10-2 : DEFECTS FOR WHICH CONTRACTOR IS GENERALLY RESPONSIBLE

TRADITIONAL GENERAL TRADITIONAL GENERAL TRADITIONAL GENERAL TRADITIONAL GENERAL CONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

TRADITIONAL GENERAL TRADITIONAL GENERAL TRADITIONAL GENERAL TRADITIONAL GENERAL CONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

DEFECTS FOR WHICH CONTRACTOR IS GENERALLY RESPONSIBLE

MANAGEMENT FEE MANAGEMENT FEE MANAGEMENT FEE MANAGEMENT FEE CONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

MANAGEMENT FEE MANAGEMENT FEE MANAGEMENT FEE MANAGEMENT FEE CONTRACTINGCONTRACTINGCONTRACTINGCONTRACTING

‘‘‘‘PACKAGE DEALPACKAGE DEALPACKAGE DEALPACKAGE DEAL’’’’ TYPES TYPES TYPES TYPES OF CONTRACTSOF CONTRACTSOF CONTRACTSOF CONTRACTS

‘‘‘‘PACKAGE DEALPACKAGE DEALPACKAGE DEALPACKAGE DEAL’’’’ TYPES TYPES TYPES TYPES OF CONTRACTSOF CONTRACTSOF CONTRACTSOF CONTRACTS

WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER DESIGNED CONTRACTDESIGNED CONTRACTDESIGNED CONTRACTDESIGNED CONTRACT

WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER DESIGNED CONTRACTDESIGNED CONTRACTDESIGNED CONTRACTDESIGNED CONTRACT

PARTLY EMPLOYER PARTLY EMPLOYER PARTLY EMPLOYER PARTLY EMPLOYER DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT


•••• Quality of Materials

•••• Standard of Workmanship

•••• Standard of Design (For elements of design in contractor’s scope of work)




• Standard of Workmanship

• Standard of DesignWHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT

WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER WHOLLY EMPLOYER DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT





•••• Standard of Design (For elements of design in contractor’s scope of work)



© HSKS

ARISING FROM ‘FAIR WEAR AND TEAR’

DEFECTS FOR WHICH CONTRACTOR IS GENERALLY

NOT RESPONSIBLE

OUT OF TIME OR STATUTE BARRED

HAVING NUMBER OF CAUSES, CONTRACTOR’S PORTION BEING MINOR

ARISING FROM MISUSE/ ABUSE BY USERS /

EMPLOYER

WAIVED BY EMPLOYER ARISING FROM WORK WHICH IS NOT

CONTRACTOR’S RESPONSIBILITY

FIG. 10-3 : DEFECTS FOR WHICH CONTRACTOR IS GENERALLY NOT RESPONSIBLE

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CONTRACTOR’S LIABILITY FOR DEFECTS:

PRINCIPAL STAGES OF CONTRACT

PRE-COMPLETION STAGE

•••• Or Pre-Handing Over Stage

•••• Or During Currency of Construction, Installation, etc.

POST-CMGD STAGE

•••• Or Post-Certification of Completion of Making Good Defects

•••• Or During Limitation Period

POST-COMPLETION STAGE

•••• Or Post-Handing Over Stage

•••• Or During ‘Defects Liability Period’, etc.

FIG. 10-4 : CONTRACTOR’S LIABILITY FOR DEFECTS – PRINCIPAL STAGES OF CONTRACT

FIG. 10-5: EMPLOYER’S PRINCIPAL REMEDIES FOR CONTRACTOR’S DEFAULT IN

RECTIFYING REPORTED DEFECTS AT PRE-CONTRACT COMPLETION STAGE

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EMPLOYER’S PRINCIPAL REMEDIES FOR CONTRACTOR’S

DEFAULT IN RECTIFYING REPORTED DEFECTS AT PRE-

CONTRACT COMPLETION STAGE

DETERMINATION OF CONTRACTOR’S EMPLOYMENT

UNDER THE CONTRACT THIRD PARTY ACTION TO MAKE

GOOD DEFECTS

POSTPONEMENT/NON-CERTIFICATION OF COMPLETION

OF WORKS

EMPLOYER MAY UNDERTAKE RECTIFICATION WORKS HIMSELF

© HSKS

LIMITATION: RELEVANT

STATUTORY ENACTMENTS

FIG. 10-6 : LIMITATION – RELEVANT STATUTORY ENACTMENTS

LIMITATION ACT 1953 (REV. 1981) - WEST MALAYSIA

LIMITATION ACT (CAP 14) REVISED EDN. 2000 -

BRUNEI

MISCELLANEOUS ACTS E.G. RAILWAYS ACT

1991 (SECTION 97) CIVIL LAW ACT 1965 (SECTION

7(5), ETC.

