Revision Questions
1. Identify the party in each of the following roles that:
i. Award the contracts to the Contractors under the P.W.D. Form of Contract.
Government
ii. Ensure the Employer’s position in the contract is protected.
Contract administrator / Architect / Superintendent officer
iii. Performs specialized construction works and in many situations his certifications
required before the CCC can be issued.
Nominated sub-Contractor
iv. Also carry out valuation of works other than the Quantity Surveyor.
Architect / Consultant
2. The Superintendent Officer (S.O.) of a project shall, as soon as possible, price each
variation using certain order of precedence.
Briefly explain the order of precedence for the variation price.
• Clause 25.1(a): for the valuation of work of similar character and executed under
similar conditions, the rates in BQ after adjustment shall be used.
• Clause 25.1(b): for the works is not of similar character or executed under similar
conditions, a fair valuation with reasonable basis rate made by the S.O. shall be
applied.
• Clause 25.1(c): the rate in the BQ shall determine the valuation of the omitted items
and if the omission substantially vary the conditions of the remaining works, the
rates of the remaining works shall be valued under rule (b).
• Clause 25.2: where the works cannot property be measured or valued, the S.O may
allow daywork price as specified in the Appendix plus 15% provided the Contractor
produces the vouchers, receipts and wage books specifying the time for labour and
plant employed and material used with 7 days after the works is done.
• Clause 25.3: the certified amount of the variations shall be added to or deducted
from the contract sum.
3. The P.W.D. 203A Form of Contract obliges the Employer to appoint the S.O. who is
responsible for the administration of the contract. The contract is made between the
Government and the Contractor.
Since the Government and the Contractor are not allowed to make direct
communication with each other, briefly explain the method of communication
between the Government and the Contractor.
• The direct communication between the Government and Contractor might cause
the transparency problem arise.
• Hence, S.O. acts as the medium of communication.
• The Contractor explain the matter to the S.O.
• The S.O. inform the higher committee such as general secretary of the ministry.
• The matter will be discussed in the meeting to decide whether to approve or reject.
• The decision made will be conveyed to the Contractor by the S.O.
• The S.O. shall communicate the Government’s decisions or instruction to the
Contractor as per Clause 5.0.
• Government to Contractor: The SO will issue drawings, details and written
instruction to the Contractor (Clause 5.1).
• Contractor to Government: The Contractor give written notice to the SO, SO will
prepare the report to notify the Government.
4. Under P.W.D. 203A Form of Contract and PAM Contract 2018, both provided several
conditions which allow the Employer to determine the contract of the employment of
the Contractor.
Briefly describe six (6) conditions to determine the employment of the Contractor.
Clause 51.1(a) of P.W.D. 203A
i. Fails to commence works at the site within 2 weeks after the Date for Possession
ii. Suspends or abandons the carrying out of the works or any part thereof for a
continuous period
iii. Fails to execute the works in accordance with the contract
iv. Persistently neglects to carry out his obligations under the contract.
v. Refuses or persistently neglects to comply with a written notice from the S.O. in
relation to any defective work
vi. Fails to comply with provisions of Clause 47 (Sub-contract or Assignment)
Clause 25.1 PAM Contract 2018
i. If without reasonable cause, the Contractor fails to commence the works in
accordance with the contract
ii. If without reasonable cause, the Contractor wholly or substantially suspends the
carrying out of the works before completion
iii. If the Contractor fails to proceed regularly and/or diligently with the works
iv. If the Contractor persistently refuses or neglects to comply with an AI
v. If the Contractor fails to comply with the provisions in Clause 17.0 (Assignment and
Sub-contracting)
vi. If the Contractor abandoned the works
5. Identify the contractual terms in each of the following situations:
i. The developer’s requirement is to start the operation of the ground floor retail
stalls and car parks without the construction of apartment above fully completed.
What can the QS suggest during the contract formation stage?
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 • Clause 21.2: Sectional Commencement Dates and Clause 21.3: Sectional
Completion Dates
• The QS shall suggest the developer to have a sectional commencement and
completion date for the ground floor retails stalls, car parks and apartment.
• The sectional commencement and completion date shall be inserted in the
Appendix.
ii. The payment can only be imposed by the Employer to the Contractor upon the
receipt of a CNC.
• Clause 22.1: Liquidated Damages and Certificate of Non-Completion
• When CNC is issued by the Architect, the Contractor shall pay the Employer a
sum calculated at the rate stated in the Appendix for the period from the
Completion Date to the date of Practical Completion.
iii. This price is inserted by the QS in the tender/contract documents meant for the
supply of materials by a Nominated Supplier.
• Clause 28.1: P.C. Sums and Provisional Sums – Nominated Suppliers.
