Contract Administration For Construction & Engineering Contracts - 1

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.
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’.
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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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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
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CONTENTS
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 CONTRACTS
1. GENERAL CONTRACTS
2. ENGINEERING/CONSTRUCTION CONTRACTS
• TYPES OF BUILDING CONTRACTS
• COMMON CONTRACT PROCUREMENT METHODS
1. TRADITIONAL GENERAL CONTRACTS
2. MANAGEMENT TYPES
3. ‘PACKAGE DEAL’ TYPES
4. MISCELLANEOUS METHODS
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• BASIC CONTRACT PRINCIPLES
1. CONTRACT DEFINITIONS
2. ELEMENTS OF CONTRACT
3. STANDARD FORMS OF CONTRACT
4. BREACH OF CONTRACT: REMEDIES
• MISCELLANEOUS ISSUES
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SIMPLE
CONTRACTS
COLLATERAL SPECIALITY
CONTRACTS CONTRACTS
(DEED)
MATERIAL
& LABOUR
CONTRACTS ORAL
CONTRACTS
LABOUR
CONTRACT GENERAL EXPRESS
CONTRACTS
CONTRACTS:
TYPES
MATERIAL SUPPLY
MAIN CONTRACTS
CONTRACT
INDEPENDENT
CONTRACTS SUB-CONTRACTS
EMPLOYMENT SUB-SUB
CONTRACTS CONTRACTS
FIG. 1-1: GENERAL CONTRACTS - TYPES

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ENGINEERING/
CONSTRUCTION
CONTRACTS:
TYPES’
FIG. 1-2 : ENGINEERING/CONSTRUCTION CONTRACTS - TYPES

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TYPE OF CONTRACT
LUMP SUM MESUREMENT COST

CONTRACTS CONTRACTS REIMBURSEMENT
CONTRACTS
LUMP SUM WITH LUMP SUM WITH

PLAN AND BILLS
SPECIFICATION OF QUANTITIES
BASED ON
BASED ON A
APPROXIMATE SCHEDULE
QUANTITIES
COST PLUS COST PLUS COST PLUS TARGET COST

FLUCTUATING FEE VALUE COST
FIXED FEE PERCENTAGE
FIG. 1-3 : TYPES OF CONTRACTS BASED ON PRICING MECHANISM
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COMMON CONTRACT PROCUREMENT METHODS
TRADITIONAL
MANAGEMENT PACKAGE MISCELLANEOUS
GENERAL
TYPE DEAL TYPE METHODS
CONTRACTTING
MANAGEMENT CONSTRUCTION
CONTRACTING MANAGEMENT BUILD, OPERATE FAST
& TRANSFER TRACKING PARTNERING
DESIGN & BUILD/ ENGINEERING, PROCUREMENT, ‘TURNKEY’

TURNKEY’
DESIGN & CONSTRUCT CONSTRUCTION & COMMISSIONING
FIG. 1-4 : COMMON CONTRACT PROCUREMENT METHODS IN USE

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FIG. 1-5 : COMPARISON OF COMMON CONTRACT PROCUREMENT METHODS
1985 1990 1995 2000
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
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FIG. 1-6: TRADITIONAL GENERAL CONTRACTING (TGC) – CONTRACTUAL RELATIONSHIPS
EMPLOYER
PROFESSIONAL
TEAM - DESIGN AND
CONTRACT ADMINISTRATION
1. Architect MAIN CONTRACTOR

2. Engineers - C&S, M&E (MC)
3. Quantity Surveyor
4. Other Specialist
DOMESTIC SUPPLIER NOMINATED SUPLLIER

(DS) (NS)
SUB-
SUB-SUB SUB-
SUB-SUB
CONTRACTORS SUB--SUB SUPPLIERS
SUB CONTRACTORS SUB-
SUB-SUB SUPPLIERS
Key
_______ : Contractual Link
_____ : Responsibility
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FIG. 1-7: ‘TURNKEY’ CONTRACTS/DESIGN & CONSTRUCT (D&C) - CONTRACTUAL
RELATIONSHIPS
PROFESSIONAL 1. Architect
EMPLOYER 2. Engineers - C&S, M&E
ADVISORS 3. Quantity Surveyor
4. Other Specialist
1. Setting up Employers
Requirements
2. Auditing role during
construction
D & C CONTRACTOR
1. Architect PROFESSIONAL SUB-

SUB- SUB-
SUB-
2. Engineers - C&S, M&E
3. Quantity Surveyor TEAM CONTRACTOR SUPPLIER
4. Other Specialist
1. Detailed Design
2. Construction supervision
SUB-
SUB-SUB SUB-
SUB-SUB
CONTRACTORS SUB-
SUB-SUB SUPPLIERS CONTRACTORS SUB--SUB SUPPLIERS
SUB
Key
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FIG. 1-8: MANAGEMENT CONTRACTING (MC) - CONTRACTUAL RELATIONSHIPS
EMPLOYER
MANAGEMENT
PROFESSIONAL TEAM CONTRACTOR
(MC)
1. Architect
4. Other Specialist
TRADE TRADE TRADE

CONTRACTOR CONTRACTOR CONTRACTOR
Key
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FIG. 1-9: CONSTRUCTION MANAGEMENT (CM) - CONTRACTUAL RELATIONSHIPS
EMPLOYER
PROFESSIONAL CONSTRUCTION
TEAM MANAGER (CM)
1. Architect
4. Other Specialist
Key TRADE TRADE

CONTRACTORS CONTRACTORS
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* CONTRACT - DEFINATIONS
1.0 PER 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
2.0 PER SECTION 2(h) MALAYSIAN CONTRACTS ACT 1950 (REV. 1974)
* An agreement
* Enforceable by Law
** CONTRACT - BASIC ELEMENTS
CLEAR + UNQUALIFIED + CONSIDERATION = CONTRACT

CONTRACT
OFFER ACCEPTANCE (LEGAL
AGREEMENT)
FIG. 1-10: CONTRACT DEFINITIONS
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FIRM OFFER/
PROPOSAL
+
UNQUALIFIED
ACCEPTANCE
+
CONSIDERATION
INTENTION TO CREATE FREE CONSENT

LEGAL RELATIONS
CERTAINTY OF TERMS LAWFUL OBJECT AND

CONSIDERATION
LEGAL CAPACITY TO PHYSICAL/LEGAL

CONTRACT POSSIBILITY
FIG. 1-11: ELEMENTS OF A VALID/ENFORCEABLE AGREEMENT
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DEFINITION/
MEANING
CHARACTERISTICS
MAIN TYPES
STANDARD
DISADVANTAGES FORMS OF TYPES
CONTRACT
ADVANTAGES
PURPOSE
FIG. 1-12 : STANDARD FORMS OF CONTRACT (PART I)
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STANDARD FORMS OF CONTRACT
GOVERNMENT/ INTERNATIONAL
PRIVATE SECTOR
PUBLIC SECTOR CONTRACTS
1. FIDIC Conditions
2. ICE Conditions
JKR / PWD MISCELLANEOUS 3. IEEE Conditions
• 203 (Rev. 1/2010) - without • CIDB Form for: 4. IMechE Conditions

quantities
- Building Contracts 2000 Edn. 5. JCT Conditions
• 203A (Rev. 1/2010) - with - Form CIDB.B (NSC/2002)
quantities
• Modified JKR/PWD Forms e.g.
• 203N (Rev. 1/2010) - For NSC LPK, MHA, etc.
• 203P (Rev. 1/2010) - For

Nominated Suppliers
• PWD Form DB (2007 Edn.)

BUILDING WORKS CIVIL ENGINEERING M & E WORKS
For Design & Build Contracts WORKS
• PAM Contract 2006 • IEM Conditions • IEM Conditions

(with quantities)
- IEM.CE 2011 - IEM.ME 1/94
• PAM Contract 2006 - IEM.CES 1/90
(without quantities) • TNB Conditions, etc.
• PAM Sub-Contract 2006
FIG. 1-13: STANDARD FORMS OF CONTRACT (PART II)

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COMMENCEMENT OF
CONTRACT AT SITE
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2.0 COMMENCEMENT OF CONTRACT AT SITE
• APPROACHES IN:
1. TRADITIONAL GENERAL CONTRACTS
2. DESIGN & BUILD / TURNKEY CONTRACTS
• FORMALITIES:
1. CONDITIONS PRECEDENT
2. INSURANCES, PERFORMANCE BONDS, ETC.
• SITE POSSESSION : MEANING AND EFFECT
• SUBMITTALS :
1. CONSTRUCTION DRAWINGS
2. SHOP DRAWINGS
3. SAMPLES
4. QA AND QC DOCUMENTS
5. HEALTH AND SAFETY DOCUMENTS
6. METHOD STATEMENTS
• TEMPORARY WORKS
• ISSUES FOR ATTENDANCE OF NOMINATED SUB-
SUB-CONTRACTORS
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• RELEVANT 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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TAKING OVER OF COMMENCEMENT
THE SITE OF CONTRACT
COMMENCEMENT: COMMENCEMENT
SITE POSSESSION
OF CONTRACT
COMMON LABELS PERIOD
COMMENCEMENT
COMMENCEMENT
OF OPERATIONS OF WORKS
ON SITE
FIG. 2-1 : COMMENCEMENT - COMMON LABELS
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PARENT COMPANY
GUARANTEE
INSURANCE PERFORMANCE BOND
PROTECTION AGAINST
CONTRACTOR’S FAILURES:
COMMON MECHANISMS
STANDBY LETTER LETTER OF COMFORT

OF CREDIT
LETTER OF AWARENESS
FIG. 2-2: PROTECTION AGAINST CONTRACTOR’S FAILURES – COMMON MECHANISMS
© HSKS
PROTECTION AGAINST CONTRACTOR’S FAILURES: AN OVERVIEW (PART I)
COMMON MECHANISMS/ PARENT COMPANY

PURPOSE
INSTRUMENTS: TYPES GUARANTEES
• Risk transferring contracts • Parent Company Guarantees
• Enable recovery of compensation • Performance Bonds

upon contractor’s default/failure
under the contract • Miscellaneous Types:
1. Letters of Comfort
2. Standby Letters of Credit
3. Insurances
PROCEDURAL
NATURE USE REQUIREMENTS
• Contractual performance of • For commercial and • Preliminary review

‘Company within a corporate administrative convenience
group is underwritten by other • Check for legal compliance
members of group • Owing to requirements of
applicable law e.g. company • Check for compliance with
• E.g. Subsidiary and Holding law, etc. formalities
Company
Cont’d….
FIG. 2-3 : PROTECTION AGAINST CONTRACTOR’S FAILURES – AN OVERVIEW (PART I)
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Cont’n.
PROTECTION AGAINST CONTRACTOR’S FAILURES: AN OVERVIEW (PART II)
MISCELLANEOUS MECHANISMS/
PERFORMANCE BONDS
INSTRUMENTS
STANDBY LETTER INSURANCE

LETTER OF COMFORT LETTER OF AWARENESS
OF CREDIT
• Reasons for • Reasons for • Reasons for • Reasons for:
• Typical contents • Comparison with letters of • Comparison with • Legal effect of Insurance
• Legal effect of letter comfort ‘Unconditional/On-Demand’ Bond • Comparison with the other
• Typical contents • Obligations under mechanisms/instruments
• Legal effect of letter • Legal effect of letter
DURATION
DURATION OF
OF FINANCIAL LIMITS PROCEDURAL
PROCEDURAL NON-
NON--PROVISION
PROVISION OF
OF RELEASE OF BOND
DEFINITION
DEFINITION TYPES
TYPES LIABILITY
LIABILITY OF LIABILITY REQUIREMENTS BOND/GUARANTEE /GUARANTEE
• See Robinson and • Two main types: • Normally stipulated in • Normally • Preliminary • Timing for • Seven main
Laver’s definition bond. Types include: stipulated in review submission circumstances
1. ‘Conditional/
Bond itself.
• Means of Default’ Bond 1. Entire duration of • Checks for • Consequences of • Effect of
guaranteeing to contract • Normally 5-10% authenticity failure to submit: breaches of
the employer: 2. ‘Unconditional/
terms and
On-Demand’ 2 Up to CPC - • Sometimes • Check for 1. Contract
conditions
1. The Bond ‘Construction’ higher compliance with provisions
contractor’s Bond formalities 2. Common law
financial • Features of • See use of
rules
local practice 3 CPC to Final ‘Indexed
viability and
Certificate – Performance
2. Contractor’s • Rules of
‘Maintenance’ Bonds’
construction
ability to Bond
and
perform
obligations enforcement 4 Up to date of
release stipulated
under the
contract by guarantor
FIG. 2-4 : PROTECTION AGAINST CONTRACTOR’S FAILURES – AN OVERVIEW (PART II)

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FIG. 2-5 : CONTRACTOR’S INSURANCE POLICIES – COMMON TYPES
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INSURANCES: AN OVERVIEW (PART I)
PURPOSES DEFINITION TYPES
• Risk allocation mechanisms • Per Robinson and Lavers
• Means of seeking compensation • Voluntary assumption of

following default/failure specified risk in return for an
agreed payment
CATEGORISATION CATEGORY I CATEGORY II PRINICPAL TYPES
• Two Main Categorization: • Liability based • Loss based • Contractor: Common Types
1. Liability based • Indemnification of insured • Compensate insured for • Employer: Common Types
2. Loss based against damages payable to loss/damage directly
3rd party incurred by insured • Occupier: Common Types
• Difference: basis of
compensation • Examples: • Examples: • Management Corporation:
Common Types
1. 3rd Party Liability 1. Contractor’s All Risk
Insurance Policy
2. Workmen’s 2. Erection All Risk
Compensation Policy
3. Professional Indemnity
Insurance
FIG. 2-6 : INSURANCES – AN OVERVIEW (PART I)

© HSKS
Cont’d…….
INSURANCES: AN OVERVIEW (PART II)
FEATURES AND PROCEDURAL

FAILURE TO INSURE
CONDITIONS REQUIREMENTS
• Necessity for checking authenticity

of: 1. Cover notes 2. Policy
• Necessity to check for compliance
with: 1. Contract requirements TIMING FOR SUBMISSION FAILURE TO INSURE
2. Formalities
• Normally stipulated in contract • Effects dictated by:
• 2 Common alternatives: 1. Governing contractual

provisions
1. Before commencement of 2. Common law rules
work/contract; or
• Possible options: Employer insures
2. Within stipulated period of and charges premiums to contractor
award of contract • Apparently not a serious ground to
effect determination
IMPORTANT
IMPORTANT
BASIS
BASIS OF
OF STANDARD PARTIES
PARTIES COMMENCEMENT
COMMENCEMENT DURATION
DURATION FINANCIAL
FINANCIAL LIMITS
LIMITS TERMINATION
TERMINATION
CONTRACTING STANDARD OF
CONTRACTING CONDITIONS
CONDITIONS
EFFECTING POLICY
POLICY OF
OF POLICY
POLICY OF POLICY
POLICY OF
OF LIABILITY
LIABILITY OF
OF POLICY
POLICY
• Submission of • Six main ones i.e. • General rule: • Various possibilities: • Different formulae: • Normally stipulated • Three main methods:
proposal by employer in
1. Condition precedent 1. Named party 1. Date of 1. Up to issue of CPC tender/contract 1. Satisfaction of
• Issue of policy to liability 2. With insurable commencement of conditions
interest contract; or 2. Up to issue of CMGD • Guidelines for precedent in
• Effect of : 2. During estimating limits. contract e.g. issue
work/construction • Typical parties: 2. Date of 3. Up to issue of Final
1. Contracts of Certificate of CPC, etc.
commencement of • General rule on
‘uberrimae 3. As to risk 1. Employer work on site; or deductibles/excess 2. Termination of
fidei’ 2. Contractor 4. Up to Final Certificate
4. Following a loss plus fixed period clauses policy by
3. Sub-contractors 3. Date of delivery of breach/mutual
2. Cover notes, event 4. Selected 3rd parties material, etc.
etc. • Requirements agreement
5. As to subrogation • Effect of ‘cross • Function of the nature pertaining to extension
of period 3. Lapse of insurance
6. On contribution liability’ provisions of contract works period and/or
extension
FIG. 2-7 : INSURANCES – AN OVERVIEW (PART II)
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SITE POSSESSION: AN OVERVIEW
PROVISIONS FAILURE TO GIVE

MEANING DEGREE POSTPONEMENT
FOR POSSESSION
• Licence revocable by
Employer at any time
• Licence to be free from
any encumbrances
GENERAL
EXCEPTIONS
EXPRESS IMPLIED LEGAL POSITION
• In Letter of • If not expressed, by • No • Express contract

