UNIVERSITI

TEKNOLOGI MARA
UiTM Cawangan Perak,
Kampus Seri Iskandar
Bandar Seri Iskandar, 32600
Bota, Perak

POST-CONTRACT ADMINISTRATION
PRACTICE
(DQS 359)
GROUP 2
1.SITE POSSESSION
2. INSURANCE AND BONDS
NAME STUDENT ID
FADHLI ZIL IKRAM BIN NAZARI 2017204986
SYED AMEEER BIN SYED ABDUL 2017202158
HAMID
DEFINITION

• According to the new oxford dictionary second edition;

-“site” is defined as a piece of land where a building was, is or will be.
-“Possession” is defined as the state of having or owning something
• Based on generally standard forms of contract commonly used describe site possession
as , the Contractors right to enter the Site, occupy and use the Site and carry out the
specified Works.
INTRODUCTION

Possesion of site • Access to the Site for the Employer, his professional team and necessary
contractors employed by the Employer.

Duration of • Starts from the date for possession of site to completion date and inclusive
of extended time if the contractor is granted extension of time.
posession

Contract period • Possession will usually provide the contractor with such exclusive
occupation and use the site as required constructing the works
RELATED CLAUSE

P.W.D FORM 203A (REV. 1/2010) P.A.M CONTRACT 2018

Clause 11 : inspection of site Clause 9 : access to the works
Clause 46 : access for works, Clause 21 : date of commencement,
etc. Postponement and date for completion
Clause 38 : possession of site
INSPECTION OF SITE (CLAUSE 11)
PWD203A (REV.1/2010)
• 11.1 before submitting the tender , contractor should go inspect the site to satisfy himself regarding these matters :

a)Nature of the ground and subsoil

b)Form and nature of the site

c)The extent and nature of the works, materials and goods necessary for the completion of the works
d)Means of communication with and access to the site
e)Accommodation he may require

f) Contractor responsible for all the information that affects the tender

• 11.2 any information or document forwarded by the government to the contractor shall not relieve the contractor of his obligations
under the provisions of this clause
PROCESS OF SITE POSESSION

• The contractor must provide performance bond or performance guarantee sum on the date of
possession of site (clause 13)
• 5% from contract sum to secure the due performance of the obligation under this contract by the
contractor – no work under this contract shall commence if
• Employer is obligated to give possession of site to allow contractor to carry out his work.
• The date of possession is stated in letter of acceptance sent to contractor and appendix of condition of
contract in contract documents.
• Usually the date of submission of the construction site is 2 weeks after the date (la)
• Within 2 weeks - the purpose to provide opportunities for the contractor to provide necessary
preparations before starting work on site
CONT’D

• The extent of possession that must be given to the contractor is not necessarily to be
the whole site. (clause 38.1)
• Employer is not deemed to guarantee possession due to events outside his control. For
example, employer is not liable if contractor is prevented from gaining access by third
party such as unlawful picket.
CONT’D

Nobody else has the right to access the site except for:
• S.O or his representative who have the rights to access the site at any time (clause
46.1(a)),
• Other contractors engaged by government and their workers executing works on or
near the site (clause 46.2),
• Employer and any authorized persons to investigate causes of accident, failure or other
events connected with the works (clause 45).
DELAY IN GIVING SITE POSSESSION

• S.O has the power to defer/change the giving of possession of site for whatever reason
• There are two situations of duration ; not exceeding 90 days or exceeding 90 days from
the date for possession fixed in the Letter of Acceptance.
• If delays is not exceeding 90 days ( clause 38.4) :
Original date of New date of site
site possession <90 days possession
CONT’D

• S.O need to issue instructions to revise the date of possession;

• The contractor to be granted EOT;
• Contractor has to proceed with the works;
• Contractor will not be entitled to any loss or damage caused by such delay, and;
• Contractor is not entitled to terminate the contract
DELAY IN GIVING SITE POSSESSION

• If delays in giving possession of the whole site has exceeded 90 days (clause 38.5) :
S.O obliged to notify Contractor has to
the contractor in 14 days reply within 14 days
writing of the causes from the datereceiving
of delay notice of S.O

• Contracor will have 2 option; :

Option 1 Option 2
Agree to proceed with works when the He can determine his own employment
site is available
He cannot claim for loss & damage He is entitled to claim for loss or damage
caused by the delay
He cannot determine his own
employment
CONT’D

