Building Process, Parties Involved and

their Obligations
by

AHMAD ARZLEE HASSAN

CONTENT
• PART I:
Building Process and Parties involved
• PART 2:
Employer’s Obligation
• PART 3:
Contractor’s Obligation
• PART 4:
Employer’s Agents and their
responsibilities
Building Process & Parties Involved

• The Construction Industry

• The Construction Categories
• Features of Construction Industry
• Design & Construction Process
• Forms of Construction Project Procurement
• Project Participants
 What is Construction?

TIME? SOURCES?
WEEKS? RESOURCES?
TERMS? MONTHS? YEAR? Man? Machine?

TYPE?
PARTIES?
APPROACHES? CONSTRUCTION

COST? RULES? WORKS?

PROCESSES?
SEQUENCES? REGULATIONS?
What is Construction Industry?

P1 S2 CIDB Act 1994 Act 520

Construction Industry is an industry concerning all
construction works.

Town & Country Planning Act 1971

The carrying out of building, engineering, mining
or other operations in, on, over or under land or
the making of material change in the use of any
building or other land
Construction??
CIDB 1994 Act 520

Installation Renewal
Maintenance
Construction Dismantling Demolition
Renovation Repair Extension Alteration

OF

SOIL,
BUILDING CANAL,
CIVIL ENG MECH & ELEC EARTH &
TYPE SEWERAGE
STRUCTURE WORKS WATER
STRUCTURE & PIPE
CONTROL
Economy  Construction
• 3.3% to 4% of GDP contributed by construction
industry (MOF 2001)
• The government sectors accounts for 52.5% of
construction volume consists of residential, mix
development incl. maintenance and repair
• 42,000 over construction firms recorded as of
2002 with many firms capable of million RM
projects locally and internationally
• Construction caters for employment in Malaysia
Features of Construction Industry

• Each are UNIQUE - • FRAGMENTATION

Location, - Design, Crafts,
Characters, Experts, Complex,
Design, Product,
Conditions, Combined effort,
Circumstances etc. Parties involved
Design and Construction Process

INTITIAL STAGE

DETAILED DESIGN STAGE

TENDER STAGE

CONTRACT STAGE
 RIBA Plan of Work
STAGE TASK PROFESIONAL
A Inception Establish appointments & requirements CL, Arch

Briefing
B Feasibility Established technical possibilities & CRep, Arch,
specialist Eng, QS

Sketch
C Outline proposal Briefs and approaches All

Plans
D Scheme design Spatial arrangements & materials All
E Detailed design Detail design, drawings and specs Arch, Eng, QS

Drawings
Working
F Production information Complete drawing and spec for tender Arch Eng
G Bill of Quantities BQ production with queries answered Arch QS
H Tender action Tender process All

Site Operations
J Project planning Agree on timetable, procedures and Cont
schedule
K Operation on site Construction, meetings, supervision, All & Cont
payment
L Completion Handover and DLP All & Cont
M Feedback Legal responsibility, response etc. All
Who’s Who?

Identify the participants and briefly explain what are their roles
in a typical setting of a construction process.
Project Participants

CLIENT CONSULTANT CONTRACTOR

Project Manager, Main Contractor,
Employer, Planners, Designers, Subcontractor,
Owner, Architect, Engineer, Trade Contractor,
Quantity Surveyors, Specialist,
Developer Land Surveyors, Labour only subcon,
ID, Landscape, Design & build
Other specialist contractors
Other Participants
• Materials and Equipment Suppliers Sectors
• Manpower
• Finance Sector
• Approving Sectors
 Contractual Relationship

MAIN
EMPLOYER CONTRACT
CONTRACTOR
Conditions of engagement
Domestic SC Contract of sale
Architect Sub
Engineer contractor Suppliers

NSC
Quantity Surveyor
Nominated Sub
Con
Employer’s And Contractor’s
Obligations
PART 1:
Employer’s Obligation
• Who is the Employer
• Implied Obligations
• Express Obligations
• Payment Obligations
• Employer’s Responsibility
PART 2:
Contractor’s Obligation
• Who is the Contractor?
• Implied Terms
• Express Terms
• Design Liability
• Contractor’s Risk
• Contractor’s Remedies
• Duty to Warn
The Employer

OWNER

EMPLOYER
CLIENT

• The persons or body which commissions the work (building or

whatever etc.) and enters into a contract with the contractor
Employer’s Main Functions
• Commission the Project
• Finance the Project
• Own the (completed) Project
• Use the (completed) Project
• Make decisions
Implied Obligations

• Possessions of site
• Supply of plans and other details (such as time
etc.)
• Avoid obstruction of work and performance
• Payment of reasonable price

