3 BTQS3024 (2023) Week2A (Instruction)

BTQS 3024 Professional Practice
(Contract Management)
Week 2(A)
Instructions and Variations
Sr Ng Chooi Chooi
Semester 3, 2023
BTQS 3024 (Contract Management) - Week 2A : Instructions &

1
Valuations
Section 1:
Obligations + liabilities

2
Valuations
PAM 2006 / PAM 2018

3
Valuations
Obligations and liabilities -
Employer (PAM Contract 2018)
• Obligations :
• Engage Architect, QS (PAM Articles 3-6).
• Ensure provision of design and specification (PAM cl.2.3).
• Gives site possession (PAM cl.21.1).
• Honours payment certificates within stated period (PAM cl.30.1).
• Refrains from interference (PAM cl.26.1(b)).
• Insures against loss and/or damage to property & persons (PAM cl.20.8).
• Refers disputes to mediation (PAM cl.34) expert determination (PAM cl.35) and
arbitration (PAM cl.37).

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Valuations
• Power :
• Agrees to changes in contract terms and assign his interest (PAM cl.3.1).
• Employs another Contractor to execute AI when original Contractor refuses (PAM
cl.2.4)
• Set-offs against certified amounts due to Contractor-limited only to amount or part
of the amount not disputed by Contractor (PAM cl.30.4).
• Requires variations to the design (through architect) (PAM cl.11.2).
• Re-occupy the site, in determination (PAM cl.25.4).
• Refuses permission for assignment by Contractor (PAM cl.17.2).
• Deducts LD from certified amounts due to Contractor (PAM cl.22.1).
……….to be continued

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Valuations
• Power : (continued)
• Pays NSCs direct when Contractor fails to pay (PAM 27.6).
• Employs another Contractor to complete works following determination (PAM
cl.25.4(a)).
• Use Contractor’s materials, plant/equipment on site for completion following
determination (PAM cl.25.4(c)).
• Retains percentage of total value of work, materials and goods which is stated in
Appendix as Percentage of Certified Value Retained (PAM cl.30.5).

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Valuations
• Liabilities :
• Acts in good faith to Contractor’s insurer (PAM cl.20.8.4).
• Ensure care is taken to other third parties (PAM cl.20.8.5).
• For wilful or negligent acts on part of Employer or his direct employees for Contractor
(PAM cl.26.1).
• Implementation of contractual rights and protection mechanism to bondsman (PAM
cl.18.4).
• For other breaches of Contract to Contractor (PAM cl.26.1).
• Indemnities (PAM cl.7.1).
• For misrepresentation of nature of work to be done (Misrepresentation Act) to
Contractor.
• For compliance to regulations to building control authority (PAM cl.4.4).

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Valuations
Architect (PAM Contract 2018)
• Obligations :
• Acts impartially.
• Certify in good faith and exercise due skill and care.
• Provides signed copy of Contract Documents, 2 copies of Contract Drawings and 2
copies of unpriced Contract Bills (PAM cl.3.3).
• Provides design and specification of works (PAM cl. 3.4).
• Gives instruction on discrepancy/divergence (PAM cl.1.4).
• Specifies on request the contractual provision which empowers instruction (PAM
cl.2.3).
• ………….to be continued…

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Valuations
• Obligations : (continued)
• Confirms instruction in writing on request (PAM cl.2.2).
• Provides further information if necessary (PAM cl.3.4).
• To specify the works that are incomplete and/or the conditions that have not been
complied with (PAM cl.15.2(a)).
• Provide reason of his/her rejection on EOT application (PAM cl.23.4).

9
Valuations
• Power :
• Demands evidence of compliance to specification (PAM cl.6.3).
• Investigates suspected or patent defects (PAM cl.15.4).
• Orders removal of executed work or materials on site (PAM cl.6.5).
• Confirms directions of Clerk of works (PAM cl.10.2).
• Gives instructions requiring variation of design (PAM cl.11.2).
• Refuses consent for removal of plant, materials or goods from site (PAM cl.14.1).
• Demands rectification of defective works (PAM cl.15.5).

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Valuations
• Liabilities :
• To Employer for ensuring proper carrying out of the works and compliance of the
contract (PAM cl.6.1).
• To exercise reasonable skill and care in carrying out his supervisory duties (PAM
Article 7(c)).
• To Employer for direction of Clerk of works (PAM cl.10.1).