LIMITATION ORDINANCE 1959 (REPRINT 1965) -

SARAWAK

PUBLIC AUTHORITIES PROTECTION ACT 1948

(REV. 1978)

LIMITATION ORDINANCE 1952 (REPRINT 1966) -

SABAH

© HSKS

FIG. 10-7 : EXPIRY OF PERIOD FOR RECTIFYING DEFECTS – OPTIONS AVAILABLE TO

CONTRACT ADMINISTRATOR

ALL DEFECTS SATISFACTORILY ALL DEFECTS SATISFACTORILY ALL DEFECTS SATISFACTORILY ALL DEFECTS SATISFACTORILY MADE GOOD/RECTIFIEDMADE GOOD/RECTIFIEDMADE GOOD/RECTIFIEDMADE GOOD/RECTIFIED

ALL DEFECTS SATISFACTORILY ALL DEFECTS SATISFACTORILY ALL DEFECTS SATISFACTORILY ALL DEFECTS SATISFACTORILY MADE GOOD/RECTIFIEDMADE GOOD/RECTIFIEDMADE GOOD/RECTIFIEDMADE GOOD/RECTIFIED

EXPIRY OF PERIOD FOR RECTIFYING DEFECTS: OPTIONS AVAILABLE TO CONTRACT ADMINISTRATOR

DEFECTS REMAINING OUTSTANDING DEFECTS REMAINING OUTSTANDING DEFECTS REMAINING OUTSTANDING DEFECTS REMAINING OUTSTANDING AND/OR UNRECTIFIEDAND/OR UNRECTIFIEDAND/OR UNRECTIFIEDAND/OR UNRECTIFIED

DEFECTS REMAINING OUTSTANDING DEFECTS REMAINING OUTSTANDING DEFECTS REMAINING OUTSTANDING DEFECTS REMAINING OUTSTANDING AND/OR UNRECTIFIEDAND/OR UNRECTIFIEDAND/OR UNRECTIFIEDAND/OR UNRECTIFIED

TAKE 3RD PARTY ACTION TAKE 3RD PARTY ACTION EMPLOYER TO UNDERTAKE

WORKS HIMSELF I.E. DEPARTMENTALLY

EMPLOYER TO UNDERTAKE WORKS HIMSELF I.E. DEPARTMENTALLY

•••• Deduct costs involved from:

a) money due to contractor and/or

b) Performance bond and/or

c) as a liquidated demand

•••• Contract administrator to:

a) Prepare and

b) Issuethe Performance Certificate forthwith.

•••• See express clauses under ICTAD/SBD/02

DEFECTS ARE EITHER:

•••• minor or not material

•••• Impracticable or inconvenient for contractor to make good

DEFECTS ARE EITHER:

•••• minor or not material

•••• Impracticable or inconvenient for contractor to make good

•••• Deduct costs involved from:

a) money due to contractor and/or

b) Performance bond and/or

c) as a liquidated demand

DEFECTS ARE EITHER:

•••• Serious and/or

•••• Material

DEFECTS ARE EITHER:

•••• Serious and/or

•••• Material

Contract administrator to:

•••• Carry out diminution in value; and

•••• Prepare and Issue Certificate of Making Good Defects

FIG. 10-8: ISSUE OF CERTIFICATE OF MAKING GOOD OF DEFECTS – PRINCIPAL EFFECTS

ON PARTIES

© HSKS

OFFICIALLY ENDS THE DEFECT LIABILITY PERIOD

(DLP)

