PROGRESS PAYMENT

C4382-PROFESSIONAL PRACTICE 3

MOHD KHAIRUDDIN BIN HAMDAN03 PUB 11 F 2023

NOR HAMIZAN BIN NOR HASHIM03 PUB 11 F 2032

NURRUL SHAFIQA BT ZURGHIBA 03 PUB 11 F 2035

NUR SYAMIMI BT ZAINOL03 PUB 11 F 2043

SYAFIQAH BT SAARANI03 PUB 11 F 2048

PENSYARAH: EN HAMDAN BIN MOHD SALLEH

INTRODUCTION Contract was an agreement that is formed between two or more parties that enforceable

legally. That agreement can be implemented orally, act or that best in writing. Agreement in contractual cover among them, authority and responsibility parties which involved that enforceable legally.

Basis contract is based on free negotiation, where party that is contract free to discuss and create any conditions (that does not violate the laws) that they require without any force, inducement and others. However there is also where contract a person have no choice to be doing free negotiation such as contract for electricity supply service and telephone. Choice that there is , in case like use that service consumer must be agreeing with all contract terms that is fixed. Contract that is shaped such named standard contract ( standard contract ). Building contract have contract elements standard.

There is important something contracts needs a bond. With no strings attached, party that welsh may be will be missed from fulfill responsibility. In business for example, knowing rights and responsibility is where need without contract and terms that is clear, a dealer may be will not be comfortable and peaceful when supply an item to a person. With the existence of contract, should occur the dealer default can get compensation or compensation. Compensation purpose or this compensation was to reinstating someone's rights that wronged to level that should take on preliminary agreement.

CONTRACT SUM

• Defination of contract sum mutually agreed upon total amount that

a principal (client or project owner) pays to a contractor on completion of

the contract, in accordance with contract terms and conditions.

• Usually total contract are stated in matter agreement in contract building.

The contract amount can variable additional @ deduction a total contract

because of change, loss or compensation and other contract that permitted inside

contract adjustment.

• The contract document contract sum including amount preliminaries,

amount contract builder, Provisional Cost Sum and Prime Cost Sum.

• Example Contract Sum

PEMBERSIHAN DAN PENGINDAHAN SUNGAI MELAKA,MELAKA PARCEL 2 - PAKEJ 3

GRAND SUMMARY OF TENDER

Bil No Description Page Tender Amount 

1 Preliminaries And General Condition Pre/8 1,206,000.00 

2 Summary Phase 1( Building Work ) SM/39 7,625,345.56 

3 Summary Phase 2 ( Building Work ) SM/109 5,435,265.00  

4 External Work Ext/98 1,265,000.00  

5 Proviosional Sum PS/15 500,000.00  

6 Prime Cost Sum PS/16 5,435,000.00  

 

Total Amount Carried To Form Of Tender 21,467,210.56  

Definition of main contractor, sub-contractor and nominated supplier

Main contractor• Main contractor is one who expert and are informed in construction field and civil

engineering work or both. This main contractor will sign the contract between contractor and profession member party or employer. This main contractor will be implementing construction project until completed like those are included in contract document. Main contractor will be implementing this building process whether by using workforce that owned his own or take subcontractor or both.

Nominated subcontractor• Sub-contractor elected by superintending officer to implement expert works , that

were appropriated in tender document / materials list as Prime Cost Sum.

Nominated Supplier• Building material supplier elected by superintending officer to supply particular

construction materials that were appropriated in tender document / materials list as prime cost sum.

Sub-contractor

Compliance to quantity value • Subcontract work quantity and material that used had to take on determination that have

been fixed in contract document that already been signed by subcontractor

Protect public interest• Subcontractor should always ensure public interest not affected due to from subcontract

work that implemented him and this indirectly it will take care of interest main contractor. This interest include property damage, security, comfort and so on.

Care site cleanliness build• Waste or surplus from something subcontract work that carried out need to be cleaned

again by subcontractor. Subcontractor should ensure this case carried out lastly subcontract work without prejudice at the site other party property build.

Nominated Supplier Subcontract Implementation

• Supplier should implement and complete supply works and submit send material or equipment to contractor

 Make Sure Goods Security

• Become supplier responsibility to ensure goods and material that hand over send to site build staying under lock and key and undamaged.