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Valuations
Contractor (PAM Contract 2018)
• Obligations :
• Carry out and complete works (PAM cl.1.1).
• Notifies Architect on discrepancy and divergence (PAM cl.1.4).
• Accepts Architect’s Instruction (PAM cl.2.1).
• Returns design documents on completion and maintain confidentiality (PAM
cl.30.10).
• Complies with statutory obligations (PAM cl.4.1).
• Provides an agent on site (PAM cl.8.1).
• Accepts QS’s measurement (PAM cl.12.1).
• Vests goods delivered to Employer (PAM cl.14.1).
• ………………….to be continued…

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Valuations
• Obligations : (continued)
• Makes good defects (PAM cl.14.1).
• Insures third party risks (PAM cl.19).
• Insures Employer’s risks (PAM cl.20.A.1).
• Insures works (PAM cl.20.A).
• Restores fire and other damage (PAM cl.20.A.4).
• Pay NSCs and NSs (PAM cl.27.5).
• Permits use of site for works not forming part of contract (PAM cl.29.1).
• Provide documentation for settlement of accounts (PAM cl.30.10).
• Preserves antiquities (PAM cl.33.1).
• Refer disputes to mediation (PAM cl.34), expert determination (PAM cl.35) and
arbitration (PAM cl.37).

13
Valuations
• Power :
• Agrees to changes in contract terms.
• Objects to replacement of Architect or QS (PAM cl.17.1).
• Assigns his interest in contract (PAM cl.17.2).
• Sub-lets work (PAM 17.3).
• Terminates /determinates his employment under contract (PAM cl.26).
• Objects to nominations (PAM cl.27.2).
• Deducts retention money and set-off against certified payment to NSCs (PAM
cl.27.13).
• Agrees /consent to omission of PC Sum and award of such works to others (PAM
cl.27.14).

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Valuations
• Liabilities :
• To insurer on duty to disclose (PAM cl.18).
• To third parties, for damage to property and personal injuries (PAM cl.19.1).
• To Employer for due performance of contract (PAM cl.15.3).
• To Employer for latent defects (PAM cl.15.5).
• To Employer under other express indemnities (PAM cl.7.1).
• To Employer for delay in completion (PAM cl.22.1).
• To Employer for loss and damage arising from default of sub-contractor or supplier
(PAM cl.27.9).
• To Employer, for loss or damage to work (PAM cl.18.2).
• To authority for compliance with regulations (PAM cl.4.4).

15
Valuations
Section 2:
Instructions

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Valuations
Implied terms vs express terms
1. Express Terms
i. Conditions as stated in standard form of contract.
ii. Example, performance bond, retention sum
2. Implied Terms
i. The Contractor shall carry out works with all proper skill and care.
ii. Materials should be in reasonably fit for purposes and of satisfactory quality.
iii. Fit for purposes – for design and build contract.
iv. A duty to operate, ie building plan approval.
v. A duty to give possession of the site within a reasonable time.
vi. An obligation not to hinder or prevent the contractor from carrying out his works.
vii. An obligation to exercise his discretion honestly and in good faith.

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Valuations
Instructions
1. What is an Instruction?
2. Verbal vs written instruction.
3. Instructions in standard forms.
4. Instruction ≠ variations.
5. Real life practice.
6. Actions in Contract Management.

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Valuations
What is instruction?
• Most standard forms of contract contain express provisions

empowering Architect/S.O. (“Architect”) to issue instruction on any
expressly empowered matters.
• The contractor’s duty of compliance only applies to written
instructions that the Architect is expressly empowered by the
conditions of contract in used.
• Contractor failing to comply with valid instruction can lead to
Architect employing 3rd party or to determine Contractor’s
employment.

19
Valuations
What is instruction? (continued)
• Instructions may be given until practical completion.

• Instructions must be valid, if not Contractor can challenge.
• Instructions must not be :-
➢‘ultra-vires’ – beyond contractual or delegated powers.
➢In beach specific contract provision or procedural requirements.

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Valuations
Verbal vs written instruction
• Instruction can be either oral or in writing.

• Verbal instruction can be forgotten, misinterpreted or modified.
• Verbal instruction, should be confirmed in writing either Architect or
Contractor, to take effect.
• A written instruction – a letter, memo, facsimile, drawing, detail,
minutes of meeting, written in site diaries or record.
• Written instructions are records that enable Contractor to claim for
variation, extension of time , loss/expense, etc.

21
Valuations
Instructions in standard forms – PAM 2018
• Clause 2.0 expressly stated Architect’s power to issue instructions.

• All instruction shall in writing entitled “Architect’s Instruction”, clause 2.2.
• The Contractor can issue “Confirmation of Architect’s Instruction” (CAI), if the
Architect fails to issue an AI to cover his verbal instruction.
• The Contractor must compliance the instructions within 7 days, failing which the
Contractor is in breach of contract. The Employer may employ and pay others to
carry out the works.