Where the contract is silent on such matters

such as time, price etc.
 Merton LBC v Stanley Hugh Leach Ltd (1985)

Hickmans v Roberts (1913)

Perini Corporation v Commonwealth of Australia

(1969)
Express Obligations
PRE CONTRACT POST CONTRACT
• Employer’s brief • Appointment of assisting
parties
• Detailed design and • Documentations
documentation
• Instructions
• Possession of site • Payment &
• Selection & compensations
appointment of • Insurance
builders • Permit & not interfere
Payment Obligation

• PRIMARY OBLIGATION is to pay the contractor for

workdone (and compensate for loss and expenses)
• As per contract sum, as per workdone periodically to be
paid within stipulated time as specified in contract

Pembinaan Leow Teck Chui SB v Dr. Leela’s

Mediacal Centre SB (1995)

Lubenhams v South Pembrokeshire (1986)

Employer’s Liability
CHANCES ARE PROJECT CAN BECOME DIFFICULT
AND EXPENSIVE TO CARRY OUT. WHY????
• Implied Warranty

• Standard Method of Measurement

Bacall Construction v NDC (1975)

Bryant & Sons Ltd v Birmingham Hospital Fund

(1938)
The Contractor
‘One who contracts to carry out and
complete construction works in return
for a financial consideration. The
contractor is responsible for the
planning of the work and for the
acquisition and deployment and
resources on site to achieve the
completion of the project. Subject to
any term to the contrary he is liable to
the employer for the defaults of his sub-
contractors, including those nominated
by the employer through his architect or
engineer.’
Construction Contract Dictionary, 1981,
E&F Spon
Contractor
• Carry out construction works
• Provide and organize resources for the
constructed project in accordance with the
design, within time and cost parameters
• Task includes tendering, execute common
trades, general labour and purchase
material and goods
• Engaging subcontractors for specialised
work
Implied Terms

TIME
WORKMANSHIP

IMPLIED
MATERIALS OBLIGATIONS
DESIGN

TO COMPLETE WORK
Express Terms

PAM 98 PAM 2006 CIDB 2000

JKR 2007 FIDIC 4th Ed

 DESIGN AND BUILD TRADITIONAL
CONTRACT CONTRACT

✗
- Designer’s

✔ Responsibility
- Still responsible for
Standard & Quality

✗
IS THERE - Fully liable - NSC’s Design
ANY DESIGN - Responsible for - Still responsible for
LIABILITY? - Fit for intended Standard & Quality
purpose
- Standard of Care Designs Some parts of the
- Material of
merchantable
✔ Work

Proposes New Design

quality

Either way, Contractor will always be liable for the

Standard of Care & Material Quality
Contractor’s Risk
• Responsibility for Site Conditions

Bottoms v York Corp. (1982)

• No Implied Warranty to Accuracy of Information

Sharpe v Sao Paolo Brazillian Railway Co

• Working Methods

Thorn v London Corporation

Contractor’s Remedies
• Extension of Time
• Variation
• Disruption allowances
• Loss and expense
• Determination
• Interest claim
• Non-payment
• Suspension of performance
Duty To Warn

CONTRACTOR EMPLOYER

•DEFECT IN DESIGN ARCHITECT

IN
•ECONOMIC OPTIONS WRITING ENGINEER

•EFFECTIVE METHODS PROJECT MANAGER

•SITE CONDITIONS
QS
•GENERAL
Duty to Warn
University of Glasgow v William Whitfield & John
Laing (1988)

Brunswick Construction v Nowlan (1974)

Edward Lindenberg v Joe Canning (1992)

Plant Construction PLC v Clive Adams Assoc (No.2)

(2000)

CGA Brown v Car (2006)

Employer’s Agent
PART 4: Employer’s Agent
• Construction Professionals
• Contractual Duties
• Contract Administration
• The Design Professional
Construction Professionals

• Design
Building Professionals
• Contract Construction Experts
Consultants
administration
ARCHITECT
• Translate briefs into ENGINEER
designs or Other
professionals
• Supervise
construction
Contractual Duties
• design,
• examination of site,
• delivery of drawings,
• information and
instructions in time,
• instruction as to methods
of working and temporary
works,
• special duties in regards
to nomination,
• knowledge of legislation,
building regulations,
• bye-laws and rights of
adjoining owners,
• excess of cost over
estimates,
• preparation of quantities,
• recommending form of
contract,
• supervision,
• administration of contract,
• comprehensive design,
surveys etc.
 Their Liability & Risks
Expectation and Demand for Reasonable
Degree of Skills and Care