Replacement or Repair• Become supplier responsibility to change and repair anything material and equipment that

were supplied him after being told in writing by contractor. That damage including whether break down, disabled or low the quality

Obligation of main contractor, nominated sub-contractor and nominated supplier.

Main Contractor• Construct, complete, test and commission the Works in accordance with

the Contract.• Take all appropriate measures expected of a contractor providing similar

works to ensure that the Works comply with the requirements of this Contract.

• Perform the Works and discharge its obligations as contained in this Contract by exercising professional judgment and practice, requisite skill, care and diligence. In performing the Work, the Contractor shall provide well-outlined procedures in the form agreed by the Government for reporting and co-ordination purposes.

• Provide and maintain throughout the Contract Period such number, categories of qualified and competent personnel necessary to perform the Works

• Carry out any other obligations and responsibilities under this Contract.

UNFIXED MATERIALS AND GOODS

•Unfixed materials and goods delivered to, places on or adjacent to the

sides and intended for incorporation there rin, shall not be removed expect

for use upon the works, unless the S.O has consented in writing to such

removal. Where the S.O. has included the value of such materials or

goods in any certificate in accordance with clause 28, under which the

contractor has received payment, such materials and goods shall become

the property of the Government

PREVIOUS PAYMENT In provide latest interim payment certificate to

contractor, previous payment should be taken into consideration. The meaning of previous payment that was contributed previously payment or sum payment that was contributed and accepted by contractor.

Item – item should be taken into previous payment. Construction work that implemented previous that

were value. Material on site that were valued previously. Work percent value preliminaries that was contributed Accumalated total value payment that has been

received by contractor. The latest progress builder work complete.

ADVANCE PAYMENT

Certain amount of money that lent by client to contractors in early construct as financial assistance to start work and is repaid through interim payment discount.

In contract practice for down payment government only used by for extend government project from Arahan Perbendaharaan Bil. 11 / 1981.Down payment is consist financial support which was given by clien to contractors early stage construction. If all dealings process this down payment can be resolved quickly, this payment may be given to contractors before site possession build or once site possession build. If too late, so objective this help grant had not achieved objective it created. This down payment more closely to financial loan that administered by client to Kontraktor. It should be paid back when project under construction where inflow of money contractor at that time was considered have been stable.

Qualification Receiving Deposit Payment Advance Payment that is eligible accepted by contractor according to

circular Perbendaharaan Bil. 10 / 2002 is as much as 25% from builder job value with maximum limit RM 10.00 million for main contractor. To sub contractor named, down payment is as much as 20% from sub- contractor value with maximum as much as limit RM 5.0 million

DOCUMENT ENTAILMENT BEFORE CONTRACTOR RECEIVING DOWN PAYMENT.

To ensure client interest, some condition and need imposed to

contractors before advance payment approved. Document that need to be

presented by contractors before down payment approved are as follows :-

Bank Guarantee

Letter Award

Insurance Policy

Letter From M.O.F

Performance Bond

Example Calculation Advance Payment. CADANGAN MEMBINA DAN MENYIAPKAN KLINIK KESIHATAN 3 TASEK

GELUGOR SEBERANG PERAI UTARA, PULAU PINANG. Maklumat Kontrak Harga Kontrak Bagi Kontraktor Utama RM 19,263,000.00 Wang Kos Prima RM 5,209,740.00 Wang Peruntukan Sementara RM 435,000.00 Nilai Kerja Pembinaan = RM 19,263,000.00 - ( RM 5,209,740.00 +

435,000.00 ) = RM 13,618,260.00 Jumlah Bayaran Pendahuluan = 25 %x RM 13,618,260.00

= RM 3,404,565.00 Kontraktor layak mendapat RM 3,404,565.00 wang pendahuluan iaitu

persamaan 25% dari kerja pembinaan.

RECOUPMENT OF ADVANCE PAYMENT

Repayment from down payment that given to contractor rejected through by gradually interim payment. Treasury directive outline repayment by using following formula

D = 2 x AP X WD -0.25(CS-(PC+PS) D = Jumlah tolakan terkumpul pada setiap bayaran interim AP = Jumlah bayaran pendahuluan D = Nilai Kerja dilaksanakan termasuk 90% bahan di tapak binaCS = Jumlah Harga KontrakPC = Jumlah wang kos primaPS = Jumlah Wang Peruntukan Sementara.

