comparison between pwd form 203a and pwd form design and built

7/22/2019 Comparison Between PWD Form 203A and PWD Form Design and Built

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Abstract

All standard forms of construction contract contain clauses for determination of contracts.

For example, PWD 203A forms, PWD Design and Built, PAM 2006 form and etc. It is the same

with the PWD 203A form where the PWD 203A (Rev. 10/83) has been replaced by the PWD

203A (Rev. 2007). These are the traditional forms of contract based on drawings and

specification (203) or bills of quantities (203A) produced for use in public sector or government

projects in both building and civil engineering contracts. Generally it can be said that a majority

of the risks have been transferred to the contractor under these standard forms of contract and

this remains true with the 2007 version.

The standard form is generally used in conjunction with the accompanying standard

administrative forms which have been produced specifically for use with the contract forms and

in many instances enhance the obligations contained within the conditions of contract. However,

based on a preliminary study that had been conducted for the research, it has been found out that

both of the employers and contractors may not actually realize their rights, procedures and

effects in determining the contractors employment under the new forms.

Hence, this study will focus on comparison between PWD 203a and PWD Design and

Built, procedures and effects as a result of determination of the contractors employment under

the forms.


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1.1 Introduction

A contract is a legally binding agreement between the parties identified in the agreement

to fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for

the execution of a contract, amongst other things, is the condition that all the parties to the

contract accept the terms of the claimed contract. Construction contracts are basically different

from major service contracts. There are various types of construction contract. The choice of

contract depends on the basis of pricing and the contract strategy that best meets the project

objectives. The various types offer different ways of handling pricing, risk transfer,

responsibility for performance, cost certainty, and complexity.

The purpose of standard forms of contract is to facilitate the contractual arrangements

between actors in a project. Standard forms of contract are readymade terms and conditions

when making a contract (Kwakye 1997). The standards vary from country to country and from

one type of project to another. These standards are generally used and accepted by different

contracting parties. It would be practically impossible to devise a standard form of contract that

would take account of all eventualities that might occur in a construction project (Andersson andGunnarsson, 2002). Standard forms of contracts are often criticized as being a compromise

containing some defective aspects. However, the advantage of their adoptions is that with the

passage of time, persons using them become familiar withtheir overall content as well as their

particular strengths and weaknesses (Kwakye 1997).


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1.2 Comparison between PWD (203a) and PWD (D & B)

There are different specialists or parties during the process of building procurement. It leads to

the fragmentation process in construction industry (Murdoch and Hughes, 2000). Each project

participant has particular aims and objectives and it is rare to find contract structures that

encourage harmony among these aims. According to the scale and requirement of the project the

parties may differ in types of contract. Figure 2 provides parties organization in PWD DB form

of contract and figure 3 shows parties relation in PWD 203A form of contract.

Figure 1: Organization chart of PWD DB form of contract

Client

Turnkey Contractor

Architect

Architect

C & S

Builders

C & S

Project

Engineer

Joint Venture Contractor

Project Director

M & E

Engineer

Design and

Implementation Project

Validation

Team

Accreditation

Team


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Figure 2: Organization chart of PWD 203A form of contract

Architect

Client

Contractor

Nominated Sub-Contractor

M & E Services

C & S

Engineer

Quantity

Surveyor

Safety

Officer

Superintending

Officer

M & E

Engineer

Executive

Director

Site

Supervisor

Assistant of Site

Supervisor

Assistant of Quantity

Surveyor


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MAIN PARTY ROLES PWD D & B PWD 203A

Client

Consultant

Contractor

Representative

Advisor

Stakeholder

Design Leadership

Management

Design

Administration

Site inspectorOverall responsibility

Constructors staff

Partial responsibility

Project director

Advisory group,

feasibility consultantEnd-user, general

public, tenant-

-

-

-

-Consultant(architect),main contractor, joint

venture contractor,

design and buildproject manager

Contract manager,

project engineer,

supervision team,builders

Architect, C & Ssub-contractor, M &E sub-contractor,

supplier

Superintending Officer

Advisory group,

feasibility consultantEnd-user, general

public, tenantArchitect(management

function)Consultant team

manager

Architect(designfunction)

Architect, contract

administrator,

supervising officer,project administration

Clerk of workBuilder, maincontractor,

principal contractor,

executive director

Project manager, site

supervisor, builders

C&S sub-contractor,M&Esub-contractor,

quantity

surveyor, supplier

Table 1: Comparison of PWD DB and PWD 203A form of contract parties


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According to table 1; PWD DB. form, there is no consultant party which directly would

be employed by the client. In fact, the client employs the contractor to design and build which

means the consultant is included in the package of the contractor. Therefore the design

leadership, design management, administration team and site inspector roles are under

contractors responsibilities. The contract management is the method in use in PWD DB. The

contract manager controls, monitors and maintains the project since the earliest stage of a

project.