Acceptance Law stipulations permitting
postponement
• Or in Contract • Freeman & Son v
Hensler
EXCEPTIONS POSSESSION
GENERAL LATEST LEGAL GENERAL
TO GENERAL ON PIECEMEAL EFFECT
PRINCIPLE POSITION LEGAL POSITION
PRINCIPLE BASIS?
• Contractor entitled to • Express Stipulations • Sufficient degree • General Position: No • Breach of Contract • Contractor entitled to
Sole/exclusive of possession/ loss occasioned
possession • Case Law • Exceptions: • Entitles Contractor to
access rescind Contract. • Contractor entitled to
a) Express EOT if expressly
• To execute work
stipulations to permitted
unimpeded
contrary contractually
• To be able to
b) Where Common • Otherwise, LAD
perform work
Law applies cannot be imposed
FIG. 2-8 : SITE POSSESSION – AN OVERVIEW
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SITE POSSESSION MEETINGS
MATTERS PARTICIPANTS
TIMING PURPOS E MINUTES
DEALT
· On Date of Commencement · 1. All Project Team

To officially handover
of Contract / Possession of Site to Member
· Date of Site Possession the Contractor
WHO DISTRIBUTION/
PREPARES ? CIRCULATION
· Contract Administrator · To all parties
EXPLANATION INTRODUCTION HANDOVER SET OUT

OF CONTRACT OF PROJECT OF VARIOUS PROCEDURES
REQUIREMENTS MEMBERS DOCUMENTS COVERING
· Document Submittals and

Approvals
· Sample Submittals and
Approvals
·
· Inspection of Work
LETTER OF COPY OF SET OF
DELEGATION CONTRACT PRICED COPY CONSTRUCTION Interim Valuations
OF POWERS DOCUMENTS OF B.Q. DRAWINGS · Claim Procedures
FIG. 2-9 : SITE POSSESSION MEETINGS
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WORK PROGRAMME
MISCELLANOUES
REPORTS
AND DOCUMENTS METHOD STATEMENTS
DESIGN AND CALCULATIONS

FOR WORKS UNDER P.C. DRAWINGS I.E. SHOP,
SUM, ‘PACKAGE DEAL’ TYPE FABRICATION, SETTING
CONTRACTS, ETC. WORKS UNDER CONTRACT: OUT, ETC.
TYPICAL SUBMITTALS BY
CONTRACTOR
DESIGN AND QA/QC DOCUMENTS

CALCULATIONS FOR
TEMPORARY WORKS
HEALTH AND SAFETY
DOCUMENTS
FIG. 2-10: WORKS UNDER CONTRACT – TYPICAL SUBMITTALS BY CONTRACTOR
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MONITORING OF
WORK PROGRESS
© HSKS
3.0 MONITORING OF WORK PROGRESS
• PROGRAMMING OF WORKS
• PARTIES RESPONSIBLE:
1. EMPLOYER
2. MAIN CONTRACTOR
3. CONTRACT ADMINISTRATOR
• PROGRESS REPORTS
• SITE RECORDS
• MEETINGS:
1. SITE POSSESSION
2. PROGRESS/SITE
3. NSC COORDINATION
4. AD-HOC
© HSKS
• RELEVANT 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
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PRINCIPAL ACTIVITIES
IMPORTANT
MILESTONES FOR
EMPLOYER TO MEET SEQUENCE OF
ACTIVITIES
WORK PROGRAMME:
PRINCIPAL CONTENTS
IMPORTANT
TIMING OF ACTIVITIES
MILESTONES FOR
CONTRACTOR TO MEET
IDENTIFICATION OF
CRITICAL ACTIVITIES
AND CRITICAL PATH
FIG. 3-2 : WORK PROGRAMME – PRINCIPAL CONTENTS
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WORK PROGRAMME: AN OVERVIEW
RESPONSIBILITY MEANING FORM CONTENTS PURPOSE OPTIONS ON PART OF ALTERATION/

SUBMISSION CONTRACT? REVISION
• Express Provisions • Sequence and • Approval • General

Timing of Activities • Rejection Policies
• By Implication • Withholding of
• Mode of
• Critical Milestones Approval
Alternatives /
Revision
• Effect of
Alternatives/
Revision
METHOD OF SEQUENCE OF FOR CONTRACT FOR
WORKING WORKING ADMINISTRATOR CONTRACTOR
PRIMIVERA/ PART OF TENDER SUBMITTED AFTER

BAR CRITICAL PATH
PERT MICROSOFT MISCELLANEOUS SUBMISSION? TENDER AWARD
CHARTS ANALYSIS
‘PROJECT’
PROJECT’
FIG. 3-3 : WORK PROGRAMME – AN OVERVIEW
© HSKS
TO LEVY CONTROL OVER
PROGRESS OF THE WORKS
TO ENSURE CONTRACT
MISCELLANEOUS IS COMPLETED
PURPOSES ACCORDING TO
SCHEDULE
PROGRESS MONITORING:
EMPLOYER’S PURPOSES
TO PLAN AND TO WARN CONTRACTOR

STREAMLINE FINANCIAL TO TAKE REMEDIAL
ARRANGEMENTS MEASURES IN CASE
TO OBVIATE DEFAULT TO TAKE NECESSARY DELAY OCCURS
REMEDIAL MEASURES IF
DELAY OCCURS OR IF
EMPLOYER IS AT FAULT
FIG. 3-4 : PROGRESS MONITORING – EMPLOYER’S PURPOSES
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PROGRESS MONITORING: AN OVERVIEW
FREQUENCY/
DURATION PURPOSE METHODS BASIS PARTIES NATURE OF
RESPONSIBLE CHECKS
• From Site • Primary Purposes • Use of Contractor’s • Employer/ contract • On regular basis
Possession Work Programme administrator
• Secondary Purposes • Normally ‘monthly’
• To Issue of Final • Contractor
Certificate • Maybe
• Normally up to i. Weekly
Practical Completion ii. Fortnightly
only PROGRESS SITE iii. Quarterly, etc.
MEETINGS RECORDS
COORDINATION/
SITE SUB-
SUB-
SITE PROGRESS PROJECT ‘AD-
AD-HOC’
HOC’
POSSESSION CONTRACTORS
MEETINGS MANAGEMENT MEETINGS
MEETINGS MEETING
MEETINGS
DURATION PURPOSE METHODS EVIDENTIAL VALUE
OFFICIAL SITE
OFFICIAL WORK
PROGRESS DIARY
RECORDS
REPORTS
FIG. 3-5 : PROGRESS MONITORING – AN OVERVIEW

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MISCELLANEOUS SITE POSSESSION
MEETINGS MEETINGS
POST CONTRACT
AD-HOC AWARD STAGE: SITE PROGRESS
MEETINGS PRINCIPAL TYPES MEETINGS
OF MEETINGS
COORDINATION/
SUB-CONTRACTOR’S PROJECT
MEETINGS MANAGEMENT
MEETINGS
FIG. 3-6 : POST CONTRACT AWARD STAGE – PRINCIPAL TYPES OF MEETINGS

© HSKS
SITE PROGRESS MEETINGS: AN OVERVIEW
TIMING PURPOSE ISSUES/ PARTICIPANTS

MINUTES
MATTERS DEALT
WHO DISTRIBUTION/
ENABLE PERMIT WORK MISCELLANEOUS PREPARES? CIRCULATION
CONTRACTOR TO PROGRESS TO
• Officially present • Be reviewed on • Enable Employer/ C.A. to • S.O./ Contract • To all parties/
progress report regular basis redress delay caused by Administrator attendees
him/them
• Present problems • Identify areas and
encountered causes of delay • Keep track of financial
progress/allocation
3RD PARTY
ONLY SITE ISSUES FINANCIAL ISSUES ISSUES AFFECTING MISCELLANEOUS
CONTRACT ISSUES
CONTRACT MAIN CONSULTANTS NSCs EMPLOYER

ADMINISTRATOR CONTRACTOR
• Chairs Meeting • Main participant • Observers Only • By invitation only • Observer only
• Main participant • Participants if contract
administrator's assistants/
representatives
FIG. 3-7 : SITE PROGRESS MEETINGS – AN OVERVIEW

© HSKS
SUB-CONTRACTORS MEETINGS: AN OVERVIEW
TIMING PURPOSE ISSUES/ MINUTES PARTICIPANTS

MATTERS DEALT
• Usually monthly prior

to site meetings
• If necessary more
frequently
WHO DISTRIBUTION/
TO ENABLE SUB-
SUB- TO PERMIT PREPARES? CIRCULATION
CONTRACTOR TO CONTRACTOR TO
• Main • To all parties/
• Officially present • Review NSC’s progress,
Contractor attendees
progress report to areas of delay, etc.
Contractor
• Identify and sort
• Present problems coordination problems
encountered
CONTRACTOR NOMINATED DOMESTIC OTHERS

(MAIN) SUB-
SUB- SUB-
SUB- (BY
CONTRACTORS CONTRACTORS INVITATION)
• Chairs Meeting • Employer

• Third Parties
• Contract
COORDINATION 3RD PARTY ISSUES MISCELLANEOUS Administrator
SITE PROBLEMS FINANCIAL ISSUES
MATTERS ISSUES
• Design • Possession • Payments • Authorities

• Site Work • Access • V.O.s • Utilities Providers
• Security • Claims • Others
FIG. 3-8 : SUB-CONTRACTORS MEETINGS – AN OVERVIEW
© HSKS
‘AD-HOC’ MEETINGS: AN OVERVIEW
CONVENORS
TIMING PURPOSE
(AS APPLICABLE)
• The Employer
• The Contract Administrator
• The Contractor
• The Sub-Contractors
AS AND WHEN USUALLY TO DISCUSS
NECESSARY FROM DICTATED BY SPECIFIC ISSUES /
TIME TO TIME CIRCUMSTANCES MATTERS
EMERGENCY FINANCIAL TECHNICAL ADMINISTRATIVE MISCELLANEOUS

ISSUES ISSUES ISSUES MATTERS ISSUES
• Site Issues • Payments • Design • Training

• Design/ Work Issues • V.O.s • Construction/Installation • Maintenance
• 3rd Party Issues • Claims • Testing and • ‘As-Built’ Records
Commissioning
• Defects
FIG. 3-9 : ‘AD-HOC’ MEETINGS – AN OVERVIEW

© HSKS
SITE RECORDS: AN OVERVIEW
DURATION PURPOSE METHODS EVIDENTIAL VALUE
• From Date of Commencement /

Site Possession to
• Completion of works
• Normally up to Practical
Completion only
PROVIDE NECESSARY OFFICIAL
INFORMATION/ EVIDENCE OFFICIAL WORK PROGRESS SITE DIARY
TO RECORDS REPORT
REVIEW WORK EVALUATE PERMIT

CONTRACTOR’’S
CONTRACTOR DULY SIGNED/ ACKNOWLEDGEMENT
PROGRESS DECISION MAKING
CLAIMS TO ENDORSED RECORDS OF RECEIPT RECORDS
• Contractor’s Scope • Extension of Time • Best evidential value • Some evidential value
• NSC’s/DSC’s Scope • Additional Work
• Direct loss and/or

expense
• Miscellaneous matters
FIG. 3-10 : SITE RECORDS – AN OVERVIEW
© HSKS
OFFICIAL WORK RECORDS: AN OVERVIEW
TIMING OF PURPOSE CONTENTS PROCEDURAL

SUBMISSION MATTERS
USE OF
DAILY WEEKLY FORTNIGHTLY DESIGNATED SIGNING OR
STAFF FOR ENDORSEMENT
• Preparing • By authorized
TIME OF SAFE
• Maintaining ENTRY Person(s) KEEPING
• Submitting • S.O/ Contract
• Daily Administrator • By S.O./Contract
FOR BASIS administrator
RECORD OF FOR CONTRACT OF OFFICIAL
SITE INFORMATION ADMINISTRATION PROGRESS REPORT • Up to lapse of
period of
limitation
SITE WORK/ RECORD RECORD OF WEATHER PROBLEMS INSTRUCTIONS MISCELLANEOUS

ACTIVITIES OF WORKERS PLANT/MACHINER CONDITIONS ENCOUNTERED
Y
• Planned • Skilled • On site • Affecting work • Design • Received • Site/ Factory

Visits
• Undertaken • Unskilled • Delaying site • Site • Carried Out
operations • Inspections
• Coordination • Outstanding
• Due to 3rd Parties
FIG. 3-11 : OFFICIAL WORK RECORDS – AN OVERVIEW

© HSKS
SITE DIARY: AN OVERVIEW
NATURE DURATION CONTENTS PROCEDURAL

MATTERS
• Preferably kept by • From commencement of

each and every site work on site until
personnel completion
• Personal record of site • If necessary until the end

activities of the contract CHECKING / PRESENTATION
ENTRIES ON ON REQUEST/ SAFE KEEPING/
DAILY BASIS ENDORSEMENT CUSTODY
• Otherwise by DEMAND
designated site
supervision team
member • By designated • By Employer’s • By Employer/ • By S.O./ contract
person Representative/ S.O./ any administrator
Designated interested party
person • Up to lapse of
period of
• Accuracy of limitation
entries
SITE WORK/ PROBLEMS

ACTIVITIES ENCOUNTERED INSTRUCTIONS RECORD OF MISCELLANEOUS ATTACHMENTS
• Undertaken • As to Site Work • Issued to Contractors • Contractor’s • Site/ factory visits • ‘As-Built’ sketches,
defaults drawings, diagrams,
• Coordination • Carried out by /omissions • Weather conditions etc.
Contractor
• Disruption to site • ‘As-erected’/ ‘As-
activities Installed’ Work/ plant,
etc.
FIG. 3-12 : SITE DIARY – AN OVERVIEW
© HSKS
SUPERVISION OF WORKS/
CONTRACT ADMINISTRATION
© HSKS
4.0 SUPERVISION OF WORKS/CONTRACT ADMINISTRATION
1.0 CONTRACT ADMINISTRATION
PURPOSE
DESIGNATION
ROLES
SOURCES OF DUTIES AND POWERS
REPRESENTATIVE/ASSISTANTS
PRINCIPAL DUTIES
LIABILITY
2.0 SUPERVISION
FORMS
DURATION
LEVEL
LIABILITIES
3.0 DISCUSSION OF CASE LAW
© HSKS
ENSURE THAT CONTRACTOR
FULFILLS HIS OBLIGATIONS
ENSURE WORKS UNDER THE CONTRACT
SATISFACTORILY
COMPLETED WITHIN ENSURE THAT EMPLOYER
ORIGINAL CONTRACT PERIOD FULFILLS HIS OBLIGATIONS
AND PRICE UNDER THE CONTRACT
CONTRACT
ADMINISTRATION:
PRIMARY PURPOSES
ENSURE THAT NEEDS/ ENSURE THAT EMPLOYER

OBLIGATIONS OF CONTRACT FULFILS HIS
ADMINISTRATOR UNDER STATUTORY/LOCAL
CONTRACT/STATUTE AUTHORITY REQUIREMENTS
ADEQUATELY FULFILLED ENSURE THAT EMPLOYER’S
POSITION ADEQUATELY
PROTECTED AGAINST VARIOUS
CLAIMS
FIG. 4-1 : CONTRACT ADMINISTRATION – PRIMARY PURPOSES
© HSKS
CONSTRUCTION SUPERINTENDING
MANAGER OFFICER/ S.O.
CONTRACT
PROJECT DIRECTOR ADMINISTRATORS:
ARCHITECT
COMMON
DESIGNATIONS
EMPLOYER’S
ENGINEER
REPRESENTATIVE
FIG. 4-2 : CONTRACT ADMINISTRATORS – COMMON DESIGNATIONS
© HSKS
AS TO
RIGHTS/ DUTIES UNDER
THE CONTRACT
WITH IMPLIED/
WITH EXPRESS OSTENSIBLE AS TO MATTERS AS TO OTHER
AUTHORITY AUTHORITY OF COST MATTERS
AS AN AGENT AS AN ADVISOR
OF THE EMPLOYER TO THE EMPLOYER
CONTRACT
ADMINISTRATOR:
RANGE OF ROLES
PERFORMED
AS AN INDEPENDENT AS AN INDEPENDENT/
CONTRACTOR IMPARTIAL
ADJUDICATOR
WHERE SUCH FOR MAINLY AS TO DISPUTE AS TO

WORK DESIGN/ RESOLUTION CERTIFICATION
IS REQUIRED DETAILING
POST- WORK
CONTRACT
FIG. 4-3 : CONTRACT ADMINISTRATOR – RANGE OF ROLES PERFORMED
© HSKS
CONDITIONS
CONDITIONS OF CONDITIONS OF
TERMS OF OF CONTRACT ENGAGEMENT/ CONTRACT
REFERENCE OF BEING SERVICES BEING
APPOINTMENT ADMINISTERED AGREEMENT ADMINISTERED
‘IN-HOUSE’ EMPLOYEE EXTERNAL BODY/PERSON
CONTRACT ADMINISTRATOR: SOURCES OF DUTIES AND POWERS
FIG. 4-4 : CONTRACT ADMINISTRATOR – SOURCES OF DUTIES AND POWERS
© HSKS
ARCHITECT
SPECIALIST
CONSULTANT CIVIL ENGINEER
PROJECT MANAGER CONTRACT ADMINISTRATOR’S STRUCTURAL ENGINEER