ISSUE OF CERTIFICATE

MAKING GOOD OF

DEFECTS: PRINCIPAL

EFFECTS ON PARTIES

EMPLOYER HAS TO RELEASE SECOND MOIETY OF RETENTION SUM THAT

IS WITHHELD

CONTRACTOR’S LIABILITY FOR LATENT AND PATENT DEFECTS CONTINUES FOR

THE STATUTORY PERIOD OF LIMITATION

MARKS THE BEGINING OF THE CONTRACTUAL PERIOD

FOR PREPARATION OF FINAL ACCOUNT

PARTIES’ OUTSTANDING OBLIGATIONS UNDER THE

CONTRACT ARE NOT RELIEVED

DISCHARGES CONTRACTOR’S RIGHTS UNDER CONTRACT TO

PHYSICALLY ATTEND TO DEFECTS

DISCHARGES LIABILITY OF GUARANTORS, INSURERS,

ETC. UNDER THE CONTRACT

MARKS THE COMMENCEMENT OF THE CONTRACTUAL PERIOD

FOR CONTRACT ADMINISTRATOR TO ISSUE

FINAL CERTIFICATE

11.0 POST COMPLETION AND FINAL ACCOUNT

•••• LIABILITIES ARISING FROM DEFAULTS/OMISSIONS IN: LIABILITIES ARISING FROM DEFAULTS/OMISSIONS IN: LIABILITIES ARISING FROM DEFAULTS/OMISSIONS IN: LIABILITIES ARISING FROM DEFAULTS/OMISSIONS IN:

* TRAINING

* O & M MANUALS

* AS-BUILT DRAWINGS

•••• FINALISATION OF ACCOUNT ISSUES FINALISATION OF ACCOUNT ISSUES FINALISATION OF ACCOUNT ISSUES FINALISATION OF ACCOUNT ISSUES

•••• FINAL CERTIFICATE ISSUES FINAL CERTIFICATE ISSUES FINAL CERTIFICATE ISSUES FINAL CERTIFICATE ISSUES

•••• POSTPOSTPOSTPOST----FINAL CERTIFICATE PROBLEMSFINAL CERTIFICATE PROBLEMSFINAL CERTIFICATE PROBLEMSFINAL CERTIFICATE PROBLEMS


* FAIRWEATHER LTD. V ASDEN SECURITIES LTD. [1979] 12 BLR 40

* CHEW SIN LONG CONSTRUCTION CO. LTD. V COSY HOUSING DEVELOPMENT PTE LTD. [1988] 1 MLJ 331

* THAMESA DESIGNS SDN. BHD. & ORS V KUCHING HOTELS SDN. BHD. [1993] 3 MLJ 28

* TOKEN CONSTRUCTION CO. LTD. V CHARLTON ESTATES LTD. [1973] 1 BLR 48

* SHEN YUAN PAI V DATO’ WEE HOOD TECK & ORS [1976] 1 MLJ 16

© HSKS

© HSKS

FIG. 11-1 : SERVICING AND MAINTENANCE – AN OVERVIEW



SERVICING & MAINTENANCE: AN OVERVIEW

PROCEDURE PROCEDURE PROCEDURE PROCEDURE FOR FOR FOR FOR

MONITORINGMONITORINGMONITORINGMONITORING

PROCEDURE PROCEDURE PROCEDURE PROCEDURE FOR FOR FOR FOR

MONITORINGMONITORINGMONITORINGMONITORING

PREVALENT PREVALENT PREVALENT PREVALENT PRACTICEPRACTICEPRACTICEPRACTICE

PREVALENT PREVALENT PREVALENT PREVALENT PRACTICEPRACTICEPRACTICEPRACTICE

PURPOSEPURPOSEPURPOSEPURPOSEPURPOSEPURPOSEPURPOSEPURPOSE FREQUENCYFREQUENCYFREQUENCYFREQUENCYFREQUENCYFREQUENCYFREQUENCYFREQUENCY EXTENTEXTENTEXTENTEXTENTEXTENTEXTENTEXTENTEXTENT EFFECT OF EFFECT OF EFFECT OF EFFECT OF FAILUREFAILUREFAILUREFAILURE

EFFECT OF EFFECT OF EFFECT OF EFFECT OF FAILUREFAILUREFAILUREFAILURE

•••• Must follow express Contract stipulations

•••• Most Contracts e.g. M&E have such provisions in the specifications.

EXPRESS EXPRESS EXPRESS EXPRESS REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

EXPRESS EXPRESS EXPRESS EXPRESS REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

IMPLIED IMPLIED IMPLIED IMPLIED REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

IMPLIED IMPLIED IMPLIED IMPLIED REQUIREMENTSREQUIREMENTSREQUIREMENTSREQUIREMENTS

•••• Per stipulations in:

a) Contract and/or b) O & M Manuals

•••• Implied from:

a) Statutory requirements

b) Trade usage

c) Local practice

•••• To ensure Contractor meets contractual obligations

•••• Not to nullify equipment warranties.

•••• To minimize defects and downtime and prolong lifetime and efficiency.

•••• To carry out and/or erroneous/negligent servicing.