• The P.C. Sums are included in the contract bills to nominate the nominated
suppliers to supply any materials and goods to be fixed by the Contractor.
7. Based on the PAM Form of Contract 2018, the Contractor has abandoned the works
due to the irreconcilable problems among the partners in the company.
Advise on the actions that the Employer needs to take so that the project can continue.
• The Employer may determine the Contractor’s employment under Clause 25.1(f).
• The Employer shall follow the procedure for determination as stipulated in Clause
25.2.
• When the Contractor’s employment is determined, the rights and duties of the
Employer and the Contractor are shown in Clause 25.4.
8. The Contractor has abandoned the project due to insolvency of his company. The
Architect found out that the interim certificate was over paid the Contractor.
Materials off site also certified by the QS.
Advice the Employer this situation with reference to PAM Form of Contract 2018.
• The Employer may determine the Contractor’s Employer under Clause 25.3.
• Upon the determination, the Final Account shall be prepared based on Clause 25.6.
• The outstanding amount due to the Employer shall be paid by the Contractor as a
debt payable to the Employer.
• The material off site certified by the QS is a breach of his duties.
• Clause 30.2 stated that the materials and goods must be for the incorporation into
the permanent works and have been delivered to and properly stored at the site and
be protected against loss, damage or deterioration and be in accordance with the
Contractor.
• Besides, Clause 30.2 also states that the certificate shall only include the value of
materials and goods which are reasonably, properly and not prematurely brought to
the site.
9. The interim certificate and payment have a set-off amount without the Contractor’s
prior knowledge. This resulted in the Contractor not able to pay his suppliers who
stopped supplying materials which caused delay to the progress of works. Appraise
the following situations based on the PAM Form of Contract.
The Contractor insisted the set-off amount is against the contract but the Employer
argued the Contractor has overrun the contract period and a CNC has been issued and
the set-off for LD.
i. Adjudicate this dispute
• According to Clause 30.4(b), the Employer is entitled to set-off all cost incurred
and loss and expense provided the Employer or the Architect on his behalf has
given the Contractor a written notice delivered by hand or registered post,
specifying his intention to set-off the amount and the grounds on which such set-
off is made not later than 28 days before any set-off is deducted from any
payment by the Employer.
• In this case, the Employer set-off the amount from the interim certificate and
payment without the Contractor’s prior knowledge. Hence, the Employer is not
entitled to set-off any amount.
• Besides, Clause 22.1 stated that the imposition of liquidated damages by the
Employer shall not be taken into account by the Architect in the issuance of
payment and final certificate and is not subject to the set-off procedures under
Clause 30.4 and adjudication.
• Hence, the deduction of the liquidated damages shall not reflect on the interim
certificate. The Employer can recover the sum as a debt or may deduct from any
monies due or to become due to the Contractor or recover from the performance
bond.
ii. The Contractor’s claim for EOT is rejected by the Architect.
• As stated in Clause 23.4, the Architect shall base on Clause 23.5, 23.6 and 23.8 to
consider the Contractor’s submission and shall either reject the Contractor’s
application with reasons or issue a Certificate of Extension of Time with the
details within 6 weeks from the receipt of the sufficient particulars.
• In this case, the cause of delay of the Contractor is not in the list of the relevant
events for the Architect to grant extension of time under Clause 23.8.
• Hence, the Architect can reject the Contractor’s application with reasons.
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10. During a contract, using P.W.D. Form of Contract, the Contractor is unable to procure
Performance bond by the Date for Possession.
Elaborate and cite the clauses on how his contract is impacted.
• Clause 13.1(b) shows that if the Contractor fails to submit the Performance Bond on
the date of possession of site, then the Contractor shall be deemed to have opted
for Performance Bond in the form of Performance Guarantee Sum.
• Clause 13.2 stated that the deductions of 10% shall be made from the first interim
payment and subsequent interim payment until the total amount deducted to a sum
equivalent to 5% of the contract sum.
• The amount retained by the Government shall be up to 12 months after the expiry
of the Defect Liability Period or the issuance of the Certificate of Making Good
Defects, whichever is the later.
11. A Contractor was held liable to make a contribution to the cost of remedial works
resulting from the demolition of load bearing walls. The walls were shown on the
Architect’s drawing as non-load bearing.
Explain the position of the Contractor in this situation.
• Clause 1.1 stated that the Contractor shall carry out and complete the works in
accordance with the contract documents and provide the materials, goods and
standards of workmanship of the quality and standard described in the contract
documents and/or required by the Architect.
• In this case, the Contractor fails to construct the walls according to the Architect’s
drawings.
• Clause 6.5(c) stated that if the Architect finds any work, materials, goods or
workmanship which is not in accordance with the contract, the Architect shall
instruct the Contractor in writing to rectify such work with no adjustment to the
Contract Sum.