REPRESENTATIVES/ ASSISTANTS:
TYPICAL EXAMPLES
QUANTITY SURVEYOR MECHANICAL ENGINEER
ELECTRICAL ENGINEER
FIG. 4-5 : CONTRACT ADMINISTRATOR’S REPRESENTATIVES/ASSISTANTS - TYPICAL

EXAMPLES
© HSKS
OVERALL SUPERVISION PROGRESS MONITORING
ADMINISTRATION OF PAYMENTS ORDERING VARIATIONS
ISSUING INFORMATION,
DRAWINGS, DETAILS, ETC. ISSUING RELEVANT INSTRUCTIONS
GRANTING APPROVALS, CONSENTS, ETC. INSPECTIONS OF WORKS
NOMINATING SUB-CONTRACTORS, ETC. ADVISING EMPLOYER
CONTRACT ADMINISTRATOR’S PRINCIPAL DUTIES FOR

TRADITIONAL GENERAL CONTRACTS
ISSUING NECESSARY REPORTS PARTICIPATING IN TESTING AND COMMISSIONING
OVERSEEING TRAINING OF EMPLOYER’S

O & M PERSONNEL MONITORING SERVICING AND MAINTENANCE
OVERSEEING COMPLETION & CHECKING AND APPROVING O & M MANUALS &

HANDING OVER OF WORKS ‘AS-BUILT’ DRAWINGS
MONITORING
PREPARING ‘FINAL ACCOUNT’
RECTIFICATION OF DEFECTS
PARTICIPATING IN PREPARATION OF MIGRATION/

FACILITIES MANAGEMENT PLANS ‘CLOSING-OFF’ CONTRACT
FIG. 4-6: CONTRACT ADMINISTRATOR’S PRINCIPAL DUTIES FOR TRADITIONAL GENERAL

CONTRACTS
© HSKS
FULL-TIME SUPERVISION
NOMINAL SUPERVISION STANDING

SUPERVISION
FORMS OF SUPERVISION:
COMMON LABELS
PERIODIC SUPERVISION CONSTANT SUPERVISION
PART-TIME SUPERVISION
FIG. 4-7 : FORMS OF SUPERVISION – COMMON LABELS
© HSKS
SUPERVISION/INSPECTIONS: OVERVIEW (PART I)
TYPICAL TYPICAL
CLAUSES IN NATURE PURPOSES
PROVISIONS IN
AGREEMENTS AND MEANING
BY-
BY-LAWS
• Engineer’s Agreement: • Building (Federal Territory of • Terms used synonymously • See Keating’s definition in
Kuala Lumpur) By-Laws 1985: ‘Building Contracts’
1. Clause 8.1 and 8.7 BEM • See Newey J’s definition
Form (1999) 1. By-Law 6: Supervision of • Three fold purpose:
Works • Distinction: Inspection imposes a
• Architect’s Agreement lesser duty: William Tompkinson 1. To ensure contractor
2. By-Law 23(1): Certificate For v St. Michael in the Hamlet. carries out work in
1. Clause 5(4)(iv) Part II: Occupation accordance with contract.
Architects (Scale of • In absence of express provisions
Minimum Fees) • By-Law 5(1) City of Kuala to contrary courts imply a duty of 2. To enable contract
(Amendment) Rules 1992 Lumpur (Earthworks) By-Laws supervision: Alexander Corfield v administrator to discharge
1975 David Grant. his obligations to employer.
2. Clause 9 Conditions of
Engagement of Architect • Malaysia: Statutory provisions 3. To enable contract
necessitate ‘supervision’ administrator to meet his
statutory obligations
FIG. 4-8 : SUPERVISION/INSPECTIONS – OVERVIEW (PART I)
© HSKS
SUPERVISION/INSPECTIONS: OVERVIEW (PART II)
LEVEL OF RESIDENT
DURATION SUPERVISION LIABILITIES
SITE STAFF
REQUIRED
• Determining factors: • Determined by: • Necessity for Resident Site • Primary responsibility for
Staff (RSS) supervision: contractor’s.
1. Nature of works under 1. Conditions of engagement See East Ham Corp. v
contract • Typical examples: Bernard Sunley.
2. Applicable statutory
2. Conditions of engagement provisions e.g. By-Laws 1. Resident architect/engineer • Heads of liabilities of contract
2. Clerk-of-works. administrator for defaults/
• Normal periods: • Prevailing Forms: 3. Other relevant staff breaches:
1. Up to issue of Practical 1. Category I: Full- • Engagement:
Completion; or time/Standing/ Constant 1. Contractual
supervision 1. By employer; or 2. In tort
2. Up to application of certificate 2. By contract administrator 3. Statutory
for occupation; or 2. Category II: Part-
Time/Periodic Supervision • Powers and duties determined • Position of contract
3. Up to issue of Certificate of by engineering/construction administrators who are
Making Good Defects 3. Category III: ‘Nominal’ contract being administered professional engineers,
Supervision and/or letter of delegation of architects, etc.
• Common practice is up to issue of
Certificate of Making Good • Legal Position: power.
Defects • Responsibilities of:
1. Must be reasonable for
works involved 1. RSS
2. Must be sufficient to check 2. Contract Administrator
the important elements
3. Adequate to meet statutory
requirements
4. Sufficient to meet
obligations of engagement
FIG. 4-9 : SUPERVISION/INSPECTIONS – OVERVIEW (PART II)
© HSKS
CONTRACT ADMINISTRATOR’S LIABILITIES: AN OVERVIEW (PART I)
LEGAL KNOWLEDGE CONTRACTUAL

HEADS OF LIABILITIES LIABILITY
AND PERSONAL DUTY
• Three main categories: • General position: Required to have

knowledge of all legal matters
1. Contractual relating to work being undertaken
2. Tortious
3. Statutory • Nature of matters.
DEFENCES
• Characteristics: • Consequences of failure
1. Not distinct/mutually exclusive • Duty is personal and non-delegable
2. Concurrent/complementary • Prove no valid
express/implied contract
3. Choice of option on aggrieved part of engagement
• If there is such valid
contract prove:
1. Contract didn’t impose

particular duty breach
of which claimed, or
GENERAL POSITION STANDARD OF CARE EFFECT OF BREACH
2. Service actually
rendered was of the
• Action by employer under terms • Duty of care owed to employer • Two options available to standard reasonably
of contract of engagement employer: expected under the
• Usually to use ‘reasonable skill circumstances
• If no express terms, implied by and care’ 1. Rescind contract and sue for
law damages; or
• Duty and standard of care either:
• Contract of engagement: 2. Affirm contract and sue for
1. Expressed in contract of damages
1. Standard forms, or engagement, or
2. ‘Bespoke’ Forms • Right of election of option
2. Implied by law belongs to employer
FIG. 4-10 : CONTRACT ADMINISTRATOR’S LIABILITIES – AN OVERVIEW (PART I)
© HSKS
CONTRACT ADMINISTRATOR’S LIABILITIES: AN OVERVIEW (PART II)
TORTIOUS LIABILITY
GENERAL POSITION NEGLIGENCE
• Duty of care in tort of negligence concurrent

with contractual duty: Brown v Boorman
• Common Forms:
1. Acts/omissions
2. Mis-statements
BASIC STANDARD REASONABLE ESTABLISHING LIABILITY TO

DEFINITION ELEMENTS SKILL & CARE LIABILITY DEFENCES
OF CARE 3RD PARTIES
• Laid down in • D owed P duty of • Application of the • Criterion: Objective • Per Hunter v • Only 3 types: • No liability to
Donoghue v care ‘Bolam Test’ Henley contractor
Stevenson • Less onerous 1. Deny existence of
• D breached this duty • Use of ‘Reasonable 1. There is a usual duty of care • Possible
• ‘Neighbourhood’ Man’ test • Use of standards and normal exceptions:
principle • Consequence: P prevailing at time of practice 2. Prove claim made See Para 5.9B5.
suffered • Use by Malaysian default not of type
• Important elements: loss/damage Courts 2. D did not adopt currently
• Proscribe use of the practice recognized
1. Causation • Loss/damage • 2 Categories: hindsight
2. Forseeability suffered not remote 3. Practice 3. Show service
1. Reasonable • See Eckersly v adopted by D rendered meets
skill & care Binnie & Partners would not be ‘Bolam Test’
2. Fitness for adopted by
another • No immunity to suit:
purpose Sutcliffe v Thackrah
reasonable D
• Need to satisfy all 3 • Situation per ‘Pure
element on balance Economic Loss’
of probabilities
FIG. 4-11 : CONTRACT ADMINISTRATOR’S LIABILITIES – AN OVERVIEW (PART II)

© HSKS
CONTRACT ADMINISTRATOR’S LIABILITIES: AN OVERVIEW (PART III)
STATUTORY LIABILITY
LIABILITIES UNDER PROFESSIONAL

GENERAL POSITION DIRECT
DELEGATED LIABILITY
STATUTORY LIABILITY
LEGISLATION
• In addition to Contractual and • Various Acts of Parliament • Liability under various By- • For professional contract
Tortious Liability applicable Laws e.g. UBBL, etc. administrator
• Various sub-heads: • Principal example: S71 Street, • Penalties/sanctions stipulated • Under specific Acts of
Drainage & Building Act 1974 in the By-Laws Parliament
1. Direct statutory liability
2. Under delegated legislation • Penalty for mis-supervision, etc. • Possible sanctions:
3. Professional liability 1. Fine
2. Suspension
3. Cancellation of
registration
FIG. 4-12 : CONTRACT ADMINISTRATOR’S LIABILITIES – AN OVERVIEW (PART III)
© HSKS
PAYMENTS/
COMMERCIAL MATTERS
© HSKS
5.0 PAYMENTS/COMMERCIAL MATTERS
• LEGAL OBLIGATION OF EMPLOYER
• PAYMENT TO MAIN CONTRACTOR/TURNKEY CONTRACTOR
• PAYMENT TO SUB-
SUB-CONTRACTORS
• ‘BACK TO BACK’
BACK’ PAYMENTS
• BREACHES IN PAYMENT OBLIGATIONS
• RELEVANT 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
PROCEDURES AND CONDITIONS
PRECEDENT
QUANTUM/AMOUNT SET-OFF/DEDUCTIONS
TIMING ENFORCEMENT/HONOURI
NG
PAYMENT: ASPECTS OF CONTRACTOR’S

ENTITLEMENTS/EMPLOYER’S OBLIGATIONS
FIG. 5-1: PAYMENTS – ASPECTS OF CONTRACTOR’S ENTITLEMENT/EMPLOYER’S OLIGATIONS
© HSKS
TIMING OF PAYMENT TO CONTRACTOR: PRINCIPAL SCHEMES/SCHEDULES
PERIODIC SCHEDULE PERIODIC SCHEDULE

DURING CURRENCY ADVANCE PAYMENT AFTER COMPLETION/
OF THE CONTRACT END OF CONTRACT
OF WHOLE OF PART OF AFTER ISSUE AFTER ISSUE OF

CONTRACT SUM CONTRACT SUM OF CPC FINAL CERTIFICATE
STAGES/MILESTONE AFTER COMPLETION/ MISCELLANEOUS/

PAYMENT END OF CONTRACT METHODS
AFTER AFTER ISSUE OF

PHYSICAL WORKS FINANCIAL
ISSUE OF CPC FINAL CERTIFICATE
FIG. 5-2 : TIMING OF PAYMENT TO CONTRACTOR – PRINCIPAL SCHEMES/SCHEDULES
© HSKS
START
Contract administrator to
resolve all preliminary issues
Yes Are the preliminary

matters expressly stipulated
in the contract?
No
Yes Are they included

in the Project Procedures
Manual?
No
Have these been No

sorted- out following award of
contract?
Yes
Have these No Contract administrator

been formalized by all the to take necessary
parties? action forthwith
Yes
Contract administrator to issue
formal record of issues agreed
upon by all relevant parties
All relevant parties

to take necessary steps to
implement issues
FIG. 5-3: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART I)

© HSKS
A
Establish if the contractor

has fulfilled his first
pre -condition to payment
Has the contractor No

commenced with the work
under the contract?
Yes
Has he No
executed any physical
work?
Yes
Has he No Contractor not

delivered materials to entitled to any
site? payment
Yes
Prima facie, contractor Contract administrator

may be entitled to payment not obliged to initiate
the progress payment
Establish if it is necessary
for the contractor to apply for
the required payment
No Does the contract

contain an express term
thereto?
Yes
B C D
FIG. 5-4: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART II)
© HSKS
B C D
Contractor not No
Is it mandatory?
obliged to apply
Yes
Contract administrator Has No Contractor may

obliged to initiate contractor complied with not be entitled to
process on his own requirements? payment until
volition he satisfies
pre -conditions
Yes
Contract administrator to proceed

with the next stage i.e. valuation
Has the No
date of valuation been
reached?
Yes
No Prima facie, valuation

Have the may not be initiated
relevant pre-conditions been until achievement
fulfilled? of necessary
requirements
Yes
No Have the
parties involved been
identified?
Yes
Deficiencies/omissions No Has the

to be addressed method for valuation been
forthwith to enable confirmed?
process to continue
Yes
E F G
FIG. 5-5: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART III)
© HSKS
E F G
Valuation of works to be carried

out jointly by the relevant parties
Valuers to prepare a valuation report
Yes Does the

contractor agree with the valuation?
No
Yes Does he
sign off the No Does he officially
valuation report? register his protest with
valuers?
No Yes
Do the valuers No
Valuation deemed to have consider the objections
been accepted by the protest?
contractor
Yes
Do they No
agree with the Contractor may protest to
objections? the certifier if necessary
Yes
Valuers may revise/amend Does the
the valuation as necessary Contractor No
protest to the
certifier?
Valuers to endorse/sign off
the valuation report prepared Yes
H I J K
FIG. 5-6: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART IV)
© HSKS
H I J K
Valuation report together with

all other necessary documents to
be submitted to the certifier
Certifier to clarify/
discuss deficiencies/
Certifier to carry out preliminary reviews omissions with the
valuers
Is the valuation Deficiencies/

No omissions may
report complete, sufficient and
accurate? compromise the
certification
Yes
Certifier to take Has the
objections into Yes
contractor any valid grounds
consideration before for objecting?
undertaking certification
No
Certifier not to consider
L objections any further
Certifier may exercise Is the date

his discretion in No
for certification
undertaking certification imminent?
Yes
Should in Has the stipulated No Certifier has no discretion to

No his discretion a minimum value of work been exceeded?
carry out certification
certificate be
issued? Yes
Yes Certifier to proceed with the
necessary certification procedures
M N O
FIG. 5-7: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS

(PART V)
© HSKS
M L N O
Is the 1st Interim Certificate due? No
Yes
Have all No
the stipulated pre-conditions been met?
Yes
Is the
subsequent Interim Certificate No
due?
Yes
Have all Prima facie,
No certificate cannot
the relevant pre-conditions
- been met?
be issued
Yes
Certifier to proceed with
preparation of Interim Certificate
Is there a Yes Use the

standard form of certificate prescribed? standard form
as prescribed
No
Utilize the form Yes
unless found Has a ‘bespoke’ form been generated?
not suitable
No
Certifier to develop an ‘ad hoc’ form
meeting the necessary criteria/contents
requirements
P Q R S T
FIG. 5-8: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART VI)
© HSKS
P Q R S T
Certifier to fill in all details

completely, sufficiently and
correctly in certificate
Are there Yes

any NSCs/Nominated
Suppliers?
No
Amount certified
Are for such parties
Yes to be indicated
there any official
assignees? separately in certificate
No
No Are
all procedural requirements met?
Yes
No Are
all formal requirements
met?
Yes
Certificate may be
challenged as invalid and No Is the signatory an
unenforceable, if and authorized person under the
when issued contract?
Yes
Have all the Deficiencies/ errors may

relevant checks for errors, No
compromise validity of
etc. been undertaken? certificate
Yes
U V W X
FIG. 5-9: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART VII)
© HSKS
U V W X
Contract administrator to CA to rectify

issue relevant certificate deficiencies/errors
as soon as possible
Is there a Certificate to be issued

certification period stipulated No within a reasonable time
in the contract? of application/ valuation
Yes
Prima facie, employer may
be in breach of contract. Is certificate
Contractor may take No
issued within the said
appropriate action for period?
employer’s breach
Yes
Contractor to Is the recipient
be furnished with No
of the original copy
original copy stipulated?
Yes
Default in service may
constitute a breach of
Is the certificate No contract on employer’s part.
issued to the stipulated To be corrected/ rectified
person? forthwith
Yes
Are copies Relevant parties have a

