MOHAMAD HAZIM MOHAMAD KHAIRI

MUHAMMAD ZAHIN BIN SAMSUDIN

MUHAMMAD NAZRUL NAIM KAMARUDDIN
AZRIE BIN ABDUL RAZAK
 CONTENT
• CLAUSE 50.0 - SUSPENSION OF WORK
• CLAUSE 51.0 - EVENTS AND CONSEQUENCES OF
DEFAULT BY THE CONTRACTOR
• CLAUSE 52.0 - TERMINATION ON NATIONAL
INTEREST
• CLAUSE 53.0 - TERMINATION ON CORRUPTION,
UNLAWFUL OR ILLEGAL ACTIVITIES
• CLAUSE 54.0 - PAYMENTS UPON SUSPENSION AND
TERMINATION ON NATIONAL INTEREST
• CLAUSE 55.0 – EVENTS AND CONSEQUENCES OF
DEFAULT BY THE GOV.
• CLAUSE 56.0 - CERTIFICATE OF TERMINATION
COSTS
 WHAT IS SUSPENSION OF
WORK???

• Longman dictionary,
‘the act of officially stopping something
from continuing for a period of time’
Reassessment Adverse
of the design weather
of the work. condition.

Contractor
unsatisfactory
performance.
PWD FORM 203A (REV. 1/2010)
Suspension and resumption of Works.

Clause 50.1 (Page 32)

• a) Anytime, the SO can
instruct the Contractor to
suspend part or all of the
works.
b)

• The Contractor have to suspend part or all of the

Works as receive the letter of instruction.

• The Contractor have to protect ,store and secure

the Works or such part of the work from
deterioration , loss and damages.
• During the suspension of work,
the contractor still have to
continue follow the obligation
in the contract such as Insurance
and Performance Bond.
• d) ANYTIME, the government can
instruct the contractor to resume the work.
When receive the instruction, the
contractor has to continue doing the
Works.
EXTENSION OF TIME
 50.2 EXTENSION OF TIME
• If the contractor have any loss and delay during the suspension of work, but
he doesn’t know the clear reasons for the suspension , the Contractor can
give notice for Extension of time.

EXCEPT
 If the suspension is due to a cause by the Contractor.

Contractor fails to take measures specified in Clause

50.1(a),which is he fails to follow the instruction to suspend
the works.

 Contractor fails to take any require redaction to slow

down the expenses required.
If the suspension of work
continue for a period
EXCEEDING 12 MONTHS,
the parties can discuss
weather to mutually
terminate the Contract or
suspend the work for a
further period.
 50.3 CONSEQUENCES OF
MUTUAL TERMINATION

Payment obligation
including all cost and
expenditure incurred by the
Clause 51.1(C) (i) are
Government and the
applicable
contractor shall be
ascertained in accordance
with Clause 54
 PAM 2006

Postponement or suspension of the work

Clause 21.4(Page 23)

• ARCHITECT may issue the AI to
suspend all or a part of any work.

• Continuous period not exceeding

the PERIOD OF DELAY stated in
Appendix.(if none stated is a
continuous period of 3 months)
 COMPARISON BETWEEN PWD 2007 AND PAM 2006

PWD 2007 PAM 2006

S.O WHO ISSUE THE ARCHITECT

SUSPENSION OF
WORK?

12 MONTHS LIMITS 3 MONTHS

When exceeds the
period, the party shall
discuss whether to
mutually terminate
the Contract or
suspend the Contract.
 GENERAL

• TERMINATION OF CONTRACTOR’S
OBLIGATION AT THE SITE BECAUSE OF :-
A) Default of Obligation
B) General Default
 51.1. DEFAULT OF OBLIGATION
(a) EVENTS OF DEFAULT
i. Fails to commence work within 2 weeks after the date of site
possession without any reasonable cause
ii. Suspension of work wholly or substantially- there are no works
carried out on site.
iii. Fails to proceed the responsibility required consistently and
diligently.
iv. Fails to carry the work as required by the contract
v. Persistently neglect to carry out his obligation under the contract
vi. Refuses or persistently neglect to comply with a written notice from
the SO:-
- repair any defects
- replace any unsuitable material
vii. Fails to comply with clause 47 (sub contract or assignment)
viii. Fails to comply with any terms and conditions of THIS contract
(PWD 203A)
 Termination procedures

Contractor Written
Contractor Termination
fails to carry notice issue
fails to notices
the work by officer
remedy the release by
according to (appendix 3
default the Officer
contract (a)(i))