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Valuations
• Express power for the Architect to issue instructions :
No Clause
1 Resolve any discrepancy in or between the contract documents 1.4
2 Issue further drawings or details 3.4
3 Revise the work programme submitted by contractor 3.5
4 Remove materials from site. 6.5(a)
5 Dismiss any person from the works 8.3
6 Vary works under contract 11.2
7 Compliance to the requirement of the authority 11.3
8 Correct error in Contract Bills 12.2
9 Rectify and/or make good defects. 15.5
10 Takes possession – remove contractor facilities 16.3
11 Make good damage to any property (not forming part of the works) 21.4
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Valuations
• Express power for the Architect to issue instructions :
No Clause
12 Insufficient information in submission for EOT application. 23.3
13 Determination of contractor’s employment 25.4
14 Removal of personnel and labour from the Site. 25.7
15 Expenditure of P.C. Sums. 27.1
16 Objection of contractor on nomination of NSC. 27.4
17 Re-nomination of NSC due to determination of Contractor 27.11
18 Re-nomination of NSC due to determination of NSC 27.12
19 Contractor’s objection on nomination of NS. 28.4
20 Protective works by Contractor. 31.3
21 Remove /dispose debris due to war damage 32.1
22 Discover of antiquities. 33.1
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Valuations
Instructions in standard forms – PWD 203A
• Clause 5.0 empowered the Superintending Officer (S.O.) to issue

instructions.
• The instruction can be in the form of drawings or provision of details
or directives.
• Must in writing.
• No specific form.
• Compliance with 7 days, failing which, the Government take over the
implementation or by other party.

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Valuations
• S.O.’s express power to issue instructions:
No Clause
1 Discrepancy and divergence 8.2

2 Compliance with laws 21.2
3 Discharge of workmen 23.6
4 Variations 24.1
5 Expenditure of Provisional Sums 34.2 & 59.1
6 Testing of materials and goods 35.2
7 Opening up, inspection and testing of work 35.2 & 36.2
8 Removal of works and goods 36.3

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Valuations
• S.O.’s express power to issue instructions:
No Clause
9 Assistance to examine, measure and test work, materials or goods 36.4

10 Provide or assist in providing right of Superintending Officer access to Works 46.1
11 Making good defects during Defects Liability Period 48.1
12 Nominate Nominated Sub-Contractor or Supplier 59.1
13 Antiquities 64.2
14 Any matter necessary and incidental to the completion of the Works 5
15 Any matter S.O is expressly empowered 5

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Valuations
Instructions in standard forms – CIDB
• Clause 3.0 empowered the Superintending Officer (S.O.) to issue

instructions.
• Must in writing.
• No oral instruction.
• The Contractor to comply with the instruction within a certain time.
• If the instruction capable implemented within 14 days, the Contractor
to complete within 14 days.
• If the instruction cannot implement with 14 days, complete with a
time stipulated by the S.O.

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Valuations
• The Contractor is entitled to request S.O. stipulate the provision of

the Conditions by which he issued the instruction.
• S.O. to issue instruction direct to any of the Nominated Sub-
Contractors.
• S.O. to issue instruction for urgent repairs.

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Valuations
• S.O.’s express power to issue instruction:
No Clause
1 Vary works under contract 28.1(a)
2 Resolve any discrepancy in or between contract documents 7.4(c)
3 Remove materials from site 15.7(a)(iii)
4 Open up for inspection 15.6(a)
5 Rectify and/or make good defects 15.7(a)
6 Dismiss any person from the works 13.4(d)
7 Expend any Provisional sum/PC Sum 41.2(a)
8 Takes possession – remove contractor facilities 23.3(b)
9 Suspension of works 19.1(a)

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Valuations
Instructions in standard forms – IEM CE 2011
• Clause 3.0 , all Engineer’s instruction must be in writing.

• If not in writing, no effect.
• The Contractor must comply with the instructions properly.
• Minutes of meetings must not be taken as instructions in writing.
• Confirmation of oral instruction either by the Engineer or contractor.
• Failure to comply with the instructions, remedy action :
• Employ other person to carry out
• Set-off or deduct from payment.

31
Valuations
• Engineer’s instruction empowered by the conditions :
No Clause
1 Vary works under contract 51.1
2 Remove materials from site 38.1
3 Open up for inspection 37.1(4)
4 Rectify and/or make good defects 48.2(1)
5 Dismiss any person from the works 15.3(2)

32
Valuations
• Engineer’s instruction empowered by the conditions:
No Clause
6 Expend any Provisional sum / PC sum 56.3(1)
7 Suspension of works 42.1
8 Make good damage to any property (not forming part of the Works) 22.4(1)
9 Carry out specific requirements of the contract 13.2(1)

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Valuations
Instruction ≠ Variations
• Not every instruction constitutes a variation but every variation

requires S.O./Architect/Engineer’s instruction.
• Contractor cannot expect additional payment for compliance with

instruction.
• Contractor cannot carry out variation works without a proper

instruction.