No
issued to the relevant right to demand the
parties? necessary copies from
contract administrator
Yes
No Is the service
of certificate formally
evidenced?
Yes
Y Z AA AB
FIG. 5-10: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART VIII)
© HSKS
Y Z AA AB
Establish the specific post--

certification requirements
Do the Omission to
recipients formally No acknowledge may
acknowledge receipt of lead to future evidential
document? problems
Yes
Contract administrator
No Is presentation to procure said
of certificate stipulated in the acknowledgements as
contract? soon as possible
Yes
Contractor
may present Is there a
certificate within No period stipulated for the
a reasonable presentation?
period of receipt
Yes
Is presentation No Delay may postpone

formally effected within this employer’s obligation to
period? honour certificate
Yes
Does employer Omission to acknowledge may
formally acknowledges receipt No lead to future evidential
of the certificate from problems and may affect the
contractor? honouring of certificate
Yes
Employer to review Contractor to procure
certificate for validity said acknowledgement
as soon as possible
AC AD AE AF
FIG. 5-11: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART IX)
© HSKS
AC AD AE AF
Are Employer may challenge

there grounds for Yes certificate and refuse to
challenging validity of honour it citing the
certificate? relevant grounds
No
Employer to proceed with honouring
certificate issued/ presented (as
applicable)
No Are there any

set-offs/deductions
- to be
made?
Yes
Employer must
No Are these
pay amount
expressly permitted by the
as certified
contract?
to the contractor
Yes
Has the Employer to determine amount
amount certified less the set- No due before the stipulated
-
offs/ deduction been honouring period lapses
established?
Yes
Has the final No

sum due been paid to the
contractor?
Yes
Has this been done in the No Employer culpable

stipulated honouring of breach of contract.
period? Contractor to take
appropriate action.
Yes
STOP
FIG. 5-12: FLOWCHART ON GENERAL PROCEDURE FOR PROCESSING OF PAYMENTS (PART X)

© HSKS
RECOVERY OF THE UNPAID
AMOUNT
MISCELLANEOUS INTEREST ON THE

REMEDIES UNPAID AMOUNT
DEFAULT IN PAYMENT:
TYPICAL CONTRACTUAL
REMEDIES
RIGHT TO DETERMINE RIGHT TO REDUCE RATE

EMPLOYMENT UNDER OF EXECUTING WORK
CONTRACT
RIGHT TO SUSPEND WORK
FIG. 5-13 : DEFAULT IN PAYMENT - TYPICAL CONTRACTUAL REMEDIES
© HSKS
CERTIFICATE WRONG ON ITS’ FACE
CERTIFICATE FUNDAMENTALLY INACCURATE
CERTIFICATE NOT IN CORRECT FORM
CERTIFICATE ISSUED BY UNAUTHORISED PERSON
CERTIFICATE ISSUED IN UNAUTHORISED MANNER
INTERIM CERTIFICATES:
TYPICAL CHALLENGES
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
DIRECT PAYMENT BY THE
EMPLOYER
PAYMENT UPON CERTIFICATION CONTINGENT PAYMENT
PAYMENT TO SUB-CONTRACTORS:
PRINCIPAL METHODS
FIG. 5-15 : PAYMENT TO SUB-CONTRACTORS – PRINICPAL METHODS
© HSKS
START
- SC to make fresh submission in the

Sub-Contractor (SC) forwards details of amount
claimed to Main Contractor (MC) officially next application
No
Is it within No Does the

the prescribed time MC accept the
limits? submission?
Yes
Yes
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
FIG. 5-16: FLOWCHART ON GENERAL PROCEDURE FOR TYPE II ‘CONTINGENT PAYMENT’ (PART I)
© HSKS
A
Is there No
such a clause in the
contract?
Yes
Is the MC may pay SC within
No
period for payment a reasonable time of receipt of
stated? monies from the Employer
Yes
Yes Does the MC

pay the SC within the
said period?
No
SC to pursue the remedies
available under the contract
Are there
Yes SC to initiate the contractual
any contractual remedies
remedies as applicable
available?
No
Is there Yes SC to initiate the Arbitration

an arbitration process if necessary
agreement?
No
SC to pursue his common

law remedies if necessary
STOP
FIG. 5-17: FLOWCHART ON GENERAL PROCEDURE FOR TYPE II ‘CONTINGENT PAYMENTS’
(PART II)
© HSKS
PAYMENT IN ‘PACKAGE DEAL’ TYPES OF CONTRACTS: AN OVERVIEW
CONTRACT SUM QUANTITIES MEASUREMENT

ANALYSIS
PURPOSE DRAFTING STRUCTURE GENERAL SITUATIONS

ACCURACY
POSITION WHERE USED
• For Tender Analysis • Normally by • Given in some Forms • As based on • Changes/V.O.s • Effect of
• For Interim Payment Contractor e.g. JCT 98, PWD Lump Sum and measurement
Form DB/T, etc. • Unforeseen
• Samples may be due to nature of expressly
• Valuation of Conditions
given by Employer • Required for: contract stipulated in
Changes/
in Employer’s some forms
Provisional Sums • No requirement
Requirements 1. Overall Works for measurement • Mostly deals with
• For any Price 2. Sections or patent errors
Adjustment Phases
GENERAL EXPRESS ERRORS/

POSITION PROVISIONS OMISSIONS PREPARATION
• Whenever used, effect • Included in most • Risk on Contractor • Contractor responsible

not similar to TGC Standard Forms
• E.g. Clause 55(2) ICE • If Employer prepares,
• Are deemed to be only • E.g. Clause 55(1) ICE, Form risk for errors/omissions
estimates Clause 13.1(d) FIDIC, etc. normally passed on to
Contractor
FIG. 5-18 : PAYMENT IN ‘PACKAGE DEAL’ TYPES OF CONTRACTS: AN OVERVIEW
© HSKS
FINAL AMOUNT TO WHICH
CONTRACTOR ENTITLED TO UNDER
THE CONTRACT
FINAL AMOUNT (SET OFFS/

DEDUCTIONS) TO WHICH
FINAL ADJUSTMENTS TO EMPLOYER ENTITLED TO UNDER
THE CONTRACT SUM THE CONTRACT
FINAL ACCOUNT: PRINCIPAL CONTENTS
FIG. 5-19 : FINAL ACCOUNT – PRINCIPAL CONTENTS
© HSKS
APPROVED VARIATIONS
TO THE CONTRACT
MISCELLANEOUS
APPROVED
ADJUSTMENTS
CONTRACTOR’S CLAIMS
PERMITTED COSTS FOR

ADJUSTMENT FOR PRICE TESTING, OPENING UP OF
FLUCTUATION, ETC. ADJUSTMENT TO THE WORK, ETC.
CONTRACT SUM: TYPICAL
HEADS/ITEMS
ADJUSTMENT FOR P.C. FEES AND CHARGES FOR

SUMS/ PROVISIONAL PERMANENT
SUMS CONNECTIONS
REMEASUREMENT OF
‘PROVISIONAL’
ITEMS/WORK
FIG. 5-20 : ADJUSTMENT TO THE CONTRACT SUM – TYPICAL HEADS/ITEMS
© HSKS
VARIATIONS/CHANGES
© HSKS
6.0 VARIATIONS/CHANGES
• WHAT CONSTITUTES ‘VARIATIONS/CHANGES’

VARIATIONS/CHANGES’
• ISSUES AS TO VALIDITY
• PROBLEMS WITH VARIATIONS
• INVALID VARIATION ORDERS AND EFFECTS
• LIMITATIONS OF VARIATIONS
• RELEVANT 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
VARIATIONS
FACTORS DETERMINING
TYPES A VALID V.O.
ADDITION OMISSION HYBRID
LEGAL NATURE OF
FORMALITIES
PROPOSED CHANGE
ISSUE BY PROCEDURAL EXPRESS CONTRACT APPLICABLE

DESIGNATED CONDITIONS COMMON
REQUIREMENTS
OFFICER APPLICABLE LAW RULES
FIG. 6-1: VARIATIONS: OVERVIEW
© HSKS
CHANGE TO BE IN RELATION
TO SCOPE OF THE WORK
SCOPE OF WORK BEING

CHANGED MUST BE AS
EXPRESSLY OR IMPLIEDLY
CONTAINED IN CONTRACT
A CHANGE BEING EFFECTED DOCUMENTS
CHANGES/VARIATIONS: BASIC ELEMENTS
FIG. 6-2 : CHANGES/VARIATIONS – BASIC ELEMENTS
© HSKS
INCREASE/
DECREASE OMIT
QUANTITY OF
WORK
WORK
EXECUTE
CHANGE
ADDITIONAL WORK
CHARACTER OF
OF ANY KIND
WORK
CHANGE VARIATIONS: CHANGE QUALITY

SEQUENCE OF TYPICAL OF WORK
WORK
EXAMPLES
CHANGE TIMING
OF WORK CHANGE
ACTIVITIES KIND OF WORK
CHANGE
DIMENSIONS OF CHANGE LEVELS
WORK OF WORK
CHANGE POSITION
OF WORK
FIG. 6-3: VARIATIONS - TYPICAL EXAMPLES
© HSKS
OMISSIONS
ADDITIONS HYBRID
ACCORDING TO NATURE
OF THE CHANGE
CONTRACTOR NSC
TIME IMPLICATIONS
CONTRACT FINANCIAL COMBINATION

EMPLOYER ADMINISTRATOR CONSIDERATIONS OF BOTH
ACCORDING TO
ACCORDING TO IDENTIT Y
CONSEQUENCES/EFFECT
OF INITIATOR OF CHANGE
OF THE CHANGE
TYPES OF VARIATIONS:
MAIN METHODS OF CLASSIFICATION
FIG. 6-4: TYPES OF VARIATIONS – MAIN METHODS OF CLASSIFICATION
© HSKS
CHANGES IN
EMPLOYER’S DEFECTIVE
REQUIREMENTS DRAWINGS
INTEFERENCE DEFECTIVE
BY EMPLOYER SPECIFICATIONS
MAL- ITEMS DEFECTIVE

ADMINISTRATION CONSTITUTING CONTRACT
OF CONTRACT DOCUMENTS
VARIATIONS
WRONG/
NEGLIGENT ADVICE DIFFERENCES
FROM CONTRACT BETWEEN BILLED
ADMINISTRATOR AND ACTUAL
QUANTITIES
CHANGES DUE
TO STATUTORY/
LEGISLATIVE
CHANGES
FIG. 6-5: ITEMS CONSTITUTING VARIATIONS
© HSKS
WHAT CONSTITUTES VARIATION WORKS
CONTRACTS CONTRACTS BASED ON VARIATION TEST

LEGAL POSITION BASED ON DRAWINGS PER RE:
BILL OF QUANTITIES AND SPECIFICATIONS CHITTICK & TAYLOR
1. Test: What is the intention of 1. Rule: All items intended to be 1. Rule: Contract requires: 1. Item specifically provided for
the parties at time of executed by Contractor must in Contract: ‘Not Extra’
contracting be provided for in the a) Not only work set out in
Contract. drawings and/or 2. If Contractor varies, contract
2. Extras: Work not specifications without an instruction:
contemplated by parties when 2. All items not provided for in Cannot Claim for ‘Extra’
contracting and not provided Contract are extras. b) But also all work incidental or
in Contract. necessarily required whether 3. If Contractor instructed by
3. Literal interpretation/ strict set out in the drawings and/or C.A. to change contract: has
3. Works which are construction. described in specifications or basis for claim for ‘Extra’
indispensably necessary to not
give effect to parties
intentions: Not extra 2. Effect: Difficult to claim extra
work [Re: Sharpe v Sao Paulo
Railway]
FIG. 6-6 : WHAT CONSTITUTES VARIATION WORKS

© HSKS
WORKS CHANGED MUST BE
DEFINED IN CONTRACT THERE MUST BE AN
DOCUMENTS ‘INSTRUCTION’
VALID VARIATION ORDER: PRINCIPAL ELEMENTS
INSTRUCTION MUST EFFECT A ‘INSTRUCTION’ TO BE ISSUED BY

CHANGE TO THE WORKS CONTRACT ADMINISTRATOR OR
BY AUTHORISED PERSON
FIG. 6-7 : VALID VARIATION ORDER – PRINCIPAL ELEMENTS
© HSKS
EXISTENCE OF EXPRESS
COMPLIANCE WITH THE CONTRACTUAL PROVISION
RELEVANT EXPRESS CONTRACT PERMITING VARIATION OF WORK
PROCEDURES UNDER THE CONTRACT
VALIDITY OF VARIATION ORDERS:

PRINCIPAL FACTORS DETERMINING
ISSUE OF VARIATION ORDER BY COMPLIANCE WITH THE

DESIGNATED PERSON APPLICABLE COMMON LAW
RULES IN RELATION TO
VARIATIONS WORKS
FIG. 6-8 : VALIDITY OF VARIATION ORDERS – PRINCIPAL FACTORS DETERMINING
© HSKS
LIMITATIONS TO VARIATIONS
LEGAL POSITION CARDINAL CHANGES
EXERCISE OF POWER
BY CONTRACT SCOPE OF WORK NATURE TESTS EFFECTS
ADMINISTRATOR
1. Power to vary work 1. Power to vary confined 1. Was it in the reasonable 1. General Rule:
confined to genuine to scope of works contemplation of the Invalid
omissions contemplated by parties parties when
at time of contracting. contracting? 2. Contractor cannot
2. If effect of omission is be compelled to
to give omitted work to 2. If effect of variation is to 2. Although not included, carry it out
3rd Parties: Invalid substantially change can it be considered an
Omission scope of work (‘Cardinal indispensable part of 3. If compelled,
Change’): Invalid the Contract? breach of contract
Variation 4. If Contractor
3. Functionally is it similar
to the intended work or carries out work,
some other work Contract rates not
required by the applicable
Contract?
DEFINITION TYPES FORM
1. Changes which render the 1. Physical work changes 1. A Single change

works substantially different
from that contracted for by 2. Financial Changes 2. A large number of
the parties otherwise small permissible
changes.
2. Constitutes a fundamental
change in the scope of the
Contract
FIG. 6-9 : LIMITATIONS TO VARIATIONS

© HSKS
PAYMENT FOR VARIED WORK:
GENERAL PRINCIPLES/METHODS
VARIED WORK WITHIN CONTRACT VARIED WORK OUTSIDE CONTRACT
ABSENCE OF EXPRESS A ‘CARDINAL’

CARDINAL’ CHANGE NOT A ‘CARDINAL’
CARDINAL’ CHANGE i.e.
EXISTENCE OF EXPRESS i.e. FUNDAMENTALLY
FORMULA IN CONTRACT DOES NOT FUNDAMENTALLY
FORMULA IN CONTRACT ALTERS CONTRACT ALTER CONTRACT
• Mutually agree upon a formula/rate; • Any contractual formula rendered • Portion of works within scope of
or invalid /inapplicable contract to be paid according to
the contract formula (if
• Be paid a reasonable sum i.e. on a • Whole works to be paid on applicable)
‘quantum meruit’ basis, etc. ‘measure and value’ basis and on
‘altered’ or ‘adjusted’ rates • Remaining works falling outside
scope of contract to be paid at a
reasonable rate
FORMULA VALID FORMULA INVALID AND/OR

AND APPLICABLE INAPPLICABLE
• Use the formula for valuation • Mutually agree upon a formula/rate;

and payment or
• No right of election • Be paid a reasonable sum i.e. on
‘quantum meruit’ basis, etc.
FIG. 6-10 : PAYMENT FOR VARIED WORK – GENERAL PRINCIPLES/METHODS

© HSKS
COST OF DELAY AND
DISRUPTION
COST OF VARIED WORK DELAY AND DISRUPTION
e.g. • Direct loss and/or
expense TO CONTRACT
• Additions
• Extended • Extension of time to
• Omissions Preliminaries Contract Period, etc.
FINANCIAL EFFECTS TIME EFFECTS
PRINCIPAL CONTRACTUAL CONSEQUENCES

OF VARIATION OF WORK UNDER CONTRACT
FIG. 6-11 : PRINCIPAL CONTRACTUAL CONSEQUENCES OF VARIATION OF WORK

UNDER THE CONTRACT
© HSKS
VALUATION OF VARIATIONS:
COMMON COMPUTATIONAL METHODS
WHERE THERE ARE

RATES/ PRICES IN THE WHERE WORK CANNOT
CONTRACT BE MEASURED
• Use of B.Q. rates • Use of Daywork Rates in Contract
• Use of Schedule of Unit Rates • On a cost-reimbursible basis

• Use of Adjusted Contract Rates
• Use of Contract Prices in: MISCELLANEOUS

WHERE NO RATES/
METHODS
a) Contract Bills; or PRICES IN CONTRACT
b) Summary of Prices; or
c) Contract Sum Analysis
• Use of ‘Fair Valuation’ principles • Use of ‘Quotation’ Method
• Use of ‘Negotiated’/’Agreed’ • Use of ‘Negotiated’/’Agreed’