Contractual
Professional
Expectation for Duties
Negligent Negligence
Professionalism
Misstatement
Kensington &
Bolam v Friern
Wimpey Chelsea AHA v
Hedley Byrne v Hospital
Construction Wettern
Heller (1964) Management
(UK) Ltd v Poole Composite Ltd
(1957)
(1984)
Contract Administrator
Typically ARCHITECT ENGINEER or
other appointed professionals act as

• Employer’s Agent
• Independent certifier

Sutcliffe v Thackrah (1974)

Merton v Leach (1985)

AS AGENT
• As Agent, it is an implied
warranty that the whole
responsibility is in the
hand of the Agent, thus
impliedly warrant a
demanded level of duty
and care, in which a
negligent act in the part of
the agent may induce
breach in the part of the
Employer
AS CERTIFIER
• Employer will leave the
appointed professional
to perform his duty
professionally, thus
authorizing them to
exercise their duty with
reasonable
professional discretion.
No improper
interference by the
employer should
happen.
 Agent of the Employer
• By name: Superintending Officer (S.O), Architects,
Employer’s Representatives, Employer’s Agent
• Not a party to the contract, but must act purely
reasonably in the interest of the Employer (as
agent)
• Any act may cause liability to the Employer; breach
of contract (as certifier)
• Can still be liable as an independent party if acting
outside the authority given
• Authority given, as per contract (e.g. PAM 2006)
Liabilities of an Employer’s Agent

• Delegation of Authority and Specialist

• Duties and Extent of Powers of the
Superintending Officers
• As to Variations and Contract
• Inspection and Supervision of the Works
• Information and Instructions to the
Contractor
• Advice to Employer
• Monitoring of Construction Works
Employer’s Agent:
Liabilities
Delegation of Authority and Specialist
• Vicarious liability applies
• Cannot delegate responsibility of high importance to
avoid liability, but can delegate

Merton v Lowe (1981)

Moresk Cleaners Ltd v Hicks (1966)

Employer’s Agent:
Liabilities
Duties and Extent of Powers of the Superintending
Officers
• Limited authority
• No power to accept tender, approve subcontracts,
varying, waiving or dispensing with any conditions of
contract or dismissing contractors

Vigers v Swindell (1939)

GPN Ltd v O2 (UK) Ltd (2005)

Employer’s Agent:
Liabilities
As to Variations and Contract
• No express power to order variation or any other
instructions or bind employer to accept contract/
subcontract

Sharpe v Sao Paolo Brazillian Railway co. (1873)

Cooper v Langdon (1841)

Employer’s Agent:
Liabilities
Inspection and Supervision of the Works
• Reasonable Supervision
• Allow contractor to carry out duty and make sure it
has been perform in accordance with the contract;
not to the extent of how to do it.

East Ham Corporation v Bernard Sunley & Sons Ltd.

(1966)

Sutcliffe v Chippendale and Edmonson (1971)

Employer’s Agent:
Liabilities
Information and Instructions to the Contractor
• Implied obligations to provide drawing and info;
comply with either expressed or implied
requirements
• To avoid claims for damages by contractor

Neodox Ltd v Swinton and Pendelebury (1958)

Royal Brompton Hospital v Hammond (No. 4) (1999)

Employer’s Agent:
Liabilities
Advice to Employer
• In recommending contractors; liability attached

Pratt v George Hills Assoc. (1987)

Partridge v Morris (1995)

Nye Saunders & Partners v Bristow (1987)

Employer’s Agent:
Liabilities
Monitoring of Construction Works
• Supervisory duties; ensure works in accordance to
contract

Imperial College of Science & Technology v Norman

Dawbarn (1987)

Clay v Crump (1964)

 Employer”s Agent As:

Impartial & Independent

Professionals
• Liability as Certifiers
• Fairness in Contract Administration
• Liability to Contractors
Employer”s Agent As:

The Design Professional

• Reasonable Standard of Skill and Care
• Fitness for Purpose
• Delegation of Design Duties
• Continuing Duty to Review his Design
• Novel and Risky Design
TUTORIAL

What are the responsibilities of a

QS in a typical Construction
settings?
Pre Contract?
Post Contract?
Quantity Surveyors
feasibility studies, preliminary estimates, cost plan,
prequalification reports, bill of quantities, tender
documents, tender estimates, tender report, contract
documents, valuation of works, interim payment,
variations, final account, project cost management, value
management, risk management, facilities management,
project management, construction management, claim
management, dispute resolution services, cost auditing,
condition survey, remeasurement, cash flow, life cycle
costing, pricing bill of quantities, pricing and agreeing
schedule of rates, attendance for arbitration or litigation
End of Lecture
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