One of the benefits for the client is that the client does not have to be so active during the

project, because most of the responsibility of the project is allocated to the contractor (Sderberg

1993). Architect (management function), consultant team manager, design manager, architect

(design function), engineer, consultant, contract administrator, supervising officer, planning

supervisor, project administration, clerk of work are the roles involved in consultant which are

the subordinates of contract manager. In PWD DB the contractor is compensated for all costs

incurred. Also failing such deductions will be recovered from the performance bond or as a debt

from contractor. Identifying and controlling (by avoiding or minimizing) the risks to a project is

a vital part of managing it. This includes those risks that have been transferred to the contractor

under PWD DB contract. The reason of popularity for using this type of contract is that the client

does not take the risk as much as the contractor has.

Hence the contractor consists of a contract manager to control over the cost and time. However

in PWD 203A the client employs consultant separately which is directly linked. In this type of

contract there is a separation of construction and design. There is a designing team, which is

contracted by the client, and they shall provide the contractor with a complete design (Ashworth

1991). The contractor subordinates include executive director who is the person in charge at site

for complementation. Any problem happens during project development or any difference

between designed and built documents in details, the executive director informs the superior and

handles all.


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The executive director includes site supervisor, quantity surveyor and safety officer who occupy

positions at the site of construction. The quantity surveyor monitors all required materials

quantities, proper cost and suggests to the client. The site supervisor manages all works, workers,

daily reports (site dairy) and the quality of work. Arranging the masonries, material maintenance

and all machines installation are the site supervisors responsibilities. In occurrence of a

problem, they refer to the project manager for handling. The different method of organizing and

maintaining the project is used in PWD 203A which is project management.

The project manager controls and monitors the work through schedule of planning during

constructing. The important aspect in PWD 203A is bills of quantities. Therefore the contractor

has the responsibility to complete the work according to the requested quantities referred to the

contract documents. In PWD 203A the government is entitled to deduct such costs, expenses and

on-cost charges or any part from any monies due to the contractor or to recover it from

performance bond as debt due from the contractor. That is the reason of being popular for this

type of contract for government sector in Malaysia.


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1.3 Categories of Comparison

In this report, the comparison will be carried out based on these categories:

1. Parties who involves in payment2. Type of payment3. Interim payment stages statement4. Advance payment5. Procedure of Interim Payment6. Schedule of issuing interim certificates7. Requirement upon issuing interim certificates8. Contractors obligation in applying payment9. Procedure of payment upon completion10.Wages of workmen affects the final payment11.Retention fund/performance bond12.Payment for liquidated damages13.Payments upon termination14.Performance bond15.Direct payment to the third party16.Late payment by government/employer


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8 Contractors

obligation in applying

payment

To make a works is done and SP

can make a valuation

1. The value of works done andproperly executed

2. The amount on any valuationof variations or the

instructions by the PD

(clause 24

3. The amount in regard to theexpenditure of provisional

sums executed or expended

(clause 25)

4. The value of any goods orunfixed materials delivered

to or adjacent to the site

intended for use or to be

incorporated into the works

5. The upervision reports asrequired by the PD under

clause 13.1

9 Procedure of paymentupon completion

1.

Within 3 month after theissuance of the certificate of

practical completion, the

contractor shall submit

application to enable the final

account prepared by the SO.

If contractor failed, SO shall

forthwith make the

assessment based on available

document for the final

account

1.

Within 3 month afterissuance of the certificate of

completion of making good

defects or the certificate of

completion of maintenance

(if any), Contractor shall

submit to PD a statement of

the final account showing in

detail the value


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2. Within 3 months after theexpiry of the defects liability

period for the whole of the

works or 3 month after the

issue of the certificate of

completion of making good

defects under clause 48

hereof, SO shall issue the

final certificate that consists

of supported documents, full

particulars complete with

receipt, vouchers, final

valuation, any amount

determined in clause 31.1

3. Final payment is paid by thegovernment to the contractor.

Final payment will not be

paid unless the contractor

satisfied the SO in hisobligation due to the

workmen

2. PD proceed to verify the finalaccount based on the

document which is given by

contractor

3. If final account is verified,PD shall issues Final

certificate which consists of

balance sum

4. Final payment is paid by thegovernment to the contractor.

Final payment will not be

paid unless the contractor

satisfied the SO in his

obligation due to the

workmen

10 Wages of workmen

affects the final

payment

Wages of all the workmen has to

be paid and all contributions

under the Employment Act 1955,

The Employee;s Social Security

act 1969, The Employees

provident Fund Act 1991 and any

other laws relevant to the

employment of workmen have

been paid.

Wages of all the workmen has to

be paid and all contributions

under the Employment Act

1955, The Employee;s Social

Security act 1969, The

Employees provident Fund Act

1991 and any other laws relevant

to the employment of workmen

have been paid.


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11 Retention fund No retention fund is applied in

government standard form.