IF THE CONTRACTOR DOES NOT GIVE HIS WRITTEN REPLY IN 14 DAYS:

• The contractor is obliged to proceed with the work;

• He is considered as not taking the option to determine his employment, and;
• He cannot terminate the contract after agreeing to proceed with the work.
 CONT’D

If delays in giving possession for part of the site exceeded 90 days (clause 38.6) :
-contractor have 2 option
Option 1 :
To request for the affected
Option 2
part to be omitted from the
contract

-Agree to proceed with works when the

iIf the S.O agrees, it becomes a
Variation:
- The contractor to proceed with the work
-The contractor is required to
carry out the work and he cannot
terminate the contract
relevant portion of the site is made
iIf the S.O does not agree: available
-Without entitlement to loss or damage
when the portion of the site is made
available.
for delayed possession of the site
- He can claim for loss and expenses -He cannot terminate the contract
- He cannot terminate the contract
CONTRCTOR OBLOGATION AFTER SITE
POSSESION
• The contractor shall thereupon and forth with commence the works…and regularly and
diligently proceed with and complete the works on or before the date for completion
• Contractor need to start the works and complete the works on or before the date of
completion as stated in appendix.
• It is an obligation contractor to proceed with the work regularly and diligently and
complete the work time.
• These requirements ensure that the contractor will perform according to the agreed
schedule and the project can be completed within the promised
CONT’D

• Contractor is obligated and could be compelled to surrender possession of the site upon the
completion of the works or when the contract is rescinded or terminated.
• The S.O will give written to the contractor specified such as default and requiring the contractor to
remedy such as default with 14 days of the receipt of the default notice or any period determined by the
officer named in appendix .

• Events of default
Clause 51.1 (a) (i) contractor fails to commence work within two (2) weeks after date of site possession.
Clause 51.1 (a) (iii) fails to proceed regularly and diligently with the performance of his obligation of
contract.
PAM CONTRACT

• Clause 9.0 – access to the works

• The architect, consultants and their authorised representatives shall at all times have
reasonable access to the works and to factories, workshops or other places where any
construction plant, materials, goods and work are being fabricated, prepared or stored for
the contract
• Architect and consultant have right to access and permitted to examine, inspect, test and/
or check the manufacture, progress of manufacture, production, fabrication, etc of all
element of works as it deems fit be these on site or off site.
CONT’D

• Commencement postponement and completion date (Refer to Clause 21.1)

- The contractor must be given full or exclusive possession of the site – the whole site even thoughsome
parts may not be needed until a later stage of the project
- The contractor is entitled to assume unrestricted possession of the whole site to enable him toplan his
work accordingly – unless there is agreement to the contrary
- The architect will issue instruction to fix the date for site possession if :
A) the date of commencement is not specified
B) the date specified becomes invalidated which is not due to contractor’s fault
e.g: deferment of possession of site by the employer to A new date
- The architect has the power to defer the possession of site for any reason
- If the date of possession is deferred, the date of completion will be revised accordingly
 CONSTRUCTION
INSURANCE AND BONDS
 DEFINITION

• Insurance is a contract by which one party (the insurer), in exchange for

consideration (i.e., money or a premium) promises to make payments
upon the destruction or injury of something in which the other party (the
insured) has an interest.

• The insurer agrees to give the insured some benefit (usually financial
compensation) if a specified event occurs. The event must involve some
uncertainty about whether or when it will happen.
WHY INSURANCE IS IMPORTANT?
RESPONSIBILITY

• Party under a construction contract

• The party accepting a risk always choose to cover their liabilities

with insurance
CLASSES OF INSURANCE :

Property Insurance

Liability Insurance
PROPERTY INSURANCE

 This relates to damage occurring to property or the works

themselves during construction and is referred to as
“property” or “works” insurance policies.
 It covers the property, contract work,materials,equipment
and machinery connected with it.
 LIABILITY INSURANCE

 Liability insurance dealing with claims by third parties

for personal injury and property damage.
 It covers the insured’s liability to third parties.
 There are three main types:
 Employer’s liability
 Public liability
 Professional Indemnity

Liability = Responsible
 LIABILITY INSURANCE ( CONT’D )

 The employer’s liability to his employees under a

contract of service or apprenticeship for personal injury
or disease arising out of the course of employment.
 Public liability covers liability for accidental injury or
death to any person(other than employees) and loss or
damage to a third party’s property.
LIABILITY INSURANCE ( CONT’D )

 Public liability insurance covers the contractor’s liability

to the employer for damage to property which is
adjacent to the site but not belonging to the employer.
 Professional Indemnity: Indemnifies the insured against
legal liability arising from the insured’s professional
activities and must be defined in the policy.