Contoh Pengiraan

Harga Kontrak Bagi Kontraktor Utama RM 19,263,000.00Wang Kos Prima RM 5,209,740.00Wang Peruntukan Sementara RM 435,000.00Jumlah Bayaran Pendahuluan RM 3,404,565.00

D = 2 X AP X WD – 0.25(CS –(PC+PS)

CS-(PC+PS)= 2X 3.404.565 X 5.0 – 0.25 ( 19.263-(5.209.740+0.435) 19.263-(5.209.740+0.435)= 6.81 X 1.0 13.68= 0.497= RM 497,000.00( Jumlah Nilai Rekupan)

STATE THE IMPORTANCE OF THE PROGRESS PAYMENT TO THE MAIN CONTRACTOR

Construction work implementation need financial investment that is high for contractor and client. It also requires long time to be completed. So out goings flow / enter that continuously and with number that reasonable is very important to ensure the a project more viable and canimplemented at the cost of that economic. Furthermore to finance contractor construction should produce and spend cost that isrelatively high early stage.

IMPORTANT PROGRESS PAYMENT

i) Paid salary – wage of inflicted worker in construction which involved at the site and contractor management.ii) Payment to supplier – building material supplier iii) Payment to rent – at the site machine rent.iv) Payment to sub contractors that carrying out work – work at the site.v) Payment for water bill, electric and cost - other cost which involved at the site.

With the existence of allocation for interim payment that was prescribed per month enable main contractor make payments to material supplier and pay rent plant hereby will launch further construction in time that is fixed.

PREPARATION OF PROGRESS PAYMENT INCLUDING INTERIM VALUATION Certain amount of money that need to be paid to periodically contractor such as that is fixed in contract on works that were finished implementing including building-materials that supplied and any different subject that is eligible calculated using contract.

INTERIM PAYMENT

Construction work implementation need financial investment that is high for contractor and client. It also requires long time to be completed. So outgoings flow / enter that continuously and with number that is reasonable is very important to ensure the a project more viable and implemented at the cost of that economic. Furthermore, generally to finance contractor construction should produce and spend cost that is relatively high in early stage.

Contractor actually crying out for payment from client from time to time to finance cost that was spent. Payment received enable contractor make payments to building material supplier, construction worker, plant rent, and equipment, general overhead and others party which related. With the existence of allocation for interim payment such as that stated in clause 28, so this payment issue can be managed by better for interest and both split good party. Whatever payment frequency according to contract terms and sum payment plausibility also important for contractor to ensure their financial flows shaping up.

DIFFERENTATIVE BETWEEN THE PREPARATION ON THE PROGRESS PAYMENT IN THE PUBLIC SECTOR AND THE PRIVATE SECTOR

Preparation Progress Payment In Public Sector

Prepare Valuation on site and Certificate Payment Once One Month Take a long time for passing of payment to contractors Have to be approval many parties before certificated payment approved

Preparation Progress Payment In Private Sector

Prepare Valuetion on site and Certificate Payment more once month. Not take a long time for passing of payment to contractors. Justified payment only Architect and Client only.

DIFFERENTIATE THE RESPONSIBILITIES OF THE MAIN CONTRACTOR, NOMINATED SUB CONTRACTOR, NOMINATED SUPPLIER, QS, ARCHITECT/SUPERINTENDING OFFICER AND CLIENT IN THE PREPARATION OF THE PROGRESS PAYMENT TO THE MAIN CONTRACTOR

Main Contractor Ensure construction work at the site run smoothly according to

schedule that is fixed

Nominated Sub Contractor Nominated Sub Contractor must finish the work

at the site according to schedule that is set and job specification that is correct not to harassing interim payment because of errors from sub contractor cause payments to interrupted main contractor payment progress.

Nominated Supplier. Ensure supplier that supplied reach at the site and according to

specifications that correct to enable contractor made claims for material on site.

Quantity Surveyor Valuetion on site to justified paid to main contractor .

Architect / Superintending Officer To approval progress work Construct on site and material on site.

Client Make progress payments build at the site to paid main contractor.

…THANK YOU…