Rates Rates
• Use of ‘Quotation’ Method • Payment on ‘quantum meruit’

basis or a reasonable sum
• Payment of a reasonable sum
FIG. 6-12 : VALUATION OF VARIATIONS – COMMON COMPUTATIONAL METHODS
© HSKS
START
Establish if the conditions

precedent have been satisfied
Has measurement No
stage been satisfactorily
completed?
Yes
Has the valuation No Prima facie, premature

stage been satisfactorily to prepare and issue
completed? certificate concerned
Yes
Contract administrator to prepare

certificate of variation of works
No Is there a
contract provision prescribing
the same?
Yes
Yes Are its

A requirements clear and
complete?
No
Have the No
requirements been agreed to by
the parties?
Yes
B C D
FIG. 6-13: FLOWCHART ON THE GENERAL PROCEDURE FOR THE CERTIFICATION OF

VALUATION (PART I)
© HSKS
A B C D
Have the No
requirements been complied
with?
Yes
Have the No
particulars been completely and
properly filled in?
Yes
Is the No
V.O./instruction
attached?
Yes
Are the No Omissions/deficiencies

measurement and valuation may render certificate
details endorsed? invalid
Yes
Has the certificate Contract administrator

No to address omissions
been checked for sufficiency and
accuracy? /deficiencies forthwith
Yes
No Has it been
signed by the authorized
person?
Yes
E F G

VALUATION (PART II)
© HSKS
E F G
Has it been
No prepared within a
reasonable/ prescribed period of
completion of measurement
and valuation?
Yes
Contract administrator to
issue certificate to the contractor
Contractor to check and

undertake necessary action
No Is the
certificate sufficient and
accurate?
Yes
No Has it been
signed by the authorized
person?
Yes
No Does it
Prima facie, comply with any prescribed
certificate is invalid requirements?
Yes
H I J

VALUATION (PART III)
© HSKS
H I J
Does the Yes Contractor

contractor agree with the to formally signify
content? acceptance
No
Does he notify No
the contract administrator officially
of his dissent?
Yes
Are the No
full particulars/details
given?
Yes
Contractor obliged No Is there a

to give notice period stipulated for the giving of
within reasonable the notice?
period only
Yes
Contractor deemed
Has the No to have accepted
contractor met the time the measurement
requirements? and valuation
Yes
Contract administrator
to review contractor’s notice
and make decision
K L M

VALUATION (PART IV)
© HSKS
K L M
Is the
Yes notice sufficient and
accurate?
No
No Has the contractor

been asked to furnish further
details?
Yes
No
Has he complied with the request?
Yes
Is the contractor’s stand Yes

reasonable?
No Contract
administrator to
Is there any Yes undertake necessary
reason not to reject the contractor’s amendments/
application? revisions
No
N
Reject the contractor’s application/notice
Communicate decision to the contractor N
Does the Contractor to give

Yes necessary notice. Contract
contractor wish to proceed with
dispute resolution? administrator to use valuation
set out in the interim period
No
STOP
FIG. 6-17: FLOWCHART ON THE GENERAL PROCEDURE FOR CERTIFICATION OF VALUATION (PART V)
© HSKS
VARIATIONS: PRINCIPAL REQUIREMENTS FOR ‘PACKAGE DEAL’
TYPE OF CONTRACTS
EXPRESS EMPLOYER’
EMPLOYER’S CONTRACTOR’
CONTRACTOR’S VARIATIONS VARIATIONS EFFECT OF
STIPULATIONS RIGHT TO VARY RIGHT TO VARY IN DLP/DCP IN WRITING PROCEDURE
• In most Standard • Permitted expressly • Permissible if only • Formal V.O.

Forms in most Standard expressly allowed Instruction from
Forms by contract E.R./P.D. condition
• Stipulate – Extent, precedent to recovery
Procedure, etc. • Due to: • Some Standard of payment
1. Value Forms do allow e.g.
engineering ICE, FIDIC, etc. • Failure of Contractor
2. Buidability • Others are silent to observe procedure/
3. Safety e.g. JKR, etc. formalities – may
4. Legal/Physical compromise recovery
NEED impossibility
EXPRESS
EXPRESS NEED FOR
FOR CONTRACTOR’
CONTRACTOR’’SS
PROVISIONS
PROVISIONS CONSULTATION RESPONSIBILITY
• Enshrined in • Prior to ordering • Be pro-active

all Standard V.O.
Forms • Not to unreasonably
• Get Contractor’s withhold consent, etc.
view on effect of
V.O. on
programme
NECESSITY
NECESSITY FOR
FOR
CONTRACT
CONTRACT ‘‘WRITTEN’
WRITTEN’’ RECOVERY
RECOVERY WITHOUT
WITHOUT
PROVISIONS ORAL INSTRUCTIONS INSTRUCTIONS
PROVISIONS INSTRUCTIONS
INSTRUCTIONS INSTRUCTIONS
• Most Standard Forms have • Requirement for ‘Writing’ • Only if contract expressly • Generally no
express clauses allows
• Includes: • Situations where permitted:
• Issued by E.R./ P.D. • Need for written confirmation
1. Letters 1. If contract expressly allows
2. Minutes of Meetings • Duty of confirmation either on: 2. Under Waiver/Estoppel
3. Drawings 3. Under concept of
1. Contractor or ‘Constructive Change’
2. Employer
FIG. 6-18: VARIATIONS – PRINCIPAL REQUIREMENTS FOR ‘PACKAGE DEAL’ TYPE OF CONTRACT
© HSKS
DELAY AND
EXTENSION OF TIME
© HSKS
7.0 DELAY AND EXTENSION OF TIME
• OPTIONS AVAILABLE TO EMPLOYER
• EXTENSION OF TIME ISSUES
• ACCELERATION OF WORKS
• DRAFTING OF DELAY AND DISRUPTION CLAIMS
• RELEVANT 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
CONSEQUENCES OF DELAY: AN OVERVIEW
BY EMPLOYER
(ACTS OF PREVENTION) BY CONTRACTOR
GRANT OF INSTRUCT CONTRACTOR

EXTENSION OF TIME TO ACCELERATE WORKS
• Only if contract expressly permits • Only if contract expressly permits

• Contractor may be entitled to: • To meet original contract deadline
1. Extended Preliminaries • Contractor to be compensated for
reasonable expenses incurred
2. Direct Loss and/or Expense
DUE TO CONTRACTOR’
CONTRACTOR’S DUE TO CONTRACTOR’
CONTRACTOR’S
DUE TO
OWN ACTS AND/OR OR SUB-
SUB-CONTRACTORS/
NEUTRAL EVENTS
OMISSIONS SUPPLIERS
• Contractor entitled to E.O.T. but • Contractor culpable • Contractor vicariously liable to

not to extended preliminaries or Employer
other claims • May be liable for:
• May seek indemnity from the
• If asked to accelerate works, 1. Liquidated Damages, or culpable party e.g. Sub-
entitled to reasonable expenses 2. Unliquidated Damages contractor, Supplier, etc.
incurred therefrom caused to Employer
FIG. 7-1 : CONSEQUENCES OF DELAY – AN OVERVIEW
© HSKS
‘FORCE MAJEURE’
EXCEPTIONALLY INCLEMENT WEATHER
CIVIL COMMOTION, STRIKES, LOCK-OUT, ETC.
LOSS OR DAMAGE TO THE WORKS OCCASIONED BY SPECIFIED PERILS
CONTRACTOR’S INABILITY TO SECURE LABOUR, GOODS, MATERIALS, ETC.
CARRYING OUT OF WORK BY STATUTORY UNDERTAKERS
EXERCISE BY GOVERNMENT OF ANY POWER WHICH DIRECTLY AFFECTS THE WORKS
EXTENSION OF TIME: COMMON

‘RELEVANT EVENTS’
FAILURE OF EMPLOYER TO GIVE POSSESSION/ACCESS IN TIME
DELAY IN THE SUPPLY OF INFORMATION/INSTRUCTIONS
VARIATIONS AND EXTRA WORKS
COMPLIANCE WITH CONTRACT ADMINISTRATOR’S INSTRUCTIONS
DELAY ON PART OF NOMINATED SUB-CONTRACTORS/SUPPLIERS
EXECUTION OF WORK NOT FORMING PART OF THE CONTRACT
LATE SUPPLY OF MATERIALS BY THE EMPLOYER

OTHER SPECIAL CIRCUMSTANCES
FIG. 7-2 : EXTENSION OF TIME – COMMON ‘RELEVANT EVENTS’

© HSKS
DEFERMENT/POSTPONEMENT
IN GIVING SITE POSSESSION
OTHER ACTS OF PREVENTION
EXPRESSLY PERMITTED BY LATE SUPPLY OF
THE CONDITIONS OF INFORMATION, DRAWINGS,
CONTRACT INSTRUCTIONS, ETC.
‘ACTS OF PREVENTION’:
TYPICAL EXAMPLES
LATE SUPPLY OF MATERIALS COMPLIANCE WITH

BY THE EMPLOYER CONTRACT
ADMINISTRATOR’S
INSTRUCTIONS, DIRECTIONS,
EXECUTION OF WORK NOT ETC.
FORMING PART OF THE
CONTRACT
FIG. 7-3 : ‘ACTS OF PREVENTION’ – TYPICAL EXAMPLES
© HSKS
‘FORCE MAJEURE’
DELAYS BY NOMINATED SUB-
CONTRACTORS/SUPPLIERS
FOR THE SAID ‘NEUTRAL
EXCEPTIONALLY INCLEMENT/
EVENTS’
ADVERSE WEATHER
‘NEUTRAL EVENTS’:
TYPICAL EXAMPLES
CONTRACTOR’S IN ABILITY CIVIL COMMOTION, STRIKES,

TO SECURE LABOUR, GOOD, LOCK OUTS INDUSTRIAL
MATERIALS AND/OR OTHER ACTION, EMBARGOES, ETC.
RESOURCES
LOSS/DAMAGE TO THE WORKS
OCCASIONED BY SPECIFIED
PERILS
OR CONTINGENCIES
FIG. 7-4 : ‘NEUTRAL EVENTS’ – TYPICAL EXAMPLES
© HSKS
CAUSE OF THE DELAY
APPROPRIATE
CONTRACT
ALL OTHER SUPPORTING REFERENCES TO SUCH
RECORDS, DETAILS, ETC. EVENT OF DELAY
DETAILS OF EFFECT OF
SCHEDULING DELAY ON WORK
DOCUMENTATION APPLICATION FOR PROGRAMME
EXTENSION OF TIME:
TYPICAL CONTENTS
ESTIMATE OF THE ESTIMATED LENGTH

EXTENSION OF TIME OF THE DELAY
REQUIRED
STEPS TAKEN/PROPOSED
TO MINIMIZE/AVOID DELAY
FIG. 7-5 : APPLICATION FOR EXTENSION OF TIME – TYPICAL CONTENTS
© HSKS
OFFICIAL WORK RECORDS
OFFICIAL PROGRESS REPORTS
SITE DIARIES
LETTERS, INSTRUCTIONS, ETC.
MEMORANDA
FACSIMILE TRANSMISSIONS, ETC.
DRAWINGS, ETC.
EXTENSION OF TIME
APPLICATION: TYPICAL
SOURCES OF INFORMATION
OFFICIAL MINUTES OF MEETING
WORK PROGRAMMES, ETC.
RECORDS/REPORTS FROM AUTHORITIES/INDEPENDENT BODIES, ETC.
SHIPPING/AIRFREIGHT RECORDS, ETC.
PROCUREMENT RECORDS, INVOICES, ETC.

DELIVERY ORDERS
OTHER MISCELLANEOUS RECORDS, DOCUMENTS, ETC.
FIG. 7-6 : EXTENSION OF TIME APPLICATION – TYPICAL SOURCES OF INFORMATION

© HSKS
START
Is progress No
delayed or is likely to be
delayed?
Yes
Does the
delaying event constitute No
one of the ‘relevant events’ /grounds
under the provisions of the
contract?
Yes
Initiate notification
of the delay procedure
Is the No
notice given in writing?
Yes
Is the notice No Is the Yes

given within the period expressly notice a condition
stipulated? precedent?
Yes No
Has an
Proceed with the Yes extension been No
application of the extension granted by the contract
of time process administrator?
A B
FIG. 7-7: FLOWCHART ON THE GENERAL PROCEDURE FOR CLAIMING EXTENSION OF TIME (PART I)
© HSKS
A B
Is the No
application given in
writing?
Yes
Is the
application made within No Is the Yes
the period expressly application a condition
stipulated? precedent?
Yes No
Has an
Contract Administrator to Yes extension been No
check application made granted by the contract
administrator?
Is the
Is the application No requirement as to Yes
complete/sufficient and sufficiency, etc. a condition
accurate? precedent?
Yes No
Establish whether contractor Has the
has done all that is reasonably No contract administrator Yes
required of him requested for information,
details, etc.?
Has the contractor Prima facie no

used his ‘best endeavours’ to No
extension of time
minimize the delay? can be granted
Yes
Contract Administrator to Return to contractor
proceed with further assessment for resubmission
for the possible grant of or reject application
extension of time as appropriate
STOP
FIG. 7-8: FLOWCHART ON THE GENERAL PROCEDURE FOR CLAIMING EXTENSION OF TIME (PART II)
© HSKS
PROCEDURES FOR CLAIMING EXTENSION OF TIME: AN OVERVIEW (PART I)
EXPRESS CONTRACT NATURE OF TIMING OF FORM OF CONTENTS OF

PROVISIONS APPLICATION NOTIFICATION THE NOTICE THE NOTICE
• Included in most standard • Various formulae used e.g.:

forms of contract • Usually stipulated in the
1. Use of specific phrases conditions of contract.
2. Stipulation of express time • Important to comply with the
periods express requirements
• Legal effect of provisions on time: • As a minimum must inform
REQUIREMENT
REQUIREMENT CATEGORIZATION
CATEGORIZATION VARIATIONS
VARIATIONS 1. Whether notification/application
the contract administrator of
the occurrence of the delay
is a condition precedent to which is likely to affect the
• Expressly stipulated • 2 broad steps: • Either a: entitlement progress or has delayed
in conditions of progress
contract of contract; 1. Notification of 1. Single exercise, 2. If affirmative, the effect of the
or the delay; and or breach of the condition
precedent • Otherwise must include:
• Implied by law 2. Making the 2. Two separate 1. Occurrence of the delay
application processes 3. Application to acts of
prevention/neutral events 2. Cause of the delay
• Depends upon
express/ implied • Review of applicable case-law 3. Relevant events causing
requirements the delay; and
4. Contractor’s intention to
make a claim
TYPES
TYPES OF
OF WRITTEN
WRITTEN NOTICES
NOTICES
EXPRESS
EXPRESS REQUIREMENTS
REQUIREMENTS GENERAL RULE EVIDENTIAL VALUE
EVIDENTIAL
/NOTICES
/NOTICES IN
IN WRITING
WRITING
• Included in most standard forms • Correspondence • Where the form is expressly • A written notice/notice in writing is
stipulated, it must be complied with of immense evidential value
• Usually stipulated as: • Facsimile transmissions
• Where not expressly stipulated, may • Therefore, even if not expressly
1. ‘Written notice’ or • Entries in official records be implied required, must try to give written
2. ‘Notice in writing’ • Entries in site diaries notice
• Official Progress reports
FIG. 7-9 : PROCEDURES FOR CLAIMING EXTENSION OF TIME – AN OVERVIEW (PART I)

© HSKS
PROCEDURES FOR CLAIMING EXTENSION OF TIME:
AN OVERVIEW (PART II)
TIMING OF FORM OF CONTENTS OF

THE APPLICATION THE APPLICATION THE APPLICATION
• Similar to ‘Form of the Notice’ • Dictated by express stipulations in

contract
• Preferably to be in writing
• Otherwise by necessary implication.
• Compliance to any express
requirements • Typical list includes:
1. Cause of delay
EXPRESS 2. Appropriate contract

GENERAL RULE reference
REQUIREMENT
3. Details of effect of delay on
programme/progress
• Included in most standard • Where specific time periods have
forms been specified these should be 4. Estimated length of delay
adhered to
• Formulae include: 5. Steps taken to
• If not practicable, requirement for mitigate/prevent delay
1. Specific time express consent for deferment
periods 6. Scheduling documentation
• Otherwise within a reasonable
2. Within a reasonable period of notification/delay 7. Miscellaneous details,
period records, documents, etc.
FIG. 7-10 : PROCEDURES FOR CLAIMING EXTENSION OF TIME – AN OVERVIEW (PART II)
© HSKS
PROCEDURES FOR CLAIMING EXTENSION OF TIME:
AN OVERVIEW (PART III)
ADEQUACY OF INFORMATION SUPPLIED NATURE OF INFORMATION REQUIRED
DETERMINING
DETERMINING FACTORS
FACTORS PRINCIPAL
PRINCIPAL SOURCES
SOURCES
• Type of relevant event • Official work records