14 Days
 51.1 DEFAULT OF OBLIGATIONS (CONT’D)

(b) TERMINATION
Contractor fails to remedy- Officer (as
named in the appendix) give written notice
to the contractor.
 51.1 DEFAULT OF OBLIGATIONS (CONT’D)
( c ) CONSEQUENCES OF TERMINATION
i. contractor shall:-
a. Stop all operations immediately.
b. Take any necessary protection works to secure the
site, equipments, good and materials against any
damage or loss and leave the site in tidy and clean
condition.
c. Remove all the workers and labour from the site.
d. -Vacate the site according to the time stipulated by
SO.
- remove all its belongings which have not been
paid by client. If contractor fails to do so, client
have right to remove and sell their belongings.
 51.1 DEFAULT OF OBLIGATIONS (CONT’D)

( c ) CONSEQUENCES OF TERMINATION (CONT’D)

e. (aa) terminate all third party appoint by the main

contractor ( sub contractor )
(bb) if required, assign government(at no cost) the
benefit of any agreement for supply of materials and
goods
(cc) allow such third party (subcontractor) to enter the
contract to complete the works.
 51.1 DEFAULT OF OBLIGATIONS (CONT’D)

( c ) CONSEQUENCES OF TERMINATION
(CONT’D)
f. Hand over all plans, drawings and other
documentation with no cost to Government.
g. Pay for any losses and damages as a result of
termination
h. Not be release from any of his obligation under
the contract.
 51.1 DEFAULT OF OBLIGATIONS (CONT’D)

ii) Government shall :-

a. Call upon the performance bond or
performance guarantee sum
b. Enter and repossess the site
c. Entitled to take any necessary steps to
complete the works (employ other person
or on its own)
d. Entitled to claim from contractor for any
losses of the termination.
 51.1 DEFAULT OF OBLIGATIONS (CONT’D)

iii) Nothing in clause 51.1 or anything else

shall render Government is liable for any
payment upon termination.
51.2. GENERAL DEFAULT
• DURING THE CONTRACT PERIOD :-
a) CONTRACTORS BECOMES BANKRUPT
b) CONTRACTOR ARE NOT CAPABLE TO
PAY TO THEIR CREDITOR.
c) CONTRACTOR RECEIVES A WINDING-
UP NOTICES
d) ……..
e)………
 51.2 (b).CONSEQUENCES OF TERMINATION

i) If termination happens under clause

51.2 therefore clause 51.1 ( c )(i) and
51.1( c )(ii) shall be reffered.
ii) Verment to Nothing in the clause 51.1
or anything else contained in this
Contract which render Go verment
for payment upon termination.
PAM Contract 2006
Clause 25.0
Page 28
 25.0 Determination Of Contractor’s
Employment By Employer
Default By Contractor
25.1 (a). Fails to commence works without any
reasonable cause
25.1 (b) suspension of work on site wholly or
substantially
25.1 ( c) Fails to proceed regularly and/or diligently with
the works
25.1 (d) persistently refuses or neglects to comply with
an AI
25.1 (e) fails to comply under clause 17.0 (subcont. &
asgmnt)
25.1 (f) Abandoned the works without due cause
 25.2. Procedure for determination

14 Days 10days

Eg. Issuance of
Issuance of
Contractor written Contractor the
persistently Notice by continue terminatio
neglect to employer with the n
comply or default Certificate
with AI Architect
CLAUSE 25.3

If the Contractor is bankrupt or

incapable to pay the debt and all his
properties have been freeze and the
Contractor will be determinate.
 CLAUSE 25.4 – rights and duties of Employer &
Contractor

• (a)
- Contractor should move out from side
- All temporary works, plants and etc can
be used by other Person
- May purchase all the materials and goods
during the completion of work.
25.4 (a) –if required by the Employer
Date of Determination

21 days

Contractor assign to the Employer the

agreement to continuing hire of construction
plants and machineries
25.4 (b) – if required by the Employer

Date of Determination

21
days

Contractor assign to the Employer the agreement

for the supply of materials, goods and/or for the
execution of any work
 25.4 (C)

• When the Architect instruct in written to the

Contractor to remove all the temporary works, plants,
machineries and etc from site, he needs to complied
with the instruction

• Otherwise the Employer may remove or sell those

property belonging to the Contractor.
 25.4 (D)

• All the cost of the completion Works and the

loss and expense suffered by the Employer
need to be pay by the Contractor
• when the Work is completed, the Employer
do not have responsibilities to make further
payment to the contractor.
•All the costs involved to complete the works
shall be included in final account.
 Determination of the Contractor

28
days

Architect or QS write a notice to Contractor of the

date of inspection on Site

The record prepared by the Architect or Qs shall be

submitted to the Contractor (1 copy)
 National Interest

• The government should not use it as a

reason not to continue with the project.
• Example: problems encountered with land
matters.
• It is something in relation with matters that
may affect the security of the country.
 30 days before the contractor
is required to leave the site,
he must have received the
notice.