• Clause 6.6 also stated that the compliance by the Contractor with a written
instruction issued under Clause 6.5 shall not entitle the Contractor to an extension
of time nor compensation for any loss and/or expense that may be incurred.
• Hence, the Contractor is liable to make contribution to the cost of remedial works
with no extension of time or compensation granted to him.
12. Some standard forms of contract have been defined practical completion as taking
place when the development is completed for all practical purposes.
Explain the meaning of the development is completed for all practical purposes.
**Answer from both forms is acceptable.
• PAM 2018: Clause 15.1
• PWD 203A: Clause 39.5
13. Based on P.W.D. 203A Form of Contract, explain the process of valuation, Final
Accounts and Final Certificate that a Project Superintending Officer should follow.
Quote and explain the relevant clauses.
Valuation
• Clause 28.3: The S.O. shall issue an interim certificate within 14 days from the date
of any valuation being made stating the amount due to the Contractor from the
Government.
Final Accounts
• Clause 31.1: Not later than 3 months after the issuance of the CPC, the Contractor
shall submit full particulars to the S.O. for the preparation of Final Account.
• Clause 31.2: If the Contractor fails to submit full particulars of all claims within the
stipulated period, the S.O. shall make the assessment based on the available
information submitted by the Contractor for the purpose of the Final Account.
Final Certificate
• Clause 31.3: Within 3 months after the expiry of the Defects Liability Period or within
3 months after the issuance of the CMGD, whichever is the later, the S.O. shall issue
the Final Certificate.
14. A Sales Gallery located at Selayang was awarded to ABC Builder Sdn Bhd under PAM
Form of Contract 2018 (With Quantities).
The Employer instructed the commencement of construction works despite without
obtaining building plan approval from Majilis Perbandaran Selayang (MPS). Stop work
order was issued by the MPS.
Advice the Architect on the entitlement of the Contractor under this circumstance.
Quote and explain the relevant clauses.
• In this issue, the Employer fails to obtain the building plan approval from the local
authority and the stop work order is issued which caused the suspension of the
works.
• The Contractor is entitled to claim for Extension of Time under Clause 23.9(x) where
the suspension of the whole or part of the works by order of an Appropriate
Authority is not due to any negligence, omission, default or breach of contract by
the Contractors and/or Nominated Sub-Contractors and follow all the procedures
for the application of Extension of Time under Clause 23.1(a) and 23.1(b).
• The Contractor is also entitled to claim for loss and/or expense under Clause 24.3(o)
due to the suspension of the whole or part of the works by order of an Appropriate
Authority due to the negligence or omission on the part of the Employer, Architect
or Consultant and he needs to follow all the procedures for the application for loss
and/or expense under Clause 24.1(a) and 24.1(b).
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15. Marvel Development Sdn Bhd awarded 10 units bungalows to Titan Construction Sdn
Bhd on 8 January 2018 with the construction period of 15 months. The contract
awarded based on PAM Form of Contract 2018 (Without Quantities).
On 10 February 2019, the Employer intended to construct 25 units bungalows at
adjacent low. The Employer wants the Architect, Archi Sdn Bhd to issue the additional
scope works as Variation Order to Tian Construction Sdn Bhd.
Advice the Employer and the Architect on the above.
• As stated in Clause 11.1, the variation means the alteration or modification of the
design, quality or quantity or works. However, the additional scope of works does
not comply with the terms of variation.
• The definition of works as stated in Article 7 (be) shall means the works described in
the Articles of Agreement and referred to in the Contract Documents and includes
any changes made to these works in accordance to with the Contract.
• Besides, the additional scope of works might cause the Performance Bond,
Retention Sum and Liquidated Damages and also affect the nature and the scope of
works.
• Hence, the additional works highly affect the original contract period and contract
sum.
• To protect the Employer’s interest, a new contract for the additional scope of works
shall be entered between the Employer and the Contractor.
16. A site agent signed a daywork sheet on the work cannot be properly measured and
valued.
However, the QS consider the signed daywork sheet are unreasonable excessive, he
intended to reduce the hours signed.
What is the QS’s position under the above situation? Explain and quote the relevant
clause based on PAM Form of Contract 2018 (With Quantities).
• According to Clause 11.6(d), the vouchers specifying the time spent daily upon the
work shall be signed by the Site Agent and verified by the Site Staff and shall be
delivered to the Architect and Quantity Surveyor at weekly intervals with the final
records delivered not later than 14 days after the work has been completed.
• As the Quantity Surveyor does not involve in the supervision works on site, he might
not understand the nature of works.
• Besides, the vouchers verified by the Site Staff is deemed to be final. The duty of the
QS is to value it and he has no right to challenge the Site Staff.