• Nature of relevant event • Official progress reports
• Particular requirements of applicable • Site diaries
express provisions • Correspondence
• Evidential value of information • Instructions
• Drawings, etc.
• Official minutes of meetings,
discussions, etc.
CONSEQUENCES
CONSEQUENCES WHERE
WHERE CONSEQUENCES
CONSEQUENCES WHERE
WHERE • Work programmes
BASIS
BASIS OF
OF FAILURE
FAILURE TO
TO RESPOND
RESPOND
PROVISION IS
IS A
A CONDITION
CONDITION PROVISION
PROVISION IS
IS NOT
NOT A
A • 3rd party reports/records
REQUIREMENT
REQUIREMENT AFTER
AFTER EXTENSION
EXTENSION
PRECEDENT
PRECEDENT CONDITION
CONDITION PRECEDENT
PRECEDENT • Procurement records, etc.
• Contractor must furnish • Breach of condition may be • Contract administrator can: • Should contractor fail to • Delivery orders
enough information to fatal to claim depending on respond by: • Shipping/airfreight records
enable contract its nature and seriousness 1. Request for further
administrator to undertake information 1. Deadline set, or • Miscellaneous
assessment satisfactorily records/documents
2. Set a new deadline for 2. Within reasonable period
• Information to be: contractor to respond of request
1. Sufficient/ complete Contract administrator may not

2. Accurate proceed further with
3. Relevant assessment
FIG. 7-11 : PROCEDURES FOR CLAIMING EXTENSION OF TIME – AN OVERVIEW (PART III)
© HSKS
ASSESSMENT OF THE APPLICATION: AN OVERVIEW (PART I)
EXPRESS THE CONTRACT

GENERAL CONTRACT ADMINISTRATOR’S DUTY
ADMINISTRATOR’ PRELIMINARY POST APPLICATION
OF CARE PROCEDURES PROCEDURES
PROVISIONS
• Included in most standard • Upon occurrence of delaying
forms of conditions of contract event, independently
undertake own assessment
especially for acts of
prevention
• Must take an active role
• Issue an interim extension to
DERELICTION
DERELICTION contractor if one due on facts
TO WHOM DUTY
DUTY TO
TO OF
OWED EMPLOYER OF DUTY:
DUTY:
CONSEQUENCES
CONSEQUENCES • Contractor can later apply for
reassessment based on
• To Employer • Positive duty vis-à-vis • May compromise additional information
‘acts of prevention’ employer’s position
• To Contractor
• Satisfaction of: • Contract administrator
• To Nominated Sub-
contractors/Suppliers 1. ‘Reasonableness’ liable to actions in:
Test and
2. ‘Fairness’ Test 1. Breach of contract
2. Tort of negligence INSUFFICIENT
• Help employer: INSUFFICIENT
PRELIMINARY
PRELIMINARY CHECKS
CHECKS INFORMATION: OPTIONS
1. Preserve right to LAD TO ESTABLISH AVAILABLE
AVAILABLE TO
TO CONTRACT
CONTRACT
2. Stave off claims from MATTERS
MATTERS SUCH AS
SUCH AS ADMINISTRATOR
ADMINISTRATOR
contractor
• Verification of occurrence • Request contractor to

of delay submit more details, etc. or
• Sufficiency, accuracy, • If delaying event of a
relevancy, etc. continuing nature:
• Compliance with pre- 1. Proceed with interim
WHO UNDERTAKES
WHO NATURE
NATURE OF
OF ROLE
ROLE ADDITIONAL
ADDITIONAL DUTY
DUTY conditions, procedural assessment
requirements, etc. 2. Grant an interim
extension
• Assessment of evidential
• Delegated by the employer • As an independent adjudicator • Per John Baker Construction v value
to authorized person • Decision making function London Protman Hotel Ltd.
• Assessment whether delay
• Usually it is the contract • Must act fairly, reasonably and • Must adhere to governing in principle entitles
administrator impartially express contractual contractor to extension
procedures in addition
FIG. 7-12: ASSESSMENT OF THE APPLICATION – AN OVERVIEW (PART I)
© HSKS
ASSESSMENT OF THE APPLICATION: AN OVERVIEW (PART II)
THE ASSESSMENT TIMING FOR MISCELLANEOUS

BASIS OF ASSESSMENT
PROCESS GRANTING EXTENSION ISSUES
• Basic principles • Factors to be taken into • Multiple extensions

consideration:
• Overriding requirements: • Review of prior decisions/ certificates
Satisfaction of: 1. Previous extensions granted
2. Effect of omissions • Concurrent delay: effects
1. ‘Reasonableness’ Test 3. Effect of concurrent delays
2. ‘Fairness’ Test • Extensions during culpable delay
3. Procedural requirements • Sources and types of information • Extension of time and omissions
used
• Important exceptions • Acceleration in lieu of extension
• Concluding decision:
1. Contractor not to be culpable • Extension of time and claims
2. Contractor to mitigate/prevent 1. Rejection of claim; or
delay 2. Grant of extension of time
• Definition of ‘best endeavours’
PROSPECTIVE/
PROSPECTIVE/
PRINCIPAL ISSUES
PRINCIPAL FACTORS
FACTORS DICTATING
DICTATING TIME
TIME PERIOD
PERIOD RETROSPECTIVE GRANTING
GRANTING
OF
OF EXTENSION
EXTENSION
• Factors dictating the timing • The need to preserve the LAD • Various formulae: • Where expressly permitted
of the grant provisions for the benefit of
the employer 1. Use of specific time • Where implied
• Express stipulations as to period stipulations
time period for granting • Courts approach:
• To allow contractor 2. Within reasonable time
• Prospective/Retrospective opportunity to reprogramme 1. Previous strict interpretation
granting of extension his works • Effect of failure to comply 2. Current liberal approach
• Situation of continuing delay • Circumstances where
retrospective granting permitted
FIG. 7-13: ASSESSMENT OF THE APPLICATION – AN OVERVIEW (PART II)
© HSKS
CERTIFICATE NOT GIVEN
ON TIME
OTHER MATERIAL CERTIFICATE NOT IN

BREACHES CORRECT FORM
CONTRACTUAL CERTIFICATE GIVEN

PROCEDURES NOT BY UNAUTHORIZED
FOLLOWED CHALLENGING CERTIFICATE PERSON
OF EXTENSION OF TIME:
COMMON GROUNDS
CERTIFICATE NOT NO NAMED

GIVEN FAIRLY CERTIFIER
DECISIONS IMPROPERLY
DELEGATED
FIG. 7-14: CHALLENGING CERTIFICATE OF EXTENSION OF TIME – COMMON GROUNDS

(PER EGGLESTON)
© HSKS
DELAY AND EXTENSION OF TIME FOR NOMINATED SUB-CONTRACTORS:
AN OVERVIEW
EXPRESS GENERAL GENERAL

GENERAL CONTRACTUAL CONTRACTUAL PROCEDURAL
REQUIREMENTS PROVISIONS POSITION REQUIREMENTS
• The principles and general requirements • Extension of time under contract can • Main steps involved are:
similar to that of Main Contract only be validly granted if:
1. Occurrence of delaying event
• Principal difference only in some 1. Delaying event is one of the
procedural requirements ‘relevant events’/grounds under 2. Notification of the delay
the conditions of sub-contract 3. Review by the contractor
• Applicable only to:
2. The express formalities or 4. Contractor forwards application
1. Nominated Sub-Contractors and procedures are strictly complied
2. Nominated Suppliers to contract administrator
with
• Does not encompass: 5. Contract administrator assesses
• The general contractual position application
1. Domestic Sub-Contractors and similar to Main Contract
2. Domestic Suppliers 6. Contract administrator
communicates decision to
contractor
7. Contractor informs sub-
contractor
PAM PUTRAJAYA
PUTRAJAYA
JKR 203N FORM PAM 1998
1998 CONDITIONS OF 8. Receipt and acknowledgement
JKR SUB---CONTRACT
SUB CONTRACT IEM.CES.1/90 FORM
IEM.CES.1/90 OF
(REV. 10/83) FORM NOMINATED
NOMINATED SUB-
SUB-- • The rules in the preparation and
FORM CONTRACT
CONTRACT issuance of the certificate of
extension of time similar to that of
• Clause 26: Delay and • Clause 8.0: Extension of Time • Clause 26: Delay and • Clause 24: Delay and Main Contract
Extension of Time Extension of Time Extension of Time
8.1:Notifying of events causing
(a): Notice of delay delay (a): Notice of delays
(b): Extension of time 8.2:Relevant events causing (b): Extension of time
delay for which extension of
(c): Dispute on failure of S.O. to time may be given (c): Dispute on failure of
grant extension of time Engineer to grant extension
8.3:A Fair and Reasonable of time
extension of time
8.4:Failure of architect to give
written consent for extension
of time
FIG. 7-15: DELAY AND EXTENSION OF TIME FOR NOMINATED SUB-CONTRACTORS –

AN OVERVIEW
© HSKS
NON-COMPLETION
AND DAMAGES
© HSKS
8.0 NON COMPLETION AND DAMAGES
• COMMON LAW POSITION
• CONTRACTUAL FORMULAE
• RIGHTS TO IMPOSE
• CHALLENGES
• MALAYSIAN POSITION
• RELEVANT 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
© HSKS
* 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
RECOVERY/PAYMENT
TRIGGERED BY OCCURRENCE SUM OF MONEY AGRRED
OF SPECIFIED DEFAULT/BREACH BY THE PARTIES
LIQUIDATED DAMAGES:
PRINCIPAL CHARACTERISTICS
SUM STIPULATED IN THE GENUINE PRE-ESTIMATE OF THE

CONTRACT LOSS
FIG. 8-1 : LIQUIDATED DAMAGES – PRINCIPAL CHARACTERISTICS
© HSKS
LIQUIDATED DAMAGES: AN OVERVIEW
LIQUIDATED
BASIC DAMAGES AND
DEFINITION ADVANTAGES DISADVANTAGES
CHARACTERISTICS PENALTIES
DISTINGUISHED
• Prof. Vincent Powell- • Four basic characteristics: • Common view • Common view
Smith’s definition
1. Sum of money • Reiteration in Philips • Disadvantages to:
• Per Eggleston agreed/fixed in Hong Kong Ltd. v AG
of Hong Kong. 1. Employer
advance by parties
• Per Robinson and Lavers
Advantages to: 2. Contractor
2. Sum is a genuine •
pre-estimate of 3. Sub-contractor
1. Employer
likely loss
2. Contractor
3. Sum is stipulated in
the contract 3. Sub-contractor
4. Recovery of sum is
triggered by
contractor’s breach
e.g. non-completion
DISTINGUISHING
EXAMPLES OF LEGAL EFFECTS
GENERAL PENALTY: DEFINITION BETWEEN THE
PENALTY CLAUSES OF PENALTIES
TWO TERMS
• Use of terms • Per Prof. Vincent Powell- • Mere labeling is inclusive • Elicited from the • Penalty: Invalid and
interchangeably Smith relevant case-law unenforceable
• Depends on construction
• Distinct difference • Per Lord Dunedin in afforded to term by the • Legal effect per Watts,
Dunlop Pneumatic Tyre courts Watts & Co. Ltd. v Mitsui
• Position in Malaysia post Co. Ltd. v New Garage & & Co. Ltd.
Selvakumar v Thiagarajah Motor Co. Ltd. • Lord Dunedin’s proposed
tests. • See Keating’s view
FIG. 8-2 : LIQUIDATED DAMAGES – AN OVERVIEW

© HSKS
INCLUSION OF EXPRESS PROVISION IN
CONTRACT PERMITTING DEDUCTION
OF THE LIQUIDATED DAMAGES
EMPLOYER HAS NOT
THE EXPRESS
WAIVED HIS RIGHT TO
LIQUIDATED DAMAGES
DEDUCT LIQUIDATED
CLAUSE IS VALID AND
DAMAGES
ENFORCEABLE
IMPOSITION OF
LIQUIDATED DAMAGES:
TYPICAL PRE-CONDITIONS
SPECIFIED DETAILS ON LIQUIDATED

CONTRACTUAL DAMAGES CLEARLY AND
PROCEDURES HAVE PROPERLY FILLED IN
BEEN STRICTLY
COMPLIED WITH DEFINITE DATE FIXED
CONTRACTUALLY FROM WHICH
DAMAGES CAN RUN
FIG. 8-3 : IMPOSITION OF LIQUIDATED DAMAGES – TYPICAL PRE-CONDITIONS
© HSKS
CONTRACTOR SHALL FAIL THE CONTRACT
TO COMPLETE ON TIME ADMINISTRATOR SHALL
DETERMINE AND ISSUE
ANY EXTENSIONS OF
MISCELLANEOUS TIME DUE TO
PRE-CONDITIONS CONTRACT
DEDUCTION OF
LIQUIDATED DAMAGES:
COMMON CONDITIONS
PRECEDENTS USED
THE EMPLOYER SHALL THE CONTRACT

GIVE WRITTEN NOTICE ADMINISTRATOR SHALL
TO THE CONTRACTOR CERTIFY THAT NO
OF HIS INTENTION TO FURTHER EXTENSIONS
DEDUCT LAD THE CONTRACT ADMINISTRATOR OF TIME ARE DUE TO
SHALL ISSUE A CERTIFICATE OF CONTRACTOR
NON-COMPLETION
FIG. 8-4 : DEDUCTION OF LIQUIDATED DAMAGES – COMMON CONDITIONS PRECEDENTS

USED
© HSKS
PROCEDURAL REQUIREMENTS FOR RECOVERY OF LIQUIDATED DAMAGES:
AN OVERVIEW
GENERAL RULE FOR

DEFINITION GENERAL PROCEDURE
IMPOSITION OF LIQUIDATED DAMAGES
• Recovery of LAD must be in accordance with the • Need to satisfy general rule
contract
• Six principal pre-conditions:
• Procedural requirements/conditions precedent
must be strictly followed 1. Existence of express contractual provision on
LAD
• Effect of the application of the ‘contra proferantum’
rule 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
DETERMINE IF DETERMINE
ESTABLISH EMPLOYER
ESTABLISH EMPLOYER HAS IF RELEVANT POST LAD
BASIC STEPS EXISTENCE AND RECOVERS THE
DEFAULT OF WAIVED HIS CERTIFICATES/ DEDUCTION
VALIDITY OF LIQUIDATED
CONTRACTOR RIGHTS TO LAD NOTICES HAVE PROCEDURES
LAD CLAUSE DAMAGES
BEEN ISSUED
• Five basic steps • Triggering event: • Crucial to • 2 forms of waiver: • Certificate of Non- • Conditions precedent • Effect of further
failure of enforceability Completion (CNC) E.O.T.
• See Figures 6-11 contractor to of provision 1. Express • Decision as to recovery
to 6-13 on the complete on time and recovery of 2. Implied • Notice of Intention to • See Fig. 6-14 & 6-
flowcharts deduct LAD • Timing 15 for flowchart
LAD • Was there
consideration in
return?
FIG. 8-5 : PROCEDURAL REQUIREMENTS FOR RECOVERY OF LIQUIDATED DAMAGES – AN

OVERVIEW
© HSKS
NON-COMPLETION AND DAMAGES IN NOMINATED
SUB-CONTRACTS: AN OVERVIEW
GENERAL POSITION EXPRESS CONTRACTUAL

NSC’S LIABILITY FOR DAMAGES
PROVISIONS
• Legal principles similar to Main Contractor • Clause 7.0: PAM ‘98 Sub-Contract Form
• Liability for 2 types of damages: • Clause 27: JKR 203N (Rev. 10/83)
1. Liquidated damages, or • Clause 27: IEM.CES 1/90 Form
2. Unliquidated/general damages
• Clause 25: ‘Putrajaya’ Conditions of Nominated Sub-Contract
EFFECT OF DAMAGES FOR EXPRESS GENERAL

NSC’S DEFAULT BREACH OF CONTRACT CONTRACTUAL FORMULA OBSERVATIONS
• Effect of default in completing • Governing Provision: S 74 • Called the ‘Financial Contractual • Necessity for parties to agree
works in time: breach of contract Contracts Act 1950 (Rev. 1974) - Remedy’ upon and arrive at a genuine pre-
‘Compensation for loss or damage estimate
• Consequences of the said breach • Usually an LAD clause
caused by breach of contract’
- Employer entitled to damages • Need to clearly stipulate
• Express stipulations as to:
i.e., either: • Three main heads of damage per conditions precedent to recovery
.
Eggleston: 1. Rate
1. LAD as stipulated in the sub- • Prudent to cap maximum limit
2. Scope of coverage
contract, or 1. Main Contractor’s liability to
3. Maximum limit • If LAD clause ‘stepped down’ into
pay LAD to employer of NSC’s
2. General damages 4. Pre-conditions, etc. sub-contract, sub-contractor
default
enforceable through bound irrespective of value of the
• Issues pertaining to the
arbitration/court action 2. Main Contractor’s own loss sub-contract
‘stepping down’ of the Main
consequent to NSC’s default
Contractor’s LAD clauses
3. Third party claims due to NSC’s
default
FIG. 8-6: NON-COMPLETION AND DAMAGES IN NOMINATED SUB-CONTRACTS – AN OVERVIEW
© HSKS
CONTRACTUAL PROVISION IS A PENALTY CLAUSE
CONTRACTUAL PROVISION IS UNCERTAIN/INCONSISTENT
NO CONTRACTUAL PROVISION TO EXTEND TIME FOR ACT OF PROVISION IN QUESTION
NO DATE STIPULATED FOR THE COMMENCEMENT OF THE CONTRACT
CONTRACT IS AT LARGE
CONDITIONS PRECEDENT NOT OBSERVED
LIQUIDATED DAMAGES:
TYPICAL GROUNDS FOR
CHALLENGING
EMPLOYER HAS WAIVED LIQUIDATED DAMAGES
CERTIFICATES OF EXTENSION OF TIME