1/1/2011 30/1/2011
b) The national interest, national policy and
national security is set by the Government
and is ought to be firm.
Matters relating to safety of the nation is
what is clearly included in national interest.
 52.2 Consequences of Termination
a) All payments incurred either by the Client
or by the Contractor are both classified as
Payments upon Termination (Clause
54.0).
b) Other clauses:-
• 51.1 (c) (i)
• 51.1 (c) (ii) (B) – Gov. repossess the site
• 51.1 (c) (ii) (C) – to complete the work by its
own or engage new contractor.
PAM – No Clauses
 Clause 53.1
• Termination
(a) If the contractor or any person on behalf of contractor
gives or have intention to give any person (involved in the
contract) any gift, money or other reward:

i. To do any action due to the contract or any other

contract with the Government
ii. To show support to any person in relation to the
contract with the Government

The officer (S.O) can terminated the contract at any

time by given the written notice to the contractor.
 Clause 53.2
• Consequence Of Termination
i. All the costs, losses, damages and
expenses shall be permitted to the
Government by the contractor.
ii. Clauses 51.1 (c) (i) and (ii) shall apply
iii. Contractor shall not be entitled to any
other form of losses including loss of
profit, damages, claim or etc. regarding
the termination of contract.
PAM 2006
not stated
 Clause 54.1
If the contractor have been terminate
according to clause 50 (suspension of
work)
or clause 52 (termination on national
interest)
Payment should be pay to the contractor
shall be following :
 Clause 54.1 (a)

Value of work until termination

Example : the substructure of the

building already done so,
payment for substructure should
be paid
 Clause 54.1 (b)

Payment for the preliminaries item

Either that work or service
Partially or already done

Example : cost for hoarding

 Clause 54.1 (c)

Materials or goods cost which have

been ordered, received or the
contractor is legally liable to accept
that delivery.

Example : contractor already order

tiles
so that cost for that expenditure
should be paid to the contractor
 Clause 54.1 (d)
Total amount of any contractor’s
expenditure
to complete the whole work
Which is that amount not recovered into
any other payment

Example : contractor have buy

materials to complete all the
column, such as formwork,
reinforcement bar
So that cost for it should be paid
 Clause 54.1 (e)
Cost for any
protection works
Removal of equipment
and site facilities

Example : contractor want to

remove crane
from site
so, cost for that should be paid for
the contractor
 Clause 54.2

• Contractor should not be entitled to any

form of losses other than stated under
clause 54.1(a)-(e)
• The amount agreed should be a final
settlement between parties.
 Clause 54.3

• The final account of this contract shall be

prepared and issued by the S.O
 •When the government fails to perform of fulfill any of
EVENT OF DEFAULT obligations without any reasonable cause.
(clause 55.0(a)) •The Contractor issue a notice to government
•Specifying the default and requiring the period specified
to remedy

•If government fails to remedy their default with

TERMINATION time given , the contractor can terminate the
(clause 55.0(b)) contract by giving written notice

•When the contract was terminate, government

CONSEQUEN need to pay to the contractor
CES OF •The value of the work up to date of termination
TERMINATIO •The amount payable of any preliminary item
N(clause which have partially done
55.0(c)) •The cost of material that have been ordered and
delivered at the site
•A sum being the amount of any expenditure
reasonably incurred by the contractor in so far as
such expenditure has not been recovered by any
other payments referred to in this sub-clause
•For the avoidance of doubt, the parties agree that
the contractor shall not be entitled to any other
form of losses
 Termination Cost

• Total loss incurred by the Government.

• Costs involved in employing new
contractor.
• Any defects for the completed works.
• Bank Guarantee.
 Clause 56.1

The S.O will carry out the assessment of all

costs involved that need to be burden on
the contractor once the new contractor is
appointed. He will then issue a Certificate of
Termination Cost stating the Completion
Cost and the Final Contract Sum for the
project.
 Clause 56.2
• What is included in the Completion Costs?

– Payment previously paid to the contractor

– Payments paid to other person appointed by the
Government for the project.
– Payment made to nominated sub contractor and
nominated suppliers.
– On- cost charges
– Loss incurred by the government due to
termination.
 Clause 56.3
 Costs involve in the Final Contract Sum ( in
provision where the contractor is not being
terminated) :-

 Total amount payable to the contractor upon

completion of the work allowing adjustment to be made
to the Contract Sum for variations.
 Deduction from the sum for other sum that should be
entitled by the government.
 Clause 56.4
• Certificate of termination cost should show
the:-
Final Contract Sum – Completion Cost
Where;
Final Contract Sum Completion Cost
Will be;
Debt payable by the Contractor to the Government
OR;
Final Contract Sum Completion Cost
Will be;
Debt payable by the Government to the Contractor
 Clause 56.5

• The amount of loss and damage included in

the Certificate of Termination Cost must be
necessary and convincing for the Contractor.
 Clause 56.6
• Terminated Contractor’s work done : 60%
• Balance of work to be completed by the
new Contractor: 40%

• Therefore, the cost incurred by the

Government for supervision, interest and
depreciation and other overhead charges
and profit should be allowed as if the work
is to be carried out by one contractor only.
PAM- No Clauses