•••• P.C. may not be issued

•••• Period may be extended

•••• Use of 3rd Parties at Contractor’s Cost

•••• Warranties may be compromised.

•••• Possible action in contract, tort, statute, etc.

•••• Daily•••• Weekly•••• Monthly•••• Quarterly•••• Yearly

•••• As stipulated:

a) In Contract b) In Manufacturer’s

Warranties/ recommendations

c) In O & M Manuals

•••• Generally, most contracts require contractor to do monthly/ quarterly servicing.

•••• In absence of express stipulations implied from:

a) Trade usage b) Local practicec) Statute

•••• General implication is that Employer will undertake daily and weekly servicing and maintenance.

CONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S DUTYDUTYDUTYDUTY

CONTRACTORCONTRACTORCONTRACTORCONTRACTOR’’’’S S S S DUTYDUTYDUTYDUTY

•••• Proper and effective record keeping of:

a) Compliances b) Deviationsc) Unusual

observations

•••• Timely recording and signing-off.

•••• Monitoring of Contractor’s work

•••• Signing-off the records

•••• Reporting to Employer of unusual observations

•••• Undertaking of routine servicing and maintenance e.g. daily, weekly, etc.

•••• Affording Contractor proper access to work being serviced.

•••• Attending to unusual observations reported.

EMPLOYERS EMPLOYERS EMPLOYERS EMPLOYERS OBLIGATIONSOBLIGATIONSOBLIGATIONSOBLIGATIONS

EMPLOYERS EMPLOYERS EMPLOYERS EMPLOYERS OBLIGATIONSOBLIGATIONSOBLIGATIONSOBLIGATIONS

CONTRACT CONTRACT CONTRACT CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR’’’’S S S S RESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITY

CONTRACT CONTRACT CONTRACT CONTRACT ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR’’’’S S S S RESPONSIBILITYRESPONSIBILITYRESPONSIBILITYRESPONSIBILITY

© HSKS

COMMON LABELS FOR RECORDS/

DRAWINGS OF COMPLETED WORKS

PLANS OF COMPLETED WORKS PLANS OF COMPLETED WORKS ‘AS-BUILT’ DRAWINGS‘AS-BUILT’ DRAWINGS

FIG. 11-2 : COMMON LABELS FOR RECORDS/DRAWINGS OF COMPLETED WORKS

‘AS-INSTALLED’ DRAWINGS‘AS-INSTALLED’ DRAWINGS ‘AS-CONSTRUCTED’ DRAWINGS‘AS-CONSTRUCTED’ DRAWINGS

© HSKS

GENERAL POSITION

‘AS-BUILT’ DRAWINGS: AN OVERVIEW

TIMING FOR SUBMISSION

TYPES/ NATURE UPDATING ACCURACY

•••• Must follow express Contract stipulations as to:

a) Type/Natureb) Contentsc) Quantityd) Timing for

Submission

•••• Most Contracts have express provisions incorporated.

•••• In Contract and Tort

•••• Primary responsibility for errors, omissions, etc.

PROFESSIONAL’S RESPONSBILITY

CONTRACTOR’S RESPONSBILITY

•••• Contractor’s responsibility at least during Limitation Period for:

a) Revisions due to product improvement.

b) Errors/ inaccuracies

•••• Professionals to update on safety issues and errors detected.

AS-BUILT/ AS-CONSTRUCTED/

AS-INSTALLED DRAWINGS

OPERATION & MAINTENANCE SCHEMATICS

/DIAGRAMMES

RECORDS OF FINAL MEASUREMENT

•••• Permanent record of works

•••• Suitably detailed for future reference.


•••• To supplement O&M Manuals


•••• Undertaken by Contract Administrator jointly with Contractor.

•••• To facilitate preparation of Final Account.

•••• In Tort, on joint and several basis

•••• Especially so for signing-off/ endorsing ‘Qualified Person’.

•••• Must comply with express contract stipulations.

•••• Normal practice is:

a) Before CPCb) After CPCc) Before CMGD

•••• Usual requirements include draft copies for approval prior to finalization.

