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.