AND/OR PRACTICAL COMPLETION NOT VALID
EXTENSIONS OF TIME GRANTED INSUFFICIENT
PRACTICAL COMPLETION ACHIEVED EARLIER THAN CERTIFIED
MISCELLANEOUS CHALLENGES/DEFENCES
FIG. 8-7: LIQUIDATED DAMAGES – TYPICAL GROUNDS FOR CHALLENGING

© HSKS
LAD: MALAYSIAN LEGAL POSITION – AN OVERVIEW
EFFECT OF S75 CONTRACTS EFFECT OF SELVAKUMAR V CIRCUMVENTING SELVAKUMAR

ACT 1950 (REV. 1974) THIAGARAJAH [1995] V THIAGARAJAH
1. No difference between penalty and liquidated 1. Employer cannot recover simpliciter sum fixed
damages clauses. in contract, whether as a penalty or liquidated
damages.
2. All liquidated damages clauses to be treated
as penalty clauses under English law. 2. Must prove actual damages/reasonable
compensation per Hadley v Baxendale.
3. Figure stipulated in Contract is the ceiling

amount recoverable.
UNDER DOCTRINE MUTUAL CLAUSE 22.2:

OF FREEDOM TO AGREEMENT PAM CONTRACT 2006
CONTRACT
1. Parties of equal bargaining strength. 1. By parties on circumventing decision 1. Contractor confirms that by
in Selvakumar v Thiagarajah. entering into the Contract
2. Free to agree on any terms between
themselves. 2. Can draft appropriate clause 2. He agrees to pay such sums
3. Philips HK Ltd. v AG of Hong Kong. 3. Which become due
4. Without Employer having to

prove his actual loss/damage
FIG. 8-8 : LAD – MALAYSIAN LEGAL POSITION – AN OVERVIEW

© HSKS
START
Is the No
contractor liable to pay
LAD?
Yes
Have all Prima facie, employer

the conditions precedents No
cannot recover liquidated
been fulfilled? damages (LAD)
Yes
Employer can proceed to

recover simpliciter the sum
fixed in the contract as LAD
Does the
contractor challenge the No
employer’s deduction of the
LAD?
Yes
Is there an Prima facie, employer

express clause circumventing Yes
can deduct the stipulated
rule in Selvakumar LAD amount
Thiagarajah?
No
Matter to be resolved
through arbitration/litigation
A B
FIG. 8-9: FLOWCHART ON THE RECOVERY OF LIQUIDATED DAMAGES - THE MALAYSIAN

POSITION POST SELVAKUMAR V THIAGARAJAH (PART I)
© HSKS
A B
Employer must prove the actual damages or

reasonable compensation per rule in Hadley v
Baxendale / S74 Contracts Act
Is
employer able to No Employer may not be
prove damages as able to recover any damages at all
required?
Yes
Are the Prima facie, employer

damages more than the sum stipulated in the Yes
can deduct the stipulated
contract LAD amount
as LAD?
No
Employer can recover only his actual damages or

reasonable compensation as decided by the arbitral
forum or the court
STOP
FIG. 8-10: FLOWCHART ON THE RECOVERY OF LIQUIDATED DAMAGES - THE MALAYSIAN

POSITION POST SELVAKUMAR V THIAGARAJAH (PART II)
© HSKS
COMPLETION AND
HANDING-OVER
© HSKS
9.0 COMPLETION AND HANDING-OVER
• PROBLEMS WITH DEFINITIONS AND TERMINOLOGY
• CONDITIONS PRECEDENT
• NON-
NON-ISSUE BY CONTRACT ADMINISTRATOR
• CHALLENGES TO CPC
• PROBLEMS ARISING FROM CPC ISSUES
• SECTIONAL COMPLETION, PARTIAL POSSESSION AND CONDITIONAL CPC
• RELEVANT 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
© HSKS
CONTRACT ADMINISTRATOR
HAS DISCRETION TO ISSUE
C.P.C. WHERE MINOR WORKS C.P.C. CAN BE ISSUED
ARE LEFT TO BE DONE ON A ‘DE NOTWITHSTANDING PRESENCE
MINIMIS’ BASIS OF LATENT DEFECTS
GUIDELINES TO DETERMINE PRACTICAL

COMPLETION PER KEATING
PRACTICAL COMPLETION MEANS C.P.C. CANNOT BE ISSUED IF

COMPLETION OF ALL WORK THAT THERE ARE PRESENT PATENT
HAS TO BE DONE DEFECTS
FIG. 9-1 : GUIDELINES TO DETERMINE PRACTICAL COMPLETION PER KEATING
© HSKS
FUNCTIONAL TEST
MISCELLANEOUS TESTS
COMPLETENESS TEST
ESTABLISHING PRACTICAL
COMPLETION:
PRINICPAL TESTS
AUTHORITIES TEST SAFETY TEST
INCONVENIENCE TEST
FIG. 9-2 : ESTABLISHING PRACTICAL COMPLETION – PRINICPAL TESTS
© HSKS
MARKS END OF CONSTRUCTION PERIOD
CONTRACTOR’S RIGHT TO POSSESSION OF SITE CEASES
CONTRACTOR’S LIABILITY FOR CARE, SECURITY, ETC., ENDS
CERTIFICATION OF INTERIM PAYMENT ENDS
EMPLOYER TO RELEASE ONE MOIETY OF RETENTION SUM
DEFECT LIABILITY PERIOD COMMENCES
ISSUE OF THE CERTIFICATE

OF PRACTICAL COMPLETION:
PRINCIPAL EFFECTS
FREE SERVICE AND MAINTENANCE PERIOD STARTS

TRIGGERS COMMENCEMENT OF PERIOD OF FINAL MEASUREMENT
AND VALUATION OF THE WORKS
CONTRACTOR’S LIABILITY TO INSURE WORKS ENDS
CONTRACTOR’S LIABILITY FOR FURTHER LAD ENDS
CONTRACT ADMINISTRATOR’S POWER TO ORDER VARIATIONS CEASES
ENDS RESTRICTION ON OPENING OF ARBITRATION
FIG. 9-3 : ISSUE OF THE CERTIFICATE OF PRACTICAL COMPLETION – PRINCIPAL EFFECTS

© HSKS
CERTIFICATE OF PRACTICAL
OBLIGATION TO INSURE COMPLETION FOR EACH SECTION
FOR EACH SECTION
ENDS WITH CPC SEPARATE EXTENSION
(DEPENDING ON OF TIME CERTIFICATION
CONTRACT PROVISION) FOR EACH SECTION
SECTIONAL COMPLETION:
PRINICPAL ISSUES/EFFECTS
RELEASE OF ONE SEPARATE LIQUIDATED

MOIETY OF RETENTION AND ASCERTAINED
SUM FOR EACH SECTION DAMAGES FOR EACH
SECTION
SEPARATE DEFECT LIABILITY
PERIOD FOR EACH SECTION
FIG. 9-4 : SECTIONAL COMPLETION – PRINCIPAL ISSUES/EFFECTS
© HSKS
ISSUE OF CERTIFICATE OF
PARTIAL OCCUPATION OF COMMENCEMENT OF
RELEVANT PART WITHIN DEFECT LIABILITY
RELEASE OF STIPULATED PERIOD PERIOD FOR RELEVANT
PERFORMANCE BOND PART ON DATE OF
AND FINAL PAYMENT POSSESSION/
UNAFFECTED OCCUPATION
PARTIAL POSSESION/
OCCUPATION:
PRINICPAL ISSUES/EFFECTS
CESSATION/REDUCTION PROPORTIONING DOWN

OF INSURANCES OF LIQUIDATED AND
CORRESPONDINGLY (IF ASCERTAINED DAMAGES
EXPRESSLY PERMITTED)
RELEASE OF A PROPORTION OF
FIRST HALF OF RETENTION SUM IN
RESPECT OF RELEVANT PART
WITHIN STIPULATED PERIOD
FIG. 9-5 : PARTIAL POSSESSION/OCCUPATION – PRINCIPAL ISSUES/EFFECTS

© HSKS
COMPLETION OF WORKS UNDER THE CONTRACT
LITERAL MEANING/ PRACTICAL SECTIONAL PARTIAL

INTERPRETATION COMPLETION COMPLETION POSSESSION
• Strict View • Also termed ‘Substantial • Envisages completion in • Situation where Employer takes
Completion’ in some cases sections/ stages/phases over/resumes possession of:
• Absence of any patent
defects; and • Adopts an expedient view • Intention must be a)Whole works, or
agreed/expressed at time of b) Part of works
• Absence of any outstanding • Connotates a state of contracting. before Contract Completion Date
works however trifling readiness for use or
occupation by Employer • Contract Documents must • Pre-Conditions:
• Rarely used in practice identify/ define: a)With consent of Contractor
• Formalized by issue of b) Consent not to be
• Has been abandoned in Certificate of Practical a) Each Section unreasonably withheld
favour of a more expedient Completion (CPC) or Taking b) The Completion dates
approach Over Certificate (TOC) c) The Corresponding LAD • Procedural aspects:
a)Issue of Certificate of Partial
• More common in practice • Each section has separate: Occupation (CPO) within 7
days of possession.
• Provided for expressly in a) Certificate of Practical
many Standard Forms Completion (CPC)/TOC b) Certificate to identify:
or Defect Notification
i) Relevant part possessed
Period (DNP)
ii) Its estimated value
b) Defects Liability Period c)DLP/DNP starts on date of
(DLP) possession
c) Liquidated and d) LAD rate reduced pro-
Ascertained Damages rata for unoccupied
(LAD) part/portion
FIG. 9-6 : COMPLETION OF WORKS UNDER THE CONTRACT – AN OVERVIEW

© HSKS
TEST ON COMPLETION: AN OVERVIEW
TYPES PURPOSE RESPONSIBILITY FAILURES
• To show compliance with the

Performance Specification/
Contract Requirements
• To meet applicable statutory
requirements.
PRELIMINARY • As a pre-condition to issue of
FINAL CPC
• As a pre-condition to
• Normally undertaken • Normally undertaken by certification by Independent 3rd
by Contractor on his either: Party Specialist.
own.
a) Contractor in the
• Prior to Final Tests on presence of
Completion. Contract
Administrator (or)
• Is a necessary prelude
to the Final Tests b) Independent 3rd
Party Specialists
• Is usually a pre-
condition to issue of
CPC.
CONTRACTOR CONTRACT INDEPENDANT TESTER
ADMINISTRATOR
• Contractually, responsible for: • Active participant and • Scope as expressly stipulated

certifier of Final Testing and in Contract.
a) Preliminary and Final Commissioning.
Testing and • Eg. SIRIM, DNV, Lloyds, TÜV,
Commissioning. • Default/negligence in Statutory authorities, etc.
certification does not relieve
b) Satisfactory Completion Contractor’s obligations.\ • May also be required under
statute.
FIG. 9-7 : TEST ON COMPLETION – AN OVERVIEW

© HSKS
OPERATION AND MAINTENANCE MANUALS: AN OVERVIEW
GENERAL
GENERAL TIMING
TIMING FOR
FOR TYPES/
TYPES/ NATURE
NATURE UPDATING ACCURACY
ACCURACY
POSITION SUBMISSION
• Must follow express • Must comply with express • Contractor’s

Contract stipulations as Contract stipulations. responsibility at least
to: during Limitation Period
• Normal practice is: for:
a) Type/Nature
b) Contents a) Before TOC a) O & M manuals due
c) Quantity b) After TOC CONTRACTOR
CONTRACTOR ‘‘S
S PROFESSIONAL’
PROFESSIONAL’’S
S
to product
d) Timing for c) Before Performance RESPONSBILITY RESPONSBILITY
RESPONSBILITY
Certificate
improvement. RESPONSBILITY
Submission
b)Errors/
• Most Contracts have • Usual requirements include inaccuracies
incorporated such draft copies for approval • In Contract and Tort • In Tort, on joint and
prior to finalization. • Professionals to update several basis
stipulations
on safety issues and • Primary responsibility
errors detected. for errors, omissions, • Especially so for
etc. signing-off/
endorsing ‘Qualified
Person’.
AS-
AS--BUILT/
BUILT/ OPERATION & RECORDS
RECORDS OF
OF FINAL
FINAL MISCELLANEOUS
AS-
AS--CONSTRUCTED/
CONSTRUCTED/ MAINTENANCE MANUALS/
MAINTENANCE MANUALS/
MEASUREMENT
MEASUREMENT RECORDS/ DOCUMENTS
RECORDS/
AS-
AS-INSTALLED DRAWINGS HANDBOOKS
• Permanent record of works • To enable Works to be operated and • Undertaken by Contract • Final testing and commissioning
maintained efficiently and safely. Administrator jointly with records
• Suitably detailed for future Contractor.
reference. • Contents, etc. to express contract • Servicing and Maintenance
stipulations/industry practice. • To facilitate preparation of Final records
• Contents, etc. to express Account.
contract stipulations/industry • O & M Training records, etc.
practice.
FIG. 9-8 : OPERATION AND MAINTENANCE MANUALS – AN OVERVIEW
© HSKS
IDENTIFICATION OF PATENT
ISSUE OF RELEVANT
DEFECTS
COMPLETION CERTIFICATE
& OUTSTANDING WORKS
HANDOVER OF APPROVALS/ COMPLETION

CLEARANCES FROM OF TESTING &
STATUTORY AUTHORITIES COMMISSIONING
TAKING OVER: TRAINING OF

HANDOVER OF ALL TYPICAL PRE- EMPLOYER’S OPERATION
NECESSARY SPARES & MAINTENANCE PERSONNEL
CONDITIONS
HANDOVER OF HANDOVER OF
ALL NECESSARY TOOLS ALL ‘AS-BUILT’ DOCUMENTS/
RECORDS
HANDOVER OF ALL
KEYS
FIG. 9-9: ‘TAKING OVER’ OF COMPLETED WORKS BY EMPLOYER – TYPICAL PRE-CONDITIONS
© HSKS
IDENTIFICATION OF THE TYPES AND
DETAILS OF NECESSARY INSPECTIONS
IDENTIFICATION OF THE IDENTIFICATION OF

MODE OF FORMALIZING THE SEQUENCE OF
THE TAKING OVER TAKING-OVER
TAKING OVER OF
COMPLETED WORKS:
PROCEDURAL ISSUES
SETTING UP OF THE ESTABLISHMENT OF

PROCEDURES FOR TAKING-OVER
RECORDING PROGRAMME
ESTABLISHMENT OF THE
RELEVANT DELIVERABLES
FIG. 9-10 : TAKING OVER OF COMPLETED WORKS – PROCEDURAL ISSUES
© HSKS
DEFECTS
© HSKS
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
STANDARD OF
WORKMANSHIP
QUALITY OF STANDARD
PATENT DEFECT LATENT DEFECT MATERIAL OF DESIGN
TYPES NATURE
DEFECTS: PRINCIPAL TYPES AND NATURE
FIG. 10-1 : DEFECTS – PRINCIPAL TYPES AND NATURE
© HSKS
DEFECTS FOR WHICH CONTRACTOR IS GENERALLY RESPONSIBLE
TRADITIONAL GENERAL MANAGEMENT FEE ‘PACKAGE DEAL’

DEAL’ TYPES
CONTRACTING CONTRACTING OF CONTRACTS
• Quality of Materials
• Standard of Workmanship
WHOLLY EMPLOYER PARTLY EMPLOYER • Standard of Design

DESIGNED CONTRACT DESIGNED CONTRACT
• Quality of Materials • Quality of Materials

• Standard of Workmanship • Standard of Workmanship
• Standard of Design (For
elements of design in
contractor’s scope of work)
WHOLLY EMPLOYER PARTLY EMPLOYER

DESIGNED CONTRACT DESIGNED CONTRACT
• Quality of Materials • Quality of Materials

• Standard of Workmanship • Standard of Workmanship
• Standard of Design (For elements of
design in contractor’s scope of work)
FIG. 10-2 : DEFECTS FOR WHICH CONTRACTOR IS GENERALLY RESPONSIBLE
© HSKS
ARISING FROM
‘FAIR WEAR AND TEAR’
HAVING NUMBER OF
CAUSES, CONTRACTOR’S ARISING FROM MISUSE/
PORTION BEING MINOR ABUSE BY USERS /
EMPLOYER
DEFECTS FOR WHICH

