contract administration for construction & engineering contracts
DESCRIPTION
Presentation materials prepared by Ir Harbans Singh K.S. for the seminar on Contract Administration for Construction & Engineering Contracts organised by the Institution of Engineers Malaysia in Year 2013.TRANSCRIPT
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.
© HSKS
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’.
© HSKS
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
SUBSUBSUBSUB----SUBSUBSUBSUBCONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORSSUBSUBSUBSUB----SUBSUBSUBSUB
CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS
1. Architect2. Engineers - C&S, M&E3. Quantity Surveyor4. Other Specialist
SUBSUBSUBSUB----SUBSUBSUBSUBCONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORSSUBSUBSUBSUB----SUBSUBSUBSUB
CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS SUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUBSUBSUBSUB----SUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERSSUB SUPPLIERS
SUBSUBSUBSUB----SUPPLIERSUPPLIERSUPPLIERSUPPLIER
SUBSUBSUBSUB----SUPPLIERSUPPLIERSUPPLIERSUPPLIER
SUBSUBSUBSUB----CONTRACTORCONTRACTORCONTRACTORCONTRACTOR
SUBSUBSUBSUB----CONTRACTORCONTRACTORCONTRACTORCONTRACTOR
PROFESSIONALPROFESSIONALPROFESSIONALPROFESSIONALTEAMTEAMTEAMTEAM
PROFESSIONALPROFESSIONALPROFESSIONALPROFESSIONALTEAMTEAMTEAMTEAM
1. Architect2. Engineers - C&S, M&E3. Quantity Surveyor4. Other Specialist
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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EMPLOYEREMPLOYEREMPLOYEREMPLOYER
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
TRADETRADETRADETRADECONTRACTORCONTRACTORCONTRACTORCONTRACTOR
1. Architect2. Engineers - C&S, M&E3. Quantity Surveyor4. Other Specialist
TRADETRADETRADETRADECONTRACTORCONTRACTORCONTRACTORCONTRACTOR
TRADETRADETRADETRADECONTRACTORCONTRACTORCONTRACTORCONTRACTOR
Key
_______ : Contractual Link_ _ _ _ _ : Responsibility
FIG. 1-8: MANAGEMENT CONTRACTING (MC) - CONTRACTUAL RELATIONSHIPS
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EMPLOYEREMPLOYEREMPLOYEREMPLOYER
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
1. Architect2. Engineers - C&S, M&E3. Quantity Surveyor4. Other Specialist
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
•••• MISCELLANEOUS ISSUESMISCELLANEOUS ISSUESMISCELLANEOUS ISSUESMISCELLANEOUS ISSUES
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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
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
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
© HSKS
FIG. 2-6 : INSURANCES – AN OVERVIEW (PART I)
© HSKS
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
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
FINANCIAL LIMITS FINANCIAL LIMITS FINANCIAL LIMITS FINANCIAL LIMITS OF LIABILITYOF LIABILITYOF LIABILITYOF LIABILITY
FINANCIAL LIMITS FINANCIAL LIMITS FINANCIAL LIMITS FINANCIAL LIMITS OF LIABILITYOF LIABILITYOF LIABILITYOF LIABILITY
• 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
•••• MISCELLANEOUS ISSUESMISCELLANEOUS ISSUESMISCELLANEOUS ISSUESMISCELLANEOUS ISSUES
© HSKS
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
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
DURATIONDURATIONDURATIONDURATION
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----
CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS
DOMESTIC DOMESTIC DOMESTIC DOMESTIC SUBSUBSUBSUB----
CONTRACTORSCONTRACTORSCONTRACTORSCONTRACTORS
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
DURATIONDURATIONDURATIONDURATION
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
DURATIONDURATIONDURATIONDURATION
•••• 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
© HSKS
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)
© HSKS
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
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
• 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
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
* 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
FIG. 6-14: FLOWCHART ON THE GENERAL PROCEDURE FOR THE CERTIFICATION OF
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
FIG. 6-15: FLOWCHART ON THE GENERAL PROCEDURE FOR THE CERTIFICATION OF
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
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
* 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
ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR
•••• 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
MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS ISSUESISSUESISSUESISSUES
MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS MISCELLANEOUS ISSUESISSUESISSUESISSUES
•••• 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
•••• Clause 26: Delay and Extension of Time
(a): Notice of delays
(b): Extension of time
(c): Dispute on failure of Engineer to grant extension of time
•••• Clause 24: Delay and 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
NON-COMPLETION
AND DAMAGES
© 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
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
* 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
© HSKS
COMPLETION AND
HANDING-OVER
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
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
* 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
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© 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
ADMINISTRATORADMINISTRATORADMINISTRATORADMINISTRATOR
•••• 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
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.
•••• Contents, etc. to express contract stipulations/industry practice.
•••• 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
© HSKS
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
© HSKS
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
© HSKS
DEFECTS
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
© HSKS
© 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
© HSKS
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
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)
•••• Quality of Materials
•••• Standard of Workmanship
•••• Quality of Materials
• 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
PARTLY EMPLOYER PARTLY EMPLOYER PARTLY EMPLOYER PARTLY EMPLOYER DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED CONTRACT DESIGNED 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)
•••• Quality of Materials
•••• Standard of Workmanship
© 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
© HSKS
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
© HSKS
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
© HSKS
POST-COMPLETION
AND
FINAL ACCOUNT
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
•••• RELEVANT CASESRELEVANT CASESRELEVANT CASESRELEVANT CASES
* 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
GENERAL GENERAL GENERAL GENERAL POSITIONPOSITIONPOSITIONPOSITION
GENERAL GENERAL GENERAL GENERAL POSITIONPOSITIONPOSITIONPOSITION
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.
•••• Contents, etc. to express contract stipulations/industry practice.
•••• To supplement O&M Manuals
•••• Contents, etc. to express contract stipulations/industry practice.
•••• 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’
THANK YOU
© HSKS