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Assignment

MBG 1243 Construction Contract Studies 1 Lecture : En Norazam Othman

Comparative analysis on clauses concerning payment and obligations:

1. PWD Form 203A 2. PWD Form DB (Rev. 2007) 3. PAM Contract 2006 (With Quantities)

NAZIB FAIZAL (MB101105)

Faculty of Build Environment Course : MSc- Construction Contract Management

Assignment MBG 1243 – Construction Contract Studies 1 Lecture : En Norazam Othman Comparative analysis on
Assignment MBG 1243 – Construction Contract Studies 1 Lecture : En Norazam Othman Comparative analysis on

MB101105-Nazib Faizal

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Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

  • 1 General view in payment obligation

Clauses that related to the payment obligation are in Table 1. PAM 2006 governs the payment in clause 30. PWD 203A governs the payment in clause 28, and PWD DB governs payment in clause 31, 36, 53, 55, and 57.

Table 1 Clauses that related to the payment obligation

No

Standard Form

Clause

Description

 
  • 1 PAM 2006

25

Determination of contractor’s employment by employer

   

26

Determination of own employment by contractor

   

30

Certificates and payment

   

37

Performance bond

 
  • 2 PWD 203A

28

Payment to contractor and interim certificates

   

31

Final account and payment certificate

   

54

Payments upon termination

   

60

Payment to nominated sub-contractor or supplier

 
  • 3 PWD DB

31

Default in payment of wages

   

36

Direct payments to contractor’s consultants

   

53

Interim payments

   

55

Effect of PD’s certificates and payment by government

   

57

Advance payment

   

63

Payments upon termination

       

In this assignment, I would like to compare base on:

  • 1. Parties who involves in payment obligation

  • 2. Type of payment

  • 3. Interim payment stages statement

  • 4. Advance payment

  • 5. Procedure of Interim Payment

  • 6. Schedule of issuing interim certificates

  • 7. Requirement upon issuing interim certificates

  • 8. Contractor’s obligation in applying payment

  • 9. Procedure of payment upon completion

    • 10. Wages of workmen affects the final payment

    • 11. Retention fund/performance bond

    • 12. Payment for liquidated damages

    • 13. Payments upon termination

    • 14. Performance bond

    • 15. Direct payment to the third party

    • 16. Late payment by government/employer

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law 1 General view in payment obligation Clauses

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2

Comparison

No

Item

PAM 2006

PWD 203A

PWD DB

1

Parties who involves

parties involves:

parties involves

parties involves:

in payment

  • 1. Contractor

  • 1. Contractor

  • 1. Contractor

obligation:

  • 2. Architect

  • 2. Superintending Officer(SO),

  • 2. Project Director (PD)

  • 3. Quantity Surveyor

or SO’s representatives

  • 3. Employer

  • 4. Employer

  • 3. Employer

2

Type of payments

Stages

Stages

Advance payment and stages

3

Interim payment stages statement

Stated in appendix

Stated in appendix

Stated in appendix

4

Advance payment

No advance payment

No advance payment

25% of the value of the contract sum

5

Procedure of interim

Procedure:

Procedure:

Procedure:

payment

  • 1. Contractor submit a payment application at the interim

  • 1. Contractor shall complete the work as in Appendix

  • 1. Contractor shall submit interim payment application

claim interval as stated in the Appendix

  • 2. Regarding to the complete work, SO shall make

  • 2. PD consider and ascertain the amount in 28 days

  • 2. Architect and Quantity consider and ascertain the

valuation of the complete work in 14 days

  • 3. PD issuing the interim payment certificates

amount in 21 days

  • 3. SO issuing interim certificates

  • 4. Government pays the

  • 3. Architect issues the interim certificates base on consideration and certain amount

  • 4. Government pays the contractor base on interim certificates

contractor base on interim certificates

  • 4. Employer pay the contractor base on interim certificates issued by architect