17. The Contractor issues a cheque for payment to the aluminium works NSC.
Subsequently, the Contractor decides to stop the cheque due to his company’s
financial difficulties.
Advice the Architect what rights does the NSC have under PAM 2018.
• Clause 27.6 stated that if the Contractor fails to pay the NSC, the Employer may, but
not obliged to, pay the amounts directly to the NSC and deduct the same from any
sums due or to become due to the Contractor.
• The Employer is not obliged to do so because there is not a privity of contract
between the Employer and the NSC as stated in Clause 27.10.
18. Yakin Construction Sdn Bhd is the main Contractor for a housing project in Nilai. The
developer is Nilai development Sdn Bhd.
The Architect certified RM500,000 as the amount due to Yakin Construction Sdn Bhd
in interim certificate No. 4 dated on 1 March 2019. The period of honouring is 30 days
upon Architect’s Certificate as stated in Appendix in PAM 2018. However, Nilai
Development Sdn Bhd only honouring RM150,000 to Yakin Construction Sdn Bhd on
30 March 2019. The balance remains outstanding on 1 August 2019.
What is Yakin Construction Sdn Bhd entitlement under this situation?
• Since the Employer only owe the Contractor a portion of the payment, the
Contractor is entitled to charge interest from the Employer based on Clause 30.17.
• Clause 30.17 stated that if the Employer fails to pay the Contractor the amount due
on any certificate after the Period of Honouring Certificate, a simple interest based
on Maybank Base Lending Rate plus 1% shall be payable by the defaulting party on
such outstanding amount until the date payment is made.
19. The Contractor for a hospital project has notified the SO in writing that the said parcel
has reached practical completion.
Advice the S.O. on the 5 criteria prior the issuance of CPC under P.W.D. Form 203A.
• Clause 39.5(a) to (e)
20. The Government awarded a public housing project to A&B Construction Sdn Bhd
based on P.W.D. 203A in October 2018. Due to the recent financial crisis, A&B
Construction Sdn Bhd not able to repay his debt and declared bankruptcy by the court
order.
Discuss the above situation and quote the relevant clause.
• The Government may terminate the contract under Clause 51.2(a)(i) by giving a
notice to the Contractor.
• The consequence of termination as stated in Clause 51.2(b).
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21. The contactor gave a written notice to the project Architect to notify him that the
works are practically completed on 15 April 2019. The project Architect has carrying
out joint CPC inspection with the Contractor on 22 April 2019. After the joint
inspection, the project Architect found out that there are no minor defects.
The project Architect seeks your opinion on the date and the issuance of the CPC.
Quote the relevant clause under PAM 2018.
• Clause 15.2(b)(i) and 15.2(b)(ii)
• The date of the issuance of CPC shall be on 15 April 2019 because there are no minor
defects.
22. Both PAM 2006 and PAM 2018 have the provision for retention fund. Discuss the
following:
a. The difference for the said provision.
• PAM 2006: The percentage of retained shall be 10% of the certified work done
until 5% of the contract sum.
• PAM 2018: The percentage of retained shall be 5% of the certified work done.
b. The similarity for the said provision.
• The time for release the first moiety and second moiety of the retention fund.
23. An Indian Convention Centre located at Batu Caves awarded to Ubud Construction
Sdn Bhd. The building contract used is PAM 2018.
The Employer, Batu Caves Management Sdn Bhd, has engaged 100 craftsmen from
India to perform the craving works not forming part of the contract. The craftsmen
delayed their works. As a result, Ubud Construction Sdn Bhd’s completion also
delayed beyond the completion date.
Discuss the Contractor’s entitlement under this context.
• The Contractor is entitled to claim for EOT under Clause 23.8(k) and loss and/or
expense under Clause 24.3(e) on the delay on the part of the craftsmen employed
or engaged by the Employer in executing the work not forming part of the Contract
or the failure to execute such works.
• Clause 24.4 stated that the Architect or QS shall ascertain the loss and/or expense.
25. For a mixed development project in KL, the Contractor has not agreed to the
nomination of a NSC under PAM 2018.
Explain to the Contractor his position under this situation.
• Clause 27.2 stated that the Architect shall not nominate any person as NSC against
whom the Contractor makes reasonable objection in accordance with Clause 27.3.
• The Contractor shall make the reasonable objection in writing not later than 14 days
from the receipt of the nomination instruction from the Architect.
• Clause 27.3 stated that subject to Clause 27.4, the Contractor shall not be required
to enter into a sub-contract with any NSC with a reasonable objection based on
available known facts and documented evidence that the financial standing or
solvency or technical competence of the NSC.
Tutorial 12
1. The Contract Administrator plays an important role in a building contract. Please
explain the 5 Contract Administrator’s roles under this context.