34
Valuations
Instruction ≠ Variations
• If not, Contractor may :

➢Not be paid for the work done.
➢Breach the contract for not carrying out work accordingly.
➢May need to remove non-compliant work and replace it with work according
to the contract.
• In most construction projects, there are circumstances where changes

or variations to the Works is inevitable.
• A variation clause in construction contract allows for changes not be
foreseeable at tender to be made, without having re-negotiate or
enter into a new separate contract each time there is a change to the
Works.
35
Valuations
Case law 1
• Dekon Sdn Bhd v Pembinaan Asas Klasik [2018] 1 CIDB-CLR 52

• Dekon Sdn Bhd (“Dekon”) was employed by MMC-Gamuda JV for double track
project.
• Dekon sub-contracted part of the works to Pembinaan Asas Klasik (“Klasik”).
• The Parties agreed to terminate the contract mutually.
• No joint final measurement and Klasik submitted final claim.
• Klasik claimed outstanding RM258,955.58.
• Dekon stated the total final contract sum subjected to their certification and
approval.

36
Valuations
Case law 1
• Dekon Sdn Bhd v Pembinaan Asas Klasik [2018] 1 CIDB-CLR 52

• The High Court awarded the judgement sum RM258,955.58 to Klasik.
• The Court of Appeal reversed the order, and held that Klasik is not entitled to
the sum.
• The Court of Appeal held that:
• The sub-subcontracts described as fixed sum contracts.
• The final value of work done, include variations, would subject to final inspection and
remeasurement.
• Lesson Learnt:
• The drafting of the contract must be clear and unambiguous.
• Intention expressed clearly.
37
Valuations
In real life practice
In writing +
in specific form
Stated the Clause

empower the Architect
on the issuance
Clear instruction
Signed by Architect
named in Article 3
Acknowledged by
Contractor

38
Valuations
In real life practice
Question
For a project using PAM 2006 (with
quantities)
1.) Can the C&S / M&E engineer issue an

Engineer’s instruction (EI) ?
2.) Are those EI valid??
3.) Should the Contractor comply the EI

within 14 days / longer period ?

39
Valuations
Actions in Contract Management
• Extract from PAM 2018

40
Valuations
Recap of lecture week 2A
• Contracting parties obligations and liabilities.

• Implied terms vs express terms.
• What is Instruction?
• Verbal vs written instruction.
• Instructions in standard forms.
• PAM 2018
• PWD 203A
• CIDB
• Instruction ≠ variations.
• In real life practice
41
Valuations
Quote of the day
“I love those who can smile

in trouble.”
– Leonardo da Vinci

42
Valuations
Thank you for your attention!!

43
Valuations

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BTQS 3024 Professional Practice

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• Most standard forms of contract contain express provisions

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• Instructions may be given until practical completion.

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• Instruction can be either oral or in writing.

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• Clause 2.0 expressly stated Architect’s power to issue instructions.

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• Clause 5.0 empowered the Superintending Officer (S.O.) to issue

BTQS 3024 (Contract Management) - Week 2A : Instructions &

1 Discrepancy and divergence 8.2

3 Discharge of workmen 23.6

5 Expenditure of Provisional Sums 34.2 & 59.1

6 Testing of materials and goods 35.2

7 Opening up, inspection and testing of work 35.2 & 36.2

8 Removal of works and goods 36.3

BTQS 3024 (Contract Management) - Week 2A : Instructions &

9 Assistance to examine, measure and test work, materials or goods 36.4

11 Making good defects during Defects Liability Period 48.1

12 Nominate Nominated Sub-Contractor or Supplier 59.1

14 Any matter necessary and incidental to the completion of the Works 5

15 Any matter S.O is expressly empowered 5

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• Clause 3.0 empowered the Superintending Officer (S.O.) to issue

BTQS 3024 (Contract Management) - Week 2A : Instructions &

• The Contractor is entitled to request S.O. stipulate the provision of

BTQS 3024 (Contract Management) - Week 2A : Instructions &

1 Vary works under contract 28.1(a)

2 Resolve any discrepancy in or between contract documents 7.4(c)

3 Remove materials from site 15.7(a)(iii)

4 Open up for inspection 15.6(a)

5 Rectify and/or make good defects 15.7(a)

6 Dismiss any person from the works 13.4(d)

7 Expend any Provisional sum/PC Sum 41.2(a)

8 Takes possession – remove contractor facilities 23.3(b)

9 Suspension of works 19.1(a)

• Clause 3.0 , all Engineer’s instruction must be in writing.

BTQS 3024 (Contract Management) - Week 2A : Instructions &

1 Vary works under contract 51.1