6

Schedule of issuing interim certificates

21 days

14 days

28 days

7

Schedule of interim certificates payment

Within the period of honouring certificates

Stated in appendix, if it not stated = 30 days

Stated in appendix, if it not stated = 30 days

8

Contractor’s

Complete details and particulars

To make a works is done and SP

  • 1. The value of works done and

obligation in applying

as required by the Architect and

can make a valuation

properly executed

payment

Quantity Surveyor

  • 2. The amount on any valuation

2 Comparison No Item PAM 2006 PWD 203A PWD DB 1 Parties who involves parties involves:

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Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No

Item

PAM 2006

PWD 203A

PWD DB

       

of variations or the instructions by the PD (clause 24

  • 3. The amount in regard to the expenditure of provisional sums executed or expended (clause 25)

  • 4. The value of any goods or unfixed materials delivered to or adjacent to the site intended for use or to be incorporated into the works

  • 5. The upervision reports as required by the PD under clause 13.1

9

Procedure of

  • 1. After six month after practical

  • 2. If the parties are agree in

  • 1. Within 3 month after the forthwith make the

  • 1. Within 3 month after

  • 2. PD proceed to verify the final

payment upon

completion of the works, the

issuance of the certificate of

issuance of the certificate of

completion

contractor shall send all

practical completion, the

completion of making good

documents necessary for preparing the final count to Architect and Quantity Surveyor

final account, then architect shall issues penultimate certificate for the release of

contractor shall submit application to enable the final account prepared by the SO. If contractor failed, SO shall

assessment based on available document for the final account

defects or the certificate of completion of maintenance (if any), Contractor shall submit to PD a statement of the final account showing in detail the value

account based on the

the retention sums and any other outstanding sum

  • 2. Within 3 months after the expiry of the defects liability

document which is given by contractor

  • 3. Within 21 days after the period oh honouring certificates for the payment of the penultimate certificate

period for the whole of the works or 3 month after the issue of the certificate of completion of making good

  • 3. If final account is verified, PD shall issues Final certificate which consists of balance sum

and within 21 days after the certificate of making good defects has been issued, in

defects under clause 48 hereof, SO shall issue the final certificate that consists

  • 4. Final payment is paid by the government to the contractor. Final payment will

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law No Item PAM 2006 PWD 203A PWD

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Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No

Item

PAM 2006

PWD 203A

PWD DB

   

the event no penultimate certificate has been issued; the final certificate shall be issued by architect

 

of supported documents, full particulars complete with receipt, vouchers, final valuation, any amount

not be paid unless the contractor satisfied the SO in his obligation due to the workmen

  • 4. Final certificate are issued

determined in clause 31.1

which consists of final account and the total sums certified in previous payment certificates

3.

Final payment is paid by the government to the contractor. Final payment will not be paid unless the contractor satisfied

  • 5. If any difference between balance due to contractor and employer, the balance shall be payable by the employer to the contractor within the period of honouring certificates

the SO in his obligation due to the workmen

10

Wages of workmen affects the final payment

Final payment is not affected by wages matter between the workmen that have been employed by the contractor,

Wages of all the workmen has to be paid and all contributions under the Employment Act 1955, The Employee;s Social Security

Wages of all the workmen has to be paid and all contributions under the Employment Act 1955, The Employee;s Social Security

workmen employed by sub

act 1969, The Employee’s

act 1969, The Employee’s

contractor, labor, and etc

provident Fund Act 1991 and any

provident Fund Act 1991 and

other laws relevant to the employment of workmen have been paid.

any other laws relevant to the employment of workmen have been paid.

11

Retention fund

Retention fund will release after Architect issued Pnultimate Certificate. Performance bond shall be refunded to the contractor without interest on the completion of works.

No retention fund is applied in government standard form.

No retention fund is applied in government standard form.

12

Payment for liquidated damages

If the contractor fails to complete the works by the completion date, Architect shall issue a certificate on non-completion.