• Act as agent / contract administrator for the Employer
• Carry out his functions and duties under the contract with care and duties
• Delegate his authority
• Issue instruction to the Contractor as per Clause 2.0
• Advise the Employer
• Inspect and monitor the contract works
• As an independent professional for the issuance of certificate
• Protect the Employer’s position in the contract
2. Mr A is the Architect for a factory awarded under PAM Contract 2018, the Contractor
did not follow the materials, goods and workmanship specification as stated in the
Contract. Explain which clause of the provision allow Mr A to issue the instructions?
Under this circumstance, what is the Contractor’s entitlement?
• Clause 6.5 stated that if the Architect finds any work, materials, goods or
workmanship which is not in accordance with the Contractor, the Architect shall
instruct the Contractor in writing to……
• In this case, the Contractor shall not entitle to an extension of time or compensation
for any loss and/or expense that may be incurred under Clause 6.6.
3. You are the Consultant Quantity Surveyor for a housing development in Kuala Langat
contracted based on PAM Contract 2018. A dispute happened between the Employer
and the Contractor. As an expert in contract administration, the Employer seek your
advice on the method to resolve the dispute between the contracting parties. Please
advise the Employer 4 effective way to resolve the dispute.
• Discussion and negotiation, Mediation. Arbitration and Litigation
4. In a building tender stated that the tender validity and open for acceptance for 3
months from the date tender closing, but the Contractor withdraw it after 3 weeks,
explaining that a suddenly increased workload. Is the Contractor liable to the
Employer for the additional costs of a replacement Contractor?
• The Contractor is not liable to the Employer for the additional costs.
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 • This is because the Contractor has no privity of contract with the Employer.
5. Clause 3.6 PAM Contract 2018 stated: “The Works Programme shall not constitute
part of the Contract, whether physically incorporated or not into the Contract
Documents:”
Explain your understanding on the above provision.
• The work programme is a tool used to monitor the progress of work and for the
assessment of extension of time and the effect of the delay and/or the disturbance
to the work progress.
• It is also used to determine whether the Contractor is progressing regular and/or
diligently.
• Clause 3.6: The work programme shall part of the contract.
• It is to allow the Architect to issue Variation Orders or to grant Extension of Time to
the Contractor if any changes happen.
• The Architect can give advice to the Contractor to revise the work programme.
• If the work programme forms part of the contract, it is not practical and flexible
because no extension of time can be granted to the Contractor.
• Besides, if the Contractor fails to follow the work programme, it becomes a
Contractor’s default.
• At the same time, the Contract Administrator is in breach because he fails to
supervise and monitor the works and result in defaults of the Employer.
6. Briefly explain the procedure to claim for extension of time under PAM Contract 2018.
• Clause 23.1(a) and 23.1(b).
Tutorial 13
1. Liquidated damages stated in Appendix PAM Contract 2018 is a genuine pre-estimate
of the loss and/or damage which the Employer will suffer. Explain to the Employer,
what are those 4 factors can be take into consideration of the computation of the
liquidated damages.
• Direct costs incurred under the contract. E.g. extend the appointment of the
consultant
• Loss of revenue and profit. E.g. rental and business
• Additional project administration costs. E.g. legal fees
• Interests and finance cost. E.g. increase of loan interest paid
2. An affordable housing awarded under PWD 203A in delay. As the Contractor for the
said project, explain the process to claim extension of time under the provision.
• Clause 43.1
3. If the Contractor fails to complete the Works by the Date of Completion or within any
extended time under PWD 203A.
I. What certificate shall the S.O. issue in the above situation?
• Clause 40.1: The S.O. shall issue a Certificate of Non-Completion.
II. What is the Government’s entitlement?
• Clause 40.2: The Government shall be entitled the Liquidated and Ascertained
Damages calculated at the rate stated in the Appendix 1 from the period of the
issuance of CNC to the date of issuance CPC or the date of termination of the
Contract.
4. For project awarded based on PWD 203A, if in the opinion of the Contractor, the works
has achieved practical completion, what is action need to be taken by:
I. The Contractor.
• Clause 39.2: If the Contractor considers that the works have achieved practical
completion, the Contractor shall notify the S.O. in writing.
II. The Superintending Officer.
• Clause 39.3: Within 14 days of the receipt of such notice, the S.O. shall carry out
testing / inspection of the works. The S.O. shall either issue the CPC to the
Contractor if in his opinion the whole works have reached Practical Completion
and have satisfactorily passed any inspection or test carried out by the S.O. or
give instruction to the Contractor specifying all defective works which are
required to be completed by the Contractor before the issuance of the CPC.