No retention fund is applied in

government standard form.

12 Payment for

liquidated damages

If the contractor fails to complete

the works by the date for

completion or within any

extended time granted pursuant to

clause 43, the SO shall issues a

certificate of non completion to

the contractor and notice the

intention of the Government to

impose liquidated and ascertained

damages that stated in appendix.

If the contractor fails to complete

the works by the date for

completion or within any

extended time granted pursuant

to clause 49, the PD shall issues

a certificate of non completion to

the contractor and notice the

intention of the Government to

impose liquidated and

ascertained damages that stated

in appendix.

13 Payment upon

termination

Base on reasonable valuation. If

contract is terminated under

clause 50 and 52, the amount to

be paid (in so far as such amounts

or items have not already been

covered by payments on accountmade to the contractor) shall be

the following:

a. The value of all work carriedout up to the date of

termination

Base on reasonable valuation. If

contract is terminated under

clause 50 and 52, the amount to

be paid (in so far as such

amounts or items have not

already been covered bypayments on account made to the

contractor) shall be the

following:

a. The value of all work carriedout up to the date of

termination


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b. The amounts payable inrespect of any preliminary

items so far as the work of

service comprised therein has

been carried out or performed

and a proper proportion of

any such items which have

been partially carried out or

performed

c. The cost of materials or goodsreasonably ordered for the

works which have been

delivered to the contractor or

of which the contractor is

legally liable to accept

delivery

d. A sum being the amount ofany expenditure reasonably

incurred by the contractor inthe expectation of completing

the whole of the works in so

far such expenditure has not

been recovered by any other

payments

e. The reasonable cost of anyprotection works and removal

of equipment and site

facilities pursuant to

termination as provided under

the contract.

b. The amounts payable inrespect of any preliminary

items so far as the work of

service comprised therein

has been carried out or

performed and a proper

proportion of any such items

which have been partially

carried out or performed

c. The cost of materials orgoods reasonably ordered for

the works which have been

delivered to the contractor or

of which the contractor is

legally liable to accept

delivery

d. A sum being the amount ofany expenditure reasonably

incurred by the contractor inthe expectation of

completing the whole of the

works in so far such

expenditure has not been

recovered by any other

payments

e. The reasonable cost of anyprotection works and

removal of equipment and

site facilities pursuant to

termination as provided

under the contract.


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14 Performance bond If the contractor fails to performs

any of his obligations under the

contract and such failure is non

remedied in accordance with this

contract, the government shall be

entitled to call upon the

performance bond, wholly or

partially.

The performance bond may be

released or refunded to the

contractor upon the completion of

works.

If the contractor fails to performs

any of his obligations under the

contract and such failure is non

remedied in accordance with this

contract, the government shall be

entitled to call upon the

performance bond, wholly or

partially.

The performance bond may be

released or refunded to the

contractor upon the completion

of works.

15 Direct Payment to the

third party

Government shall paid the

nominated sub

contractor/suppliers according to

interim certificates/final

certificates

Applied in direct payment to the

contractors consultants. Forthe

purpose of payment to the

consultant, the contractor and the

consultant shall enter an

irrevocable Deed of Assignment

for the assignment of any moneydue to the consultant to be paid

directly by the government.

16 Late payment by

employer/government

No provision No provision


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Conclusion

In conclusion, the main differences in construction contract are the extent to which the

client is responsible for the management of the project, risk allocation and the internal

responsibilities of the project members. According to the comparison which is given above, the

roles link are depended on the type of contract and it would lead the liabilities and risk to the

parties. In PWD DB, contractors responsibilities vary from PWD 203A. The contractors

responsibilities in PWD DB are the design leadership, design management, administration team

and site inspection roles.

The traditional contractual arrangement sets out the legal relationship the parties wish to

establish and the rights, obligations and procedures for resolving contractual disputes .There are

several factors that affect what type of contract is suitable for a certain project such as the

amount of involvement from the client, the location of the project, technical complexity.

The project manager controls and monitors the work through schedule of planning during

constructing.

The trend of the faster development of the construction industry in Malaysia make Design &

Build contract more familiar and efficient because it may avoid the delay in completing the

project. The increasingly of complex projects, and the search for quicker and cheaper solutions

and achievement of value for money will influence the need for new organisational and

management methods. This will have a positive influence in terms of the integration of main

project stakeholders and phases, as well as the ultimate success of the entire construction project.

In an initial stage of the design phase, the client has to adopt a suitable contractual arrangement

for the project and a corresponding standard form of contract in order to attain the proper

management and organization in project.


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References

Malaysian Construction and Contract Law, Retrieved from

http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-

forms/p-w-d-form-of-contract-203-2007/

Determination Of Contractors Employment UnderPWD 203a (Rev. 2007) And PAM2006 Standard

Forms Of Contract Retrieved from

http://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdf
http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdfhttp://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdfhttp://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdfhttp://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/

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