Indemnity = protection
SALIENT FEATURES OF AN INSURANCE
CONTRACT

 The premium that is payable

 The amount of taxation
 Any additional fees payable
 How long the quotation is valid for
 The name of the insurance company
 Key facts document outlining all the salient
information pertaining to the insurance Salient = Important
WHAT INSURANCE CAN AND CAN’T DO?

 Not all risk is insurable

 There is an interplay between insurable and
uninsurable risk.
 Regardless of insurance in place, loss avoidance and
mitigation are preferable to an insurance settlement.
 Insurance can remove barriers to collaboration
 Insurers provide their best terms and conditions to
projects where risk is managed.
TYPES OF INSURANCE

 All risks insurance.

 Professional indemnity insurance.
 Product liability insurance.
 Public liability insurance.
 Latent defects insurance.
ALL RISKS INSURANCE
 All Risks Insurance is an insurance modality that covers
all types of Engineering Civil Works.
 Theaim of this insurance is protecting against the
accidental loss or damage to the works, including the
contractor’s construction plant and equipment,
 Aswell as third parties’ claims due to personal
damage, provided that these directly result from such
construction works.
 PROFESSIONAL INDEMNITY INSURANCE
 Professional indemnity insurance insures against liability
arising from professional negligence.
 This usually includes a contractual liability that is
equivalent to professional negligence, such as a
breach of a contractual obligation to exercise
reasonable skill, care and diligence when carrying out
design. Architects, engineers, other professional
consultants and a building contractor that owes a
design responsibility to its employer are usually Indemnity = protection
required to maintain such insurance.
Negligence = Failure to
take care over
something
PRODUCT LIABILITY INSURANCE

 Product liability insurance protects against liability for

injury to people or damage to property, arising out of
products supplied by a business. Suppliers of
equipment to a construction or engineering project,
such as lifts or escalators, may be required to maintain
such insurance, sometimes in place of professional
indemnity insurance.
PUBLIC LIABILITY INSURANCE

 Publicliability insurance covers liability arising from

death or personal injury to third parties other than the
insured's own employees and for damage to property
belonging to third parties.
LATENT DEFECTS INSURANCE

 Latent defects insurance is also known as decennial

insurance.
 Typically protects the owner against the cost of
remedying the structure of a building, due to a
defect.
 Usually, it lasts for ten years from the original
construction of a building. Typically, a building owner
must arrange the cover in advance.
Latent Defect = Hidden
defect in material
RISK MANAGEMENT PROJECTS

 Therisks range from project planning, contract

formation, onsite work, subcontractor performance,
materials on site etc.
 About two-thirds are not directly insurable for risks that
are identified in a construction.
 There
are six steps in a risk management plan or
program
RISK MANAGEMENT – THE SIX STEPS PLUS
ONE
 Risk Assessment
 Risk Identification
 Risk Analysis
 Risk Evaluation
 Risk Treatment
 Monitoring and review
 Communication and consultation
BONDS

 Performance bond is a surety bond issued by an

insurance company or a bank to guarantee
satisfactory completion of a project by a contractor.
 It
is a contract between insured and bonding
company.

Surety Bond = A
contract between
both parties
BID BONDS
 Usually a percentage of the contract price used to
guarantee that if a contractor does not accept a bid
that is awarded to them that the owner will be
compensated by the surety for an amount up to the
amount of the second lowest bidder.
PERFORMANCE BOND
 Ifa contractor defaults the surety is obligated to
complete the project up to the original value plus the
value of any change orders that were approved by
the surety

Surety = A person who

takes responsibility for
another’s performance
PAYMENT BOND

 Payment bond usually for labor and material:

 If the owner has paid the contractor and the
contractor did not pay the subcontractors, then the
surety will pay them.
 In this case the surety company still have responsibility
to pay for the sub contractor.

Surety = A person who

takes responsibility for
another’s performance
CERTIFICATE OF INSURANCE
 Thecertificate holder should always be the Agency or
entity contracting for services.
 The certificate should be signed.
 Named insured correctly identified.
 Dates should cover the entire period.
 Check in the policy limits.
 Make sure there is a policy number.