If the contractor fails to complete the works by the date for completion or within any extended time granted pursuant

If the contractor fails to complete the works by the date for completion or within any extended time granted pursuant

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law No Item PAM 2006 PWD 203A PWD

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Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No

Item

PAM 2006

PWD 203A

PWD DB

   

Upon the issuance of the certificate of non completion , the contractor shall pay or allow to the employer a sum calculated at the rate stated in appendix

to clause 43, the SO shall issues a certificate of non completion to the contractor and notice the intention of the Government to impose liquidated and ascertained damages that stated in appendix.

to clause 49, the PD shall issues a certificate of non completion to the contractor and notice the intention of the Government to impose liquidated and ascertained damages that stated in appendix.

13

Payment upon

Base on reasonable valuation

Base on reasonable valuation. If

Base on reasonable valuation. If

termination

and put in the final account.

contract is terminated under clause 50 and 52, the amount to

contract is terminated under clause 50 and 52, the amount to

be paid (in so far as such amounts or items have not already been covered by payments on account made to the contractor) shall be the following:

be paid (in so far as such amounts or items have not already been covered by payments on account made to the contractor) shall be the following:

  • a. The value of all work carried out up to the date of termination

  • a. The value of all work carried out up to the date of termination

  • b. The amounts payable in respect of any preliminary items so far as the work of service comprised therein has been carried out or performed and a proper proportion of any such items which have been partially carried out or performed

  • b. The amounts payable in respect of any preliminary items so far as the work of service comprised therein has been carried out or performed and a proper proportion of any such items which have been partially carried out or performed

  • c. The cost of materials or goods reasonably ordered for the works which have been delivered to the contractor or of which the contractor is legally liable to accept delivery

  • c. The cost of materials or goods reasonably ordered for the works which have been delivered to the contractor or of which the contractor is legally liable to accept delivery

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law No Item PAM 2006 PWD 203A PWD

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Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No

Item

PAM 2006

PWD 203A

PWD DB

     
  • d. A sum being the amount of any expenditure reasonably incurred by the contractor in the expectation of completing the whole of the works in so far such expenditure has not been recovered by any other payments

  • d. A sum being the amount of any expenditure reasonably incurred by the contractor in the expectation of completing the whole of the works in so far such expenditure has not been recovered by any other

  • e. The reasonable cost of any

payments

protection works and removal of equipment and site facilities pursuant to termination as provided under the contract.

  • e. The reasonable cost of any protection works and removal of equipment and site facilities pursuant to termination as provided under the contract.

14

Performance bond

In the event, If the employer determine the employment of the contractor, or if there is any breach of contract, the employer may call on the performance bond and utilize and make payments out of or deduction from the performance bond for the completion of and/or rectification of the works and reimbursement of loss, and or/expense suffered by the employer. In the event, if the contractor determines his own employment, the employer shall return the performance bond to the contractor for cancellation.

If the contractor fails to performs any of his obligations under the contract and such failure is non remedied in accordance with this contract, the government shall be entitled to call upon the performance bond, wholly or partially. The performance bond may be released or refunded to the contractor upon the completion of works.

If the contractor fails to performs any of his obligations under the contract and such failure is non remedied in accordance with this contract, the government shall be entitled to call upon the performance bond, wholly or partially. The performance bond may be released or refunded to the contractor upon the completion of works.

15

Direct Payment to the

No provision for direct payment

Government shall paid the

Applied in direct payment to the

third party

to the subcontractor/consultants

nominated sub

contractor’s consultants. For the

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law No Item PAM 2006 PWD 203A PWD

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Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No

Item

PAM 2006

PWD 203A

PWD DB

     

contractor/suppliers according to interim certificates/final certificates

purpose of payment to the consultant, the contractor and the consultant shall enter an irrevocable Deed of Assignment for the assignment of any money due to the consultant to be paid directly by the government.

16

Late payment by employer/government

Employer shall pay interest basen on the Maybank Lending Tate plus one percent

No provision

No provision

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law No Item PAM 2006 PWD 203A PWD

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