Tutorial 14
1. Multi Million Sdn Bhd is the main contractor for a public project which awarded under
P.W.D 203A 2010. Unfortunately, the Contractor not able to proceed with the works
diligently and regularly due to the company financial problems.
Advice the Superintending Offer, on the rights of the Government.
• The Government may terminate the contract 51.1(a)(iii) by give the written notice
to the Contractor specifying the default and requiring the Contractor to remedy the
default within 14 days from the receipt of the default notice.
• If the Contractor fails to remedy the breach within the stipulated period, the
Government shall have the right to terminate the Contract by giving a written notice
to the Contractor as stated in Clause 51.1(b).
• The consequences of the termination of the Government and the Contractor are
shown in Clause 51.1(c).
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Final
1. Explain the type of instruction that can be issued to a Contractor.
• Clause 1.4: Discrepancy or divergence between documents
• Clause 6.3: Inspection and testing
• Clause 6.5: Work not in accordance with the contract
• Clause 11.3: Issue of variation after practical completion
• Clause 11.4: AI on P.C. Sums and Provisional Sums
2. The reasons of EOT.
• The EOT provision is for all intended purposes to preserve the Employer’s rights to
Liquidated Damages.
• If the EOT provision is deleted in the building contract, the Architect has no ground
to grant EOT which cause the contract period “at large”.
• Time at large means that the Contractor is not bound to complete the works on or
before the completion date, but at his own reasonable time.
• However, the Contractor is still liable to pay for the general damages under the
common law.
3. How to mitigate the peculiar condition to ensure the Contractor preserve his right to
claim EOT?
• Before signing the contract, the Contractor shall have the knowledge on the Contract.
• If he found the peculiar condition, he can discuss with the contract administration.
• Amendments can be made in the standard form of contract provided the agreement
between both parties are achieved.
• In the event of delay, the Contractor shall follow the proper procedures for the
application of EOT.
4. Explain the clause of Contractor shall not wholly or substantially sub-contract the
works under PAM and PWD.
• See Clause 17.0 (PAM) and Clause 47.0 (PWD).
• Clause 17.2 prohibited the Contractor to assign his rights or benefits under the
Contract to any other parties without the written notice of the Employer.
• Clause 17.3 prohibited the Contractor to wholly or substantially sub-contract the
works.
• No prohibition for the Contractor to sub-contract the specialist trades to the special
sub-contractor i.e. plumbing sub-contractor.
• In PAM Clause 25.1(e), the Employer may determine the Contractor’s employment.
• In PWD Clause 47.3, the S.O. shall instruct the Contractor to terminate the sub-
contract.
• If the Contractor fails to do so, the Government may terminate the contract based
on Clause 51.1(a)(vii).
5. There should not be new VO or AI issued after CPC, only for minor works. What should
be done to avoid this situation?
• The Architect should inspect the completed work jointly with the Contractor,
Employer’s representative, NSC and the other Consultant before CPC is issued.
• It is the Architect’s duties to ensure all the construction meets the approved
drawings and specification.
• If anything was found not constructed according to the drawings or specification and
not listed as a punch list item, he shall request the Contractor to make good on the
items.
6. Based on the sectional completion, explain how the facilities or building can be used
before the project completed? Section / Partial
• Sectional: Clause 21.2 and 21.2 (PAM) v Clause 41.1 and 41.2 (PWD)
• Partial: Clause 16.1 and 16.2 (PAM) v Clause 42.1 (PWD)
7. What happen if the Contractor failed to comply AI?
• Clause 2.4: The Employer may employ and pay the other persons to complete the
works and the cost of employing the other persons and the additional cost shall be
set-off.
• Clause 25.1(d): The Employer may determine the Contractor’s employment if he
persistently refuses or neglects to comply with an AI.
8. What is as-built drawings?
• Actual drawings to shows the works constructed on site.
• For the purpose of reporting the work progress.
• See Clause 3.10: As-built drawings and operation and maintenance manuals.
9. Steps from CPC until the Contractor move out.
PAM 2018
• Release of first moiety of retention fund
• Release of Performance Bond
• Defects Liability Period
• Issuance of Certificate of Making Good Defects
• Release of second moiety of retention fund
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 • Final Account and Final Certificate
PWD 203A
• Defects Liability Period
• Issuance of Certificate of Making Good Defects
• Release of Performance Bond / Performance Guarantee Sum
• Final Account and Final Certificate
10. What is SO’s duties if the Contractor cannot finish on time?
• Issue a letter of enquiry to the Contractor.
• Issue Certificate of Non-Completion if the works delay beyond the completion date
as per Clause 40.1.
• Under this circumstance, the Government is entitled to impose Liquidated and
Ascertained Damages with the issuance of CNC.
• Without the issuance of CNC, the time will be at large and cause the Government
cannot claim for LAD.
