Tutorial 3

1. List down and discuss the various types of certificates an architect is empowered to
issue in a building contract

The various type of certificates an architect is empowered to issue in a building

contract including:

-Interim Certificate, this certificate issued is to allow the contractor to claim payment of
work done from the client or developer. In the PAM2018 clause 30, the contractor
submitted a payment application for interim claim with the complete details and particulars
as required by the Architect or Consultant Quantity Surveyor. Then, the Architect or CQS/
M&E Engineer will go to the site to ascertain the amount claimed by the contractor. CQS
is to issue a valuation certificate including M&E Enginneer’s recommendation to the
Architect within 7 days and upon receipt of CQS valuation certificate; the Architect must
issues Architect Certificate to the employer within 21 days from receipt of contractor’s
claim. After receipt of the Architect certificate; the employer shall need to pay the amount
certified to the Contractor within the Period of Honoring Certificates.

-Final certificate, this certificate is issued by the Architect signifies that the Contractor has
completed his various obligations under the contract. This certificate shall be issued upon
the issuance of the Certificate of Making Good Defects and the Consultant Quantity
Surveyor must also complete the Final Account within the period as stipulated. Moreover,
the period to complete the final account by CQS is stated in the appendix. If none is stated
it shall be 15 months from the date of Certificate of Practical Completion. The final
payment to Contractor; Architect shall issue a Final Certificate to the Employer.
Additionally, Final certificate shall be issued within 28 days after Certificate of Making
Good Defects has been issued or within 21 days after the period of honoring of certificate
for the payment of the Penultimate Certificate. Final Certificate contains final payment to
Contractor based on the Final Account less all sums certified in previous payment
certificates to Contractor.
-Penultimate certificate
Once the penultimate certificate has been issued, it means that there is no more work
to evaluate and trigger the final progress payment. Only remains the final certificate that
has not been issued by the Architect. This certificate is required to be issued by an
Architect not later than fourteen days after the Certificate of Making Good Defects has
been issued for penultimate payment. The difference between penultimate certificate and
normal certificate for a progress payment is that the half of the retention sum which is 2.5%
has been released. Apart from this, the penultimate payment shall be made by the
Employer within the period of honoring certificate (21days). There will be no further
payments will be made until any of the defects have been rectified and the final certificate
is issued. At this point, the final payment will be made, including the release of the
remaining retention fund.

-Certificate of Making Good Defects

The Certificate of Making Good Defects is a certificate that is in relation to the completion
of defects, shrinkage, imperfections and any other fault raised during the Defects Liability
Period. Once practical completion has been certified, the defects liability period begins. If
any defects appear within the Defects Liability Period(DLP), the Architect shall prepare a
Schedule of defects, which is to be delivered to the Contractor not later than 14 days after
the expiration of the DLP. The Contractor, upon receiving the schedule of defects, he
shall make good the defects occur within 28 days. Besides that, the Architect can instruct
the Contractor to make good any critical defects that need to be rectified urgently during
the DLP. Normally, the defects liability period is 12 months. When the Contractor has
made good all the defects specified by Architect in the DLP, the Contractor shall send a
written notice to the Architect, who shall within 14 days to issue a Certificate of Making
Good Defects in which the date of making good defects is the date of receipt of
Contractor’s notice.

Certificate of Practical Completion

This certificate will be issued by an Architect when the works are practically completed,
even if there are some minor defects. When works are Practically Completed, the
contractor shall be required to give the Architect a Written Notice within fourteen days. If
the Architect confirms the works have not achieved “practically completed”, the Architect
should reply to the Written Notice by stating the reasons of the impractically completed.
When a certificate is issued, the employer may occupy and use the work as long as he
has reasonable authority to contact the contractor to complete the minor items still to be
addressed and to repair any defects. This is because it means that the work is sufficiently
complete to be safely used by the employer for the purpose he wishes. Although the
employer can occupy and use the work, the contractor still owns it. This means that the
contractor is still liable for loss or damage to the work, unless the loss or damage is
caused by the employer.

Certificate of Extension of Time

Under PAM Contract 2018, this certificate of extension of time (EOT) will be issued by
the Architect when the contractor successfully applies for an extension of time. The
intention of requesting an extension of time and a preliminary estimate of the reasons for
the delay be included in the Written Notice and must be given within 28days from the date
of AI (Architect Instruction), this will be a prerequisite for the extension. The Contractor
must submit details of its final claim within 28days after the end of the cause of delay,
failing which the Contractor shall be deemed to have assessed that the event in question
will not delay the completion of the Works beyond the Completion Date. If the Contractor
submits insufficient information on the EOT application within 28 days, the Architect shall
reply to the Contractor and advise of any deficiencies and may request further information
within 28 days. Upon submission of sufficient information, the Architect will consider the
information submitted by the Contractor and reject the Contractor's application with
reasons or issue an EOT certificate within six weeks.
2. A building contract requires an employer to make progress payment to a contractor
based on an interim certificate issued by an architect.

Discuss the provisions in a building contract on the responsibility of the employer and the
contractual rights of the contractor if the employer defaults in honoring the architect
interim certificate.

A provision is a legal clause that is designed to protect the interests of one or all
of the parties involved in a building contract. As an employer, he/she has the responsibility
of taking one of the important provisions that should be listed on the building contract
which is the contingent payment provisions. The contingent payment provisions had a
common concern among contractors in the construction industry is the risk of non-
payment for work that has been completed. If the provision is clearly expressed as setting
a condition precedent in which the general contractor is not obligated to pay the
subcontractor unless payment is received by the employer, it is considered a pay-if-paid
provision.

Interim Certificates are being used oftenly in the building construction contracts
and it is only to be issued by the architect at regular intervals based on periodic estimates
of the value of works properly executed and materials and goods supplied for the works.
In order to arrive at an amount due in interim certificates, interim valuations are to be
carried out upon receipt of the contractor’s claim with details and particulars.

In addition to issuing the Interim Certificate, the Architect is also required to direct
the Contractor as to the amounts payable to any of the Nominated Sub-Contractors and
Nominated Suppliers under the Interim Certificate. Other than that,the Architect also
informs or notify the relevant Nominated Sub-Contractor and Nominated Supplier as to
the amounts due to them under the Interim Certificate.

If the Contractor Fail to submit a Payment Application, it can be deemed that he

has waived his rights for the issuance of an Interim Certificate (and corresponding
payment) for the relevant interval. In such an instance, the decision as to whether an
Interim certificate shall be issued rest solely with the Architect. If an Employer fails to
honour the Certificate less any Liquidated Damages or set-off to which he is entitled to
the Contractor may subject to the giving of notice and suspended the work.