FIG. 11-3: ‘AS-BUILT’ DRAWINGS – AN OVERVIEW

© HSKS

FINAL CERTIFICATE

CERTIFICATION UPON EXPIRY OF CONTRACT PERIOD:

COMMON LABELS

FINAL PAYMENT CERTIFICATE

MISCELLANEOUS LABELS

FINAL ACCOUNT CERTIFICATE

PERFORMANCE CERTIFICATE

ULTIMATE CERTIFICATE

FIG. 11-4 : CERTIFICATION UPON EXPIRY OF CONTRACT PERIOD – COMMON LABELS

© HSKS

ISSUED UPON EXPIRY OF THE CONTRACT PERIOD

FINALCERTIFICATE: PRINCIPAL

CHARACTERISTICS

PRIMA FACIE, SIGNIFIES DISCHARGE OF THE CONTRACT

BY PERFORMANCE

ACTUAL EFFECT DICTATED BY THE PRECISE TERMS OF

THE APPLICABLE CONDITIONS OF CONTRACT

ISSUED BY THE CONTRACT ADMINISTRATOR

RENDERS THE CONTRACT ADMINISTRATOR ‘FUNCTUS

OFFICO’

LAST OF THE VARIOUS CERTIFICATES ISSUED

DURING CONTRACT PERIOD

FIG. 11-5 : FINAL CERTIFICATE – PRINCIPAL CHARACTERISTICS

© HSKS

ISSUE OF PERFORMANCE CERTIFICATE (P.C.)

TYPICAL PRE-CONDITIONS TO THE ISSUE OF THE FINAL CERTIFICATE

PREPARATION AND FINALIZATION OF THE FINAL

ACCOUNT

SATISFACTION OF ALL OTHER OBLIGATIONS/DUTIES

UNDER CONTRACT EXPIRY OF DEFECT

NOTIFICATION PERIOD (DNP)

FORMAL APPLICATION FOR THE FINAL PAYMENT

CERTIFICATE

CERTIFICATION OF COMPLETION OF SERVICING

AND MAINTENANCE

FIG. 11-6 : TYPICAL PRE-CONDITIONS TO THE ISSUE OF THE FINAL PAYMENT CERTIFICATE

© HSKS

EFFECT OF ISSUE OF FINAL PAYMENT CERTIFICATE –

PRINCIPAL MATTERS FOR WHICH CERTIFICATE PROVIDES

‘CONCLUSIVE EVIDENCE’

THAT ALL THE CONTRACTOR’S FINANCIAL CLAIMS HAVE BEEN PROPERLY ACCOUNTED FOR

SATISFACTION OF THE COMPLETION CRITERIA AS SPELT OUT IN THE CONTRACT AND WHERE IT IS STIPULATED TO BE TO THE

REASONABLE SATISFACTION OF THE CONTRACT ADMINISTRATOR

FIG. 11-7 : EFFECT OF ISSUE OF FINAL PAYMENT CERTIFICATE – PRINCIPAL MATTERS FOR

WHICH CERTIFICATE PROVIDES ‘CONCLUSIVE EVIDENCE’

THAT ALL EXTENSIONS OF TIME OFFICIALLY GRANTED ARE CORRECT

THAT EXCEPT FOR ANY COMPUTING ERRORS, ETC. ALL RELEVANT ADJUSTMENTS (ADDITIONS/

DEDUCTIONS) HAVE BEEN MADE TO THE CONTRACT SUM

© HSKS

FINAL CERTIFICATE: TYPICAL CHALLENGES TO

‘CONCLUSIVENESS’/’FINALITY’

FRAUD/DISHONESTY/FRAUDULENT CONCEALMENT BY CONTRACTOR

CERTIFIER IMPROPERLY PRESSURIZED/INFLUENCED

CERTIFICATE EMBODIES WRONG DECISION ON A POINT OF LAW

THE EFFECT OF THE PRESENCE OF AN ARBITRATION CLAUSE

CERTIFICATE NOT GIVEN ON TIME

MISCELLANEOUS CHALLENGES/GROUNDS FOR CHALLENGING

CERTIFICATE NOT GIVEN IN CORRECT FORM

UNDISCOVERED DEFECTS E.G. LATENT DEFECTS, ETC.

FRAUD/COLLUSION BETWEEN CERTIFIER AND OTHER PARTY

COMPUTATIONAL ERRORS, ACCIDENTAL INCLUSIONS/EXCLUSIONS, ETC.

CERTIFIER ACTING ‘ULTRA VIRES’

CERTIFICATE NOT GIVEN BY AUTHORIZED PERSON

FIG. 11-8: FINAL PAYMENT CERTIFICATE – TYPICAL CHALLENGES TO ‘CONCLUSIVENESS’/

’FINALITY’

Contract Administration for Construction & Engineering Contracts

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Transcript of Contract Administration for Construction & Engineering Contracts