• The LAD can be deducted from the any money due or to become due to the
Contractor or Performance Bond or debt due from the Contractor.
• The Government may employ and pay the others to complete the outstanding works.
11. How can the Contractor avoid LD?
• Before the issuance of CNC, he should ask the Employer/Government’s permission
to employ others to ensure the works are not delayed provided he follows Clause
17.2(PAM) / Clause 47.1(PWD).
• If the CNC is issued, he still can lock for others to complete the works to reduce the
amount of LD by paying the costs and expenses incurred to employing others.
• Alternatively, if there is no CNC / CPC issued, the Employer cannot impose LD.
12. Discrepancies/problems, what type of AI should be issued?
• Clause 6.5 and 11.1
13. Delay due to VO, what should the Contractor do?
• Advise the Architect to issue EOT.
• The relevant event is Clause 23.8(h): compliance with AI issued by the Architect.
• The Contractor shall apply the EOT by following Clause 23.1(a) and 23.1(b).
14. Delay happen, what should the Contractor do before delay happened?
• The Contractor has used his best endeavour to prevent delay.
• Relevant event stated in the contract happens.
• Discuss with Architect / S.O.
• Follow all the procedures for the application of EOT.
• See Clause 23. (PAM) and Clause 43.0 (PWD).
15. NSC notices the discrepancies between main and subcontract.
• NSC can ignore it because he has no obligation to rectify or inform anyone.
• NSC is not the party in the main contract, he has no contractual relationship.
• NSC only has the contractual relationship with the main Contractor.
• Thus, NSC only needs to fulfil his obligation under the sub-contract.
• However, if the discrepancy involves critical aspects or related to the health and
safety, he should inform the Architect.
• This is to prevent his liabilities in litigation.
• If discrepancies in terms of materials and goods, follow NSC Contract.
• If discrepancies in terms of contract condition, follow Main Contract.
Additional
Expressed Terms
• Conditions as stated in the standard form of contract
• E.g. performance bond and retention sum.
Implied Terms
• The Contractor shall carry out works with all proper skill and care
• Materials should be in reasonably fit for purposes and reasonably quality
• Fit for purposes – for design and build contract
• A duty to operate, e.g. obtain the building plan approval
• An obligation not to hinder or prevent the Contractor from carrying out his works
• An obligation to exercise his discretion honesty and in good faith
3 Ways Variations Might Occur
• The Employer may change their minds
• Discrepancy between tender, contract and the construction drawings
• Changes in legislation and other external factors
Different contract deal with the contract price in different ways
• Contract with BQs – paid upon the works described and quantified
• Lump Sum Contracts – paid upon the schedule of works
• Remeasurement Contracts – paid in full based on the works completed and quantities
actually carried out
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Types of payment in construction
• Advance payment
• Payment based on work executed
• Stage payment
• Bullet payment
Why the original interim certificate issue to the Employer in lieu to the Contractor?
• The Employer is the pay master.
• The interim certificate must be addressed to him to enable him to draw the loan from
the bank by using the interim certificate.
What would the situation if the Contractor not submit their progress claim in the interim
claim interval?
• If the Contractor does not submit the progress claim which mean the work done for the
month is zero.
• The QS still need to issue the valuation certificate to the Architect and the amount
stated in the interim certificate for the month will be in zero.
What would the situation if the Architect took more than 21 days to issue the interim
certificate?
• He can additional time will be counted into the period of honouring certificate which
lead to a shorter period of honouring certificate.
If the Employer fails to honour the certificate, the Contractor may:
• Suspend the work under Clause 30.7 (Full amount)
• Charge interest under Clause 30.17 (Part of the amount)
• Determine his own employment under Clause 26.1(a)
• Refer to adjudication under Clause 34.1
Purpose of Retention Fund
• If the Contractor fails to perform his obligation such as failure to rectify the defects, the
Employer may utilize the fund to pay the third party to carry out the defective works.
• Recover the Employer’s cost and loss
• Safety provision against re-possession of materials and goods by the Contractor’s
supplier, if the retention of title is still not transferred to the Contractor.
Essential Features of an Architect Certificate
• Must be tangible, in writing and in the form of a physical document.
• Must be date – the certificate is issued to record an event or contractual status at a
specific point of time.
• Must refer to the Contract or works to which the Architect to issue a certificate.
• Must be directed or addressed and issued towards the relevant party.
• Must be sent, served or delivered in accordance with Clause 34.0
• Must refer to a specific issue for which the Architect is empowered to issue the
certificate. E.g. extension of time, interim payment.
• Must have a specific declaration by the Architect.
• Must be signed by the Architect as named in the Article 3 of the Article of Agreement.