CONTRACTOR IS GENERALLY
NOT RESPONSIBLE
WAIVED BY EMPLOYER ARISING FROM WORK

WHICH IS NOT
CONTRACTOR’S
RESPONSIBILITY
OUT OF TIME OR STATUTE
BARRED
FIG. 10-3 : DEFECTS FOR WHICH CONTRACTOR IS GENERALLY NOT RESPONSIBLE
© HSKS
POST-COMPLETION STAGE
• Or Post-Handing Over Stage
• Or During ‘Defects Liability Period’, etc.
PRE-COMPLETION STAGE POST-CMGD STAGE

• Or Pre-Handing Over Stage • Or Post-Certification of
• Or During Currency of Completion of Making Good
Construction, Installation, Defects
etc. • Or During Limitation Period
CONTRACTOR’S LIABILITY FOR DEFECTS:

PRINCIPAL STAGES OF CONTRACT
FIG. 10-4 : CONTRACTOR’S LIABILITY FOR DEFECTS – PRINCIPAL STAGES OF CONTRACT
© HSKS
DETERMINATION OF
CONTRACTOR’S EMPLOYMENT THIRD PARTY ACTION TO MAKE
UNDER THE CONTRACT GOOD DEFECTS
EMPLOYER’S PRINCIPAL REMEDIES FOR CONTRACTOR’S

DEFAULT IN RECTIFYING REPORTED DEFECTS AT PRE-
CONTRACT COMPLETION STAGE
POSTPONEMENT/NON- EMPLOYER MAY UNDERTAKE

CERTIFICATION OF COMPLETION RECTIFICATION WORKS HIMSELF
OF WORKS
FIG. 10-5: EMPLOYER’S PRINCIPAL REMEDIES FOR CONTRACTOR’S DEFAULT IN

RECTIFYING REPORTED DEFECTS AT PRE-CONTRACT COMPLETION STAGE
© HSKS
LIMITATION ACT 1953 (REV.
MISCELLANEOUS ACTS 1981) - WEST MALAYSIA
E.G. RAILWAYS ACT
1991 (SECTION 97) CIVIL LIMITATION ORDINANCE
LAW ACT 1965 (SECTION 1959 (REPRINT 1965) -
7(5), ETC. SARAWAK
LIMITATION: RELEVANT
STATUTORY ENACTMENTS
PUBLIC AUTHORITIES LIMITATION ORDINANCE

PROTECTION ACT 1948 1952 (REPRINT 1966) -
(REV. 1978) SABAH
LIMITATION ACT (CAP 14)

REVISED EDN. 2000 -
BRUNEI
FIG. 10-6 : LIMITATION – RELEVANT STATUTORY ENACTMENTS
© HSKS
EXPIRY OF PERIOD FOR RECTIFYING DEFECTS:
OPTIONS AVAILABLE TO CONTRACT ADMINISTRATOR
ALL DEFECTS SATISFACTORILY DEFECTS REMAINING OUTSTANDING

MADE GOOD/RECTIFIED AND/OR UNRECTIFIED
• Contract administrator to:

a) Prepare and
b) Issue
the Performance Certificate forthwith. DEFECTS ARE EITHER:
DEFECTS ARE EITHER:
• See express clauses under ICTAD/SBD/02
• minor or not material
• Serious and/or
• Impracticable or inconvenient
• Material
for contractor to make good
Contract administrator to:

• Carry out diminution in value; and
• Prepare and Issue Certificate of Making Good Defects
EMPLOYER TO UNDERTAKE
TAKE 3RD
RD PARTY ACTION WORKS HIMSELF I.E.
DEPARTMENTALLY
• Deduct costs involved from: • Deduct costs involved from:
a) money due to contractor and/or a) money due to contractor and/or
b) Performance bond and/or b) Performance bond and/or
c) as a liquidated demand c) as a liquidated demand
FIG. 10-7 : EXPIRY OF PERIOD FOR RECTIFYING DEFECTS – OPTIONS AVAILABLE TO

CONTRACT ADMINISTRATOR
© HSKS
OFFICIALLY ENDS THE
DEFECT LIABILITY PERIOD DISCHARGES
PARTIES’ OUTSTANDING (DLP) CONTRACTOR’S RIGHTS
OBLIGATIONS UNDER THE UNDER CONTRACT TO
CONTRACT ARE NOT PHYSICALLY ATTEND TO
RELIEVED DEFECTS
CONTRACTOR’S LIABILITY
FOR LATENT AND PATENT MARKS THE BEGINING OF
DEFECTS CONTINUES FOR THE CONTRACTUAL PERIOD
THE STATUTORY PERIOD OF ISSUE OF CERTIFICATE FOR PREPARATION OF FINAL
LIMITATION ACCOUNT
MAKING GOOD OF
DEFECTS: PRINCIPAL
EFFECTS ON PARTIES
DISCHARGES LIABILITY OF MARKS THE

GUARANTORS, INSURERS, COMMENCEMENT OF THE
ETC. UNDER THE CONTRACTUAL PERIOD
EMPLOYER HAS TO
CONTRACT FOR CONTRACT
RELEASE SECOND MOIETY
OF RETENTION SUM THAT ADMINISTRATOR TO ISSUE
IS WITHHELD FINAL CERTIFICATE
FIG. 10-8: ISSUE OF CERTIFICATE OF MAKING GOOD OF DEFECTS – PRINCIPAL EFFECTS

ON PARTIES
© HSKS
POST-COMPLETION
AND
FINAL ACCOUNT
© HSKS
11.0 POST COMPLETION AND FINAL ACCOUNT
• LIABILITIES ARISING FROM DEFAULTS/OMISSIONS IN:
* TRAINING
* O & M MANUALS
* AS-BUILT DRAWINGS
• FINALISATION OF ACCOUNT ISSUES
• FINAL CERTIFICATE ISSUES
• POST-
POST-FINAL CERTIFICATE PROBLEMS
• RELEVANT 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
SERVICING & MAINTENANCE: AN OVERVIEW
PROCEDURE
GENERAL PURPOSE FREQUENCY EXTENT EFFECT OF
FOR
POSITION FAILURE
MONITORING
• Must follow express • To ensure Contractor • Per stipulations in: • To carry out and/or
Contract stipulations meets contractual erroneous/negligent
obligations a) Contract and/or servicing.
• Most Contracts e.g. b) O & M Manuals
M&E have such • Not to nullify equipment • P.C. may not be issued
provisions in the warranties. • Implied from:
specifications. • Period may be extended
• To minimize defects and a) Statutory
downtime and prolong requirements • Use of 3rd Parties at
lifetime and efficiency. Contractor’s Cost
b) Trade usage
• Warranties may be
c) Local practice compromised.
• Possible action in contract,
tort, statute, etc.
PREVALENT
PREVALENT EXPRESS
EXPRESS IMPLIED
PRACTICE
PRACTICE REQUIREMENTS REQUIREMENTS
REQUIREMENTS
• Daily • As stipulated: • In absence of express

• Weekly
a) In Contract
stipulations implied CONTRACT
• Monthly from: CONTRACTOR’
CONTRACTOR’’S
S ADMINISTRATOR’
ADMINISTRATOR’S EMPLOYERS
EMPLOYERS
• Quarterly b) In Manufacturer’s
Warranties/ a) Trade usage DUTY
DUTY RESPONSIBILITY OBLIGATIONS
• Yearly
recommendations b) Local practice
c) In O & M Manuals c) Statute
• Proper and effective • Monitoring of • Undertaking of routine
• Generally, most contracts • General implication is record keeping of: Contractor’s work servicing and
require contractor to do that Employer will maintenance e.g. daily,
monthly/ quarterly undertake daily and a) Compliances • Signing-off the weekly, etc.
servicing. weekly servicing and b) Deviations records
maintenance. c) Unusual • Affording Contractor
observations • Reporting to proper access to work
Employer of unusual being serviced.
• Timely recording and observations
signing-off. • Attending to unusual
observations reported.
FIG. 11-1 : SERVICING AND MAINTENANCE – AN OVERVIEW

© HSKS
PLANS OF COMPLETED WORKS ‘AS-BUILT’ DRAWINGS
COMMON LABELS FOR RECORDS/

DRAWINGS OF COMPLETED WORKS
‘AS-INSTALLED’ DRAWINGS ‘AS-CONSTRUCTED’ DRAWINGS
FIG. 11-2 : COMMON LABELS FOR RECORDS/DRAWINGS OF COMPLETED WORKS
© HSKS
‘AS-BUILT’ DRAWINGS: AN OVERVIEW
GENERAL TIMING FOR ACCURACY

TYPES/ NATURE UPDATING
POSITION SUBMISSION
• Must follow express • Must comply with express • Contractor’s

Contract stipulations contract stipulations. responsibility at least
as to: during Limitation Period
• Normal practice is:
for:
a) Type/Nature CONTRACTOR’S PROFESSIONAL’S
a) Before CPC
b) Contents RESPONSBILITY RESPONSBILITY
b) After CPC a) Revisions due to
c) Quantity
c) Before CMGD product
d) Timing for
improvement. • In Contract and • In Tort, on joint
Submission • Usual requirements include
Tort and several basis
draft copies for approval b) Errors/ inaccuracies
• Most Contracts have
prior to finalization.
express provisions • Primary • Especially so for
incorporated. • Professionals to update responsibility for signing-off/
on safety issues and errors, endorsing
errors detected. omissions, etc. ‘Qualified
Person’.
AS-BUILT/ OPERATION &

RECORDS OF FINAL
AS-CONSTRUCTED/ MAINTENANCE SCHEMATICS
MEASUREMENT
AS-INSTALLED DRAWINGS /DIAGRAMMES
• Permanent record of works • To supplement O&M Manuals • Undertaken by Contract Administrator

jointly with Contractor.
• Suitably detailed for future • Contents, etc. to express
reference. contract stipulations/industry • To facilitate preparation of Final
practice. Account.
• Contents, etc. to express
contract stipulations/industry
practice.
FIG. 11-3: ‘AS-BUILT’ DRAWINGS – AN OVERVIEW
© HSKS
FINAL CERTIFICATE
MISCELLANEOUS FINAL ACCOUNT

LABELS CERTIFICATE
CERTIFICATION UPON EXPIRY

OF CONTRACT PERIOD:
COMMON LABELS
PERFORMANCE ULTIMATE CERTIFICATE

CERTIFICATE
FINAL PAYMENT
CERTIFICATE
FIG. 11-4 : CERTIFICATION UPON EXPIRY OF CONTRACT PERIOD – COMMON LABELS
© HSKS
ISSUED UPON EXPIRY OF THE
CONTRACT PERIOD
ACTUAL EFFECT DICTATED

BY THE PRECISE TERMS OF
THE APPLICABLE
ISSUED BY THE CONTRACT
CONDITIONS OF CONTRACT
ADMINISTRATOR
FINALCERTIFICATE:
PRINCIPAL
CHARACTERISTICS
RENDERS THE CONTRACT LAST OF THE VARIOUS

ADMINISTRATOR ‘FUNCTUS CERTIFICATES ISSUED
OFFICO’ DURING CONTRACT PERIOD
PRIMA FACIE, SIGNIFIES

DISCHARGE OF THE CONTRACT
BY PERFORMANCE
FIG. 11-5 : FINAL CERTIFICATE – PRINCIPAL CHARACTERISTICS
© HSKS
ISSUE OF PERFORMANCE
CERTIFICATE (P.C.)
SATISFACTION OF ALL
OTHER OBLIGATIONS/DUTIES EXPIRY OF DEFECT
UNDER CONTRACT NOTIFICATION PERIOD (DNP)
TYPICAL PRE-CONDITIONS TO
THE ISSUE OF THE
FINAL CERTIFICATE
FORMAL APPLICATION FOR CERTIFICATION OF

THE FINAL PAYMENT COMPLETION OF SERVICING
CERTIFICATE AND MAINTENANCE
PREPARATION AND
FINALIZATION OF THE FINAL
ACCOUNT
FIG. 11-6 : TYPICAL PRE-CONDITIONS TO THE ISSUE OF THE FINAL PAYMENT CERTIFICATE
© HSKS
SATISFACTION OF THE COMPLETION
CRITERIA AS SPELT OUT IN THE
CONTRACT AND WHERE IT IS
THAT ALL THE CONTRACTOR’S STIPULATED TO BE TO THE
FINANCIAL CLAIMS HAVE BEEN REASONABLE SATISFACTION OF THE
PROPERLY ACCOUNTED FOR CONTRACT ADMINISTRATOR
EFFECT OF ISSUE OF FINAL PAYMENT CERTIFICATE –

PRINCIPAL MATTERS FOR WHICH CERTIFICATE PROVIDES
‘CONCLUSIVE EVIDENCE’
THAT ALL EXTENSIONS OF TIME THAT EXCEPT FOR ANY COMPUTING

OFFICIALLY GRANTED ARE CORRECT ERRORS, ETC. ALL RELEVANT
ADJUSTMENTS (ADDITIONS/
DEDUCTIONS) HAVE BEEN MADE TO
THE CONTRACT SUM
FIG. 11-7 : EFFECT OF ISSUE OF FINAL PAYMENT CERTIFICATE – PRINCIPAL MATTERS FOR
WHICH CERTIFICATE PROVIDES ‘CONCLUSIVE EVIDENCE’
© HSKS
FRAUD/DISHONESTY/FRAUDULENT CONCEALMENT BY CONTRACTOR
UNDISCOVERED DEFECTS E.G. LATENT DEFECTS, ETC.
COMPUTATIONAL ERRORS, ACCIDENTAL INCLUSIONS/EXCLUSIONS, ETC.
CERTIFICATE NOT GIVEN IN CORRECT FORM
CERTIFICATE NOT GIVEN ON TIME
CERTIFICATE NOT GIVEN BY AUTHORIZED PERSON
FINAL CERTIFICATE:
TYPICAL CHALLENGES TO
‘CONCLUSIVENESS’/’FINALITY’
CERTIFIER ACTING ‘ULTRA VIRES’
CERTIFIER IMPROPERLY PRESSURIZED/INFLUENCED
FRAUD/COLLUSION BETWEEN CERTIFIER AND OTHER PARTY
CERTIFICATE EMBODIES WRONG DECISION ON A POINT OF LAW
THE EFFECT OF THE PRESENCE OF AN ARBITRATION CLAUSE
MISCELLANEOUS CHALLENGES/GROUNDS FOR CHALLENGING
FIG. 11-8: FINAL PAYMENT CERTIFICATE – TYPICAL CHALLENGES TO ‘CONCLUSIVENESS’/

’FINALITY’
© HSKS
THANK YOU
© HSKS

Contract Administration For Construction & Engineering Contracts - 1

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Contract Administration For Construction & Engineering Contracts - 1

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IEM TRAINING CENTRE SDN. BHD.

TWO DAY INTENSIVE COURSE ON

CONTRACT ADMINISTRATION FOR

Presented by: IR. HARBANS SINGH K.S.

Ir. Harbans Singh K.S.

Ir. Harbans Singh K.S. is a Professional and Chartered Engineer, Arbitrator,

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

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

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

7.0 DELAY AND EXTENSION OF TIME

8.0 NON-COMPLETION AND DAMAGES

9.0 COMPLETION AND HANDING OVER

11.0 POST COMPLETION AND FINAL ACCOUNT

• TYPES OF BUILDING CONTRACTS

• COMMON CONTRACT PROCUREMENT METHODS

1. TRADITIONAL GENERAL CONTRACTS

3. ‘PACKAGE DEAL’ TYPES

3. STANDARD FORMS OF CONTRACT

4. BREACH OF CONTRACT: REMEDIES

FIG. 1-1: GENERAL CONTRACTS - TYPES

FIG. 1-2 : ENGINEERING/CONSTRUCTION CONTRACTS - TYPES

LUMP SUM MESUREMENT COST

LUMP SUM WITH LUMP SUM WITH

COST PLUS COST PLUS COST PLUS TARGET COST

FIG. 1-3 : TYPES OF CONTRACTS BASED ON PRICING MECHANISM

DESIGN & BUILD/ ENGINEERING, PROCUREMENT, ‘TURNKEY’

FIG. 1-4 : COMMON CONTRACT PROCUREMENT METHODS IN USE

1985 1990 1995 2000

1.0 TRADITIONAL GENERAL 95% 76% 31% 20%

3.0 CONSTRUCTION 1% 3% 9% 10%

4.0 PACKAGE DEAL TYPE’ 2% 15% 52% 60%

5.0 BUILD, OPERATE AND - 2% 5% 8%

1. Architect MAIN CONTRACTOR

DOMESTIC SUPPLIER NOMINATED SUPLLIER

1. Architect PROFESSIONAL SUB-

TRADE TRADE TRADE

Key TRADE TRADE

1.0 PER ANSON

* Legally binding agreement

** CONTRACT - BASIC ELEMENTS