Good Practice Before Issuing CPC
• Receipt of the written confirmation from all consultants that the works under their
respective scope have been completed to their satisfaction.
• A physical inspection of the works
Effects of the Issuance of CPC
• Completion of the works by the Contractor.
• The Employer can take the possession of the completed works.
• The commencement dates of the Defects Liability Period and the period to complete
the Final Account.
• The Contractor is entitled to receive half of the retention fund.
• The Contractor’s liability to liquidated damages and insure the works ends
Importance of Certificate of Non-Completion
• The LD which the Employer is entitled to claim shall be calculated at the rate set out in
the Appendix for the period between the date of CNC and the date of the CPC.
• The failure to issue the CNC on time may render the time to be set at large for the
contract and the Employer may lose his right claim LD for non-completion.
- To remind the Contractor that the time is the essence.
- To request the Contractor to prepare a accelerate programme for the speedy
completion of all remaining works along with an estimated date as to when the Practical
Completion can be achieved.
- To remind the Contractor to extend all insurance policies related to Clause 19 and 20.
- To remind the Contractor to extend the Performance Bond, if required.
- To notify all NSC of the issuance of the CNC.
Determination for Breach
• Under common law.
• The party may make clear that it has no intention of performing further.
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• The party may be guilty of such a serious breach of contract that will be treated as
having no intention of performing.
• Bring the contract to an end
Determination of the Contractor’s Employment
• The contract still exists even though the contractor’s employment is determined.
• The conditions laid down the procedures for determination.
• Not all of these circumstances amount to breach of contract to justify determination.
• Appointment of new contractors for the continuation of works.
Contractual Relationship
• The Employer appoints the relevant consultants, Architect, QS and Engineer.
• The Employer enters into a main contract with the main contractor.
• The main contractor entered into a sub-contract with the nominated sub-contractor
appointed by the Employer on Architect’s Instruction.
• The main contractor under Clause 17.3 shall not wholly or substantially sub-contract the
contract works to other domestic contractors.
• The NSC contract is signed between the main contractor and NSC.
• In the event of any discrepancy between the main contract and NSC contract. The NSC
contract shall prevail.
• Any assignment of the NSC shall obtain the consent from both the Employer and the
main contractor.
• Any contention in relation to pre-tender process upon signing of the sub-contract will
not be entertained.
Effective Method to Prevent Construction Claim
• Proper documentation
- Properly record, keep and document the factual evidence like daily progress reports,
progress photographs, minutes of meeting, request for information and AI.
• Knowledge on the contract
- The Contractor should read the contract / tender document thoroughly, understand
their role, obligations and responsibilities.
• Preservation of rights
- Served written notice of potential claims, follow the procedures and time frame as
stipulated in the contract.
• Qualify the changes
- The Contractor should qualify any valuation involves additional cost prior the execution,
negotiation or signing off.
• Planning, scheduling and monitoring
- Proper planning, scheduling and monitoring of works to ensure adequate resources,
time, worker allocated for each activity in the work programme.
• Proactive actions
- Proactive measures including quick responses to non-compliance from the Employer,
confirm verbal instruction, request additional information through Request for
Information (RFI) and apply for Extension of Time in the evets of delay.
Liquidated Damages
• A pre-determined sum which becomes payable by a party to a contract if certain
specified breaches occur.
• Replace the right to claim damages measured by the amount of loss actually suffered.
• The parties to know from the start as much as possible about the risks they bear.
• They also save time and money on arbitration and litigation.
• The parties are fully aware of the monetary rights and liabilities and the amount that
the Contractor could price for the risk.
• If the LD amount is too high, whereby the Employer is benefit from the default, the
Contractor may contest with proof.
• A claim for unliquidated damages under common law is available if ‘NIL’ is inserted in
the Appendix of the conditions which treats the LD as inoperative and the LD clause was
strike off in the contract.
Certificate of Completion and Compliance
The Principal Submitting Person (PSP) must sign a CCC to confirm that the project:
• For which the PSP had obtained building plans approval from a local authority.
• Is completed.
• Has met all statutory requirements with regards to health and safety aspects.
• Is ready to be occupied with all essential utilities services connected.
Presentation of Claim
• Introduction: names of parties, original contract sum, commencement and completion
date, details of condition of contact, details of EOT claimed and certified amount.
• Facts relating to the claim:
• Contractual basis of the claim: claim for L/E or additional expenses within the conditions
or claim for common law damages due to breach of expressed or implied terms.
• Details of the claim: any instructions or delays which have occurred, reasons and effects
of delay and supporting documents.
• Evaluation of the claim: site overhead or preliminary costs, head office overheads,
depreciation on plants, increased insurance costs, interest and finance charges, cost
claims from sub-contractors, adjustment of levies, cost escalation and loss of profit.
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